<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
(Check the appropriate box:)
/ /Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11c
or Rule 14a-12
PCD Inc.
-------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee Required
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(I)(1),
14a-6(I)(2), or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
<PAGE>
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (setting
forth the amount on which the filing fee is calculated
and how such amount was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
-------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------
<PAGE>
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
[PCD LOGO]
Dear Stockholder:
You are invited to attend the 1997 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, May 9,
1997, at 10:00 a.m., local time.
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
<PAGE>
[PCD LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 9, 1997
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, May 9,
1997, at 10:00 a.m., local time, for the purpose of considering and acting
upon the following:
1. The election of a member of the Board of Directors.
2. 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 March 19, 1997 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
April 9, 1997
<PAGE>
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, MA 01960-7977
_______________
PROXY STATEMENT
_______________
FOR THE ANNUAL MEETING OF THE STOCKHOLDERS
To Be Held May 9, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PCD Inc. (the "Corporation"). Such
proxies will be voted at the annual meeting of stockholders of the Corporation
to be held on Friday, May 9, 1997, and any adjournments or postponements
thereof, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders dated April 9, 1997. The
address of the Corporation'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 April 9, 1997. Stockholders of record at the close of business
on March 19, 1997 (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 March 19, 1997 the Corporation had 5,909,733 outstanding shares of
Common Stock, $0.01 par value, constituting the only class of voting
securities of the Corporation. 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. Under the rules of the national Association of
Securities Dealers (NASD) that governs brokers using NASD's automated
quotation system (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.
With regard to the election of directors, under Massachusetts law and the
Corporation's By-laws, each nominee for election as a director shall be
elected if he or she receives the affirmative
<PAGE>
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
Corporation'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 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 Corporation'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. One director of the
Corporation is to be elected at the annual meeting, to hold office, subject to
the By-laws, until the annual meeting of stockholders in 2000 or until his
respective successor has been elected and qualified. Certain information with
respect to the nominee for election as director proposed by the Corporation
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 Corporation may recommend. Proxies can not be voted for more than one
nominee.
2
<PAGE>
<TABLE>
<CAPTION>
Served as
Director
Nominee, Age, Principal Occupation or Position, Other Directorships Since
- ------------------------------------------------------------------- ---------
<S> <C>
TO BE ELECTED FOR A TERM ENDING IN 2000
Harold F. Faught, 72 ................................................ 1983
Consultant
TO CONTINUE IN OFFICE UNTIL 1999
John L. Dwight, Jr., 52 ............................................. 1980
Chairman, Chief Executive Officer and President of the
Corporation Theodore C. York, 54
................................................ 1994
President, Highland Group
TO CONTINUE IN OFFICE UNTIL 1998
Bruce E. Elmblad, 68 ................................................ 1980
Consultant,
Director, Martek Biosciences Corporation and Antex Biologics, Inc.
C. Wayne Griffith, 63 ............................................... 1980
Chairman, Chief Executive Officer
and President, Acorn Management Associates, Inc.
</TABLE>
Mr. Faught has served as a director of the Corporation 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 Corporation since November 1980, when Mr.
Dwight purchased a controlling interest in PCD. Mr. Dwight was previously Vice
President -- International of Burndy Corporation, 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 Corporation since 1994. During
1995 and 1996, Mr. York was President of Saber Equipment Corporation, a
petrochemical equipment company and is a director of several private
companies. 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.
Mr. Elmblad has served as a director of the Corporation since 1980. From
April 1990 to January 1995, Mr. Elmblad was President of SED Management
Company, Inc., a venture capital management company. Before April 1990 and
since January 1995, he has been a
3
<PAGE>
private investor and has served as a consultant to and a director of several
high technology companies.
Mr. Griffith has served as a director of the Corporation since 1980. A
management consultant and investor, Mr. Griffith is President and Chief
Executive Officer of Acorn Management Associates, Inc., and President and
Chief Executive Officer of College Counsel. Previously, he held the positions
of Chairman, Chief Executive Officer and President of Digitec, Inc.; Chairman,
Chief Executive Officer and President of Xylogics, Inc., Executive
Vice-President of Leeds & Northrup Corporation, Group Vice President of Burndy
Corporation; and spent 12 years in senior sales/marketing roles at AMP, Inc.
On February 14, 1997, Saber Equipment Corp. ("Saber"), a development stage
company of which Messrs. Elmblad and York are directors and Mr. York is
president and chief executive officer, 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 is proceeding.
Although the Board of Directors does not contemplate that the nominee for
election as director 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 five meetings of the Board of Directors during 1996. All of the
members of the Board of Directors attended at least 80% of the meetings of the
Board and the committees on which they served. Directors who are employees of
the Corporation do not receive any compensation for service as director. Each
non-employee director is currently paid $750 for attendance at each Board
meeting. For 1996, each director, other than Mr. Dwight, received a total of
$3,000 for his services.
The 1996 Eligible Directors Stock Plan of the Corporation (the "Directors
Stock Plan") was approved by the Board of Directors on January 30, 1996 and
thereafter by the Corporation'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 Corporation or any subsidiary of the
Corporation (an "Outside Director") who has not previously been granted an
option to purchase shares of Common Stock will be
4
<PAGE>
granted, on the thirtieth day after such meeting or any subsequent annual
meeting of stockholders, an option to purchase 3,000 shares of Common stock at
an exercise price equal to the fair market value on the date of grant. In
addition, on the thirtieth day after such meeting, 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 shall vest six months
after, and expire 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 Corporation's
accounting practices, internal accounting controls and financial results and
oversees the engagement of the Corporation's independent auditors. The members
of the Audit committee are Mr. Elmblad 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
Corporation and administers various compensation and benefit plans, including
the 1992 Stock Option Plan and the 1996 Stock Plan. The members of the
Corporation's Compensation Committee are Mr. Faught and Mr. Griffith. Upon Mr.
Faught's re-election to the Board of Directors, Mr. Faught intends to resign
as a member of the Compensation Committee effective as of the date of the
annual meeting, May 9, 1997. The Board of Directors will elect his successor
at the meeting of the Board following the annual meeting.
None of the members of the Audit Committee or the Compensation Committee is
a past or current officer or employee of the Corporation. The Board of
Directors does not maintain a nominating committee or a committee performing
similar functions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Faught is a former senior vice president of Emerson Electric Co., which
currently owns 32.3% of the outstanding Common Stock of the Corporation.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
5
<PAGE>
The following report is provided by the Compensation Committee of the Board
of Directors. The Committee supervises the Corporation'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 Corporation. The Committee, which consists entirely
of non-employee directors, met two times in 1996.
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 Corporation 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.
* COMPANY PERFORMANCE: The Program is designed to reflect the
overall performance of the Corporation, with appropriate
consideration of conditions that exist in the industry. In
determining compensation levels and compensation changes,
the Committee considers the Corporation'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
Corporation'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 Corporation'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.
6
<PAGE>
* BASE SALARY: The base salary of each executive is reviewed
annually by the Committee. Salary changes reflect the
overall performance of the Corporation, 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. 1996 base salaries for the
Chief Executive Officer and the other executive officers are
shown in the summary compensation table. Effective January
1, 1997, Mr. Dwight's annual base salary was increased 8% to
$204,070. In setting Mr. Dwight's base salary, the committee
took into account his leadership and direct contributions to
the Corporation which resulted in the Corporation's strong
financial performance for the year ended 1996.
* ANNUAL MANAGEMENT INCENTIVE PLAN: The Corporation'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 Corporation'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
$100,000, which was 53.1% of his base salary for 1996.
* 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 Corporation 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 Corporation does not have an employment agreement with the Chief
Executive Officer or any of its other executive officers.
No specific actions have been taken with respect to the $1 million
compensation deduction limit under section 162(m) of the Internal Revenue Code
because the Corporation's compensation levels have never exceeded the limits
and are not expected to exceed the limit by a material amount over the next
several years.
SUMMARY
The Committee believes the Corporation's compensation program has been
designed and managed by the Committee to directly link the compensation of the
Corporation's executives to the performance of the Corporation, individual
performance and Stockholder return. The current levels of compensation for the
Corporation's senior executives are generally below market levels for similar
electronic connector companies. The Committee expects
7
<PAGE>
to address these compensation levels over time, consistent with Corporation
and individual performance, and will continue to emphasize performance-based
and stock-based compensation linking management and stockholder interests.
The Compensation Committee
H.F. Faught
C.W. Griffith
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the
Corporation's Chief Executive Officer and each of the other four most highly
compensated executive officers during the year ended December 31, 1996 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Number of
Shares
Annual Compensation Underlying
---------------------- Options All-Other
Year Salary($) Bonus($)(1) Granted(#) Compensation($)(2)
---- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
Name and
Principal Position
- -------------------
John L. Dwight, Jr. 1996 $188,313 $100,000 - $ 7,712
Chairman of the 1995 177,647 80,000 - 7,737
Board, Chief 1994 167,606 48,000 - 5,988
Executive Officer
and President
Michael S. Cantor 1996 116,019 35,000 - 8,787
Vice President, 1995 111,649 30,000 - 9,649
Sales and Marketing 1994 106,600 10,000 - 8,273
Jeffrey A. Farnsworth
Vice President 1996 103,474 60,000 - 9,663
and General 1995 98,061 40,000 - 8,429
Manager - CTi 1994 88,516 19,000 - 6,034
Mary L. Mandarino 1996 84,584 32,000 5,000 7,850
Vice President, 1995 77,494 30,000 - 8,879
Finance and 1994 73,224 14,000 - 7,999
Administration
and Treasurer
Roddy J. Powers 1996 106,163 37,000 - 7,029
Vice President, 1995 101,109 30,000 - 6,884
Operations 1994 97,175 10,000 - 4,748
All executive 1996 620,348 264,000 10,000 41,041
officers as a 1995 565,960 210,000 48,000 41,578
group (6 persons) 1994 533,121 101,000 - 33,042
</TABLE>
8
<PAGE>
(1) The Corporation's officers are eligible for annual cash
bonuses under the terms of the Corporation's Management
Incentive Plan, adopted each year. 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 Corporation's
operating budget and results of operations.
(2) Includes amounts awarded pursuant to the Corporation's 401(k)
Salary Savings Plan, life insurance premium remainders and
automobile allowances. For 1996, such amounts were,
respectively, Mr. Dwight, $4,409, $436 and $2,867; Mr.
Cantor, $4,324, $376 and $4,087; Mr. Farnsworth, $4,194, $155
and $5,314; Ms. Mandarino, $3,325, $101 and $4,424; and Mr.
Powers, $3,937, $283 and $2,809.
OPTION GRANTS/SAR GRANTS
Options granted to the Named Executive Officers during 1996 are set forth
in the following table.
<TABLE>
<CAPTION>
Option Grants in the Last Year
Individual Grants
-------------------------------------------------
Number of Percent of
Shares Total Options
Underlying Granted to Exercise
Options Employees Price Expiration
Granted (#) in 1996 ($/share) Date
----------- -------------- --------- ----------
<S> <C> <C> <C> <C>
NAME
John L. Dwight, Jr....... - - - -
Michael S. Cantor........ - - - -
Jeffrey A. Farnsworth.... - - - -
Mary L. Mandarino........ 5,000 33.3% $12.00 07/23/06
Roddy J. Powers.......... - - - -
All executive officers
as a group (6 persons).. 10,000 66.7% $12.00 07/23/06
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Option Grants in the Last Year (Continued)
Potential Realizable
Value at Assumed
Annual Rates
of Stock Price
Appreciation
for Option Term (1)
5%($) 10%($)
------- --------
<S> <C> <C>
NAME
John L. Dwight, Jr....... - -
Michael S. Cantor........ - -
Jeffrey A. Farnsworth.... - -
Mary L. Mandarino........ $37,734 $ 95,625
Roddy J. Powers.......... - -
All executive officers
as a group (6 persons).. $75,468 $191,250
- ---------------
</TABLE>
(1) These amounts represent hypothetical gains that could be achieved for the
respective options if they are exercised at the end of their respective terms.
The assumed 5% and 10% rates of stock price appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Corporation's estimate or projection of the future Common Stock price. This
table does not reflect any actual appreciation in the price of the Common
Stock to date.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Year
Shares Acquired Value Realized
on Exercise (#) ($)(1)
---------------- --------------
<S> <C> <C>
Name:
- -----
John L. Dwight, Jr.......... 10,000 $108,542
Michael S. Cantor........... 25,000 271,354
Jeffrey A. Farnsworth....... - -
Mary L. Mandarino........... 15,500 179,640
Roddy J. Powers............. 20,000 197,083
All named executive officers
as a group (6 persons)..... 70,500 756,619
- ---------------
<TABLE/>
(1) The difference between the aggregate fair market value of the
11
<PAGE>
shares acquired on the date of exercise and the aggregate
option exercise price for such shares.
</TABLE>
<TABLE>
<CAPTION>
Aggregated Year-End Option Values
Number of Securities
Underlying Unexercised
Options at In-the-Money Options
Year-End (#) Year-End ($)(1)
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Name:
- -----
John L. Dwight, Jr...... 62,000 - $ 734,958 -
Michael S. Cantor....... 119,000 - 1,410,646 -
Jeffrey A. Farnsworth... 120,000 24,000 1,413,000 $275,000
Mary L. Mandarino....... 81,750 3,750 955,510 3,750
Roddy J. Powers......... 124,000 - 1,469,917 -
All officers as
a group (6 persons).... 508,000 31,500 5,985,281 282,500
- ---------------
<TABLE/>
(1) The fair market value of the Common Stock on December 31,
1996 was computed utilizing the closing market price ($13.00)
on that date, less the option exercise price.
STOCK AWARDS
1996 STOCK PLAN
The PCD 1996 Stock Plan (the "1996 Plan") was adopted by the Board of
Directors on January 30, 1996 and approved by the stockholders on March 8,
1996. For informational purposes and pursuant to Rule 16b-3 under the Exchange
Act, the Corporation is providing the following description of the 1996 Plan
as so adopted.
The 1996 Plan was adopted to ensure that an adequate number of option
shares are available to provide appropriate incentives to key employees and
other persons who provide significant services to the Corporation and its
subsidiaries (the "Corporation Group") by providing these individuals with an
opportunity to purchase or receive as bonuses stock of the Corporation and
thereby permitting them to share in the Corporation's success. The
Corporation's future success is highly dependent on the retention and
continuing motivation of the persons who perform key services for and make key
contributions to the Corporation. The
12
<PAGE>
Corporation believes that an active program of awarding stock options to those
key employees and other individuals has been, and will continue to be, an
important component of their compensation arrangements in a way that, directly
associates their interests with those of the Corporations stockholders.
The 1996 Plan provides for the granting of incentive stock options
("ISOs"), non-incentive stock options ("NSOs") (both ISOs and NSOs are
collectively referred to as "Options"), stock purchase authorizations
("Purchase Authorizations"), stock bonus awards ("Bonuses"), and Stock
Appreciation Rights ("SARs"). (The above-listed items are referred to herein
collectively as "Awards".) There initially were 324,000 shares available for
Awards under the 1996 Plan. On December 31, 1996, there remained available
309,000 shares for future Awards under the 1996 Plan. The closing price of the
Corporation's Common Stock as reported by the Nasdaq National Market System on
March 19, 1997 was $15.50.
The 1996 Plan is administered by the Compensation Committee of the Board
(the "Committee"). The 1996 Plan provides that each member of the Committee
must be a "disinterested person" as defined in Rule 16b-3, as in effect prior
to its recent amendment, and an "outside director" under Section 162(m) of the
Internal Revenue Code (the "Code"). Under the 1996 Plan, the Committee
determines which employees will be granted Awards under the 1996 Plan, the
number of shares covered by, and the duration of, each Award under the 1996
Plan, and other terms and conditions applicable to each Award granted under
the 1996 Plan. These determinations are made at the time the Award is granted.
Under the 1996 Plan, the Committee selects the key employees, consultants
and other individual contributors of or to the Corporation Group
("Participants") to receive Awards under the 1996 Plan, except that only
employees of the Corporation Group may be granted ISOs. Directors of the
Corporation who are employees of the Corporation, as well as the Named
Executive Officers and other key employees and service providers, are eligible
to participate in the 1996 Plan and may be granted Awards thereunder. The
Committee also has authority to interpret the 1996 Plan and Awards, to
prescribe, amend and rescind rules and regulations relating to the 1996 Plan,
and to make all other determinations necessary or desirable for the
administration of the 1996 Plan. The Committee may establish guidelines for
the grant of Awards to key employees of the Corporation Group who are not
executive officers of the Corporation, and the Committee may delegate to the
Corporation's Chief Executive Officer the authority to grant Awards, within
those guidelines, to eligible non-executive key employees.
13
<PAGE>
In accordance with Code Section 162(m), a public Corporation may not deduct
certain executives' compensation in excess of $1,000,000 per individual unless
such compensation is performance-based. Awards are deemed performance-based
only to the extent that, among other things, the plan to which they relate
specifies the maximum number of options which may be granted to any
Participant during a specified period of time. Accordingly, the 1996 Plan
indicates that the maximum number of Awards which may be granted to any
individual during each successive 12 month period commencing on the effective
date of the 1996 Plan is 50,000 shares.
At the time of granting an Award, the Committee will determine the purchase
price per share to be paid upon the exercise of each Option or upon the
purchase pursuant to each Purchase Authorization granted or made under the
1996 Plan, each within certain parameters. The exercise price per share to be
paid upon the exercise of each ISO granted under the 1996 Plan must be at
least 100% of the fair market value on the date of grant, or in the case of an
ISO granted to an employee owning more than 10% of the Common Stock of the
Corporation or its subsidiaries, must be at least 110% of the fair market
value. The purchase price per share payable on exercise of each NSO or upon
the purchase of shares pursuant to each Purchase Authorization granted under
the 1996 Plan must be at least 85% of the fair market value of the Common
Stock on the date of the grant. Bonus shares will be issued in consideration
of services previously rendered, which will be valued for such purposes by the
Committee. No Award under the 1996 Plan may be granted with a purchase price
less than the par value of the Common Stock. The aggregate fair market value,
as determined on the grant date, of the shares for which ISOs are exercisable
for the first time by a Participant during any calendar year under all the
plans of the Corporation may not exceed $100,000. The Corporation receives no
consideration from a Participant for the grant of an Award under the 1996
Plan.
Each Option is exercisable for the full amount or for any part thereof. At
the discretion of the Committee, Options granted under the 1996 Plan may be
made exercisable in installments which become available to the Participant
from time to time during the term of the Option. However, no Option may be
exercised later than 10 years after the date of grant and no ISO granted to a
person who owns over 10% of the Common Stock at the time of the grant may be
exercised more than five years from the date of the grant. Vesting is
determined in the sole discretion of the Compensation Committee of the Board
of Directors. In connection with Committee's grants to date, it has fixed
vesting in four approximately equal annual installments, the first of which
vests on the date of grant. No awards may be made under the 1996 Stock Plan
after January 29, 2006.
14
<PAGE>
Payment must be made in full at the time the Option is exercised, or at the
time the purchase pursuant to a Purchase Authorization is made. Payment must
be made in cash or by check, or, if approved in advance by the Committee and
subject to the provisions of applicable law, by delivery and assignment to the
Corporation of other shares of stock of the Corporation having a market price
equal to the exercise or purchase price, or by the Participant's recourse
promissory note, or by a combination of any of the above methods. In addition,
the Participant must satisfy all applicable federal, state and local income
and employment tax withholding obligations before the Corporation is required
to deliver any shares under the 1996 Plan.
A Participant may not transfer an Option, SAR or Purchase Authorization
except by will or the laws of descent or distribution, and only the
Participant may exercise an Option, SAR or Purchase Authorization during the
Participant's lifetime.
Under the 1996 Plan, Participants who are directors or executive officers
of the Corporation, if required to comply with rules promulgated under Section
16 of the Exchange Act as in effect prior to August 15, 1996, may not acquire
unrestricted ownership of shares of Common Stock pursuant to an Award for at
least six months after the date of grant of the Award, and may not sell or
otherwise dispose of share acquired under the 1996 Plan for at least six
months after such acquisition.
The number of shares that may be issued under the 1996 Plan is subject to
adjustment for stock dividends, stock splits, stock, combinations,
recapitalizations and other similar changes. Any shares subject to an Award
which expires or terminates unexercised as to such shares, any shares
reacquired by the Corporation pursuant to forfeiture or a repurchase right
under the 1996 Plan and any shares subject to an SAR which are not issued upon
exercise of the SAR will again become available for future Awards under the
1996 Plan.
The 1996 Plan provides that the aggregate number and kind of shares
reserved under the 1996 Plan and the number, kind and exercise or purchase
price of shares covered by any outstanding Options, SARs and Purchase
Authorizations granted under the 1996 Plan will be appropriately adjusted in
the event of any stock split, stock dividend, combination of shares, or other
similar change in the capitalization of the Corporation, but that no
adjustment in any exercise price shall be made which would reduce the exercise
price to less than the par value per share. In the event that the Corporation
is to be consolidated with or acquired by another entity in a merger or other
reorganization and the holders of a majority of the outstanding voting stock
of the Corporation immediately preceding the consolidation or acquisition
will, immediately following such event, hold, as a
15
<PAGE>
group, less than a majority of the voting stock of the surviving or successor
entity, or in the event of a sale of all or substantially all of the
Corporation's assets (each, an "Acquisition"), the 1996 Plan provides that the
board of directors of the surviving or successor entity (the "Successor
Board") shall, as to outstanding Option, SARs and Purchase Authorizations,
either (i) provide, upon written notice to the Participants, that all Options,
SARs and Purchase Authorizations must be exercised, to the extent then
exercisable or to be exercisable as a result of the Acquisition, within a
specified period, at the end of which period the Options, SARs and Purchase
Authorizations will terminate; (ii) terminate all Options, SARs and Purchase
Authorizations in exchange for a cash payment equal to the excess of fair
market value of the shares subject to the Options, SARs and Purchase
Authorizations (to the extent then exercisable or to be exercisable as a
result of the Acquisition) over the exercise price thereof or (iii) make
provision for the continuation of the Options, SARs and Purchase
Authorizations by substituting on an equitable basis for the shares then
subject to such Options, SARs and Purchase Authorizations either (x) the
consideration payable with respect to outstanding shares of Common Stock in
connection with the Acquisition; (y) shares of the stock of the surviving or
successor entity; or (z) such other securities as the Successor Board deems
appropriate. In the case of a recapitalization or reorganization of the
Corporation other than a transaction described in the preceding sentence
pursuant to which stock of the Corporation or of another entity is issued with
respect to outstanding shares of Common Stock, a Participant will upon
exercise of an Option, SAR or Purchase Authorization be entitled to receive
securities equivalent to the securities he or she would have received had he
or she exercised the Option, SAR or Purchase Authorization prior to such
reorganization.
Within certain limits, the Committee may amend the 1996 Plan or the terms
of any Awards or agreements thereunder at any time without the consent of the
Participants. The Committee may not, however, amend the 1996 Plan (i) to
adversely affect or impair any then outstanding Award or related agreement
without the consent of the Participant holding such Award or related
agreement; or (ii) without obtaining or being conditioned upon stockholder
approval, to increase the maximum number of shares available under the 1996
Plan (except in the event of a change in the capital structure of the
Corporation), materially increase the benefits accruing to Participants,
materially modify the requirements as to eligibility for participation in the
1996 Plan, or make any other change which, pursuant to the Code or regulations
thereunder or Section 16(b) of the Exchange Act and rules and regulations
thereunder, requires action by the stockholders.
16
<PAGE>
The 1996 Plan will terminate on January 30, 2006. The expiration date of
each Award will be no later than ten years from the date of grant.
FEDERAL INCOME TAX CONSIDERATIONS
The rules governing the tax treatment of options and stock acquired from
the exercise of options are quite technical. Therefore, the description of tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.
ISOs granted pursuant to the 1996 Plan are intended to qualify as
"Incentive Stock Options" within the meaning of Section 422 of the Code. If
the Participant makes no disposition of the shares acquired pursuant to the
exercise of an ISO within one year after the transfer of shares to such
Participant and within two years from the grant of the ISO, such Participant
will realize no taxable income as a result of the grant or exercise of such
ISO; any gain or loss that is subsequently realized will be treated as
long-term capital gain or loss, as the case may be. Under these circumstances,
the Corporation will not be entitled to a deduction for federal income tax
purposes with respect to either the issuance of such ISOs or the transfer of
shares upon their exercise. Under current law, long-term capital gain is taxed
at a maximum rate of 28%.
Participants generally will realize income for purposes of the federal
alternative minimum tax to the extent that the fair market value of the shares
purchased upon exercise of an ISO exceeds the option price for the shares(the
"spread amount"). Under current law, the maximum rate of alternative minimum
tax is 28%. For purposes of the alternative minimum tax only, the spread
amount will be added to the option price in calculating a purchaser's basis in
the stock and thus determining the purchaser's gain or loss on the sale of
shares acquired upon exercise of such ISOs. A credit for any net alternative
minimum tax paid by an ISO holder on exercise may be available to offset the
Participant's regular income tax in subsequent years, including any tax on the
income resulting from a sale of the shares acquired upon the exercise.
If shares subject to ISOs are disposed of prior to the expiration of the
time periods described above, the Participant will recognize ordinary income
in the year in which the disqualifying disposition occurs, the amount of which
will generally be the lesser of (i) the excess of the market value of
17
<PAGE>
the shares on the date of exercise over the exercise price, or (ii) the gain
recognized on such disposition. Such amount will ordinarily be deductible by
the Corporation for federal income tax purposes in the same year, provided
that the Corporation satisfies certain federal income tax withholding
requirements. In addition, the excess, if any, of the amount realized on a
disqualifying disposition over the market value of the shares on the date of
exercise will be treated as capital gain.
A Participant who acquires shares by exercise of a NSO generally recognizes
as taxable ordinary income, at the time of exercise, the difference between
the exercise price and the fair market value of the shares on the date of
exercise. The amount of the Participant's taxable income will ordinarily be
deductible by the Corporation in the same year in which the Participant
recognizes the taxable income, subject to the requirements of Section 162(m).
SARs are grants entitling a Participant to receive, upon exercise of the
SAR, distribution of an amount in cash or shares or a combination thereof with
a value equal to or less than the difference between the market price per
share of the Corporation's Common Stock on the date of exercise and the market
price on the date of grant, multiplied by the number of shares for which the
SAR is exercised. A Participant will realize compensation income in the full
amount of such distribution. The Corporation will be allowed a corresponding
deduction of the amount of the distribution, generally in the Corporation's
tax year in which the exercise occurs. The Participant will obtain a basis in
any shares distributed in satisfaction of SARs equal to the fair market value
of such shares at the time of such exercise (which is the amount of
compensation income realized), for purposes of determining capital gain or
loss on the later sale of such shares. The Corporation must withhold federal
and applicable state and local income taxes with respect to a SAR
distribution. For SAR distributions made in shares of the Corporation's stock,
withholding will be applied against other compensation payable from the
Corporation.
Under Section 162(m) of the Code, the Corporation may be limited as to
federal income tax deductions to the extent that total individual compensation
paid to the Named Executive Officers exceeds $1,000,000 in any one year. The
Corporation can preserve the deductibility of certain compensation in excess
of $1,000,000 however, provided that it complies with conditions imposed by
Section 162(m) of the Code, including the payment of performance-based
compensation pursuant to a plan approved by stockholders. The 1996 Plan is
designed to provide the Corporation flexibility and the opportunity to qualify
certain aspects of compensation as performance-based compensation under
Section 162(m), should the Corporation at some time in the future
18
<PAGE>
pay compensation that is subject to Section 162(m).
BENEFITS UNDER 1996 PLAN
Due to the discretionary nature of the 1996 Plan, it is not possible to
determine who the future Participants in the 1996 Plan will be or the number
or value of Awards to be received by any Participant or group under the 1996
Plan. The following table sets forth information with respect to the aggregate
grants of Awards under the 1996 Plan to the Named Executive Officers, to all
current executive officers as a group, to all non-employee directors as a
group, and to non-executive officer employees of the Corporation during 1996.
</TABLE>
<TABLE>
<CAPTION>
Name and Position Dollar Value($)(1) Number of units (2)
----------------- ------------------ -------------------
<S> <C> <C>
John L. Dwight, Jr. - -
Chairman of the Board,
Chief Executive Officer
and President
Michael S. Cantor - -
Vice President,
Sales and Marketing
Jeffrey A. Farnsworth - -
Vice President and
General Manager - CTi
Mary L. Mandarino $ 5,000 5,000
Vice President, Finance
and Administration and
Treasurer
Roddy J. Powers - -
Vice President,
Operations
All Current 10,000 10,000
Executive Officers
as a Group (6 persons)
All Current Directors - -
Who Are Not Officers
as a Group
All Non-Executive 5,000 5,000
Officer Employees
as a group
- --------------------
<TABLE/>
19
<PAGE>
(1) Value of in-the-money options at year-end. An "in-the-money"
option is an option for which the option price of the
underlying stock is less than the December 31, 1996 market
price of $13.00; the value shown reflects stock market
appreciation since the date of the granting of the option.
(2) Includes all options granted under the 1996 Plan in 1996,
whether vested or unvested, and whether exercised or
unexercised as of December 31, 1996.
1992 STOCK OPTION PLAN
The Corporation's 1992 Stock Option Plan (the "1992 Plan") was adopted by
the Board of Directors on January 30, 1992 and approved by the stockholders on
April 20, 1992. The 1992 Plan was subsequently amended by the Board of
Directors on January 30, 1996 and approved by the Corporation's stockholders
on March 8, 1996. As of March 19, 1997, 954,000 shares of Common stock were
reserved for issuance under the 1992 Plan, 796,299 shares of which are subject
to outstanding options. The Corporation does not intend to grant any further
Awards under the 1992 Plan.
For informational purposes and pursuant to Rule 16b-3, the Corporation is
providing the following description of the 1992 Plan as approved by the
stockholders on March 8, 1996.
The 1992 Plan was adopted to ensure that an adequate number of option
shares are available to provide appropriate incentives to employees and other
persons who are expected to contribute to the future growth and success of the
Corporation and its subsidiaries (the "Corporation Group") by providing these
individuals with an opportunity to purchase stock of the Corporation and
thereby permitting them to share in the Corporation's success. The
Corporation's future success is highly dependent on the retention and
continuing motivation of the persons who perform key services for and make key
contributions to the Corporation. The Corporation believes that an active
program of awarding stock options to those key employees and other individuals
has been, and will continue to be, an important component of their
compensation arrangements in a way that directly associates their interests
with those of the Corporation's stockholders.
The 1992 Plan provides for the granting of incentive stock options ("ISOs")
and non-incentive stock options ("NSOs") (both ISOs and NSOs are collectively
referred to as "Options"). The closing price of the Corporation's Common Stock
as reported by the Nasdaq National Market System on March 19, 1997 was $15.50.
The 1992 Plan has been administered by the Compensation Committee of the
Board (the "Committee"). The 1992 Plan provides
20
<PAGE>
that each member of the Committee must be a "disinterested person" as defined
in Rule 16b-3, as in effect prior to its recent amendment, and an "outside
director" under Section 162(m) of the Code. Under the 1992 Plan, the Committee
has had the power to determine which employees will be granted Options under
the 1992 Plan, the number of shares covered by, and the duration of, each
Option under the 1992 Plan, and other terms and conditions applicable to each
Option granted under the 1992 Plan. These determinations were made at the time
each Award was granted.
Under the 1992 Plan, the Committee has selected the key employees,
officers, consultants, advisors and other individual contributors of or to the
Corporation Group ("Participants") to receive Options under the 1992 Plan,
except that only employees of the Corporation Group have been eligible for
grant of ISOs. Since February 1, 1996, non- employee directors of the
Corporation have not been eligible to receive Options under the 1992 Plan.
The Committee has authority to interpret the 1992 Plan and Options, to
prescribe, amend and rescind rules and regulations relating to the 1992 Plan
and to make all other determinations necessary or desirable for the
administration of the 1992 Plan. The Committee has been authorized to
establish guidelines for the grant of Options to key employees of the
Corporation Group who are not executive officers of the Corporation, and the
Committee has been authorized to delegate to the Corporation's Chief Executive
Officer the authority to grant Awards, within those guidelines, to eligible
non-executive key employees.
At the time of granting an Option, the Committee determines the purchase
price per share to be paid upon the exercise of each Option granted under the
1992 Plan, within certain parameters. The exercise price per share to be paid
upon the exercise of each ISO granted under the 1992 Plan must be at least
100% of the fair market value of such share on the date of the grant, or in
the case of an ISO granted to an employee owning more than 10% of the Common
Stock of the Corporation or its subsidiaries, at least 110% of the fair market
value. The aggregate fair market value, as determined on the grant date, of
the shares for which ISOs are exercisable for the first time by a Participant
during any calendar year under all the plans of the Corporation may not exceed
$100,000. The Corporation has received no consideration from a Participant for
the grant of an Option under the 1992 Plan.
Each Option is exercisable for the full amount or for any part thereof. At
the discretion of the Committee, Options granted under the 1992 Plan may be
made exercisable in installments which become available to the Participant
from time to time during the term of the Option. However, no Option may be
exercised later
21
<PAGE>
than 10 years after the date of grant and no ISO granted to a person who owns
over 10% of the Common Stock at the time of the grant may be exercised more
than five years following the date of the grant.
Payment must be made in full at the time the Option is exercised. Payment
must be made by delivery and assignment to the Corporation of shares of stock
of the Corporation having a fair market value equal to the exercise price of
the shares to be acquired; (ii) by any other means which the Board of
Directors determines are consistent with the purposes of the 1992 Plan, or by
a combination of any of the above methods. In addition, the Participant must
satisfy all applicable federal, state and local income and employment tax
withholding obligations before the Corporation is required to deliver any
shares under the 1992 Plan.
A Participant may not transfer an Option except by will or the laws of
descent or distribution, and only the Participant may exercise an Option
during the Participant's lifetime.
Under the 1992 Plan, Participants who are directors or executive officers
of the Corporation, if required to comply with rules promulgated under Section
16 of the Exchange Act as in effect prior to August 15, 1996, may not acquire
unrestricted ownership of shares of Common Stock pursuant to an award for at
least six months after the date of grant of the Option, and may not sell or
otherwise dispose of shares acquired under the 1992 Plan for at least six
months after such acquisition. Vesting is determined in the sole discretion of
the Compensation Committee of the Board of Directors. In connection with
Committee's grants to date, it has fixed vesting in four approximately equal
annual installments, the first of which vests on the date of grant.
The number of shares that may be issued under the 1992 Plan is subject to
adjustment for stock dividends, stock splits, stock combinations,
recapitalizations and other similar changes. Any shares subject to an Option
which expires or terminates unexercised as to such shares, and any shares
reacquired by the Corporation pursuant to forfeiture or a repurchase right
under the 1992 Plan will again become available for future Options, if any,
under the 1992 Plan.
The 1992 Plan provides that the aggregate number and kind of shares
reserved under the 1992 Plan and the number, kind and exercise or purchase
price of shares covered by any outstanding Options granted under the 1992 Plan
will be appropriately adjusted in the event of any stock split, stock
dividend, combination of shares, or other similar change in the capitalization
of the Corporation, but no adjustment in any exercise price shall be made
which would reduce the exercise
22
<PAGE>
price to less than the par value per share. In the event that the Corporation
is to be consolidated with or acquired by another entity in a merger or other
reorganization and the holders of a majority of the outstanding voting stock
of the Corporation immediately preceding the consolidation or acquisition
will, immediately following such event, hold, as a group, less than a majority
of the voting stock of the surviving or successor entity, or in the event of a
sale of all or substantially all of the Corporation's assets (each, an
"Acquisition"), the 1992 Plan provides that the board of directors of the
surviving or successor entity (the "Successor Board") shall either (i) provide
that all Options must be exercised, to the extent then exercisable or to be
exercisable as a result of the Acquisition, within a specified period, at the
end of which period the Options will terminate; (ii) terminate all Options in
exchange for a cash payment equal to the excess of fair market value of the
shares subject to the Options (to the extent then exercisable or to be
exercisable as a result of the Acquisition) over the exercise price of such
Options; or (iii) make provision for the continuation of the Options by
substituting on an equitable basis for the shares then subject to such Options
either (x) the consideration payable with respect to outstanding shares of
Common Stock in connection with the Acquisition; (y) shares of the stock of
the surviving or successor entity; or (z) such other securities as the
Successor Board deems appropriate. In the case of a recapitalization or
reorganization of the Corporation other than a transaction described in the
preceding sentence pursuant to which stock of the Corporation or of another
entity is issued with respect to outstanding shares of Common Stock, a
Participant will upon exercise of an Option be entitled to receive securities
equivalent to the securities he or she would have received had he or she
exercised the Option prior to such reorganization.
Within certain limits, the Committee may amend the 1992 Plan or the terms
of any Options or agreements thereunder at any time without the consent of the
Participants. The Committee may not, however, amend the 1992 Plan (i) to
adversely affect or impair any then outstanding Option or related agreement
without the consent of the Participant holding such Option or related
agreement; or (ii) under the 1992 Plan, without obtaining or being conditioned
upon stockholder approval, to increase the maximum number of shares available
under the 1992 Plan (except in the event of a change in the capital structure
of the Corporation), materially increase the benefits accruing to
Participants, materially modify the requirements as to eligibility for
participation in the 1992 Plan, or make any other change which, pursuant to
the Code or regulations thereunder or Section 16(b) of the Exchange Act and
rules and regulations thereunder, requires action by the stockholders.
23
<PAGE>
The 1992 Plan will terminate on January 29, 2002. The expiration date of
each option will be no later than 10 years from the date of grant.
FEDERAL INCOME TAX CONSIDERATIONS
The rules governing the tax treatment of options and stock acquired from
the exercise of options are quite technical. Therefore, the description of tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.
ISOs granted pursuant to the 1992 Plan are intended to qualify as
"Incentive Stock Options" within the meaning of Section 422 of the Code. If
the Participant makes no disposition of the shares acquired pursuant to the
exercise of an ISO within one year after the transfer of shares to such
Participant and within two years from the grant of the ISO, such Participant
will realize no taxable income as a result of the grant or exercise of such
ISO; any gain or loss that is subsequently realized will be treated as
long-term capital gain or loss, as the case may be. Under these circumstances,
the Corporation will not be entitled to a deduction for federal income tax
purposes with respect to either the issuance of such ISOs or the transfer of
shares upon their exercise. Under current law, long-term capital gain is taxed
at a maximum rate of 28%.
Participants generally will realize income for purposes of the federal
alternative minimum tax to the extent that the fair market value of the shares
purchased upon exercise of the ISO exceeds to the option price for the shares
(the "spread amount"). Under the current law, the maximum rate of alternative
minimum tax is 28%. For purposes of the alternative minimum tax only, the
spread amount will be added to the option price in calculating a purchaser's
basis in the stock and thus determining the purchaser's gain or loss on the
sale of shares acquired upon exercise of such ISOs. A credit for any net
alternative minimum tax paid by an ISO holder on exercise may be available to
offset the Participant's regular income tax in subsequent years, including any
tax on the income resulting from a sale of the shares acquired upon the
exercise.
If shares subject to ISOs are disposed of prior to the expiration of the
time periods described above, the Participant will recognize ordinary income
in the year in which the disqualifying disposition occurs, the amount of which
will generally be the lesser of (i) the excess of the market value of
24
<PAGE>
the shares on the date of exercise over the exercise price, or (ii) the gain
recognized on such disposition. Such amount will ordinarily be deductible by
the Corporation for federal income tax purposes in the same year, provided
that the Corporation satisfies certain federal income tax withholding
requirements. In addition, the excess, if any, of the amount realized on a
disqualifying disposition over the market value of the shares on the date of
exercise will be treated as capital gain.
A Participant who acquires shares by exercise of a NSO generally recognizes
as taxable ordinary income, at the time of exercise, the difference between
the exercise price and the fair market value of the shares on the date of
exercise. The amount of the Participant's taxable income will ordinarily be
deductible by the Corporation in the same year in which the Participant
recognizes the taxable income, subject to the requirements of Section 162(m).
BENEFITS UNDER 1992 PLAN
No Awards were made under the 1992 Plan in 1996. The following Participants
received the following benefits under the 1992 Plan in 1995:
</TABLE>
<TABLE>
<CAPTION>
Name and Position Dollar Value($)(1) Number of units (2)
----------------- ------------------ -------------------
<S> <C> <C>
John L. Dwight, Jr. - -
Chairman of the Board, Chief
Executive Officer and President
Michael S. Cantor - -
Vice President,
Sales and Marketing
Jeffrey A. Farnsworth $549,998 48,000
Vice President and
General Manager - CTi
Mary L. Mandarino - -
Vice President, Finance and
Administration and Treasurer
Roddy J. Powers - -
Vice President, Operations
All Current Executive Officers
as a Group (6 persons) 549,998 48,000
All Current Directors Who 412,499 36,000
Are Not Officers as a Group
All Non-Executive Officer 668,003 60,000
Employees as a group
- --------------------
<TABLE/>
25
<PAGE>
(1) Value of in-the-money options at year-end. An "in-the-money"
option is an option for which the option price of the
underlying stock is less than the December 31, 1996 market
price of $13.00; the value shown reflects stock market
appreciation since the date of the granting of the option.
(2) Includes all options granted under the 1992 Plan in 1995,
whether vested or unvested, and whether exercised or
unexercised as of December 31, 1996.
PCD 1996 ELIGIBLE DIRECTORS STOCK PLAN
The PCD 1996 Eligible Directors Stock Plan (the "Directors Plan") was
adopted by the Board of Directors on January 30, 1996 and approved by the
stockholders on March 8, 1996. For informational purposes and pursuant to Rule
16b-3 of the Exchange Act, the Corporation is providing the following
description of the Directors Plan as so adopted.
The Directors Plan was adopted to increase the Corporation's ability to
attract and retain non-employee directors of the Corporation by providing them
with an opportunity to purchase Common Stock, to provide additional incentives
to the Corporation's directors and to encourage the highest level of
performance by them by offering them a personal financial stake in the
Corporation's success. The Corporation also believes that the Directors Plan
encourages directors to make a greater equity investment in the Corporation,
more closely aligning the interests of the directors and the stockholders.
All options granted under the Directors Plan are non-statutory stock
options ("Options"). The Corporation has reserved 36,000 shares of Common
Stock for issuance under the Directors Plan, none of which are subject to
outstanding Options. The closing price of the Corporation's Common Stock as
reported by the Nasdaq National Market System on March 19, 1997, was $15.50.
All current directors of the Corporation who are not employees are eligible
to participate in the Directors Plan ("Eligible Directors"). Under the
Directors Plan, each Eligible Director who has not theretofore been granted an
option to purchase Common Stock will, on the thirtieth day following the first
annual meeting of stockholders of the Corporation at which he or she is
elected as a director, be granted an Option to purchase 3,000 shares of Common
Stock at an exercise price equal to the fair market value on the date of the
grant. In addition, on the thirtieth day after such meeting, each Eligible
Director will be granted an option at each annual meeting of stockholders to
purchase 1,500 shares of Common Stock at an exercise price equal to the far
market value on the date of grant. A total of 36,000 shares are available for
awards under the Directors Stock Plan.
26
<PAGE>
Each option granted shall vest 6 months after, and expire 10 years from, the
date of grant of such option. The compensation committee of the Board (the
"Committee") is responsible for the interpretation and administration of the
provisions of the Directors Plan.
Each Eligible Director to whom an Option is granted may exercise that
Option from time to time, in whole or in part, during the period that it is
exercisable, by payment of the Option Price of each share purchased, in cash
or by delivery to the Corporation of a number of shares of Common Stock having
a total current market value equal to the Option Price multiplied by the
number of shares the participant intends to purchase under the Option.
However, the exercise price of an Option may not be paid by delivery to the
Corporation of shares of Common Stock if such delivery would constitute a
violation of the provisions of any law (including without limitation Section
16 of the Exchange Act) or related regulation or rule or if such shares have
not been held by the Eligible Director for at least six months before such
delivery.
An Eligible Director may not transfer an Option except by will or the laws
of descent or distribution, and only the Eligible Director may exercise an
Option during his or her lifetime.
The number of shares that may be issued under the Directors Plan is subject
to adjustment for stock dividends, stock splits, stock combinations, recapitaliz
ations and other similar changes. Any shares subject to an Option which
expires or terminates unexercised as to such shares, and any shares reacquired
by the Corporation pursuant to forfeiture under the Directors Plan will again
become available for future Option grants under the Directors Plan.
The Directors Plan provides that in the event of any stock split, stock
dividend, combination of shares, or other similar change in the capitalization
of the Corporation, the aggregate number and kind of shares reserved under the
Directors Plan and the number, kind and exercise or purchase price of shares
covered by any outstanding Options granted under the Directors Plan will be
appropriately adjusted, but that no adjustment in any exercise price may be
made which would reduce the exercise price to less than the par value per
share. The Directors Plan further provides that in the event that the
Corporation is to be consolidated with or acquired by another entity in a
merger or other reorganization and the holders of a majority of the
outstanding voting stock of the Corporation immediately preceding the
consolidation or acquisition will, immediately following such event, hold, as
a group, less than a majority of the voting stock of the surviving or
successor entity, or in the event of a sale of all or substantially all of the
Corporation's assets (each, an
27
<PAGE>
"Acquisition"), the board of directors of the surviving or successor entity
(the "Successor Board") shall either (i) provide that all Options must be
exercised, to the extent then exercisable or to be exercisable as a result of
the Acquisition, within a specified period, at the end of which period the
Options will terminate; (ii) terminate all Options in exchange for a cash
payment equal to the excess of fair market value of the shares subject to the
Options (to the extent then exercisable or to be exercisable as a result of
the Acquisition) over the exercise price of such Options; or (iii) make
provision for the continuation of the Options by substituting on an equitable
basis for the shares then subject to such Options either (x) the consideration
payable with respect to outstanding shares of Common Stock in connection with
the Acquisition; (y) shares of the stock of the surviving or successor entity;
or (z) such other securities as the Successor Board deems appropriate. In the
case of a recapitalization or reorganization of the Corporation other than a
transaction described in the preceding sentence pursuant to which stock of the
Corporation or of another entity is issued with respect to outstanding shares
of Common Stock, an Eligible Director will upon exercise of an Option be
entitled to receive securities equivalent to the securities he or she would
have received had he or she exercised the Option prior to such reorganization.
Within certain limits, the Committee may amend, suspend, or terminate the
Directors Plan. However, under the Directors Plan, no such action may, without
approval or ratification by the stockholders, increase the maximum number of
shares reserved under the Directors Plan, change the number of shares subject
to Options to be granted to Eligible Directors or change the exercise price
for those Options (other than because of a stock split, stock dividend, or
other similar form of recapitalization by the Corporation); alter the class of
individuals eligible for Options; change the date of grant or certain terms
and conditions expressly set forth in the Directors Plan; or make any other
change which, pursuant to the Code or regulations thereunder or Section 16(b)
of the Act and the rules and regulations promulgated thereunder, requires
action by the stockholders. The Committee may not, without the consent of the
holder of the Option, take any action that would alter or impair any Option
previously granted.
Under the Directors Plan, the Committee may not amend the Directors Plan to
change the amount, timing or price of Option grants made to Eligible Directors
more often than once every six months, except to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
applicable rules and regulations thereunder.
The Directors Plan will terminate on January 30, 2006. Any shares remaining
under the Directors Plan at that time which are
28
<PAGE>
not subject to outstanding Options and any shares which become available
because of the expiration or termination of an Option will cease to be
reserved for purposes of the Directors Plan.
FEDERAL INCOME TAX CONSIDERATIONS
The rules governing the tax treatment of Options and stock acquired from
the exercise of Options are quite technical. Therefore, the description of tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.
An Eligible Director who acquires shares by exercise of an Option generally
recognizes as taxable ordinary income, at the time of exercise, the difference
between the exercise price and the fair market value of the shares on the date
of exercise. The amount of the Eligible Director's taxable income will
ordinarily be deductible by the Corporation in the same year in which the
Eligible Director recognizes the taxable income, subject to the requirements
of Section 162(m).
BENEFITS UNDER DIRECTORS PLAN
The following Eligible Directors will receive the following benefits under
the Directors Plan in 1997, assuming each director remains in office, at the
Annual Meeting:
</TABLE>
<TABLE>
<CAPTION>
Name Dollar Value($) Number of Units (NSOs)
- -------------------- --------------- ----------------------
<S> <C> <C>
All Current Directors
Who Are Not Executive
Officers as a Group
(4 persons). . . . . . not determinable 6,000
</TABLE>
Only current directors are eligible to receive Options under the Directors
Plan.
RETIREMENT BENEFITS
Effective May 1, 1992, the Corporation adopted the Precision Connector
Designs, Inc. 401(k) Salary Savings Plan pursuant to Section 401 of the
Internal Revenue Code (the "Code"), whereby employees may contribute a
percentage of compensation to their retirement fund, provided that the
percentage contributed may not exceed the maximum contribution allowed under
the Code. Employees become eligible to participate in the Plan at the
beginning of
29
<PAGE>
the calendar quarter following the one year anniversary of their date of hire.
The Corporation makes matching contributions of 50% percent of employee
contributions, up to a maximum of 6% of employee compensation, provided that
the Corporation's total contribution may not exceed 15% of the prior year's
pre-tax income.
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 public
offering) through December 31, 1996.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CRSP
Measurement Period Total Return Peer
(Fiscal Quarter Covered) PCD Inc. Index for Nasdaq Group
- ------------------------ -------- ---------------- -----
<S> <C> <C> <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
<TABLE/>
30
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 19, 1997, certain information
with respect to the security ownership of the Common Stock by officers and
directors of the Corporation:
</TABLE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Name of 5% Stockholders Ownership (1) Percent
- ----------------------- ----------------- -------
<S> <C> <C>
John L. Dwight, Jr.(2)..................... 966,800 16.2%
Other Directors and Named Executive Officers
- --------------------------------------------
Bruce E. Elmblad........................... 56,460 1.0
Harold F. Faught(3)........................ 36,000 1.0
C. Wayne Griffith(4)....................... 90,800 1.5
Theodore C. York(5)........................ 36,000 1.0
Michael S. Cantor(6)....................... 115,000 1.9
Jeffrey A. Farnsworth(7)................... 120,000 2.0
Mary L. Mandarino(8)....................... 91,750 1.5
Roddy J. Powers(9)......................... 114,000 1.9
All directors and executive officers as
a group (10 persons)(10)................ 1,628,575 25.1
- ---------------
</TABLE>
(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 March 19, 1997 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 62,000 shares subject to currently exercisable options. Includes
27,600 shares held by Mr. Dwight's children, with respect to which Mr.
Dwight disclaims beneficial ownership.
(3) Includes 36,000 shares subject to currently exercisable options. Does not
include 1,882,080 shares which are beneficially held by Emerson Electric
Co. and its subsidiary, InnoVen III Corporation, of which Mr. Faught was
an officer from 1973 to 1993, when he retired, and which he has since
served in a consulting capacity.
(4) Includes 36,000 shares subject to currently exercisable options.
(5) Includes 36,000 shares subject to currently exercisable options.
(6) Includes 90,000 shares subject to currently exercisable options.
(7) Includes 120,000 shares subject to currently exercisable options.
31
<PAGE>
(8) Includes 81,750 shares subject to currently exercisable options.
(9) Includes 104,000 shares subject to currently exercisable options.
(10) Includes 567,000 shares subject to currently exercisable options.
PRINCIPAL STOCKHOLDERS
As of March 19, 1997, the only persons known to management to own
beneficially more than 5% of the outstanding Common Stock of the Corporation
are named below:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial
Beneficial Owner Ownership (1) Percent
------------------- ----------------- -------
<S> <C> <C>
Emerson Electric Co. 1,918,080(2) 32.3%
8000 West Florissant
St. Louis, MO 63136
John L. Dwight, Jr. 966,800(3) 16.2%
c/o PCD Inc.
Two Technology Drive
Centennial Park
Peabody, MA 01960-7977
Thomson Hortsman & Bryant Inc. 417,100(4) 7.1%
Park 80 West Plaza Two
Saddle Brook, NJ 07663
T. Rowe Price Associates, Inc. 363,000(5) 6.1%
100 E. Pratt Street
Baltimore, MD 21202
Morgan Grenfell Capital
Management Incorporated 332,000(6) 5.6%
885 Third Avenue, Suite 3200
New York, NY 10022
Wellington
Management Company, L.L.P. 301,950(7) 5.1%
75 State Street
Boston, MA 02109
- ---------------
<TABLE/>
(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
32
<PAGE>
subject to options currently exercisable or exercisable
within 60 days following March 19, 1997 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 1,882,080 shares owned by Emerson Electric Co. and
its wholly owned subsidiary InnoVen III Corporation and over
which it has both sole voting and dispositive power, as set
forth in its most recent statement, filed as of December 31,
1996, pursuant to Section 13G of the Securities Exchange Act
of 1934 (the "Act"). Also includes 36,000 shares subject to
currently exercisable options held by Harold F. Faught, a
director of the Corporation and a consultant to Emerson
Electric Co.
(3) John L. Dwight, Jr.'s beneficial ownership of Common Stock of
the Corporation, as set forth in his most recent statement,
filed as of December 31, 1996, pursuant to Section 13G of the
Act, consists of 939,200 shares over which he has both sole
voting and dispositive powers and 27,600 shares over which he
has shared voting and dipositive powers. Mr. Dwight disclaims
beneficial ownership with respect to the 27,600 shares held
by Mr. Dwight's children. Also includes 62,000 shares subject
to currently exercisable options.
(4) Thomson Hortsman & Bryant Inc.'s beneficial ownership of
Common Stock of the Corporation, as set forth in its most
recent statement, filed as of December 31, 1996, pursuant to
Section 13G of the Act, consists of 286,500 shares over which
it has sole voting power, 2,600 shares over which it has
shared voting power, 417,100 shares over which it has sole
dispositive power and no shares over which it has shared
dispositive power.
(5) T. Rowe Price Associates, Inc.'s beneficial ownership of
Common Stock of the Corporation, as set forth in its most
recent statement, filed as of December 31, 1996, pursuant to
Section 13G of the Act, 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.
(6) Morgan Grenfell Capital Management Incorporated's beneficial
ownership of Common Stock of the Corporation, as set forth in
its most recent statement, filed as of December 31, 1996,
pursuant to Section 13G of the Act, consists of 62,600 shares
over which it has sole voting power, no shares over which it
has shared voting power, 332,000 shares over which it has
33
<PAGE>
sole dispositive power and no shares over which it has shared
dispositive power.
(7) Wellington Management Company L.L.P.'s beneficial ownership
of Common Stock of the Corporation, as set forth in its most
recent statement, filed as of December 31, 1996, pursuant to
Section 13G of the Act, consists of no shares over which it
has sole voting power, 172,400 shares over which it has
shared voting power, no shares over which it has sole
dispositive power and 301,950 shares over which it has shared
dipositive power.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and persons who own beneficial
ownership more than ten percent of any class of equity security in the
Corporation to file with the Securities and Exchange Commission initial
reports of such ownership and reports of changes in such ownership. Officers,
directors and such beneficial owners are required by Securities and Exchange
Commission regulations to furnish the Corporation 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
Corporation, the absence of a Form 3 or a Form 5 and each executive officer's
written representation that no Form 5 was required, the Corporation believes
that during the year 1996, its officers, directors and greater than ten
percent beneficial owners complied with all applicable Section 16(a) filing
requirements except that, based upon information received by the Corporation,
an executive officer, Ms. Mandarino, was 12 days late in filing an amended
Form 4 for the cash exercise of 5,200 stock options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 1996, two subsidiaries of Emerson Electric Co., which
currently owns 32.3% of the outstanding Common Stock of the Corporation, have
purchased or ordered from the Corporation, or a distributor of the
Corporation's products, certain of the Corporation's industrial terminal block
products for an aggregate purchase price of approximately $82,700. Such
products were sold by the Corporation on the Corporation's customary pricing
and other terms.
34
<PAGE>
II. INDEPENDENT ACCOUNTANTS
The selection of Coopers & Lybrand L.L.P. as the independent accountants of
the Corporation for previous years has been reaffirmed for 1997. Coopers &
Lybrand L.L.P. has no financial interest, direct or indirect, in the
Corporation 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.
III. OTHER GOVERNANCE INFORMATION
STOCKHOLDER PROPOSAL
Any stockholder, whether of record or a beneficial owner, desiring to
submit a proposal for consideration to appear in the Corporation's Proxy
Statement for the annual meeting of stockholders of the Corporation to be held
in 1998 shall submit such proposal, typewritten or printed, addressed to the
Clerk of the Corporation. Such proposal must identify the name and address of
the stockholder, the number of the Corporation'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 Corporation, 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 Corporation's Proxy Statement, the Corporation will consider
other items of business and nominations for election as director of the
Corporation that are properly brought 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 Corporation,
and other applicable requirements must be met. In general, such notice is
timely if it is received at the principal executive offices of the Corporation
at least 60 days in advance of the 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 Corporation specify the
information to be included in the stockholder's notice.
35
<PAGE>
Stockholders directly 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 Corporation at
least 60 days in advance of the date in the then-current year that corresponds
to the 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
Corporation 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 Corporation.
EXPENSES OF SOLICITATION
All expenses of soliciting proxies will be paid by the Corporation. Proxies
may be solicited personally, or by telephone, by employees of the Corporation,
but the Corporation will not pay any compensation for such solicitations. The
Corporation 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 Corporation's annual report on Form 10-K for the year ended
December 31, 1996, as filed with the Securities and Exchange commission,
excluding certain exhibits thereto, may be obtained without charge by
contacting the Office of Investor Relations, 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 of the Board
Dated: April 9, 1997
36
<PAGE>
APPENDIX A
FRONT OF PROXY CARD
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, Massachusetts 01960-7977
Annual Meeting of Stockholders - May 9, 1997
Proxy Solicited on Behalf of the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints John L. Dwight,
Jr. and C. Russel Hansen, Jr. as Proxies, with full power of substitution to
each, to vote for and on behalf of the undersigned at the 1997 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, May 9, 1997 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 on 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" PROPOSAL 1.
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?
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ ______________________________
<PAGE>
BACK SIDE OF PROXY CARD
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
With-
____________________ 1. Election of Director For hold
PCD Inc. Harold F. Faught [ ] [ ]
____________________
2. 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 ---------
Mark box at right if an address
change or comment has been noted [ ]
on the reverse side of this card
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, May 9,
1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
PCD Inc.
</TABLE>
