PEN INTERCONNECT, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 19, 1997
To the Shareholders of Pen Interconnect, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of Pen
Interconnect, Inc., a Utah corporation (the "Company"), will be held on
Wednesday, February 19, 1997, at 3:00 p.m., local time, at The Hilton Hotel, 150
West 500 South, Salt Lake City, Utah (the "Meeting"), for the following
purposes:
1. To elect four (4) directors to serve for one year terms, or until their
respective successors shall be duly elected or appointed.
2. To ratify the appointment of Grant Thornton LLP, as independent auditor for
the Company for the fiscal year ending September 30, 1997 for the purpose
of auditing the financial statements and books of the Company for and
during the period ending on that date.
3. To transact such other business as may properly come before the Meeting, or
any adjournment or postponement thereof.
The Board of Directors has established December 20, 1996 as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting. Accordingly, only shareholders of record at the close of business on
that date are entitled to vote at the Meeting, or any adjournment or
postponement thereof.
BY ORDER OF THE BOARD OF
DIRECTORS
/s/ C. Reed Brown
C. Reed Brown
Secretary
Salt Lake City, Utah
January 24, 1997
IMPORTANT
Shareholders are cordially invited to attend the Meeting. Regardless of
whether you expect to attend the Meeting in person, we urge you to read the
attached Proxy Statement and sign and date the accompanying proxy card and
return it in the enclosed postage-prepaid envelope. It is important that your
shares be represented at the Meeting. If you receive more than one proxy card
because your shares are registered in different names or notices go to different
addresses, each card should be completed and returned to assure that all of your
shares are voted. Your proxy will not be used if you are present at the Meeting
and desire to vote your shares personally.
<PAGE>
PEN INTERCONNECT, INC.
2351 South 2300 West
Salt Lake City, Utah 84119
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 19, 1997
---------------------
SOLICITATION OF PROXIES
This Proxy Statement is furnished to shareholders of Pen Interconnect,
Inc., a Utah corporation (the "Company"), in connection with the solicitation by
the Board of Directors of the Company of proxies from the Company's shareholders
for use at the 1997 Annual Meeting of Shareholders of the Company to be held on
Wednesday, February 19, 1997, at 3:00 p.m., local time, at The Hilton Hotel, 150
West 500 South, Salt Lake City, Utah, and at any adjournment or postponement
thereof (the "Meeting"). At the Meeting, the Company's shareholders will be
asked to (i) elect four directors, (ii) approve independent public accountants
to audit the Company's financial statements for the fiscal year ending September
30, 1997, and (iii) vote on such other matters as may properly come before the
Meeting or any adjournment or postponement of the Meeting.
The approximate date upon which this Proxy Statement, the enclosed proxy
and the attached Notice of Annual Meeting of Shareholders are first being sent
to shareholders is January 27, 1997.
The entire cost of soliciting proxies for use at the Meeting will be borne
by the Company. Proxies will be solicited by use of the mails. Directors,
officers and regular employees of the Company may also solicit proxies by
telephone, telecopier or personal contact. The Company will not pay any special
compensation, to any person, in connection with the solicitation of proxies. The
cost of the solicitation of proxies will include the cost of supplying necessary
copies of the solicitation materials to the beneficial owners of those common
shares which are held of record by brokers, dealers, banks, voting trustees and
their nominees, including, upon request, the reasonable expenses which are
incurred by such record holders in mailing the solicitation materials to
beneficial owners.
PROXIES
Proxies in the enclosed form will be effective if they are properly
executed, returned to the Company prior to the Meeting, and not revoked. The
common shares represented by each effective proxy will be voted at the Meeting
in accordance with the instructions of the shareholder. If no instructions are
indicated on a proxy, all common shares represented by that proxy will be
1
<PAGE>
voted (i) in favor of the election of the nominees for directors described in
this proxy statement, (ii) in favor of ratification of the appointment of Grant
Thornton LLP as the Company's independent auditors for the fiscal year ending
September 30, 1997, and (iii) in the discretion of the persons named in the
accompanying Proxy, upon such other matters as may properly come before the
Meeting.
A shareholder giving a proxy pursuant to this solicitation may revoke it at
any time prior to its exercise by delivering to the Secretary of the Company a
written notice of revocation, or a duly executed proxy bearing a later date, or
by attending the Meeting and voting in person. Any written notice revoking a
proxy should be sent to the principal executive offices of the Company,
addressed as follows: Pen Interconnect, Inc., 2351 South 2300 West, Salt Lake
City, Utah 84119 attn: Secretary.
INFORMATION ON OUTSTANDING SHARES AND VOTING
Only shareholders of record at the close of business on December 20, 1996,
are entitled to notice of, and to vote at, the Meeting. At the record date,
3,033,407 of the Company's common shares, par value $.01 per share, were issued
and outstanding and there were no preferred shares outstanding. Each share is
entitled to one vote.
A majority of the votes entitled to be cast at the Meeting is required for
a quorum for the transaction of business at the Meeting. Abstentions and broker
non-votes (i.e., shares held by brokers or nominees as to which the broker or
nominee indicates on a proxy that it does not have discretionary authority to
vote) are each included in the determination of the number of shares present and
voting for purposes of determining the presence of a quorum. Each is tabulated
separately. Under Utah law, once a quorum is established, shareholder approval
with respect to a particular proposal is generally obtained when the votes cast
in favor of the proposal exceed the votes cast against the proposal. In the
election of directors, the four nominees receiving the highest number of votes
will be elected. Abstentions and broker non-votes will not be considered as
votes cast against any matter considered at the Meeting and will not affect the
outcome of any matter considered at the Meeting
PROPOSAL # 1 - ELECTION OF DIRECTORS
Nominees and Information
At the Meeting, four (4) directors are to be elected to serve one year
terms expiring at the annual meeting of shareholders to be held in 1998. All
directors will serve until their successors are duly elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office.
The persons named as proxy holders in the enclosed proxy cards (Messrs.
James S. Pendleton and Wayne R. Wright) have advised the Company that, unless a
contrary direction is indicated on the proxy card, they intend to vote for the
four nominees named below. They have
2
<PAGE>
also advised the Company that in the event any of the four nominees are not
available for election for any reason, they will vote for the election of such
substitute nominee or nominees, if any, as the Board of Directors may propose.
The Board of Directors has no reason to believe that any nominee will be
unavailable to serve on the Board. The four nominees receiving the highest
number of votes at the Meeting will be elected.
The Company's nominees for the Board of Directors are as follows:
<TABLE>
<CAPTION>
Director
Name Age Principal Occupation Since
---- --- -------------------- -----
<S> <C> <C> <C>
James S. Pendleton 58 Business Executive - Chief Executive 1985
Officer of the Company and Chairman of the
Board
Wayne R. Wright 58 Business Executive - Executive Vice 1985
President and Chief Financial Officer of the
Company
Stephen C. Fryer 58 Business Executive - Senior Vice President 1995
of Sales and Marketing
C. Reed Brown 50 Attorney - Secretary 1989
</TABLE>
JAMES S. PENDLETON has been Chairman of the Board, President and Chief
Executive Officer of the Company since 1985. Mr. Pendleton has also served the
Company as Operations Manager for Product Design. From 1974 to 1985, Mr.
Pendleton was President and CEO of PenTec Enterprises. From 1972 to 1974, he
served as a Sales Manager for W.H. Bintze, an electronics distribution company.
From 1964 to 1972, Mr. Pendleton was an electronics sales representative for
Straube Associates, a company specializing in electronic components. Prior to
joining Straube Associates, Mr. Pendleton served in the U.S. Navy as an Aviation
and Electronics Specialist. Mr. Pendleton attended Foothill College of Business
Administration.
WAYNE R. WRIGHT has served as Executive Vice President and Chief Financial
Officer of the Company since 1985. From 1984 to 1985, he was Vice President and
CFO of PenTec Enterprises. From 1968 to 1984 he was Controller, Vice President
of Operations and Division General Manager for Beehive International, a computer
peripheral company. From 1967 to 1968, Mr. Wright was the General Accounting
Manager for Litton Data Systems. From 1961 to 1968, he was employed by
Beeline/Frontier Refinery as Division Office Manager. Mr. Wright received his
Bachelor of Science Degree in Accounting and Finance from the University of
Utah.
C. REED BROWN has served as a director of the Company since 1989. Since
1973, he has been a practicing attorney. From 1992 to 1996 he served as Vice
President and General Counsel of Exerhealth, Inc.
STEPHEN C. FRYER has served as a director of the Company since 1995 and as
the Senior Vice President of Sales and Marketing since October 15, 1996. From
1989 to 1996 Mr.
3
<PAGE>
Fryer was a principal in Ventana International, Ltd., an Irvine, California
based venture capital and private investment banking firm. Mr. Fryer graduated
from the University of Southern California in 1960 with a Bachelors Degree in
Mechanical Engineering and has spent in excess of 28 years in the computer
business in the United States as well as Asia and Europe.
Board of Director Meetings and Committees
The Board of Directors held 11 meetings in fiscal year ended September 30,
1996. Each director attended at least 75% of all of the meetings of the Board of
Directors.
The Board of Directors has a standing Audit Committee and Compensation
Committee. The Audit Committee met twice during fiscal year 1996. The
Compensation Committee met three times during fiscal year 1996.
The responsibilities of the Audit Committee include: (1) the recommendation
of the selection and retention of the Company's independent public accountants;
(2) the review of the independence of such accountants; (3) the review of the
Company's internal control system; and (4) the review of the Company's annual
financial report to stockholders. The Audit Committee is comprised of Messrs. C.
Reed Brown, Chairman, Wayne R. Wright and Stephen C. Fryer. The Compensation
Committee is comprised of Stephen C. Fryer, Chairman, C. Reed Brown and Wayne R.
Wright.
Compensation of Directors
Members of the Board of Directors employed by the Company do not receive
any separate compensation for services performed as a Director. Members of the
Board of Directors not employed by the Company received $525 per month.
Directors are reimbursed for their actual expenses incurred in connection with
their attendance at meetings of the Board of Directors.
Certain Relationships and Related Transactions
The following information summarizes certain transactions, either engaged
in within the last two (2) years or proposed to be engaged in by the Company and
the individuals described.
During 1989, the Company loaned to Mr. Pendleton $370,335, at an interest
rate of 10% per annum, evidencing this transaction. The balance of the loan was
zero and $47,311 as of September 30, 1996 and 1995, respectively. Interest
income received was $5,006 and $7,846 for the years ended September 30, 1996 and
1995, respectively.
During the period ended September 30, 1995, the Company guaranteed personal
indebtedness of Mr. Pendleton in the maximum amount outstanding at any one time
of $180,000. This indebtedness was paid in full during fiscal year 1996 and the
guarantee was released.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR ALL OF THE FOUR DIRECTOR NOMINEES.
4
<PAGE>
PROPOSAL #2 - RATIFICATION OF
INDEPENDENT AUDITOR
At the meeting, shareholders will be asked to elect, ratify and approve the
Company's independent public accountants for the fiscal year ending September
30, 1997. Currently, Grant Thornton LLP ("Grant Thornton") acts as the Company's
principal accountant, and has acted in that capacity since March, 1995.
The Company does not anticipate that any representative of Grant Thornton
will be present at the Meeting. If a representative is present, he or she will
have the opportunity to make a statement, and will be expected to be available
to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE TO RATIFY THE SELECTION
OF GRANT THORNTON AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE COMPANY FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 1997.
DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the names, ages and positions held by all
directors and executive officers of the Company as of the date hereof. Directors
serve until the next annual meeting of shareholders and until their successors
have been duly elected or appointed. Executive officers serve at the discretion
of the Board of Directors.
<TABLE>
<CAPTION>
Year First
Elected or
Name Age Position Appointed
---- --- -------- ---------
<S> <C> <C> <C>
Alan Weaver 53 President and Chief Operating 1996
Officer
James S. Pendleton 58 Chief Executive Officer and 1985
Chairman of the Board
Wayne R. Wright 58 Executive Vice President, Chief 1985
Financial Officer and Director
C. Reed Brown 49 Secretary and Director 1989
Stephen C. Fryer 58 Senior Vice President of Sales and 1995
Marketing and Director
L. Carl Rasmussen 62 Vice President of Consumer Sales 1994
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C>
Robert "Duke" 62 Senior Vice President of Investor 1991
DeForest Relations
</TABLE>
Business Biographies
For a description of the business biographies of certain of the Company's
officers and directors, see the section of this Proxy Statement entitled
"Election of Directors."
Alan Weaver has served as President of the Company since September 20,
1996. From September of 1993 until April 1, 1996 Mr. Weaver was the President of
the InCirT Technology Division of The Cerplex Group, Inc. From 1990 to September
1993, he was the President of InCirT Technology Incorporated. Prior to joining
InCirT, Mr. Weaver was President of Curtis Electronics from 1982 to 1990,
Manager of Strtegic Planning for the International Groups Product Division of
Digital Equipment Corp. from 1980 to 1982, and Director of Operations for the
Electronics Division of Northern Telecom Inc. from 1977 to 1980.
L. Carl Rasmussen has served as a Vice President of the Company since 1994,
and previously was Director of Marketing from 1987. From 1984 to 1987 he was a
self-employed electronics sales representative. From 1973 to 1984, he served as
Director of Marketing, Sales Manager and in other managerial positions for
Beehive International, a computer peripheral company. Mr. Rasmussen received his
Bachelor of Science Degree from the College of Engineering at Utah State
University.
Robert "Duke" DeForest joined the Company in 1991 as a Vice President. In
September of 1996, he was named as Senior Vice President of Investor Relations.
From 1989 to 1991, he owned and managed Datavault/Rocky Mtn. Sales, a company
specializing in electronic sales and electronic televaulting. From 1987 to 1989,
he was employed as Senior Vice President/Director for Forval America, Inc., a
Japanese marketing company which specializes in the high-speed modem business.
From 1981 to 1987, he was President, Chief Executive Officer and a Director of
Digital Recording Corporation, a public company which specializes in optical
recording. Mr. DeForest has also served as Senior Vice President of Operations
and Vice President of Sales and Marketing for Beehive International. He received
his Bachelor of Science Degree in Electrical Engineering from the University of
Wyoming and a Masters of Science Degree in Electrical Engineering from the
University of Utah.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Company's executive officers and directors, and persons
who beneficially own more than ten percent of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the National
Association of Securities Dealers Automated Quotations System ("NASDAQ") and to
furnish the Company with copies.
6
<PAGE>
Based on its review of the copies of such forms received by the Company, or
written representations from certain reporting persons, the Company believes
that during fiscal year 1996 all filing requirements under Section 16(a) were
complied with.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's common
stock beneficially owned as of December 20, 1996, (i) by each person who is
known by the Company to own beneficially more than 5% of the Company's common
stock, (ii) by each director and director nominee, (iii) by each of the
Company's named executive officers, (iv) by all directors, director nominees and
executive officers, as a group, as reported by each such person. Unless
otherwise indicated, each stockholder's address is c/o the Company, 2351 South
2300 West, Salt Lake City, Utah 84119.
Amount and
Nature of
Beneficial Owner, Directors, Nominees Beneficial % of
and Named Executive Officers Ownership(1) Class
James S. Pendleton (2)(3) 875,037 28.6%
James S. Pendleton Family Trust 456,441 15.0%
Virginia C. G. Pendleton Family Trust 373,452 12.3%
Wayne R. Wright (4) 227,109 7.4%
C. Reed Brown(5) 8,000 .3%
Stephen C. Fryer(6) 34,502 1.1%
Holders of More than 5%
The Cerplex Group, Inc. 316,737 10.4%
1382 Bell Avenue
Tustin, California
Dogwood Associates, Inc. 214,000 7.1%
5 Dogwood Lane
Lawrence, New York 11559
West End Capital Corp. Pty. Ltd. 214,000 7.1%
14 Church Street
Hawthorn, Victoria, Australia 3122
All Officers and Directors as a Group 1,264,199 40.0%
(persons) (2)(3)(4)(5)(6)
7
<PAGE>
(1) Except as noted otherwise, all shares are owned beneficially and of record.
(2) Includes 456,441 shares of Common Stock held by the James S. Pendleton
Family Trust of which Mr. Pendleton is a trustee and beneficiary, 15,144
Shares in Mr. Pendleton's account in the Company's ESOP, and 30,000 shares
that are unissued but with respect to which Mr. Pendleton has the right to
acquire beneficial ownership through the exercise of stock options within
60 days of the date of this Proxy Statement.
(3) Includes 373,452 Shares of Common Stock held by the Virginia C. G.
Pendleton Family Trust. Mr. Pendleton has voting control of these Shares.
(4) Includes 100,000 shares held by the Wayne R. Wright Family Trust, 50,000
shares held by the LaRae Wright Family Trust of which Mr. Wright is a
trustee and beneficiary, 7,109 Shares in Mr. Wright's account in the ESOP,
and 30,000 shares that are unissued but with respect to which Mr. Wright
has the right to acquire beneficial ownership through the exercise of stock
options within 60 days of the date of this Proxy Statement.
(5) Includes 8,000 shares that are unissued but with respect to which Mr. Brown
has the right to acquire beneficial ownership through the exercise of stock
options within 60 days of the date of this Proxy Statement.
(6) Includes 12,000 shares that are unissued but with respect to which Mr.
Fryer has the right to acquire beneficial ownership through the exercise of
stock options within 60 days of the date of this Proxy Statement.
Except as set forth above, the Company knows of no beneficial owner of five
percent of more of the Company's common stock nor does it know of any
arrangement which may at a subsequent date result in a change of control of the
Company.
COMPENSATION OF EXECUTIVE OFFICERS
Name and Principal Fiscal All Other
Position Year Salary Bonus Compensation
James S. Pendleton 1996 $133,500 $45,332 $-0-
1995 $125,000 $69,278 $-0-
1994 $125,000 $27,340 $-0-
Wayne R. Wright 1996 $88,595 $23,716 $-0-
1995 $78,800 $23,425 $-0-
1994 $78,800 $16,050 $-0-
The above table does not include certain insurance, the use of a car, and
other personal benefits, the total value of which does not exceed $50,000 or 10%
of such person's cash
8
<PAGE>
compensation. As of September 30, 1996, Mr. Pendleton did not hold any stock
options, nor is he the beneficiary of any stock appreciation, defined benefit
pension or long-term incentive plans.
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Proxy Statement and for consideration
at the Meeting, shareholder proposals must be submitted on a timely basis.
Proposals for the 1998 Annual Meeting of Shareholders must be received by the
Company no later than September 30, 1997 in order that they be included in the
proxy statement and form of proxy relating to that meeting. Any such proposals,
as well as any questions related thereto, should be directed to the Secretary of
the Company.
OTHER MATTERS
The Board of Directors is not aware of any other business which may come
before the Meeting. If any other matters should properly come before the
Meeting, the persons named on the enclosed proxy card will vote all proxies in
accordance with their best judgment on such matters.
ADDITIONAL INFORMATION
The Company will provide, without charge to any person from whom a proxy is
solicited by the Board of Directors, upon written request of such person, a copy
of the Company's Annual Report on Form 10-KSB, including the financial
statements and schedules thereto (as well as exhibits thereto, if specifically
requested), required to be filed with the Securities and Exchange Commission.
Written requests for such information should be directed to: Investor Relations
Department, Pen Interconnect, Inc., 2351 South 2300 West, Salt Lake City, Utah
84119.
BY ORDER OF THE BOARD OF
DIRECTORS
/s/ C. Reed Brown
C. Reed Brown
Secretary
January 27, 1997
9
<PAGE>
PROXY FOR PEN INTERCONNECT, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 19, 1997
The undersigned hereby appoints JAMES S. PENDLETON and WAYNE R. WRIGHT, and
either of them, as proxies for the undersigned, with full power of substitution,
to represent the undersigned and to vote, as designated below, all of the common
shares of Pen Interconnect, Inc., which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of Pen Interconnect, Inc. to be held on
February 19, 1997, and at any and all adjournments and postponements thereof.
1. ELECTION OF DIRECTORS
Nominees: James S. Pendleton, Wayne R. Wright, C. Reed Brown, Stephen C. Fryer.
o FOR all nominees listed above; except as marked to the contrary in
accordance with the instruction below (Instruction: To withhold
authority to vote FOR any individual nominee strike a line through the
nominee's name in the list above.)
o WITHHOLD AUTHORITY to vote for all nominees listed above.
2. Proposal to ratify the selection of Grant Thornton LLP as the independent
public accountants for Pen Interconnect, Inc. for the fiscal year ending
September 30, 1997.
3. In their discretion, on such other matters as may properly come before the
Meeting, including the election of any person to any position for which a
bona fide nominee is named in the Proxy Statement and such person is unable
to serve or for good cause will not serve.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and, when
properly executed, will be voted in the manner directed herein by the
undersigned. If no direction is given, this Proxy will be voted IN FAVOR of all
nominees named in proposal 1 and FOR proposal 2.
Dated: _________________________, 1997
(Signature of Shareholder)
10
<PAGE>
(Signature of Shareholder if held jointly)
Exact Name(s) of Shareholder(s)
PLEASE PRINT
Please sign exactly as your name appears herein. Where shares are
held jointly in names of two or more persons ALL should sign. When
signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If a corporation, please sign in full
corporate name by President or other authorized officer. If a
partnership, please sign in full partnership name by authorized
Partner.
Please mark, sign, date and return this Proxy promptly in the enclosed envelope.
No postage need be affixed if mailed in the United States.
11
