<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 Section240.14a-11(c) or
Section240.14a-12
CVC, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
<TABLE>
<S> <C> <C>
[LOGO]
[LOGO] NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
CVC, INC.
525 Lee Road
Rochester, New York 14606
(716) 458-2550 [LOGO]
</TABLE>
January 28, 2000
Dear Shareholder:
I invite you to attend our 2000 Annual Meeting of Shareholders on Tuesday,
February 29, 2000. The meeting will be held at 9:00 a.m. in the Foster Room of
the Boston Harbor Hotel, 70 Rowes Wharf, Boston, Massachusetts. After the
business session, we will discuss the financial results for 1999 and report on
current operations.
On the following pages you will find the Notice of Meeting, which lists the
matters to be conducted at the meeting and the Proxy Statement. In addition to
the election of seven directors, you will be asked to ratify the appointment of
the independent public accountants.
Your vote is very important regardless of the number of shares you own.
Detailed voting instructions appear on the next page.
The Board of Directors recommends that you vote "FOR" proposals 1 and 2.
Sincerely,
[LOGO]
Christine B. Whitman
Chairman, President and
Chief Executive Officer
<PAGE>
<TABLE>
<S> <C> <C>
CVC, INC.
525 Lee Road
Rochester, New York 14606
(716) 458-2550 [LOGO]
</TABLE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<S> <C>
TIME...................... 9:00 a.m. on Tuesday, February 29, 2000
PLACE..................... Foster Room
Boston Harbor Hotel
70 Rowes Wharf
Boston, Massachusetts 02110
ITEMS OF BUSINESS......... (1) Election of 7 directors
(2) Ratification of the appointment of
PricewaterhouseCoopers LLP as independent public
accountants for fiscal year 2000; and
(3) Such other business as may properly come before the
meeting or any adjournment or postponement.
RECORD DATE............... You are entitled to vote if you were a shareholder of record
at the close of business on January 25, 2000.
10-K/ANNUAL REPORT........ Our 1999 10-K/Annual Report to Shareholders for the fiscal
year ended September 30, 1999, which is not a part of the
proxy soliciting material, is enclosed.
PROXY VOTING.............. Shareholders of record can vote as follows:
MARK, SIGN, DATE AND RETURN the enclosed proxy card and
return it in the envelope provided.
You may revoke your proxy in the manner described in the
accompanying Proxy Statement at any time up to the time your
proxy is voted on the day of the meeting.
</TABLE>
January 28, 2000
YOUR VOTE IS IMPORTANT
PLEASE VOTE YOUR SHARES PROMPTLY
<PAGE>
CVC, INC.
525 LEE ROAD
ROCHESTER, NEW YORK 14606
PROXY STATEMENT
These proxy materials are furnished in connection with the solicitation by
the Board of Directors of CVC, Inc. ("CVC," the "Company," "our," "we" or "us"),
a Delaware corporation, of proxies to be voted at our 2000 Annual Meeting of
Shareholders (the "Annual Meeting") or at any adjournment or postponement.
You are invited to attend our Annual Meeting on February 29, 2000, beginning
at 9:00 a.m. in the Foster Room of the Boston Harbor Hotel, 70 Rowes Wharf,
Boston, Massachusetts.
This Proxy Statement, form of proxy and voting instructions will be mailed
to our shareholders starting January 28, 2000.
SHAREHOLDERS ENTITLED TO VOTE: Holders of shares of CVC's common stock (the
"Common Stock") at the close of business on January 25, 2000 are entitled to
receive notice and to vote their shares at the Annual Meeting. As of that date,
there were 11,604,819 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote on each matter properly brought before the Annual
Meeting.
PROXIES. Your vote is important. Shareholders of record may vote their
proxies by marking the appropriate boxes on the enclosed proxy card and by
signing, dating and returning the card in the enclosed envelope.
You may revoke your proxy and reclaim your right to vote up to and including
the day of the Annual Meeting by (1) giving written notice of revocation to the
Inspectors of Election, Boston EquiServe, 150 Royall Street, Canton, MA 02021,
(2) timely delivery of a valid, later-dated proxy or (3) voting by ballot at the
Annual Meeting.
You can save us the expense of a second mailing by voting promptly. If your
shares are held by a bank, broker or other holder of record, check the
information provided with your voting instruction form.
VOTE AT THE ANNUAL MEETING
Your mail-in vote will not limit your right to vote at the Annual Meeting if
you later decide to attend in person. If your shares are held in the name of a
bank, broker or other holder of record, you must obtain a proxy, executed in
your favor, from the holder of record to be able to vote at the meeting.
All shares that have been properly voted, and not revoked, will be voted at
the Annual Meeting in accordance with your instructions. If you sign and return
your proxy card but do not give voting instructions, the shares represented by
the proxy will be voted by the Proxy Committee as recommended by the Board of
Directors.
The Proxy Committee consists of Christine B. Whitman, Chairman, President
and Chief Executive Officer, and Emilio O. DiCataldo, Senior Vice President and
Chief Financial Officer. Proxy cards, unless otherwise indicated by the
shareholder, also confer upon the Proxy Committee discretionary authority to
vote all shares of stock represented by the proxies on any matter which properly
may be presented for action at the meeting even if not covered herein. If any of
the nominees for director named in Proposal 1--Election of Directors should be
unavailable for election, the proxies will be voted for the election of such
other person as may be recommended by the Board of Directors in place of such
nominee. The Board of Directors is not aware of any matter for action by the
shareholders at the Annual Meeting other than the matters described in the
Notice.
<PAGE>
PROXY STATEMENT (CONTINUED)
QUORUM. The presence, in person or by proxy, of the holders of a majority
of the shares of Common Stock entitled to vote at the Annual Meeting is required
to constitute a quorum.
COST OF PROXY SOLICITATION. The Company will pay the cost of soliciting
proxies for the Annual Meeting. We have retained CIC Express Service, Inc. to
distribute material to beneficial owners whose shares are held by brokers, banks
or other institutions and to assist in soliciting proxies, for a fee estimated
at $2,500 plus expenses. In addition, directors, officers and other employees
may solicit proxies in person or by mail. We will reimburse brokers, banks and
others who are record holders of Common Stock for reasonable expenses incurred
in obtaining voting instructions from beneficial owners of such shares.
REQUIRED VOTE. A plurality of the votes of holders of shares represented at
the Annual Meeting, in person or by proxy, and entitled to vote is required for
the election of directors. The affirmative vote of holders of a majority of
shares represented at the Annual Meeting, in person or by proxy, and entitled to
vote is required for approval of the other proposal to be voted on by the
shareholders. Abstentions have the same effect as a vote against any proposal.
Broker non-votes are deemed not entitled to vote and are not counted as votes
for or against any proposal.
2
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of December 31, 1999, by each person or entity
known to CVC to own beneficially more than 5% of the outstanding shares of
Common Stock, each of CVC's directors and the named executive officers and all
directors and executive officers as a group. Unless otherwise indicated below,
to the knowledge of CVC, all persons listed below have sole voting and
investment power with respect to their shares of Common Stock, except to the
extent authority is shared by spouses under applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED (1)(2)
--------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------ --------- --------
<S> <C> <C>
BENEFICIAL OWNERS OF MORE THAN 5% OF COMMON STOCK:
Advent International Group (3).............................. 1,017,590 8.77%
Hakuto Co., Ltd............................................. 583,000 5.02%
Nikko Tecno................................................. 1,412,316 12.17%
Seagate Technology, Inc. (4)................................ 3,219,073 25.97%
DIRECTORS (5):
Robert C. Fink.............................................. 4,889 *
Maurice F. Holmes........................................... -- *
Douglas A. Kingsley (6)..................................... 1,017,590 8.77%
Thomas C. McDermott......................................... 2,000 *
Seiya Miyanishi (7)......................................... 1,412,316 12.17%
Donald L. Waite (8)......................................... 3,219,073 25.97%
NAMED EXECUTIVE OFFICER (5):
Christine B. Whitman**...................................... 726,400 6.07%
Mehrdad M. Moslehi.......................................... 307,200 2.65%
Christopher J. Mann (9)..................................... 283,676 2.40%
Emilio O. DiCataldo......................................... 146,000 1.25%
Giovanni Nocerino........................................... 106,667 *
All directors and executive officers as a a group (14
persons) (10)............................................. 7,345,811 55.27%
</TABLE>
- ------------------------
* Less than one percent.
** Also serves as a director.
(1) The number of shares of Common Stock shown in the table above as
beneficially owned includes shares issuable pursuant to options and warrants
that may be exercised within 60 days after December 31, 1999. Shares
issuable pursuant to such options and warrants are deemed outstanding for
computing the percentage of beneficial ownership of the person holding such
options and warrants but are not deemed outstanding for computing the
percentage of beneficial ownership of any other person.
(2) Includes shares of Common Stock issuable upon exercise of options, as
follows: Robert C. Fink-2,223 shares; Christine B. Whitman-358,400 shares;
Mehrdad M. Moslehi-3,200 shares; Christopher J. Mann-207,400 shares; Emilio
O. DiCataldo-96,000 shares and Giovanni Nocerino-106,667 shares.
(3) Includes ownership by the following venture capital funds managed by Advent
International Corporation: (1) 853,658 shares of Common Stock issued to
Global Private Equity III Limited Partnership, (2) 130,792 shares of Common
Stock issued to Advent PGGM Global Limited Partnership, (3) 12,906 shares of
Common Stock issued to Advent Partners GPE III Limited Partnership,
(4) 3,861 shares of Common Stock issued to Advent Partners (NA) GPE III
Limited Partnership and (5) 15,040 shares of
3
<PAGE>
Common Stock issued to Advent Partners Limited Partnership. Advent
International Group is the general partner for all of the above limited
partnerships.
(4) Includes 790,760 additional shares of Common Stock issuable upon exercise of
a warrant held by Seagate Technology, Inc.
(5) The stockholders' address is: c/o CVC, Inc., 525 Lee Road, Rochester, New
York, 14606.
(6) Represents 1,017,590 shares beneficially owned by Advent International
Group. Mr. Kingsley is a Senior Vice President of Advent International
Corporation, the venture capital firm which is the manager of the funds
affiliated with the Advent International Group. Mr. Kingsley disclaims
beneficial ownership of the shares of Common Stock beneficially owned by
Advent International Group except to the extent of his indirect pecuniary
interest therein as a partner in Advent International Group.
(7) Represents 1,412,316 shares of Common Stock beneficially owned by Nikko
Tecno, of which Mr. Miyanishi is a director, officer and principal
stockholder. Mr. Miyanishi disclaims beneficial ownership of the shares of
Common Stock owned by Nikko Tecno except to the extent of his indirect
pecuniary interest therein as a stockholder of Nikko Tecno. Mr. Miyanishi's
address is: c/o Nikko Tecno, P.O. Box 139, Central Tokyo, Japan.
(8) Represents 3,219,073 shares beneficially owned by Seagate Technology, Inc.
Mr. Waite is an executive officer and stockholder of Seagate Technology,
Inc. Mr. Waite disclaims beneficial ownership of the shares of Common Stock
owned by Seagate Technology, Inc. except to the extent of his indirect
pecuniary interest therein as a stockholder of Seagate Technology, Inc.
(9) Includes 20,316 shares of Common Stock held in an irrevocable trust for
Mr. Mann's children. Mr. Mann disclaims beneficial ownership of these
shares.
(10) Includes (1) 1,412,316 shares held of record by Nikko Tecno, the ownership
of which is attributed to Mr. Miyanishi, (2) 1,017,590 shares held of record
by Advent International Group, the ownership of which is attributed to
Mr. Kingsley, (3) 3,219,073 shares held of record by Seagate Technology,
Inc., the ownership of which is attributed to Mr. Waite, and (4) 20,316
shares held in an irrevocable trust for Mr. Mann's children, the ownership
of which is attributed to Mr. Mann.
4
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires CVC's officers and directors, and persons who own more
than 10% of a registered class of its equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the Nasdaq National Stock Market, and to furnish CVC with copies of
all such forms they file. Mr. Douglas Kingsley, a current director of CVC and a
director nominee, and Mr. George R. Thompson, a former director of CVC, did not
file Form 3s with the SEC at the time they became directors of CVC
(Mr. Kingsley in December 1998 and Mr. Thompson in May 1999). Both Mr. Thompson
and Mr. Kingsley filed Form 3s on November 10, 1999 in connection with CVC's
initial public offering. Advent International Group did not file a Form 3 with
the SEC at the time it became a 10% shareholder of CVC pursuant to a private
placement of CVC preferred stock December 1998. Upon completion of CVC's initial
public offering in November 1999, Advent International Group was no longer a 10%
shareholder of CVC.
BOARD AND COMMITTEE MEMBERSHIP
MEETINGS OF THE BOARD OF DIRECTORS: During fiscal year 1999, there were
seven meetings of the Board of Directors and nine meetings of committees of the
Board. All director nominees attended at least 75% of the meetings of the Board
and committees of which they were members.
COMMITTEES OF THE BOARD OF DIRECTORS. The three standing committees of the
Board are: Audit, Compensation and Executive. Members of each committee, who are
elected by the full Board, are named below. The Company follows the practice of
periodically rotating the membership of all committees and the chairmanship of
the Audit and Compensation Committees.
AUDIT COMMITTEE
The Audit Committee oversees the performance and reviews the scope of the
audit performed by CVC's independent accountants. It also reviews audit plans
and procedures, changes in accounting policies and the use of independent
accountants for non-audit services. The Audit Committee operates pursuant to a
written charter. Members of the Audit Committee are Mr. Donald L. Waite
(Chairman), Mr. Douglas A. Kingsley and Mr. Thomas C. McDermott. During fiscal
year 1999, the Audit Committee met four times.
COMPENSATION COMMITTEE
The Compensation Committee determines the compensation and benefits of all
officers of CVC and establishes general policies relating to compensation and
benefits of all other CVC employees. It is also responsible for administering
CVC's stock option plans in accordance with the terms thereof. Members of the
Compensation Committee are Mr. Robert C. Fink (Chairman), Mr. Douglas A.
Kingsley and Mr. Maurice F. Holmes. During fiscal year 1999, the Compensation
Committee met four times.
EXECUTIVE COMMITTEE
The Executive Committee is responsible for all matters which arise between
meetings of the Board of Directors, to the extent permitted by law. Members of
the Executive Committee are Mrs. Christine B. Whitman (Chairman), Mr. Donald L.
Waite and Mr. Thomas C. McDermott. During fiscal year 1999, the Executive
Committee did not meet.
5
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE REPORT
Compensation of the Company's executives is subject to review and approval
by the Compensation Committee (the "Committee") of the Company's Board of
Directors. In determining the fiscal year 1999 compensation paid to the
Company's executive officers, the Committee employed compensation policies
designed to align such compensation with the interests of the Company's
shareholders and to relate it to overall corporate performance. These policies
are intended to attract and retain executives whose abilities are critical to
the long-term success of the Company, to support a performance-oriented
environment that rewards achievement of internal corporate goals and to reward
executives for the enhancement of shareholder value.
The components of the compensation of each executive officer, including the
Chief Executive Officer ("CEO"), are base salary, cash bonus awards and stock
option grants, as described below:
BASE SALARY. The base salary component of total compensation is designed to
be competitive for similar companies in terms of industry group, technology,
complexity and company size. Company size reflects both sales and market
capitalization. The Committee, on behalf of the Board, works with management to
maintain an executive salary structure based on competitive analyses. Committee
discretion is used in determining individual salary amounts for executive
officers with no specific formula. Generally, executive officer salaries,
including that of the CEO, are reviewed on a regular basis as market conditions
require to maintain a competitive compensation structure.
PERFORMANCE BASED AWARDS. All executive officers, including the CEO,
participate in the Company's Performance Incentive Plan. Awards under the
Performance Incentive Plan are intended to reflect the Committee's belief that a
significant portion of the annual compensation of each executive officer should
be contingent upon the financial performance of the Company and the individual
contribution of each executive officer. Awards under the Performance Incentive
Plan, including those to the CEO, are contingent upon the attainment of
specified Company financial goals, with a threshold profitability target
established by the Committee at the time of the approval of the budget for the
fiscal year. It is intended that overachievement of goals should result in
above-median total annual compensation and underachievement of goals should
result in below-median total annual compensation. In addition, consideration is
given to the relative contribution of each executive officer in attainment of
that performance.
STOCK OPTION AWARDS. The grant of stock option awards to executive officers
creates a direct link between compensation and long-term increases in
shareholder values and is intended to be the most meaningful component of
executive compensation. The Committee believes that stock option grants provide
an incentive that focuses the executive officers' attention on managing the
Company from the perspective of an owner with an equity stake in the business.
Options are subject to vesting provisions to encourage executive officers to
remain employed with the Company. The size of each option grant is based on the
executive officer's responsibilities, relative position with the Company and the
Committee's judgment with respect to the executive's impact on shareholder
value. The Committee also takes into account the number of stock options
previously granted.
IMPACT OF SECTION 162(M) OF THE INTERNAL REVENUE CODE. The Committee has
considered the potential impact of Section 162(m) of the Internal Revenue Code
on the compensation paid to the Company's executive officers. Section 162(m)
disallows a tax deduction for any of the Named Executive Officers, including the
CEO, unless such compensation is performance-based. In general, it is the
Company's policy to qualify, to the maximum extent possible, its executives'
compensation for deductibility under applicable tax laws. There can be no
assurance that the Internal Revenue Service will grant such treatment to the
compensation paid. The Company believes that the stock options granted in fiscal
year 1999 and prior fiscal years satisfied the requirements of federal tax law
and thus, compensation recognized in connection with such awards should be fully
deductible. It is the Company's intention to make efforts to maximize
deductibility of compensation paid to its officers under such law. During fiscal
year 1999, the Company did not exceed the $1.0 million deductibility cap with
respect to any officer covered by such law.
In approving the amount and form of compensation for the Company's Named
Executive Officers, the Committee will continue to consider all elements of the
cost to the Company of providing such compensation, including the potential
impact of Section 162(m).
MEMBERS OF THE COMPENSATION COMMITTEE:
ROBERT C. FINK (CHAIRMAN)
DOUGLAS A. KINGSLEY
MAURICE F. HOLMES
6
<PAGE>
COMPENSATION
DIRECTOR COMPENSATION
FEES
Nonemployee directors receive the following fees:
<TABLE>
<S> <C>
Annual Retainer: $8,000.00 (Payable in shares of Common Stock)
Board Meeting Fee: $1,500.00
Committee Chair Retainer: $1,000.00
Committee Meeting Fee: $ 500.00
</TABLE>
BENEFIT PLANS
CVC's Nonemployee Directors' 1999 Stock Option Plan contains provisions
pursuant to which options for 7,500 shares of Common Stock are granted to each
nonemployee director upon commencement of service on the Board, and options for
2,000 shares of Common Stock are granted to each nonemployee director on
March 31 of each year of continued service on the Board. CVC has authorized and
reserved 200,000 shares of Common Stock for issuance under this plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Kingsley, a director of CVC, is a Senior Vice President of Advent
International Corporation, a principal stockholder of the Company. In
December 1998, CVC sold an aggregate of 100,000 shares of Series C Convertible
Preferred Stock for a price of $100.00 per share and a warrant to purchase an
aggregate of 200,000 shares of Common Stock to entities affiliated with Advent
International Corporation in a private placement. The Series C Convertible
Preferred Stock was automatically converted into 1,016,257 shares of Common
Stock, as well as 100,000 shares of Series D Redeemable Preferred Stock upon
consummation of CVC's initial public offering in November 1999. The Series D
Redeemable Preferred Stock was redeemed by CVC upon the consummation of the
initial public offering for a redemption price of $10.0 million.
Mr. Waite, a director of CVC, is an executive officer of Seagate
Technology, Inc. which is a principal stockholder of CVC, as well as a major
customer. Total revenues attributed to sales of CVC products to Seagate
Technology, Inc. were $29.2 million in fiscal 1997, $21.3 million in fiscal 1998
and $28.4 million in fiscal 1999.
Mr. Miyanishi, a director of CVC, is the President and Chief Executive
Officer of Nikko Tecno, a Japanese corporation which is a principal stockholder
and a distributor of CVC's products in Japan. CVC borrowed from Nikko Tecno
$1.5 million in November 1990 and $1.0 million in December 1991 under two
unsecured notes that required quarterly interest payments calculated at an
annual rate of 9%. The principal of the $1.0 million note was paid in
October 1997. The principal of the $1.5 million note was paid in January 1999.
As part of CVC's acquisition of Commonwealth Scientific Corporation in
May 1999, CVC entered into a consulting agreement with George R. Thompson, Jr.,
the former Chief Executive Officer of Commonwealth and a director of CVC from
May 1999 through November 12, 1999, when he resigned as a director of the
Company. Under the terms of this consulting agreement, CVC is obligated to pay
Mr. Thompson an aggregate amount of $525,000 over the three-year period
following the acquisition, as consideration for consulting services provided by
him to CVC. In addition, Mr. Thompson is entitled to benefits, such as an
automobile allowance and health insurance coverage. This consulting agreement
may be terminated by Mr. Thompson for any reason at any time and by the Company
if Mr. Thompson: (1) materially breaches his obligations under a non-competition
agreement; (2) is convicted of a felony or any offense involving
misappropriation of money; (3) willfully fails or refuses to perform his duties
under his agreement or (4) upon Mr. Thompson's death.
7
<PAGE>
With respect to all of the transactions listed above, CVC believes that the
terms of these transactions were, at the time entered into, no less favorable
than CVC could have obtained with non-affiliated parties. It is CVC's policy
that when a transaction or matter comes before its Board of Directors in which a
director may have a conflict, the nature and extent of the potential conflict is
disclosed and/or reviewed with the Board of Directors, after which the
conflicted director is prohibited from participating in any discussions and
subsequent Board voting relating to the transaction or matter in which he or she
may have a conflicting interest. In addition, any transaction of this type must
be approved by a majority of those CVC directors who do not have a conflicting
interest in any such transaction.
EXECUTIVE COMPENSATION
The following table shows for fiscal years ended September 30, 1997, 1998
and 1999, respectively, the cash compensation paid by the Company, as well as
other compensation paid for those years, to the Named Executive Officers in all
capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
# OF SECURITIES
ANNUAL COMPENSATION UNDERLYING OPTIONS
-------------------------------------- SARS LONG-TERM
OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) AWARDS COMPENSATION(2)
- --------------------------- -------- -------- -------- ---------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Christine B. Whitman........ 1999 $178,652 $28,000 -- 33,333 $2,936
President, Chief Executive 1998 173,040 47,600 -- -- 2,647
Officer and Chairman 1997 167,250 46,600 -- 51,000 2,325
Giovanni Nocerino........... 1999 224,950 -- $75,654(3) -- 3,085
Executive Vice President, 1998 183,333 -- 16,535 160,000 --
Sales & Service 1997(4) -- -- -- -- --
Mehrdad M. Moslehi.......... 1999 158,489 10,000 -- 16,667 2,700
Senior Vice President and 1998 147,054 31,100 -- -- 2,576
Chief Technical Officer 1997 140,078 29,100 -- 12,000 1,905
Christopher J. Mann......... 1999 158,487 -- 41,127(5) 16,667 3,810
Senior Vice President, 1998 147,290 27,100 77,731(5) -- 4,153
Marketing 1997 122,406 28,500 31,962(5) 22,500 2,506
Emilio O. DiCataldo......... 1999 152,148 25,000 -- 30,000 2,213
Senior Vice President and 1998 146,692 31,800 -- -- 1,900
Chief Financial Officer 1997 142,551 34,400 46,930(6) 48,000 1,330
</TABLE>
- ------------------------
(1) In accordance with the rules of the SEC, other compensation in the form of
perquisites and other personal benefits has been omitted in those instances
where such perquisites and other personal benefits constituted less than the
lesser of $50,000 or 10% of the total annual salary and bonus for the
executive officer for each fiscal year.
(2) Represents matching contributions made by CVC on behalf of the executive
officer to its 401(k) Plan.
(3) Represents automobile allowance of $1,901 and sales commissions of $73,754.
(4) No information for fiscal 1997 is presented as Mr. Nocerino joined CVC in
fiscal 1998. Mr. Nocerino became one of CVC's executive officers in the fall
of 1997.
8
<PAGE>
(5) Represents automobile allowance of $10,488 and sales commissions of $30,639
in 1999, automobile allowance of $10,488 and sales commissions of $67,243 in
1998 and automobile allowance of $10,488 and sales commissions of $21,474 in
1997.
(6) Represents relocation expense of $17,500, relocation allowance of $26,670
and dues of $2,760
The following table contains information regarding the option grants made
during fiscal 1999 to each of the Named Executive Officers. CVC issued no stock
appreciation rights in fiscal 1999.
OPTION GRANTS
<TABLE>
<CAPTION>
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
PERCENT OF APPRECIATION FOR
NUMBER OF TOTAL OPTIONS OPTION TERM
SECURITIES GRANTED TO EXERCISE OR INDIVIDUAL GRANTS
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME OPTIONS FISCAL 1999 ($/SHARE) DATE 5% 10%
- ---- ---------- ------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Christine B. Whitman................ 33,333 10.70% $6.00 5/14/09 $255,254 $322,099
Giovanni Nocerino................... -- -- -- -- -- --
Mehrdad M. Moslehi.................. 16,667 5.35 6.00 5/14/09 127,631 161,054
Christopher J. Mann................. 16,667 5.35 6.00 5/14/09 127,631 161,054
Emilio O. DiCataldo................. 30,000 9.63 6.00 5/14/09 229,731 289,892
</TABLE>
The following table sets forth information regarding exercise of options and
the number and value of options held at September 30, 1999, by each of the
officers listed below.
YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Christine B. Whitman.......................... 353,600 53,733 $3,263,456 $293,880
Giovanni Nocerino............................. 53,333 106,667 227,732 455,468
Mehrdad M. Moslehi............................ 3,200 21,467 13,664 85,868
Christopher J. Mann........................... 206,000 25,667 1,905,332 113,666
Emilio O. DiCataldo........................... 142,800 49,200 1,081,812 241,152
</TABLE>
- ------------------------
(1) The value of the unexercised, in-the-money options on September 30, 1999 is
based on the difference between the initial public offering price of the
common stock of $10.00 per share on November 12, 1999 and the per share
option exercise price, multiplied by the number of shares of common stock
underlying the options
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the current members of the Compensation Committee, Messrs, Fink,
Holmes and Kingsley, was at any time during fiscal year 1999, or at any other
time within the past five years, an officer or employee of the Company. No
executive officer of the Company serves as a member of a board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of CVC's Board of Directors or its Compensation Committee.
9
<PAGE>
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
CVC has entered into severance agreements with the Named Executive Officers.
These agreements provide that these employees will serve CVC in their offices
for a term of three years, with automatic one-year renewals, subject to earlier
termination as provided for in these agreements. These agreements set forth the
following minimum base salary during the term of the particular agreement as
follows: (1) Ms. Whitman--$168,000; (2) Mr. DiCataldo--$140,369;
(3) Mr. Mann--$124,162; (4) Dr. Moslehi--$142,771; and (5) Dr. Nocerino
$220,000. These amounts are subject to possible increase at the sole discretion
of the Compensation Committee. Each employee is also eligible to receive, at the
sole discretion of the Compensation Committee, an annual bonus based on the
contribution of the employee towards achievement of the annual business goals of
CVC. Under these agreements, the employees are entitled to participate in the
employee benefit plan of CVC and are eligible for the grant of stock options, in
the sole discretion of the Compensation Committee.
In addition, these agreements provide that each of these employees is
entitled to a lump-sum cash severance payment in the following circumstances:
- Upon a termination by CVC of the employee without cause; and
- Upon a termination by the employee of his employment with CVC, within six
months immediately following an acquisition, merger, reorganization of CVC
or other similar transaction or event.
This lump-sum severance payment is equal to the employee's base salary as in
effect immediately prior to termination multiplied by a number of months
(24 months for Ms. Whitman, 18 months for Mr. DiCataldo, 12 months for Drs.
Moslehi and Nocerino and Mr. Mann), and then discounted to present value from
the dates payments would otherwise have been made.
Upon an acquisition, merger, reorganization or other similar transaction or
event, all options to purchase shares of Common Stock held by the employees that
were not then vested will become fully and immediately vested and exercisable,
unless provision has been made for (1) continuation of any CVC option plan
and/or the assumption of options by a successor corporation or (2) the
substitution for the options of new options covering the stock of a successor
corporation, with appropriate adjustments. An employee terminated after any of
these types of transactions or events will retain the right to exercise any
options to purchase shares of common stock for 12 months following the date of
his or her termination or, if earlier, the expiration of the original term of
the option.
These agreements include restrictive covenants for the benefit of CVC
relating to non-disclosure by the employee of CVC's confidential business
information and CVC's right to inventions and technical improvements of the
employee.
PERFORMANCE GRAPH
This information is not available as the Common Stock was not publicly
traded during fiscal 1999. The Company consummated its initial public offering
on November 12, 1999.
10
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members. Six are
nonemployee directors and one is a member of management. The terms of all of the
directors currently serving on the Board expire at the Annual Meeting. All of
the directors currently serving on the Board have been nominated by the Board of
Directors for re-election to one-year terms at the Annual Meeting. Each nominee
elected will hold office until the Annual Meeting of Stockholders to be held in
2001 and until a successor has been duly elected and qualified, unless prior to
such meeting a director shall resign, or his or her directorship shall become
vacant due to his or her death or removal. Shares represented by proxies that
are returned properly signed will be voted for the nominees unless the
shareholder indicates on the proxy that authority to vote the shares is withheld
for one or more or for all of the nominees listed. A proxy cannot be voted for a
greater number of persons than the seven nominees named below. Directors are
elected by a plurality of the votes cast. Shares not voted, whether by
withholding or broker non-vote, have no effect on the election of directors
except to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes.
The following information set forth has been furnished to the Company by the
directors and sets forth the principal occupation and employment during the past
five years of each director nominee, positions and offices with the Company, and
membership on other boards of directors.
The following seven individuals have been nominated for election at the
Annual Meeting for a term ending 2001:
CHRISTINE B. WHITMAN
Ms. Whitman joined CVC Products in 1978 and has served as President, Chief
Executive Officer and Chairman of CVC since its acquisition of CVC Products in
1990. Ms. Whitman received a BA from Syracuse University and is a member and
Secretary of the Board of Directors of SEMI/SEMATECH. She currently is a
director of Frontier Telephone of Rochester and The M&T Bank. Ms. Whitman serves
on the Executive Committee of the Board of Directors of the Industrial
Management Council, the Board of Trustees for the Greater Rochester Chamber of
Commerce, the United Way Board of Directors, the Al Sigl Center Partners'
Foundation Board of Governors and is a member of the Board of Trustees of
Rochester Institute of Technology.
ROBERT C. FINK
Mr. Fink has been a director of CVC since 1997. In 1993, Mr. Fink joined Lam
Research Corporation, a manufacturer of semiconductor processing equipment, and
formerly served as the Chief Operating Officer, following Lam's acquisition of
Drytek, Inc. Mr. Fink served as the President of Drytek from 1983 to 1988. Prior
to Drytek, Mr. Fink spent four years with ITT Corporation's Semiconductor
Division as Director of VLSI Operations for North America and 12 years with
General Instrument Corporation's Microelectronics Division as Director of
Worldwide Manufacturing Resources. Mr. Fink's career also includes 13 years with
General Electric Corporation. He received a BS in Metallurgical Engineering from
Polytechnical Institute of New York.
MAURICE F. HOLMES
Mr. Holmes has been a director of CVC since October 1999. Since
January 1999, Mr. Holmes has been a Professor of the Practice of Management and
Engineering Systems at the Massachusetts Institute of Technology, as well as
holding a dual professorship with both its Sloan School of Management and School
of Engineering. Prior to this, Mr. Holmes served as Corporate Vice President and
the Chief Engineer for Xerox Corporation beginning in 1994. Mr. Holmes received
a BS degree from the University of Pittsburgh
11
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS (CONTINUED)
and a MS in Mechanical and Aerospace Science from the University of Rochester.
He currently is a director of Optical Dynamics Corporation and Storage
Technology Corporation. In addition, Mr. Holmes serves on the Board of Trustees
of Rochester Institute of Technology and the Ford Design Institute.
DOUGLAS A. KINGSLEY
Mr. Kingsley has been a director of CVC since 1998. Mr. Kingsley is a Senior
Vice President of Advent International Corporation, a venture capital firm,
where he has been employed since 1990. From 1985 through 1988 Mr. Kingsley was a
sales engineer for Teradyne, Inc., a manufacturer of automatic test equipment
for the electronics industry. Mr. Kingsley is a graduate of Dartmouth College
and Harvard Business School. He is a director of LeCroy Corporation and a member
of the Board of Overseers of the Boston Symphony Orchestra.
THOMAS C. MCDERMOTT
Mr. McDermott has been a director of CVC since October 1999. From 1994 to
1997, Mr. McDermott was Chief Executive Officer and President of Goulds
Pumps, Inc., and from 1996 to 1997 he also held the position of Chairman of the
Board. From 1986 to 1993, Mr. McDermott was the President and Chief Operating
Officer of Bausch & Lomb. Prior to this, Mr. McDermott served in a variety of
management positions at Bausch & Lomb, and also was a member of its Board of
Directors from 1983 until 1993. Mr. McDermott received a BS degree and an
Honorary Doctoral Degree from Providence College. He currently is a director of
Canandaigua Brands, Inc. and Thomas & Betts Corporation. In addition,
Mr. McDermott serves on the Board of Governors of University of Rochester
Medical Center and as a Trustee of Rochester Institute of Technology and St.
Bernard's Institute.
SEIYA MIYANISHI
Mr. Miyanishi has been a director of CVC since 1990. Since 1987,
Mr. Miyanishi has served as President and Chief Executive Officer of Nikko
Tecno, a company based in Japan and involved in the import and export of capital
equipment, which was founded in 1946. Mr. Miyanishi has served as owner,
President and Chief Executive Officer of several other companies in Japan.
Mr. Miyanishi received a BS of managerial economics from Keio University.
DONALD L. WAITE
Mr. Waite has been a director of CVC since 1995. Since 1983, Mr. Waite has
served in various positions for Seagate Technology, Inc., most recently as
Senior Administrative Officer, Senior Financial Officer and Executive Vice
President. Additionally, Mr. Waite was named interim chief executive officer of
Dragon Systems in October, 1999. Dragon Systems is a voice recognition software
company in which Seagate Technology, Inc. holds a minority ownership position.
Mr. Waite received a BS in Accounting from Creighton University and a JD from
Georgetown University Law Center. Mr. Waite is a Certified Public Accountant.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
12
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounting firm for the Company in fiscal year 1999
was PricewaterhouseCoopers LLP ("PwC"). The Board, upon the recommendation of
the Audit Committee, has appointed this firm, subject to ratification by the
shareholders, to audit the financial statements of the Company for fiscal year
2000. The Audit Committee, in arriving at its recommendation to the Board,
reviewed the performance of PwC in prior years, as well as the firm's reputation
for integrity and competence in the fields of accounting and auditing. The Audit
Committee expressed its satisfaction with PwC in these respects.
PwC has audited the Company's financial statements annually since 1995.
Representatives of PwC will be present at the Annual Meeting to make a
statement, if they desire to do so, and to respond to appropriate questions.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
13
<PAGE>
DEADLINES FOR SUBMISSION OF
PROXY PROPOSALS, NOMINATION OR DIRECTORS AND OTHER BUSINESS
PROXY STATEMENT PROPOSALS. Shareholder proposals intended to be included in
the Proxy Statement and form of proxy for the Annual Meeting of Shareholders to
be held in 2001, in addition to meeting certain eligibility requirements
established by the Securities and Exchange Commission, must be in writing and
received by the Secretary at the Company's principal executive offices on or
prior to September 30, 2000. Alternate notice deadlines apply if the date of the
annual meeting differs by more than 30 days from the date of the previous year's
annual meeting.
By Order of the Board of Directors
[LOGO]
Emilio O. DiCataldo
Secretary
Rochester, New York
January 28, 2000
14
<PAGE>
PROXY
CVC INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS-FEBRUARY 29, 2000.
(SEE PROXY STATEMENT FOR DISCUSSION OF ITEMS)
The undersigned hereby appoints Christine B. Whitman and Emilio O. DiCataldo,
and each of them, as proxies of the undersigned, each with full power to act
without the other and with full power of substitution and re-substitution, to
vote all the shares of Common Stock of CVC, Inc. that the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on February
29, 2000, at 9:00 a.m. (local time), and at any postponements or adjournments
thereof, with all the powers the undersigned would have if personally
present, as follows:
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
SEE REVERSE SEE REVERSE
SIDE SIDE
- -------------------------------------------------------------------------------
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE.
1. To elect to the Board of Directors the following nominees for the term
indicated in the Proxy Statement.
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(EXCEPT AS MARKED TO THE CONTRARY BELOW) to vote for all nominees listed below
Robert C. Fink Seiya Miyanishi
Maurice F. Holmes Donald L. Waite
Douglas A. Kingsley Christine B. Whitman
Thomas C. McDermott
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
RECORD DATE SHARES:
[clear area]
FOR AGAINST ABSTAIN
2. Ratification of the appointment by the Board of / / / / / /
Directors of PricewaterhouseCoopers LLP as
independent public accountants for fiscal 2000.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting, all in accordance with the
accompanying Notice and Proxy Statement, receipt of which is hereby
acknowledged.
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES REPRESENTED
THEREBY WILL BE VOTED. IF A CHOICE IS SPECIFIED BY THE STOCKHOLDER, THE
SHARES WILL BE VOTED ACCORDINGLY. IF NOT OTHERWISE SPECIFIED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE CHANGES / /
ON REVERSE SIDE
NOTE: SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SIGNING IN A REPRENSENTATIVE
CAPACITY, PLEASE GIVE FULL TITLE. JOINT OWNERS (IF ANY) SHOULD EACH SIGN.
Please be sure to sign and date this Proxy. Date
Shareholder sign here Co-owner sign here
- -------------------------------------------------------------------------------
DETACH CARD DETACH CARD
PLEASE, SIGN, DATE, AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
CVC, INC.
c/o EquiServe
P.O. Box 8040
Boston, MA 02266-8040
ADMISSION TICKET
2000 ANNUAL MEETING
OF
SHAREHOLDERS
OF
CVC, INC.
TUESDAY, FEBRUARY 29, 2000
9:00 A.M.
BOSTON HARBOR HOTEL
70 ROWES WHARF
BOSTON, MA
