<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
HADCO CORPORATION
(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.
[ ] 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> 2
HADCO CORPORATION
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
To The Stockholders:
The Annual Meeting of Stockholders of Hadco Corporation (the
"Corporation"), a Massachusetts corporation, will be held on Wednesday, February
26, 1997 at 10:00 A.M. at 100 Federal Street, Boston, Massachusetts, for the
following purposes:
1. To fix the number of directors at nine (9) and to elect a Board of
Directors for the ensuing year.
2. To consider and act upon a proposal to approve the amendment and
restatement of the Hadco Corporation 1991 Non-Employee Director Stock
Option Plan (the "Plan"), as amended, to: (i) increase the number of
shares of Common Stock available for issuance under the Plan from
150,000 to 300,000 shares, (ii) provide that any current non-employee
director who will have five years of service in such capacity on
February 26, 1997 be automatically granted, on such date and on each
anniversary of service thereafter, an option to purchase 3,000 shares
of the Corporation's Common Stock and (iii) provide that any current
non-employee director who does not have five years of service in such
capacity on March 15, 1997 and any future non-employee director each be
automatically granted, on the date such non-employee director achieves
five years of service in such capacity and on each anniversary of
service thereafter, an option to purchase 3,000 shares of the
Corporation's Common Stock.
3. To ratify the selection of the firm of Arthur Andersen LLP as auditors
for the fiscal year ending October 25, 1997.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Stockholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on Thursday, January 2, 1997, the record
date fixed by the Board of Directors for such purpose.
By Order of the Board of Directors,
JAMES C. HAMILTON,
Clerk
January 15, 1997
- --------------------------------------------------------------------------------
STOCKHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN
THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL
- --------------------------------------------------------------------------------
<PAGE> 3
HADCO CORPORATION
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
------------------------
PROXY STATEMENT
JANUARY 15, 1997
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Hadco Corporation (the "Corporation") for use at the
Annual Meeting of Stockholders of the Corporation to be held on Wednesday,
February 26, 1997, at 10:00 A.M., at 100 Federal Street, Boston, Massachusetts.
Only stockholders of record as of the close of business on January 2, 1997
will be entitled to vote at the meeting and any adjournments thereof. As of that
date, 10,421,633 shares of Common Stock of the Corporation were issued and
outstanding. Each share outstanding as of the record date will be entitled to
one vote, and stockholders may vote in person or by proxy. Execution of a proxy
will not in any way affect a stockholder's right to attend the meeting and vote
in person. Any stockholder delivering a proxy has the right to revoke it by
written notice to the Clerk at any time before it is exercised.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended October 26, 1996, is being mailed together with this proxy
statement to all stockholders entitled to vote. It is anticipated that this
proxy statement and the accompanying proxy will be first mailed to stockholders
on or about January 24, 1997.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as director, abstentions and broker
"non-votes" are counted as present or represented for purposes of determining
the presence or absence of a quorum for the meeting. A "non-vote" occurs when a
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because, in respect of such other proposal, the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner. The election of directors by the
stockholders shall be determined by a plurality of the votes cast by
stockholders entitled to vote, and votes withheld will not be counted toward the
achievement of a plurality. On all other matters being submitted to
stockholders, an affirmative vote of a majority of the shares present or
represented and voting on each such matter is required for approval. An
automated system administered by the Corporation's transfer agent tabulates the
votes. The vote on each matter submitted to stockholders is tabulated
separately. Abstentions are included in the number of shares present or
represented and voting on each matter. Broker "non-votes" are not considered
voted for the particular matter and have the practical effect of reducing the
number of affirmative votes required to achieve a majority for such matter by
reducing the total number of shares from which the majority is calculated.
Each of the persons named as proxies in the proxy is a director and officer
of the Corporation. All properly executed proxies returned in time to be cast at
the meeting will be voted. With respect to the election of a Board of Directors,
any stockholder submitting a proxy has a right to withhold authority to vote for
any individual nominee or group of nominees to the Board of Directors by writing
the name of such individual or group in the space provided on the proxy. The
proxies will be voted as stated below and under "Election of Directors." The
stockholders will also consider and vote upon a proposal to approve an amendment
and restatement of the Corporation's 1991 Non-Employee Director Stock Option
Plan. Finally, the stockholders will act upon a proposal to ratify the selection
of auditors. Where a choice has been specified on the proxy with
<PAGE> 4
respect to these matters, the shares represented by the proxy will be voted in
accordance with the specification and will be voted FOR if no specification is
indicated.
The Board of Directors knows of no other matter to be presented at the
meeting. If any other matter should be presented at the meeting upon which a
vote may be properly taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as proxies in the proxies.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of January 2, 1997, the name of each
person who, to the knowledge of management, beneficially owned more than 5% of
the 10,421,633 shares of Common Stock of the Corporation outstanding at such
date, the number of shares owned by each of such persons, and the percentage of
the outstanding shares represented thereby.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------- ------------ ----------
<S> <C> <C>
Horace H. Irvine II........................... 923,512(2) 8.9%
c/o Hadco Corporation
12A Manor Parkway
Salem, New Hampshire 03079
J&W Seligman & Co. Incorporated............... 702,100 6.7
100 Park Avenue
New York, NY 10017
FMR Corp...................................... 675,800(3) 6.5
82 Devonshire Street
Boston, MA 02109
- ---------------
<FN>
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares.
(2) Includes 124,855 shares held in a voting trust for the benefit of Andrea P.
Irvine. Mr. Irvine, who is the sole trustee of such trust and retains sole
voting power with respect to the shares held in such trust, disclaims
beneficial ownership of such shares. Does not include 245,517 shares held
in irrevocable trusts for the benefit of members of Horace H. Irvine II's
family. Mr. Irvine, who is not a trustee of such trusts, disclaims
beneficial ownership of such 245,517 shares. James C. Hamilton, Clerk and
General Counsel to the Corporation, Lawrence Coolidge, a Director of the
Corporation, and Gilbert M. Roddy, Jr. are co-trustees of these irrevocable
trusts. Horace H. Irvine II retains no voting or dispositive power with
respect to these shares. All voting rights under these trusts reside in
Messrs. Hamilton, Coolidge and Roddy, who have the right to dispose of such
shares. Messrs. Coolidge and Hamilton own 11,000 and 12,250 shares,
respectively, as individuals, in addition to the shares they hold as
co-trustees. Mr. Coolidge's 11,000 shares include 6,000 shares issuable
upon the exercise of stock options that will become exercisable within 60
days of January 2, 1997.
(3) According to information provided to the Corporation by FMR Corp., as of
January 2, 1997, FMR Corp. beneficially owned 675,800 shares of the Common
Stock of the Corporation. Includes 608,200 shares beneficially owned by
Fidelity Management & Research Company, as a result of its serving as an
investment adviser to various investment companies registered under Section
8 of the Investment Company Act of 1940 and as an investment adviser to
certain other funds which are generally offered to
</TABLE>
2
<PAGE> 5
limited groups of investors. Also includes 67,600 shares beneficially owned
by Fidelity Management Trust Company, as a result of its serving as trustee
or managing agent for various private investment accounts, primarily
employee benefit plans, and as an investment adviser to certain other funds
which are generally offered to limited groups of investors. FMR Corp. has
sole voting power with respect to 11,600 shares and sole dispositive power
with respect to 675,800 shares.
ELECTION OF DIRECTORS
The directors of the Corporation are elected annually and hold office until
the next annual meeting of stockholders and until their successors shall have
been elected and shall have qualified. Shares represented by all proxies
received by the Board of Directors and not so marked as to withhold authority to
vote for any individual director or for all directors will be voted (unless one
or more nominees are unable or unwilling to serve) for fixing the number of
directors for the ensuing year at nine and for the election of the nominees
named below. The Board of Directors knows of no reason why any such nominee
should be unable or, for good cause, unwilling to serve, but if such should be
the case, proxies will be voted for the election of some other person or for
fixing the number of directors at a lesser number.
The nine nominees are currently directors of the Corporation and, except
for Mr. Pomeroy and Mr. Taylor, were elected at the Annual Meeting of
Stockholders held on February 28, 1996. Mr. Pomeroy was elected a director by
the Board of Directors at a meeting on September 6, 1996, and Mr. Taylor was
elected a director by the Board of Directors at a meeting on December 3, 1996.
The nominees for directors and further information with respect to each nominee
are set forth below.
HORACE H. IRVINE II
Mr. Horace H. Irvine II, age 59 and founder of the Corporation, has been
its Chairman of the Board since the Corporation was organized in 1966, and its
Chief Executive Officer from that date until 1986. He is Chairman of the
Nominating Committee of the Board of Directors. He was President of the
Corporation between 1966 and 1980 and Treasurer of the Corporation between 1966
and 1984.
ANDREW E. LIETZ
Mr. Lietz, age 58, has been President and Chief Executive Officer of the
Corporation since October 28, 1995, Chief Operating Officer and Vice President
of the Corporation from July 1991 to October 28, 1995, and a director of the
Corporation since 1993.
PATRICK SWEENEY
Mr. Sweeney, age 61, has been a director of the Corporation since 1991, and
was President and Chief Executive Officer of the Corporation from that date
until October 28, 1995. He is currently a consultant to the Corporation. He was
Chief Operating Officer of the Corporation from July 1990 to July 1991.
J. STANLEY HILL
Mr. Hill, age 82, has been a director of the Corporation since 1981. He is
Chairman of the Audit and Stock Option Committees of the Board of Directors.
During the past 27 years, he has been president of Digiplan Inc., a private
consultant to the computer users' industry.
OLIVER O. WARD
Mr. Ward, age 61, has been a director of the Corporation since 1987. He is
Chairman of the Compensation, Executive and Finance Committees of the Board of
Directors. He was a founder and has
3
<PAGE> 6
served as chairman of the board, chief executive officer and president of
Germanium Power Devices Corp., a manufacturer and marketer of germanium
semiconductors, since 1973.
LAWRENCE COOLIDGE
Mr. Coolidge, age 60, has been a director of the Corporation since 1995. He
is Chairman of the Long-Term Planning and Strategy Committee. He has been the
president and a private trustee of Loring, Wolcott & Coolidge Office, a
fiduciary services provider, since 1962. On August 1, 1994, Mr. Coolidge became
an associate of Loring, Wolcott & Coolidge Fiduciary Advisors, a registered
investment advisor.
JOHN F. SMITH
Mr. Smith, age 61, has been a director of the Corporation since 1995. He
has been the president of MYCOS International, Inc., a property development
corporation, since April 1993 and president of PerSeptive Biosystems, Inc. since
July 1996. In April 1993, Mr. Smith retired as Senior Vice President and Chief
Operating Officer of Digital Equipment Corporation, a computer company, in which
capacities he had served since 1991. He began his career at Digital Equipment
Corporation in 1958 and served in various other senior management positions from
1976 to 1991. Mr. Smith is also a director of Ansys Corporation, Instron
Corporation, PerSeptive Biosystems, Inc. and Sequoia Systems, Inc.
JOHN E. POMEROY
Mr. Pomeroy, age 55, has been a director of the Corporation since September
6, 1996. He has been president and chief executive officer of Dover
Technologies, a group of manufacturing companies and a subsidiary of Dover
Corporation, since 1987. Mr. Pomeroy is also a director of Adept Technologies,
Inc.
JAMES C. TAYLOR
Mr. Taylor, age 58, has been a director of the Corporation since December
3, 1996. He has been an advisory director at Downer and Company, an investment
banking firm, since 1995. He was a managing director of Burns Fry Limited, an
investment banking firm, from 1988 to 1994.
4
<PAGE> 7
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
Set forth below is certain information as of January 2, 1997 with respect
to beneficial ownership of shares of the Corporation's Common Stock by all
directors and director nominees and all executive officers named in the Summary
Compensation Table set forth below under "Executive Compensation" individually,
and by all directors, director nominees and executive officers of the
Corporation as a group.
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
---------------- ------------ --------
<S> <C> <C>
Horace H. Irvine II....................................... 923,512(2) 8.9%
Andrew E. Lietz........................................... 165,146(3) 1.6
Patrick Sweeney........................................... 27,000 *
Timothy P. Losik.......................................... 26,775(4) *
James R. Griffin.......................................... 39,746(5) *
Richard Saporito.......................................... 23,650(6) *
John O. Irvine(7)......................................... 115,000(8) 1.1
J. Stanley Hill........................................... 38,000(9) *
Oliver O. Ward............................................ 0 *
Lawrence Coolidge......................................... 256,517(10) 2.5
Mikael Salovaara.......................................... 3,100 *
John F. Smith............................................. 9,000(11) *
John E. Pomeroy........................................... 3,000(12) *
James C. Taylor........................................... 3,000(12) *
All directors, director nominees and executive officers as
a group (16 persons).................................... 1,676,696(13) 15.7
- ---------------
<FN>
* Less than one percent.
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares.
(2) See footnote (2) to the table under "Principal Holders of Voting
Securities."
(3) Includes 134,746 shares issuable upon the exercise of stock options granted
to Mr. Lietz that are currently exercisable or will become exercisable
within 60 days after January 2, 1997. Of the 165,146 shares listed in the
table above, 30,000 shares are held by a trust of which Mr. Lietz is the
sole trustee and sole beneficiary.
(4) Includes 22,775 shares issuable upon the exercise of stock options granted
to Mr. Losik that are currently exercisable or will become exercisable
within 60 days after January 2, 1997. Of the 26,775 shares listed in the
table above, 4,000 shares are held jointly with Mr. Losik's spouse.
(5) Includes 37,300 shares issuable upon the exercise of stock options granted
to Mr. Griffin that are currently exercisable or will become exercisable
within 60 days after January 2, 1997.
(6) Includes 23,450 shares issuable upon the exercise of stock options granted
to Mr. Saporito that are currently exercisable or will become exercisable
within 60 days after January 2, 1997.
(7) Horace H. Irvine II and John O. Irvine are brothers.
</TABLE>
5
<PAGE> 8
(8) Includes 15,000 shares issuable upon the exercise of currently exercisable
stock options granted to John O. Irvine.
(9) Includes 7,000 shares issuable upon the exercise of currently exercisable
stock options granted to Mr. Hill. Does not include 20,000 shares owned by
Mr. Hill's wife, Doris Hill, as to which Mr. Hill disclaims beneficial
ownership.
(10) See footnote (2) to the table under "Principal Holders of Voting
Securities."
(11) Consists of 9,000 shares issuable upon the exercise of stock options
granted to Mr. Smith that are currently exercisable or will become
exercisable within 60 days after January 2, 1997.
(12) Consists of 3,000 shares issuable upon the exercise of currently
exercisable stock options granted to each of Messrs. Pomeroy and Taylor.
(13) Includes 245,517 shares held by Mr. Coolidge, James C. Hamilton, and
Gilbert M. Roddy, Jr., as co-trustees and 124,855 shares held by Horace H.
Irvine II as trustee. See footnote (2) to the table under "Principal
Holders of Voting Securities." Includes 134,746 shares issuable upon the
exercise of stock options granted to Andrew E. Lietz, that are currently
exercisable or will become exercisable within 60 days after January 2,
1997. See footnote (3) above. Includes 22,775 shares issuable upon the
exercise of stock options granted to Mr. Losik that are currently
exercisable or will become exercisable within 60 days after January 2,
1997. See footnote (4) above. Includes 37,300 shares issuable upon the
exercise of stock options granted to Mr. Griffin that are currently
exercisable or will become exercisable within 60 days after January 2,
1997. See footnote (5) above. Includes 23,450 shares issuable upon the
exercise of stock options granted to Mr. Saporito that are currently
exercisable or will become exercisable within 60 days after January 2,
1997. See footnote (6) above. Includes 15,000 shares issuable upon the
exercise of currently exercisable stock options granted to Mr. Irvine. See
footnote (8) above. Includes 7,000 shares issuable upon the exercise of
currently exercisable stock options granted to Mr. Hill. See footnote (9)
above. Includes 9,000 shares issuable upon the exercise of stock options
granted to Mr. Smith that are currently exercisable or will become
exercisable within 60 days after January 2, 1997. See footnote (11) above.
Includes an aggregate of 6,000 shares issuable upon the exercise of
currently exercisable stock options granted to Messrs. Pomeroy and Taylor.
See footnote (12) above. Includes an aggregate of 15,250 shares owned by
two executive officers not named in the above table and an aggregate of
28,000 shares issuable upon the exercise of stock options held by one
executive officer of the Corporation not named in the above table that are
currently exercisable or will become exercisable within 60 days after
January 2, 1997.
6
<PAGE> 9
BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Corporation held four meetings during the
fiscal year ended October 26, 1996. The Compensation Committee, of which Messrs.
Ward (Chairman), Hill, Coolidge and John O. Irvine are members, determines the
compensation of the Corporation's senior management and held seven meetings
during fiscal 1996. The Audit Committee, of which Messrs. Hill (Chairman), Ward
and Smith are members, oversees financial results and internal controls of the
Corporation, including matters relating to the appointment and activities of the
Corporation's independent auditors, and met once during fiscal 1996. The
Long-Term Planning and Strategy Committee, of which Messrs. Coolidge (Chairman),
Ward, Lietz, Salovaara, Smith, Horace H. Irvine II and Sweeney are members,
reviews and makes recommendations concerning long-term planning and strategy
matters relating to the Corporation. The Long-Term Planning and Strategy
Committee met five times during fiscal 1996. The Executive Committee, of which
Messrs. Ward (Chairman), Horace H. Irvine II, Sweeney, Coolidge, Smith and Lietz
are members, can act in place of the full Board of Directors to the extent
permitted by law. The Executive Committee held two meetings during fiscal 1996.
The Stock Option Committee, of which Messrs. Hill (Chairman), John O. Irvine and
Smith are members, administers and makes recommendations and awards concerning
the Corporation's stock option plans. The Stock Option Committee held four
meetings during fiscal 1996. The Finance Committee, of which Messrs.
Ward(Chairman), Horace H. Irvine II, Lietz, Salovaara and Smith are members,
makes recommendations concerning general financial policy and held six meetings
during fiscal 1996. The Nominating Committee, of which Messrs. Horace H. Irvine
II (Chairman), Coolidge and Lietz are members, recommends to the Board
nominations for the Board of Directors. The Nominating Committee will consider
highly qualified candidates proposed in writing by stockholders. Stockholders
who wish to propose a nomination should submit the person's name and background
information to the Clerk of the Corporation. The Nominating Committee held two
meetings during fiscal 1996. The current membership of the Committees was most
recently determined by the Board of Directors on February 28, 1996, except that
Mr. Sweeney resigned from the Compensation Committee on September 9, 1996 and
Mr. Ward replaced Mr. Salovaara as Chairman of the Finance Committee on October
18, 1996. During fiscal 1996, no incumbent director attended fewer than 75% of
the aggregate of (i) the total number of meetings of the Board of Directors
(held during the period for which he has been a director) and (ii) the total
number of meetings held by all Committees of the Board on which he served
(during the period that he served).
7
<PAGE> 10
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table shows compensation information with respect to services
rendered to the Corporation in all capacities during the fiscal years ended
October 26, 1996, October 28, 1995 and October 29, 1994, for (i) the individual
who served as the Chief Executive Officer for the fiscal year ended October 26,
1996 and (ii) each of the four other most highly compensated executive officers
whose aggregate salary and bonus exceeded $100,000 in the fiscal year ended
October 26, 1996 (with the Chief Executive Officer, collectively, the "Named
Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION(2)
ANNUAL AWARDS
COMPENSATION(1) SECURITIES
------------------ UNDERLYING ALL OTHER
NAME AND SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(3) (#) ($)(4)
------------------ ---- ------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Andrew E. Lietz(5)................. 1996 $200,000 $220,674 0 $ 1,375
Chief Executive Officer, 1995 200,000 192,690 0 6,301
President and Director 1994 192,193 140,000 120,000 4,024
Horace H. Irvine II................ 1996 $204,000 $ 0 0 $ 1,768
Chairman of the Board of 1995 204,000 0 0 6,301
Directors 1994 204,000 0 0 12,197
Timothy P. Losik(6)................ 1996 $107,173 $151,443 10,000 $ 1,144
Chief Financial Officer 1995 101,000 95,000 30,000 4,504
Vice President and Treasurer 1994 92,109 69,250 0 2,615
James R. Griffin................... 1996 $114,366 $151,443 15,000 $ 1,315
Vice President 1995 105,000 120,000 7,000 4,758
1994 105,000 51,750 20,000 3,036
Richard Saporito................... 1996 $ 92,570 $118,991 0 $ 1,004
Vice President 1995 92,016 62,000 0 4,048
1994 92,016 62,000 0 2,689
- ---------------
<FN>
(1) Excludes perquisites and other personal benefits for fiscal 1996, 1995 and
1994, the aggregate annual amount of which for each Named Officer was less
than the lesser of $50,000 or 10% of the total of annual salary and bonus
reported.
(2) The Corporation did not grant any restricted stock awards or stock
appreciation rights or make any long term incentive plan payouts during
fiscal 1996, 1995 and 1994.
(3) Bonuses are reported in the year earned, even if actually paid in a
subsequent year. Deferred portions are subject to forfeiture if a Named
Executive's employment is terminated for any reason other than death,
disability or retirement with the Corporation's consent.
(4) Reflects the following matching 401(k) contributions to the Hadco
Corporation Retirement Plan (the "Retirement Plan") in 1996, 1995 and 1994,
respectively: Andrew E. Lietz, $1,375, $1,500 and $1,500; Horace H. Irvine
II, $1,768, $1,500 and $1,500; Timothy P. Losik, $1,144, $1,010 and $921;
James R. Griffin, $1,315, $1,132 and $1,132; and Richard Saporito, $1,004,
$835 and $1,002. For fiscal 1996, the Corporation accrued, and in December
1996 made, a contribution of $3,335,000 to the Retirement Plan, which has
not yet been allocated among the participants in the Retirement Plan.
Consequently, the total amount of contributions by the Corporation in
fiscal 1996 to the Retirement Plan for the Named Officers cannot be set
forth. Also reflects the following contributions to the Retirement Plan for
fiscal 1995 and
</TABLE>
8
<PAGE> 11
1994, respectively (with the 1995 contributions not having been previously
allocated in time to be included in the fiscal 1995 proxy statement):
Andrew E. Leitz, $4,801 and $2,524; Horace H. Irvine II, $4,801 and $2,254;
Timothy P. Losik, $3,494 and $1,694; James R. Griffin, $3,626 and $1,904;
and Richard Saporito, $3,213 and $1,687. Amounts set forth in this column
also include, for Horace H. Irvine II, premiums paid by the Corporation
with respect to a $1,000,000 split-dollar life insurance policy on Mr.
Irvine II's life owned by an irrevocable trust established by him of which
family members are beneficiaries pursuant to an agreement with the trust
whereby the Corporation paid the term life insurance portion of the annual
premiums and the non-term portion of the annual premiums. Such non-term
portion of the annual premiums was recoverable by the Corporation upon
termination of the agreement. In fiscal 1994, the Corporation paid $5,393
for the term life insurance portion of the premiums and $2,780 for the
non-term portion of the premiums. In May 1994, the trust repaid all non-
term premium advances, and the Corporation and the trust terminated the
split-dollar life insurance agreement.
(5) Mr. Lietz has an Employment Agreement with the Corporation containing a one
year non-competition agreement following termination of employment and
providing for a salary of $200,000 per year (adjusted to $240,000 by the
Compensation Committee in October 1996) and for the payment of one year's
annual base salary if his employment is terminated without cause; if such
termination without cause occurs after the first anniversary of the
Employment Agreement, Mr. Lietz will also be paid any bonus which the
Compensation Committee determines would have been paid to him if his
employment had continued through the end of the fiscal year in which the
termination occurs. Mr. Lietz was elected President and Chief Executive
Officer, effective immediately following Patrick Sweeney's resignation from
those positions on October 28, 1995.
(6) Mr. Losik became an executive officer in March of 1994, and the
compensation reported covers his compensation for the full 1994 fiscal
year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows information regarding grants of stock options to
the Named Officers during the fiscal year ended October 26, 1996. The
Corporation did not grant any stock appreciation rights in fiscal 1996.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED(#)(1) FISCAL YEAR(%) ($/SH)(1) DATE 5%($) 10%($)
---- ------------ --------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Andrew E. Lietz....... 0 0% n/a n/a $ 0 $ 0
Horace H. Irvine II... 0 0% n/a n/a $ 0 $ 0
Timothy P. Losik...... 10,000 6.65% $31.50 11/28/05 $198,102 $502,029
James R. Griffin...... 15,000 9.97% $31.50 11/28/05 $297,153 $753,043
Richard Saporito...... 0 0% n/a n/a $ 0 $ 0
- ---------------
<FN>
(1) These options were granted at an exercise price equal to the fair market
value of the Corporation's Common Stock on the date of grant. These options
have a term of ten years from date of grant and become exercisable as to
15% of the shares on each of the first six anniversaries of the date of
grant and as to 10% of the shares on the seventh anniversary of the date of
grant.
</TABLE>
9
<PAGE> 12
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation on the
Corporation's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Corporation's estimates of future stock
price growth. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the timing of such exercise and sale of the
shares and the future performance of the Corporation's Common Stock. There
can be no assurances that the rates of appreciation assumed in this table
can be achieved or that the amounts reflected will be received by the Named
Officers.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to options to purchase the
Corporation's Common Stock granted to the Named Officers under the Corporation's
stock option plans, including: (i) the number of shares of Common Stock
purchased upon exercise of options in the fiscal year ended October 26, 1996;
(ii) the net value realized upon such exercise; (iii) the number of unexercised
options outstanding at October 26, 1996; and (iv) the value of such unexercised
in-the-money options at October 26, 1996:
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FY-END OPTIONS/SARS
ACQUIRED OCTOBER 26, 1996(#) AT FY-END($)(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Andrew E. Lietz............ 30,000 $832,250 116,746/88,000 $2,966,563/$1,915,340
Horace H. Irvine II........ 0 $ 0 0/0 $ 0/$ 0
Timothy P. Losik........... 8,000 $191,223 13,700/44,150 $ 319,283/$ 744,787
James R. Griffin........... 1,500 $ 36,563 28,900/36,200 $ 708,797/$ 457,358
Richard Saporito........... 8,000 $213,180 18,200/14,300 $ 461,862/$ 342,913
- ---------------
<FN>
(1) Value is based on the difference between the option exercise price and the
fair market value of the Corporation's Common Stock on October 26, 1996
($30.375 per share, the last reported sale price of the Corporation's
Common Stock on the NASDAQ National Market on October 25, 1996), multiplied
by the number of shares underlying the option.
</TABLE>
10
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Corporation's Common Stock for the five fiscal
years ended October 26, 1996, with the cumulative total return for the NASDAQ
Market Index and an SIC Index that includes organizations in the Corporation's
Standard Industrial Classification (SIC) Code 3672 - Printed Circuit Design (the
"Peer Group"), currently consisting of 36 organizations. The comparison assumes
$100 was invested on October 25, 1991 in the Corporation's Common Stock and in
the foregoing NASDAQ Market Index and Peer Group and assumes reinvestment of
dividends, if any.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
HADCO CORPORATION, NASDAQ MARKET INDEX
AND PEER GROUP
[LINE CHART]
<CAPTION>
- ------------------------------------------------------------------------------------
Oct. 1991 Oct. 1992 Oct. 1993 Oct. 1994 Oct. 1995 Oct. 1996
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Corporation $100.00 $145.00 $152.50 $165.00 $525.00 $607.50
NASDAQ Market Index $100.00 $ 96.87 $127.13 $135.16 $160.32 $188.27
Peer Group Index $100.00 $148.40 $202.93 $165.05 $271.48 $321.27
- ------------------------------------------------------------------------------------
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Patrick Sweeney served on the Compensation Committee from February 28, 1996
through September 9, 1996. In August 1995, Mr. Sweeney resigned as President and
Chief Executive Officer of the Corporation, effective October 28, 1995. In
connection with his resignation, he entered into an agreement with the
Corporation providing that he would continue to remain an employee through
January 31, 1996, at his current annual salary of $200,000 per year, plus other
standard fringe benefits, and would serve as a consultant to the Corporation
from February 1, 1996 through January 31, 1998 at compensation of $208,160 per
year. Under the agreement from October 28, 1995 through January 31, 1998, his
duties and responsibilities shall be those reasonably requested of him by the
President, with it being anticipated that such duties may include marketing and
public relations services for the Corporation, both domestically and
internationally. Under the agreement unvested stock options of Mr. Sweeney for
109,000 shares of Common Stock were canceled. In the agreement, the Corporation
agreed to pay Mr. Sweeney a bonus on February 1, 1997, for services rendered to
the Corporation during fiscal 1995, of the same percentage of the bonus pools
that would become available for
11
<PAGE> 14
senior executives of the Corporation in respect of fiscal year 1995 that Mr.
Sweeney received of senior executive bonus pools for fiscal year 1994. Although
recorded in the agreement, this bonus was awarded based on performance criteria
independent of the arrangements in connection with Mr. Sweeney's resignation;
the agreement also provides that from February 1, 1996 through January 31, 1998,
Mr. Sweeney, so long as he is not employed by another employer, would receive
reasonable and necessary out-of-pocket uninsured medical (including dental and
vision care) expenses incurred for treatment of himself and his spouse up to and
including a maximum cumulative aggregate amount of $200,000. Should Mr. Sweeney
die before January 31, 1998, all salary and subsequent consulting fees would be
due to his estate to the same extent as they would have been due to him had he
continued living. The agreement also contains a non-competition covenant of Mr.
Sweeney running through January 31, 1998 and terminates his prior employment
agreement with the Corporation.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee is comprised of four outside directors and
determines salary and bonuses of the Corporation's executive officers. The Stock
Option Committee is comprised of three outside directors, and it administers and
makes recommendations and awards under the Corporation's stock option plans.
The Corporation's executive compensation policies are designed to provide
levels of compensation that assist the Corporation in attracting, motivating and
retaining qualified executives by providing a competitive compensation package
based on corporate and individual performance. The Corporation's executive
compensation program for fiscal year 1996 consisted of the following elements:
(1) base salary; (2) incentive compensation in the form of annual cash bonuses,
and (3) long-term incentive compensation in the form of non-qualified stock
options. Elements (1) and (2) are administered by the Compensation Committee,
and element (3) is administered by the Stock Option Committee.
The base salaries of the Corporation's executive officers, including the
Chief Executive Officer, were previously compared in November 1992 for fiscal
1993 by the Compensation Committee with survey data of the base salaries of
executives in comparable industries. The Compensation Committee determined then
that the base salaries of the Corporation's executive officers were then at or
somewhat below the median in most cases with respect to such survey data. The
Compensation Committee also determined at that time that salaries which were
close to or somewhat below the median of the survey data, together with stock
options and incentive bonuses, were competitive. The companies used for this
comparison of base salaries were a different and much broader group than the
companies in the peer group used for comparison in the Corporation's Stock
Performance Graph. The Compensation Committee felt that using this broader group
of companies, consisting of electronics and technology companies, for this
comparison was appropriate because it believed the responsibilities of the
Corporation's executive officers to be more comparable to those of this broader
group of companies in the electronics industry than just to those of printed
circuit companies.
The Compensation Committee had determined in November 1995 that base cash
salaries of the executive officers, including the Chief Executive Officer, would
be maintained for fiscal 1996 at their then current levels, just as it had
determined in November 1994 with respect to such base cash salaries for fiscal
1995 (with the exception during fiscal 1996 for increases in base salaries of
Mr. Losik and Mr. Saporito to maintain relative parity among the executive
officers) and just as it had determined in November 1993 with respect to such
base cash salaries for fiscal 1994. In determining final overall compensation
levels for the Corporation's executive officers for fiscal 1996, the
Compensation and Stock Option Committees felt that any additional increases in
compensation should be tied to incentive considerations, with the size of any
bonus pool being dependent upon earnings per share and the value of the stock
options being dependent on stock value. In October 1996, the Compensation
Committee determined that base cash salaries for fiscal 1997 should be increased
for all executive officers, including the Chief Executive Officer. These
increases were deemed
12
<PAGE> 15
necessary and appropriate for the Corporation to maintain competitiveness with a
broader group of companies as described in the last sentence of the preceding
paragraph. These increased salaries were used in the determination of bonuses to
paid for fiscal 1996 as provided below.
In February 1996, the Compensation Committee established a bonus plan
covering the executive officers entitled the Officer and Business Unit Manager
Bonus Plan (the "Bonus Plan"). Bonuses under the Bonus Plan are based on a
percentage of the participant's base salary determined by reference to (1)
annual earnings per share of the Corporation and (2) the Corporation's financial
results relevant to an industry peer group. These amounts are then multiplied by
a percentage factor determined by the Committee and based on the Chief Executive
Officer's evaluation of the participant's individual performance. The companies
used for the industry peer group comparison in subsection (2) were a smaller and
more targeted group than the companies in the peer group used for comparison in
the Corporation's Stock Performance Graph or the group for comparison of base
cash salaries described above. The Compensation Committee felt that using this
smaller group of companies, consisting of the Corporation, Altron Incorporated,
Circo Craft Co. Inc., Continental Circuits Corp., Merix Corporation and Sanmina
Corp., was appropriate because it believed that the performance of these
companies is directly comparable to that of the Corporation for purposes of
performance based compensation. It was decided that the Chief Executive
Officer's bonus amount would be determined independently by the Compensation
Committee using the same above criteria except that the Chief Executive
Officer's recommendation would not be applicable and the Compensation Committee
would make an independent determination of the personal performance of the Chief
Executive Officer.
Under the Bonus Plan, individuals receiving bonuses receive sixty percent
(60%) of the bonus when it is declared and the remaining forty percent (40%) of
the bonus in three equal installments over a three-year period. Any deferred
amounts are forfeited if an individual's employment is terminated for any reason
other than death, disability or retirement with the Corporation's consent. These
deferrals will be implemented with bonuses determined during December 1996 for
the fiscal year ending October 26, 1996.
The Stock Option Committee determined that the Corporation was to utilize
stock options as both a reward and incentive for executive performance and to
align management interests with shareholder interests. In determining the stock
option portion of the executive officers' (except the Chief Executive Officer's)
compensation (i.e., number of stock options granted to each individual executive
officer), the Stock Option Committee based its determination upon (1) general
corporate performance; (2) Chief Executive Officer's recommendations; (3)
relevant business unit performance; and (4) personal performance of the
particular executive officers. The Stock Option Committee assigned roughly equal
weight to each of the various criteria listed above. Each of these criteria was
considered in the context of the cyclical nature of the earnings of the
Corporation, and the particular challenges and difficulties faced by the printed
circuit industry in general during the time period in question. In addition, in
determining levels of awards of stock options to executive officers, the Stock
Option Committee also took into account the number of options already
outstanding or previously granted to each executive officer, the exercise price
of the options in light of current market value per share as a reflection of
current value, and the time outstanding before expiration of the respective
options.
In determining the stock option portion of the Chief Executive Officer's
compensation for fiscal 1996, the Stock Option Committee took into account
general corporate performance and the personal performance of the Chief
Executive Officer, together with the ability of the Chief Executive Officer to
enhance shareholder value, provide overall leadership to the Corporation,
including the development and implementation of strategic plans for the
Corporation, and demonstrate organizational and management skill. The Stock
Option Committee assigned essentially equal weight to each of these criteria. In
making its determination as to stock option grant levels for the Chief Executive
Officer, the Stock Option Committee also took into consideration the following
factors which are considered in establishing such levels for the other executive
officers: the number of options already outstanding or previously granted to the
Chief Executive Officer, the exercise price
13
<PAGE> 16
of the options in light of current market value per share as a reflection of
current value, and the time outstanding before expiration of the options.
Pursuant to [Section]162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Corporation may deduct no more than $1,000,000 of
compensation for covered executive officers other than compensation that is
"performance based" within the meaning of [Section]162(m) of the Code. The
Compensation Committee does not currently anticipate the need to address this
issue for cash compensation because the current cash compensation of the
Corporation's executive officers subject to the deduction limitation rules of
[Section]162(m) of the Code does not currently approach and is not expected to
approach $1,000,000 soon. Option grants pursuant to the Non-Qualified Stock
Option Plan of November 29, 1995 are intended to qualify as "performance-based"
compensation, and such Plan is the only equity-related plan of the Corporation
that the Board currently believes it appropriate to bring into compliance with
[Section]162(m) of the Code.
<TABLE>
<S> <C>
Respectfully submitted Respectively submitted
by the Compensation Committee by the Stock Option Committee
Oliver O. Ward, Chairman J. Stanley Hill, Chairman
Lawrence Coolidge John O. Irvine
J. Stanley Hill John F. Smith (from November 29, 1995)
John O. Irvine (from February 28, 1996) Mikael Salovaara (through November 29, 1995)
John F. Smith (through February 28, 1996)
Patrick Sweeney (from February 28, 1996
through September 9, 1996)
</TABLE>
COMPENSATION OF DIRECTORS
During fiscal 1996 and at present, the Corporation has paid and is paying
each non-employee director an annual fee of $15,000 and $750 for each meeting
attended, plus $500 for each additional Committee meeting held on the same day,
and Chairmen of Committees of the Board of Directors have received and are
receiving an additional annual fee of $2,000. The Board of Directors has plans
to consider a proposal to provide future compensation to non-employee directors
in the form of both cash and stock of the Corporation. Under the Corporation's
1991 Non-Employee Director Stock Option Plan, each person who becomes a director
for the first time and is not an employee of the Corporation is automatically
granted an option to purchase 15,000 shares of common stock at the then current
fair market value, with provision in such Plan for acceleration of vesting upon
a change of control as defined therein. See "Proposal to Approve an Amendment
and Restatement of the Hadco Corporation 1991 Non-Employee Director Stock Option
Plan" for a description of additional option grants to be made to non-employee
directors if such proposal is approved.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Horace H. Irvine II has a limited partnership interest of 17% in a New
Hampshire limited partnership (the "Partnership"). Most of the Corporation's
space in Salem, New Hampshire is leased from the Partnership pursuant to three
lease agreements, with terms ranging from one to five years. The three leases,
which together account for approximately 62% of the space leased from the
Partnership, contain extension options of the Corporation, which, if exercised,
would result in an escalation of annual fixed rent in accordance with a formula
based on the Consumer Price Index. Two of the leases expire in October 2000 with
options available through October 2006, and one of the leases expires in March
2000 with an option available through March 2006. As a result of checking by
management of other relevant real estate transactions, the Corporation believes
that these leases are on terms no less favorable to the Corporation than could
be obtained from unaffiliated parties. For the Corporation's 1996 fiscal year,
the Corporation had aggregate rental expense under
14
<PAGE> 17
these leases of approximately $529,000. At the time of entry into the leases,
Mr. Irvine was an executive officer and director of the Corporation.
Mr. Hamilton, Clerk of the Corporation, is a partner in the law firm of
Berlin, Hamilton & Dahmen, which serves as general counsel to the Corporation.
The Corporation paid Berlin, Hamilton & Dahmen $285,720 for professional
services rendered in fiscal 1996.
PROPOSAL TO APPROVE AN AMENDMENT AND RESTATEMENT OF THE
HADCO CORPORATION 1991 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
PROPOSED AMENDMENT
On December 12, 1991, the Board of Directors adopted the Hadco Corporation
1991 Non-Employee Director Stock Option Plan (the "Plan") which received
stockholder approval on March 4, 1992. The Plan was amended by the Board of
Directors on March 4, 1992. On December 3, 1996, the Board of Directors, subject
to stockholder approval, amended and restated the Plan to: (i) increase the
number of shares of Common Stock available for issuance under the Plan from
150,000 to 300,000 shares, (ii) provide that any current non-employee director
who will have five years of service in such capacity on February 26, 1997 be
automatically granted, on such date and on each anniversary of service
thereafter, an option to purchase 3,000 shares of the Corporation's Common Stock
and (iii) provide that any current non-employee director who does not have five
years of service in such capacity on February 26, 1997 and any future
non-employee director each be automatically granted, on the date such
non-employee director achieves five years of service in such capacity and on
each anniversary of service thereafter, an option to purchase 3,000 shares of
the Corporation's Common Stock. The Corporation believes that the proposed
amendment and restatement of the Plan is important to permit the Corporation to
obtain and retain the services of qualified persons who are neither employees
nor officers of the Corporation to serve as members of the Board of Directors
and to demonstrate the Corporation's appreciation for their service upon the
Board of Directors. These amendments, together with the restated Plan as a
whole, are described below. The complete text of the Plan in the form as
proposed to be amended and restated is attached hereto as Appendix A.
By reason of the proposed amendment to the Plan, in the fiscal year ending
October 25, 1997, Messrs. Hill and Ward would each be granted an option to
purchase 3,000 shares of the Corporation's Common Stock if the proposed
amendment is approved by the stockholders. The last reported sale price of the
Corporation's Common Stock on the NASDAQ National Market on January 2, 1997 was
$46.50.
DESCRIPTION OF THE AMENDED AND RESTATED PLAN
Purpose. The purpose of the Plan is to promote the interests of the
Corporation by providing an inducement to obtain and retain the services of
qualified persons who are neither employees nor officers of the Corporation to
serve as members of the Board of Directors and to demonstrate the Corporation's
appreciation for their service upon the Corporation's Board of Directors.
Administration. The Plan is administered by the Stock Option Committee of
the Board of Directors of the Corporation. The current members of the Stock
Option Committee are Messrs. Hill (Chairman), John O. Irvine and Smith. Members
of the Stock Option Committee are appointed by the Board of Directors. The Stock
Option Committee, subject to the provisions of the Plan, has the power to
construe the Plan, to determine all questions thereunder and to adopt and amend
such rules and regulations for the administration of the Plan as it may deem
desirable.
Shares Subject to the Plan. As amended and restated, the Plan authorizes
the grant of options for 300,000 shares of Common Stock. As of January 2, 1997,
157,000 shares remained available for further grants
15
<PAGE> 18
of options under the Plan. Outstanding options under the Plan are subject to
adjustment as described below under "Changes in Stock; Recapitalization and
Reorganization." If any options granted under the Plan are surrendered before
exercise or lapse without exercise, in whole or in part, the shares reserved
therefor shall revert to the status of available shares under the Plan.
Eligibility; Automatic Grant of Options under the Plan. Options are
currently granted pursuant to the Plan only to non-employee members of the Board
of Directors of the Corporation who are not officers of the Corporation. Each
member of the Corporation's Board of Directors who was neither an employee nor
an officer of the Corporation ("Non-Employee Director") and was a member of the
Board of Directors on December 12, 1991 was automatically granted on December
12, 1991, and each person who was not a member of the Corporation's Board of
Directors on December 12, 1991 and is elected for the first time as a Non-
Employee Director is automatically granted on the date his or her Board
membership first commences, without further action in either such case by the
Board, an option to purchase fifteen thousand (15,000) shares of the
Corporation's Common Stock.
In addition, if the amended and restated Plan is approved by the
stockholders, each Non-Employee Director who is currently a member of the Board
of Directors on February 26, 1997 and who then has five years of service in such
capacity would automatically be granted on February 26, 1997 and on each
anniversary of service in such capacity thereafter, without further action by
the Board, an option to purchase three thousand (3,000) shares of the
Corporation's Common Stock. Each Non-Employee Director who is currently a member
of the Corporation's Board of Directors on February 26, 1997 and who does not
then have at least five years of service in such capacity but who subsequently
achieves five years of service in such capacity, and each person who in the
future is elected for the first time as a Non-Employee Director and subsequently
achieves five years of service in such capacity, would each be automatically
granted on the date of his or her fifth anniversary of service in such capacity
and on each anniversary of service in such capacity thereafter, without further
action by the Board, an option to purchase three thousand (3,000) shares of the
Corporation's Common Stock.
The options described in the two paragraphs immediately above shall be the
only options ever to be granted at any time under this Plan to any such current
Non-Employee Directors and to any such future Non-Employee Directors. The
effectiveness of the amendment and restatement is in all respects subject to,
and shall be of no force and effect unless and until, the occurrence of approval
of the proposed amendment and restatement by the affirmative vote of a majority
of the Corporation's shares present in person or by proxy and entitled to vote
at a meeting of shareholders at which this amended and restated Plan is
presented for approval. In the event that such approval as aforesaid has not
been received on or before February 26, 1997, then in such event, the proposed
amendment and restatement shall be null and void and the Plan shall remain in
effect as it was before the amendment and restatement was adopted by the Board
of Directors, and upon the occurrence of such approval as aforesaid, this
amended and restated Plan shall become effective as of the date of the
Directors' approval thereof.
Except for the specific options referred to above no other option shall be
granted under the Plan.
Option Price. The exercise price per share of options granted under the
Plan is 100% of the fair market value of the Corporation's Common Stock on the
date the option is granted.
Option Duration. The Plan requires that options granted thereunder shall
expire on a date which is seven (7) years from the date of option grant.
Vesting under the Plan. The options to purchase 15,000 shares of the
Corporation's Common Stock granted under the Plan to Non-Employee Directors upon
the commencement of his or her Board membership first become exercisable to the
extent of one-fifth of the shares covered by the option. Thereafter, one-fifth
of
16
<PAGE> 19
the shares covered by the option will become exercisable on each anniversary of
the option grant commencing with the first anniversary of the option grant.
The new options proposed to be granted under the amended and restated Plan
to Non-Employee Directors upon five years of service on the Board of Directors
shall vest (i.e., become exercisable) in the optionee immediately upon grant.
Upon any sale of all or substantially all of the assets of the Corporation,
or upon any merger, consolidation or tender offer in respect of which the
stockholders holding all of the Corporation's outstanding voting securities
immediately prior to the consummation thereof hold less than 50% of all of the
Corporation's outstanding voting securities immediately after such consummation
(each of the foregoing sale, merger, consolidation or tender offer hereinafter
called an "Acquisition"), then the date upon which all then outstanding and
unvested options granted under this Plan become fully vested and exercisable
shall be automatically accelerated to occur immediately prior to the
consummation of such Acquisition; provided however, that any such then
outstanding options which are not thereupon exercised in full immediately prior
to the consummation of such Acquisition shall thereupon terminate.
Exercise of Options and Payment for Stock. Each option granted under the
Plan shall be exercisable as provided in such option agreement. Exercise of an
option under the Plan is effected by a written notice to exercise, delivered to
the Corporation together with payment for the shares in full, which payment may
be made in part or in full by tendering shares of Common Stock of the
Corporation valued at fair market value. Such written notice shall also specify
the number of shares as to which the option is being exercised.
Notwithstanding any other provisions of the Plan, the Corporation has no
obligation to deliver any certificate or certificates upon exercise of an option
under the Plan until one of the following conditions is satisfied: (i) the
shares with respect to which the option has been exercised are at the time of
issue of such shares effectively registered under applicable Federal and state
securities acts as now in force or hereafter amended; or (ii) counsel for the
Corporation shall have given an opinion that such shares are exempt from
registration under Federal and state securities acts as now in force or
hereafter amended; and until the Corporation has complied with all applicable
laws and regulations including, without limitation, all regulations required by
any stock exchange upon which the Corporation's outstanding Common Stock is then
listed. Under the Plan, the Corporation must use its best efforts to bring about
compliance with the above conditions within a reasonable time, except that the
Corporation is under no obligation to cause a registration statement or
post-effective amendment to any registration statement to be prepared at its
expense solely for the purpose of covering the issue of shares in respect of
which any option may be exercised. It is the present intention of the
Corporation to prepare and file a Registration Statement on Form S-8 with
respect to the shares issuable under the amended and restated Plan.
Options granted under the Plan may, to the extent in compliance with
applicable law, be exercised by payment in accordance with a cashless exercise
program under which, if so instructed by the holder of the option, shares of
Common Stock may be issued directly to the broker or dealer of the holder of the
option upon receipt by the Corporation of the purchase price of the Common Stock
covered by such option in cash or check from the broker or dealer.
By allowing payment of the exercise price by delivering shares of the
Corporation, the Plan permits the "pyramiding" of shares. Pyramiding occurs when
the option holder in a series of successive transactions uses the shares
received upon the prior exercise of an option to purchase additional shares
under further outstanding options. An optionee can thereby substantially
increase his equity ownership in the Corporation without a significant capital
contribution. For example, assume that an optionee has outstanding options to
purchase 100 shares of the Corporation's stock at an exercise price of $5 per
share and that the stock is currently selling at $10 per share. Pyramiding, its
most extreme form, would permit submission of only one
17
<PAGE> 20
share for the receipt of two shares, which would in turn be immediately
resubmitted for the receipt of four shares. These successive exchanges could
theoretically continue until all available options were exercised. The result,
under this example, would be that an optionee would obtain the value of the
spread between the stock's option price and its market value of $500, without
any cash contribution and an investment equivalent only to the value of one
share. Under the Plan, however, the potential effect of pyramiding is limited by
the requirement that any single exercise of an option must be made with respect
to at least 100 shares, unless an optionee has vested options with respect to
fewer than 100 shares, in which case the optionee must exercise his option with
respect to all of the remaining vested shares. Under accounting principles, a
charge against the Corporation's income may be necessary for options exercised
by the use of pyramiding.
Effect of Termination as a Director or of Death or Disability. In the
event an optionee ceases to be a member of the Board of Directors of the
Corporation for any reason other than death or disability, any unexercised
options granted to such optionee under the Plan shall, to the extent not then
exercisable, immediately terminate and become void, and any options which are
then exercisable but have not been exercised at the time the optionee so ceases
to be a member of the Board of Directors may be exercised, to the extent they
are then exercisable, by the optionee within a period of ten (10) days following
such time the optionee so ceases to be a member of the Board of Directors, but
in no event later than the expiration date of the option.
In the event an optionee ceases to be a member of the Board of Directors of
the Corporation by reason of his disability or death, any option granted under
the Plan to such optionee shall be immediately and automatically accelerated and
become fully vested and all unexercised options shall be exercisable (by the
optionee's personal representative, heir or legatee, in the event of death)
during the period ending 180 days after the date the optionee so ceases to be a
member of the Board of Directors, but in no event later than the expiration date
of the option.
Non-Assignability of Options. Any option granted pursuant to the Plan
shall not be assignable or transferable other than by will or the laws of
descent and distribution and shall be exercisable during the optionee's lifetime
only by him.
Changes in Stock; Recapitalization and Reorganization. The amended and
restated Plan clarifies that, in the event that the outstanding shares of the
Common Stock of the Corporation are changed into or exchanged for a different
number or kind of shares or other securities of the Corporation or of another
corporation by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, or in the event of a stock split,
combination of shares or dividends payable in capital stock, automatic
appropriate adjustment shall be made in the number and kind of shares as to
which outstanding options or portions thereof then unexercised shall be
exercisable and in the available shares set forth in the Plan. Such adjustment
in outstanding options shall be made without change in the total price
applicable to the unexercised portion of such options and with a corresponding
adjustment in the option price per share.
If any option under the Plan shall be assumed, or a new option substituted
therefor, as a result of sale of the Corporation, whether by a corporate merger,
consolidation or sale of property or stock, then membership on the Board of
Directors of such assuming or substituting corporation or by a parent
corporation or a subsidiary thereof shall be considered for purposes of an
option to be membership on the Board of Directors of the Corporation.
Termination and Amendment of the Plan. The Board may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable,
provided, however, that the Board may not, without approval by the affirmative
vote of the holders of a majority of the securities of the Corporation present,
or represented, and entitled to vote at a meeting duly held in accordance with
the applicable laws of the state in which the Corporation is incorporated, (i)
materially increase the benefits accruing to participants under the
18
<PAGE> 21
Plan; (ii) materially increase the number of shares for which options may be
granted under the Plan; or (iii) materially modify the requirements as for
eligibility for participation in the Plan. In no event may any provision of the
Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any successor or amended provision
thereof) of the Securities Exchange Act of 1934 (including, without limitation,
provisions as to eligibility and who may participate in the Plan, the amount and
price of shares for which options may be granted or the timing of awards,) be
amended more than once every six months, other than to comport with changes in
the Internal Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder. Termination or any modification or amendment of the Plan shall
not, without consent of a participant, affect his rights under an option
previously granted to him.
FEDERAL INCOME TAX CONSEQUENCES
The following general rules are applicable under current federal income tax
law to options under the Plan:
1. The optionee generally does not realize any taxable income under
the grant of an option, and the Corporation is not allowed a business
expense deduction by reason of such grant.
2. The optionee generally will recognize ordinary compensation income
at the time of exercise of the option in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise over
the exercise price.
3. When the optionee sells the shares, he or she generally will
recognize a capital gain or loss in an amount equal to the difference
between the amount realized upon the sale of the shares and his or her
basis in the stock (generally, the exercise price plus the amount taxed to
the optionee as compensation income). If the optionee's holding period for
the shares exceeds one year, such gain or loss will be a long-term capital
gain or loss.
4. The Corporation generally should be entitled to a tax deduction
when compensation income is recognized by the optionee.
5. An optionee may be entitled to exercise an option by delivering
shares of the Corporation's Common Stock to the Corporation in payment of
the exercise price. If an optionee exercises an option in such fashion,
special rules will apply.
Special rules apply under certain circumstances if the stock acquired upon
exercise of an option is subject to certain restrictions on resale under federal
securities laws applicable to directors, officers or 10% stockholders.
In addition, the Internal Revenue Code imposes special taxes on payments
for services that are treated as "excess parachute payments." A "parachute
payment" is any payment in the nature of compensation made to a director,
employee, officer, shareholder or other highly compensated individual which is
contingent on a change in the ownership or effective control of a corporation.
Such payments include the value to an optionee under the Plan of accelerated
vesting of stock options triggered by an Acquisition. A payment to an individual
will not be treated as a parachute payment, however, unless the present value of
all such payments to the individual exceeds 300% of such individual's average
annual compensation over the preceding five years ("annual base amount"). If
payments to an individual constitute parachute payments, that portion of the
payments made in any year which exceeds the recipient's annual base amount will
be treated as an "excess parachute payment." Excess parachute payments are
subject to a non-deductible 20% excise tax, imposed on the recipient, in
addition to the regular income tax imposed on the payment. In addition, no
deduction is permitted to the Corporation for any excess parachute payment.
19
<PAGE> 22
The Plan is not an employee benefit plan which is subject to the provisions
of the Employee Retirement Income Security Act of 1974, and the provisions of
Section 401(a) of the Code are not applicable to the Plan.
Approval of the amendment and restatement of the Plan will require, under
its terms, the affirmative vote of stockholders holding at least a majority of
the outstanding voting stock of the Corporation voting in person or by proxy at
the Annual Meeting of Stockholders. The Board of Directors recommends a vote FOR
the approval of the amendment and restatement of the Plan.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending October 25, 1997. Arthur Andersen LLP has served as the
Corporation's auditors and outside accountants since 1966. It is expected that a
member of the firm will be present at the Annual Meeting of Stockholders with
the opportunity to make a statement if so desired and will be available to
respond to appropriate questions. The directors recommend a vote FOR
ratification of this selection. The ratification of this selection is not
required under the laws of the Commonwealth of Massachusetts, where the
Corporation is incorporated, but the results of this vote will be considered by
the Board of Directors in selecting auditors for future fiscal years.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting of
the Corporation must be received at the Corporation's principal executive
offices no later than September 26, 1997. In order to curtail controversy as to
the date on which a proposal was received by the Corporation, it is suggested
that proponents submit their proposals by Certified Mail -- Return Receipt
Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation, and
in addition to soliciting stockholders by mail through its regular employees,
the Corporation may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Corporation
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Corporation
may also be made of some stockholders in person or by mail, telephone or
telegraph following the original solicitation.
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<PAGE> 23
APPENDIX A
HADCO CORPORATION
1991 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
DECEMBER 12, 1991
AS AMENDED BY THE BOARD OF DIRECTORS ON MARCH 4, 1992
AS AMENDED AND RESTATED BY THE BOARD OF DIRECTORS ON DECEMBER 3, 1996
1. Purpose. This Non-Qualified Stock Option Plan to be known as the 1991
Non-Employee Director Stock Option Plan (hereinafter, the "Plan") is intended to
promote the interests of Hadco Corporation (hereinafter, the "Company") by
providing an inducement to obtain and retain the services of qualified persons
who are neither employees nor officers of the Company to serve as members of the
Board of Directors and to demonstrate the Company's appreciation for their
service upon the Company's Board of Directors.
2. Rights to be Granted. Under this Plan, options are granted that give
an Optionee the right for a specified time period to purchase a specified number
of shares of Common Stock, par value $0.05, of the Company. The option price is
determined in each instance in accordance with the terms of this Plan.
3. Available Shares. The total number of shares of Common Stock, par
value $0.05, of the Company, for which options may be granted shall not exceed
three hundred thousand (300,000) shares subject to adjustment in accordance with
Section 13 of this Plan. Shares subject to the Plan are authorized but unissued
shares or shares that were once issued and subsequently reacquired by the
Company. If any options granted under the Plan are surrendered before exercise
or lapse without exercise, in whole or in part, the shares reserved therefor
revert to the option pool and continue to be available under the Plan.
4. Administration. The Plan shall be administered by the Stock Option
Committee of the Company (the "Committee"). The Committee shall, subject to the
provisions of the Plan and Section 17 in particular, have the power to construe
the Plan, to determine all questions thereunder, and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable.
5. Option Agreement. Each option granted under the provisions of this
Plan shall be evidenced by an Option Agreement, in such form as may be approved
by the Committee, which Agreement shall be duly executed and delivered on behalf
of the Company and by the Optionee to whom such option is granted. The Agreement
shall contain such terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Committee.
6. Eligibility and Limitations. Options may be granted pursuant to this
Plan only to non-employee members of the Board of Directors of the Company who
are not officers of the Company who also meet the other criteria as provided in
Section 8 below.
7. Option Price. The purchase price of the stock covered by an option
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of Section 13 of this Plan. For
purposes of this Plan, the fair market value of a share of Common Stock on any
day shall be the mean between the high and low sale price of such share on the
last day preceding the date of option grant as quoted on the NASDAQ National
Market System, or if there were no such trades on such day the mean between the
high and low sale price of such share on the NASDAQ National Market System on
the last preceding day on which it was traded.
8. Automatic Grant of Options. (a) Each member of the Company's Board of
Directors who is neither an employee nor an officer of the Company
("Non-Employee Director") and is currently a member of
A-1
<PAGE> 24
the Board of Directors on December 12, 1991 will be automatically granted on
December 12, 1991, and each person who is not a member of the Company's Board of
Directors on December 12, 1991 and in the future is elected for the first time
as a Non-Employee Director will be automatically granted on the date his or her
Board membership first commences, without further action in either such case by
the Board, an option to purchase fifteen thousand (15,000) shares of the
Company's Common Stock (subject to appropriate adjustment for any
recapitalization, reclassification, stock split, stock dividend or similar
event). Anything in this Plan to the contrary notwithstanding, the effectiveness
of this Plan and of the grant of all options hereunder is in all respects
subject to, and this Plan and options granted under it shall be of no force and
effect unless and until, and no option granted hereunder shall in any way vest
or become exercisable in any respect unless and until, the occurrence of
approval of the Plan by the affirmative vote of a majority of the Company's
shares present in person or by proxy and entitled to vote at a meeting of
shareholders at which the Plan is presented for approval. In the event that such
approval as aforesaid has not been received on or before June 30, 1992, then in
such event this Plan and any options granted hereunder shall be null and void,
and upon the occurrence of such approval as aforesaid, the Plan and such options
shall become effective as of the date of the Directors' approval of the Plan.
(b) Each Non-Employee Director who is currently a member of the Board of
Directors on February 26, 1997 and who then has five years of service in such
capacity will be automatically granted on February 26, 1997 and on each
anniversary of service in such capacity thereafter, without further action by
the Board, an option to purchase three thousand (3,000) shares of the Company's
Common Stock (subject to appropriate adjustment for any recapitalization,
reclassification, stock split, stock dividend or similar event). Each Non-
Employee Director who is currently a member of the Company's Board of Directors
on February 26, 1997 and who does not then have at least five years of service
in such capacity but who subsequently achieves five years of service in such
capacity, and each person who in the future is elected for the first time as a
Non-Employee Director and subsequently achieves five years of service in such
capacity, will each be automatically granted on the date of his or her fifth
anniversary of service in such capacity and on each anniversary of service in
such capacity thereafter, without further action by the Board, an option to
purchase three thousand (3,000) shares of the Company's Common Stock (subject to
appropriate adjustment for any recapitalization, reclassification, stock split,
stock dividend or similar event). All options granted in this Section 8(b),
together with any options granted under Section 8(a) above, shall be the sole
options ever to be granted at any time under this Plan to any such current
Non-Employee Directors and to any such future Non-Employee Directors. Anything
in this Section 8(b) to the contrary notwithstanding, the effectiveness of this
Section 8(b) is in all respects subject to, and this Section 8(b) shall be of no
force and effect unless and until, the occurrence of approval of this Section
8(b) by the affirmative vote of a majority of the Company's shares present in
person or by proxy and entitled to vote at a meeting of shareholders at which
this Section 8(b) is presented for approval. In the event that such approval as
aforesaid has not been received on or before February 26, 1997, then in such
event, this Section 8(b) shall be null and void, and upon the occurrence of such
approval as aforesaid, this Section 8(b) shall become effective as of the date
of the Directors' approval of this Section 8(b).
(c) Except for the specific options referred to above no other option shall
be granted under this Plan.
9. Period of Option. Options granted hereunder shall expire on a date
which is seven (7) years after the date of grant of the options.
10. Exercise of Option. Subject to the terms and conditions of this Plan
and the Option Agreement, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
Company by mail or in person addressed to Treasurer, Hadco Corporation, 12A
Manor Parkway, Salem, New Hampshire 03079, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares, which payment may be in whole or in part in shares of the
Common Stock of the Company already owned by the person or persons exercising
the option,
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<PAGE> 25
valued at fair market value determined in accordance with the provisions of
Section 7; provided, however, that there shall be no such exercise at any one
time as to fewer than one hundred (100) shares or all of the remaining shares
then purchasable by the person or persons exercising the option, if fewer than
one hundred (100) shares. A copy of such notice shall be provided to Berlin,
Hamilton & Dahmen, LLP, 73 Tremont Street, Boston, Massachusetts 02108, or to
such other counsel as the Company may hereafter designate, and to the First
National Bank of Boston, Shareholder Services Division, Post Office Box 1865,
Boston, Massachusetts 02105, or to such other Stock Transfer Agent as the
Company may hereafter designate. The Transfer Agent shall, on behalf of the
Company, prepare a certificate or certificates representing such shares acquired
pursuant to exercise of the option, shall register the Optionee as the owner of
such shares on the books of the Company and shall cause the fully executed
certificate(s) representing such shares to be delivered to the Optionee as soon
as practicable after payment of the option price in full. The holder of an
option shall not have any rights of a shareholder with respect to the shares
covered by the option, except to the extent that one or more certificates for
such shares shall be delivered to him upon the due exercise of the option.
Notwithstanding the foregoing provisions, an option granted hereunder may, to
the extent in compliance with applicable law, be exercised by payment in
accordance with a cashless exercise program under which, if so instructed by the
holder of the option, shares of Common Stock may be issued directly to the
broker or dealer of the holder of the option upon receipt by the Company of the
purchase price of the Common Stock covered by such option in cash or check from
the broker or dealer, and except to the extent modified by this sentence, the
exercise will comply with, and be subject to, all the other provisions of this
Section 10.
11. Vesting of Shares and Non-Transferability of Options.
(a) Vesting of Options Granted under Section 8(a) of Plan. Options granted
under Section 8(a) of this Plan shall vest (i.e., become exercisable) in the
Optionee and thus become exercisable, in accordance with the following schedule:
<TABLE>
<CAPTION>
CUMULATIVE NUMBER OF SHARES
FOR WHICH OPTION IS EXERCISABLE DATE OF VESTING
------------------------------- ---------------
<S> <C>
1/5 of total Option Shares........... At the date of approval of the Plan by the
shareholders of the Company (all as
described in Section 8). In the event such
approval has been received by the date of
grant of the option then at said date of
grant of option.
2/5 of total Option Shares........... 1 year anniversary of the date of the grant
of option.
3/5 of total Option Shares........... 2 year anniversary of the date of the grant
of option.
4/5 of total Option Shares........... 3 year anniversary of the date of the grant
of option.
100% of total Option Shares.......... 4 year anniversary of the date of the grant
of option.
</TABLE>
Upon any sale of all or substantially all of the assets of the Company, or upon
any merger, consolidation or tender offer in respect of which the stockholders
holding all of the Company's outstanding voting securities immediately prior to
the consummation thereof hold less than 50% of all of the Company's outstanding
voting securities immediately after such consummation (each of the foregoing
sale, merger, consolidation or tender offer hereinafter called an
"Acquisition"), then the date upon which all then outstanding options granted
under Section 8(a) of this Plan become fully vested and exercisable shall be
automatically accelerated to occur immediately prior to the consummation of such
Acquisition; provided, however, that any such then outstanding options which are
not thereupon exercised in full immediately prior to the consummation of such
Acquisition shall thereupon terminate.
A-3
<PAGE> 26
(b) Vesting of Options Granted under Section 8(b) of Plan. Options granted
under Section 8(b) of this Plan shall vest (i.e., become exercisable) in the
Optionee immediately upon grant. Any then outstanding options which are not
thereupon exercised in full immediately prior to the consummation of an
Acquisition shall thereupon terminate.
(c) Accumulation. The number of shares as to which the option may be
exercised shall be cumulative, so that once the option shall become exercisable
as to any shares it shall continue to be exercisable as to said shares, until
expiration or termination of the option as provided in the Plan.
(d) Legend on Certificates. The certificates representing such shares
shall carry such appropriate legend, and such written instructions shall be
given to the Company's Transfer Agent, as may be deemed necessary or advisable
by Counsel to the Company in order to comply with the requirements of the
Securities Act of 1933 or any state securities laws.
(e) Non-transferability. Any option granted pursuant to this Plan shall
not be assignable or transferable other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
him.
12. Termination of Option Rights.
(a) In the event an Optionee ceases to be a member of the Board of
Directors of the Company for any reason other than death or disability, any then
unexercised options granted to such Optionee shall, to the extent not then
exercisable, immediately terminate and become void, and any options which are
then exercisable but have not been exercised at the time the Optionee so ceases
to be a member of the Board of Directors may be exercised, to the extent they
are then exercisable, by the Optionee within a period of ten (10) days following
such time the Optionee so ceases to be a member of the Board of Directors, but
in no event later than the expiration date of the option.
(b) In the event that an Optionee ceases to be a member of the Board of
Directors of the Company by reason of his or her disability or death, any option
granted to such Optionee shall be immediately and automatically accelerated and
become fully vested and all unexercised options shall be exercisable by the
Optionee (or by the Optionee's personal representative, heir or legatee, in the
event of death) during the period ending one hundred eighty (180) days after the
date the Optionee so ceases to be a member of the Board of Directors, but in no
event later than the expiration date of the option.
13. Adjustment Upon Changes in Capitalization and Other Matters. In the
event that the outstanding shares of the Common Stock of the Company are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization or reclassification, or in the event of
a stock split, combination of shares or dividends payable in capital stock,
automatic appropriate adjustment shall be made in the number and kind of shares
as to which outstanding options or portions thereof then unexercised shall be
exercisable and in the available shares set forth in Section 3 above. Such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
If an option hereunder shall be assumed, or a new option substituted
therefor, as a result of sale of the Company, whether by a corporate merger,
consolidation or sale of property or stock, then membership on the Board of
Directors of such assuming or substituting corporation (hereinafter called the
"Successor Corporation") or by a parent corporation or a subsidiary therefor
shall be considered for purposes of an option to be membership on the Board of
Directors of the Company.
A-4
<PAGE> 27
14. Restrictions on Issuance of Shares. Notwithstanding the provisions of
Sections 8 and 10 of the Plan, the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied:
(i) The shares with respect to which the option has been exercised are
at the time of the issue of such shares effectively registered under
applicable Federal and State securities acts as now in force or hereafter
amended; or
(ii) Counsel for the Company shall have given an opinion that such
shares are exempt from registration under Federal and State securities acts
as now in force or hereafter amended; and until the Company has complied
with all applicable laws and regulations, including without limitation all
regulations required by any stock exchange upon which the Company's
outstanding Common Stock is then listed.
The Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to cause a registration statement or a post-effective
amendment to any registration statement to be prepared at its expense solely for
the purpose of covering the issue of shares in respect of which any option may
be exercised.
15. Representation of Optionee. The Company shall require the Optionee to
deliver written warranties and representations upon exercise of the option that
are necessary to show compliance with Federal and State securities laws
including to the effect that a purchase of shares under the option is made for
investment and not with a view to their distribution (as that term is used in
the Securities Act of 1933).
16. Approval of Stockholders. The effectiveness of this Plan and of the
grant of all options hereunder is in all respects subject to approval by the
Company's shareholders, all as more fully set forth in Section 8 above.
17. Termination and Amendment of Plan. The Board may at any time
terminate the Plan or make such modification or amendment thereof as it deems
advisable, provided, however, that the Board may not, without approval by the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the state in which the Company is
incorporated, (i) materially increase the benefits accruing to participants
under the Plan; (ii) materially increase the number of shares for which options
may be granted under the Plan; or (iii) materially modify the requirements as to
eligibility for participation in the Plan. In no event may any provision of this
Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any successor or amended provision
thereof) of the Securities Exchange Act of 1934 (including, without limitation,
provisions as to eligibility and who may participate in the Plan, the amount and
price of shares for which options may be granted or the timing of awards), be
amended more than once every six months, other than to comport with changes in
the internal Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder. Termination or any modification or amendment of the Plan shall
not, without consent of a participant, affect his rights under an option
previously granted to him.
A-5
<PAGE> 28
DETACH HERE
HADCO CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 26, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R
O The undersigned appoints Horace H. Irvine II and Andrew E. Lietz, and
X each of them, proxies, with full power of substitution to vote all shares
Y of the stock of the Corporation which the undersigned is entitled to vote
at the Annual Meeting of Stockholders of Hadco Corporation to be held on
Wednesday, February 26, 1997 at 10:00 a.m. at 100 Federal Street, Boston,
Massachusetts, and at any adjournments thereof, upon matters set forth in
the Notice of Annual Meeting of Stockholders and Proxy Statement dated
January 15, 1997, a copy of which has been received by the undersigned. The
proxies are further authorized to vote, in their discretion, upon such
other business as may properly come before the meeting or any adjournments
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF
NO DIRECTION IS GIVEN, WILL BE VOTED FOR FIXING THE NUMBER OF DIRECTORS
AND THE ELECTION OF DIRECTORS AND FOR THE PROPOSALS IN ITEMS 2 AND 3.
------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
------------------
<TABLE>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
<S> <C> <C> <C> <C>
1. To fix the number of Directors at nine and to elect a
Board of Directors for the ensuing year.
FOR AGAINST ABSTAIN
NOMINEES: Horace H. Irvine II, Patrick Sweeney, Andrew 2. To approve the amendment [ ] [ ] [ ]
E. Lietz, J. Stanley Hill, Oliver O. Ward, Lawrence and restatement of the Hadco
Coolidge, John F. Smith, John E. Pomeroy and James C. Corporation 1991 Non-Employee
Taylor Director Stock Option Plan
FOR WITHHELD
[ ] [ ] FOR AGAINST ABSTAIN
3. To ratify the selection of [ ] [ ] [ ]
[ ]_____________________________________ Arthur Andersen LLP as
FOR, EXCEPT VOTE WITHHELD FROM ABOVE auditors for the fiscal year
NOMINEE(S) ending October 25, 1997.
MARK HERE FOR ADDRESS [ ]
CHANGE AND NOTE AT LEFT
If signing as attorney, executor, trustee or guardian,
please give your full title as such
Signature________________________________ Date________________ Signature________________________________ Date________________
</TABLE>
