<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant.....................................[X]
Filed by a Party other than the Registrant..................[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Continental Circuits Corp.
------------------------------------------------
(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)(4) 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:
<PAGE> 2
3502 EAST ROESER ROAD
PHOENIX, ARIZONA 85040
(602) 268-3461
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Continental Circuits Corp., a
Delaware corporation (the "Company") will be held at The Buttes Resort, 2000
Westcourt Way, Tempe, Arizona 85282, on Friday, December 13, 1996 at 8:00 a.m.
(Arizona Time) for the following purposes:
(1) to elect three directors to serve until the 1999 annual
meeting of stockholders or until their successors are elected
and qualified;
(2) to approve the Company's Employee Stock Purchase Plan;
(3) to approve the Company's 1996 Stock Option Plan; and
(4) to transact such other business as may properly come before
the meeting and any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. A copy of the Company's 1996 Annual Report
to Stockholders, which includes financial statements, also accompanies this
Notice.
Stockholders of record at the close of business on October 24, 1996 are
entitled vote at the meeting or any adjournment thereof. Shares can be voted at
the meeting only if the holder is present or represented by proxy. A list of
stockholders entitled to vote at the meeting will be open for inspection at the
Company's corporate headquarters for any purpose germane to the meeting during
ordinary business hours for ten days prior to the meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
Joseph G. Andersen
Secretary
Phoenix, Arizona
November 1, 1996
<PAGE> 3
CONTINENTAL CIRCUITS CORP.
3502 EAST ROESER ROAD
PHOENIX, ARIZONA 85040
----------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 13, 1996
----------------------------
SOLICITATION, EXECUTION AND REVOCATION OF PROXIES
Proxies in the accompanying form are solicited on behalf, and at the
direction, of the Board of Directors of Continental Circuits Corp., a Delaware
corporation (the "Company") for use at the Annual Meeting of Stockholders to be
held on December 13, 1996 (the "Annual Meeting"). All shares represented by
properly executed proxies, unless such proxies have previously been revoked,
will be voted in accordance with the direction on the proxies. If no direction
is indicated, the shares will be voted in favor of the proposal to be acted upon
at the Annual Meeting. The Board of Directors is not aware of any other matter
which may come before the Annual Meeting. If any other matters are properly
presented at the meeting for action, including a question of adjourning the
Annual Meeting from time to time, the persons named in the proxies and acting
thereunder will have discretion to vote on such matters in accordance with their
best judgment.
When stock is in the name of more than one person, the proxy is valid
if signed by any of such persons unless the Company receives written notice to
the contrary. If the stockholder is a corporation, the proxy should be signed in
the name of such corporation by an executive or other authorized officer. If
signed as attorney, executor, administrator, trustee, guardian or in any other
representative capacity, the signer's full title should be given and, if not
previously furnished, a certificate or other evidence of appointment should be
furnished.
This Proxy Statement and the form of proxy which is enclosed are being
mailed to the Company's stockholders commencing on or about November 4, 1996.
A stockholder executing and returning a proxy has the power to revoke
it at any time before it is voted. A stockholder who wishes to revoke a proxy
can do so by executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of the Company prior to the vote at the Annual
Meeting, by written notice of revocation received by the Secretary prior to the
vote at the Annual Meeting or by appearing in person at the Annual Meeting,
filing a written notice of revocation and voting in person the shares to which
the proxy relates.
In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by the directors, officers and
regular employees of the Company. Such persons will receive no additional
compensation for such services. Arrangements will also be made with certain
brokerage firms and certain other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of Common Stock
held of record by such persons, and such brokers, custodians, nominees and
fiduciaries will be reimbursed for their reasonable out-of-pocket expenses
incurred in connection therewith. It is not anticipated that any other persons
will be engaged to solicit proxies. However, the Company may seek services of an
outside proxy solicitor in the event such services become necessary. All
expenses incurred in connection with this solicitation will be borne by the
Company.
The mailing address of the principal corporate office of the Company is
3502 East Roeser Road, Phoenix, Arizona 85040.
<PAGE> 4
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only the stockholders of record at the close of business on October 24,
1996 (the "Record Date") will be entitled to vote at the meeting. On the Record
Date, there were issued and outstanding 7,194,725 shares of Common Stock, the
Company's only class of stock outstanding. Each holder of Common Stock is
entitled to one vote, exercisable in person or by proxy, for each share of the
Company's Common Stock held of record on the Record Date. The presence of a
majority of the shares of Common Stock entitled to vote, in person or by proxy,
is required to constitute a quorum for the conduct of business at the Annual
Meeting. The Inspector of Election appointed by the Board of Directors shall
determine the shares represented at the meeting and the validity of proxies and
ballots, and shall count all votes and ballots. The three nominees for director
receiving the highest number of affirmative votes (whether or not a majority)
cast by the outstanding shares represented at the Annual Meeting and entitled to
vote thereon, a quorum being present, shall be elected as directors. The
affirmative vote of the majority of the quorum is required with respect to the
approval of the other proposals set forth herein.
Abstentions and broker non-votes are each included in the determination
of the number of shares present for quorum purposes. Because abstentions
represent shares entitled to vote, the effect of an abstention will be the same
as a vote cast against a proposal, except with respect to election of directors,
for which only affirmative votes are relevant. A broker non-vote, on the other
hand, will not be regarded as representing a share entitled to vote on the
proposal and, accordingly, will have no effect on the voting for such proposal.
Only affirmative votes are relevant in the election of directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock at September 30, 1996 with respect to
(i) each person known by the Company to beneficially own more than five percent
of the outstanding shares of the Company's Common Stock, (ii) each director of
the Company, (iii) each of the executive officers listed in the Summary
Compensation Table set forth herein, and (iv) all directors and executive
offices of the Company as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
---------------------------------------------
Identity of Stockholder or Group Number Percent
- -------------------------------- ------ -------
<S> <C> <C>
Angelo A. DeCaro, Jr -- --
Michael O. Flatt 526,666(2) 7.3%
Albert A. Irato -- --
Michael F. Jarko 60,000(3) *
Thomas E. Linnen (4) 36,000 *
John W. Maddux 125,000 1.7%
Frederick G. McNamee, III 60,000(5) *
John W. Nance 2,500 *
Mark. R. Hollinger -- --
Lee A. Small 55,000 *
David C. Wetmore -- --
All directors and executive officers as a group 867,166 12.1%
(12 persons) (2)(3)(4)(5)
</TABLE>
- --------------------------
* Less than 1.0%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes
voting or investment power with respect to securities. In
2
<PAGE> 5
accordance with SEC rules, shares which may be acquired upon exercise
of stock options which are currently exercisable or which become
exercisable within 60 days of the table are deemed beneficially owned
by the optionee. Except as indicated by footnote, and subject to
community property laws where applicable, the persons or entities named
in the table above have sole voting and investment power with respect
to all shares of Common Stock shown as beneficially owned by them.
(2) All shares are owned of record by the Flatt Family Trust, which is
controlled by Mr. Flatt and his spouse, Joanie L. Flatt.
(3) Voting and investment power shared with spouse as to 5,000 shares.
(4) Mr. Linnen terminated employment on June 11, 1996.
(5) Indicated shares may be acquired upon exercise of employee incentive
stock options.
3
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members and is
classified into three classes, with each class holding office for a three-year
period. Action will be taken at the Meeting for the election of three directors
to serve until the 1999 annual meeting of stockholders and until their
respective successors have been elected and qualified. SHARES REPRESENTED BY THE
ENCLOSED PROXY WILL BE VOTED FOR THE COMPANY'S NOMINEES, ANGELO A. DECARO, JR.,
ALBERT A. IRATO AND JOHN W. NANCE, UNLESS OTHERWISE SPECIFIED ON THE PROXY.
Messrs. DeCaro, Irato and Nance are all currently directors of the Company.
If any of the nominees should decline or be unable to act as a
director, which is not anticipated, the proxies may be voted for a substitute
nominee designated by the Board of Directors. In no event may the proxies be
voted for more than two nominees.
Any stockholder entitled to vote for the election of directors at a
meeting may nominate persons for election as directors only if written notice of
such stockholder's intent to make such nomination is given, either by personal
delivery to the Company's Secretary at 3502 East Roeser Road, Phoenix, Arizona
85040 or by United States mail, postage prepaid to Secretary, Continental
Circuits Corp., 3502 East Roeser Road, Phoenix, Arizona 85040 not later than:
(i) with respect to the election to be held at the annual meeting of
stockholders, 30 days in advance of such meeting, and (ii) with respect to any
election to be held at a special meeting of stockholders for the election of
directors, the close of business on the tenth day following the date on which
notice of such meeting is first given to stockholders. Each such notice must set
forth: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that such stockholder is a holder of record of stock of the corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between such stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder; (d) such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a proxy or information
statement filed with the Securities and Exchange Commission pursuant to proxy
rules promulgated under the Securities Exchange Act of 1934, as amended, or any
successor statute thereto if such nominee had been nominated, or intended to be
nominated, by the Board of Directors; and (e) the manually signed consent of
each nominee to serve as a director of the corporation if elected. The presiding
officer of a stockholder meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
The names of the nominees for directors and of the directors whose
terms continue beyond the Annual Meeting, and certain information about them,
are set forth below.
4
<PAGE> 7
<TABLE>
<CAPTION>
Director
Principal Occupation of Company
Name and Directorships Age Since
---- ------------------------ --- -----------
Nominees for election as directors whose terms will expire in 1999:
<S> <C> <C> <C>
Angelo A. DeCaro, Jr. (1) Elected as a Director of the Company on 45 1995
September 7, 1995 to fill a vacancy on the Board
of Directors. Since July 1995, Mr. DeCaro has
been President, Chief Executive Officer and a
Director of XeTel Corporation, Austin, Texas, an
assembler of electronic cards, and from 1993
through July 1995, he was President, Chief
Operating Officer and a Director of that
company. Prior to that time, Mr. DeCaro was
Director of Operations-- Printed Wiring Board
Products and Services at the IBM circuit board
facility in Austin, Texas from 1992 to 1993, and
Plant Manager of the same facility from 1989 to
1992. From 1974 through 1989, Mr. DeCaro
served IBM in various other management
capacities.
Albert A. Irato (2) Elected as a Director of the Company on 58 1995
September 7, 1995, to fill a vacancy on the
Board of Directors. Since 1992, Mr. Irato has
been President and Chief Executive Officer of
Hypercom, Inc. Phoenix, Arizona, a manufacturer
of electronic point of sale systems. From 1985
until 1992, Mr. Irato served in various
management capacities at American Express
Corp., most recently as Senior Vice President.
John W. Nance (1) Director from 1975 to 1987 and re-elected to the 59 1993
Board in December 1993. Prior to his retirement
in 1993, he was the Manager of Large Systems
Business Planning for Bull-HN Worldwide
Information Systems in Phoenix for three years
and a forecasting/business analyst for Bull-HN
for the preceding two years.
</TABLE>
Directors whose terms will expire in 1998:
5
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Frederick G. McNamee, III (3) President and Chief Executive Officer of the 39 1994
Company since September 1994, director since
November 11, 1994, and Chairman of the Board
since December 16, 1994. He spent the past 15
years with IBM in Austin, Texas in a variety of
circuit board manufacturing positions. He most
recently was manager of the IBM circuit board
facility in Austin from November 1992 to
September 1994 during its transition from a
captive manufacturer with sales solely to IBM to
a significant merchant manufacturer with sales to
other OEMs. From 1989 to 1992, Mr. McNamee
served as Volume Production Manager of the
IBM facility
David C. Wetmore (2) Elected to the Board of Directors in December 48 1995
1995. Managing Director of The Updata Group,
Inc. (beginning November 20, 1995), a Holmdel,
New Jersey investment banking firm. From
November 1992, to November 1995, Mr.
Wetmore was the Chief Operating Officer of
Legent Corp. a publicly traded systems
software company in Herndon, Virginia.
From February 1988 to November 1992, he
was the Chairman of the Board, Chief
Executive Officer and President of Goal
Systems International, a systems software
company in Columbus, Ohio that began
public trading of its stock in 1989. Mr
Wetmore is also a director of the
following entities: Walker Interactive
Systems, a publicly traded application
software company in San Francisco,
California; Nationwide Investing
Foundation, a Columbus, Ohio registered
public investment company, and various
other non-public companies.
</TABLE>
Directors whose terms will expire in 1997:
6
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
Michael O. Flatt (1)(3) Joined the Company in 1972 as General 58 1975
Manager. He has been a member of the Board
of Directors since 1975 and has held various
senior executive positions with the Company,
including President and Chief Executive Officer
from 1975 to 1983 and from December 1992 to
September 1994 and Chairman of the Board from
1983 through 1989. He is the author of Printed
Circuit Board Basics published in 1992 by
Miller-Freeman Publishing. He presently is
President of Michael O. Flatt, Ltd., a consulting
firm serving the circuit board industry. Mr. Flatt
is Chairman of the Audit Committee.
Michael F. Jarko (2)(3) Director of the Company from 1978 to 1987 and 59 1988
re-elected to the Board in December 1988. Prior
to his retirement in 1987, he was President and
owner of Jarko Associates, a Phoenix-based
manufacturers' representative company. From
1977 to July 1987, all marketing services for the
Company were provided by Jarko Associates. In
July 1987, substantially all of the Jarko
employees who were devoting their efforts
exclusively to marketing the Company's products
were hired by the Company.
</TABLE>
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Nominating Committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons beneficially owning more than
10% of the Company's Common Stock are required to report their initial ownership
of the Company's Common Stock and any subsequent changes in that ownership to
the Securities and Exchange Commission. Specific due dates for these reports
have been established and the Company is required to disclose any failure to
file by these dates. The Company believes that all of these filing requirements
were satisfied during the year ended July 31, 1996, except that (i) John A.
Carr, a former director of the Company failed to file one report with respect to
four transactions, which transactions were reported on a Form 5; (ii) Steven J.
Walters, the controller of the Company and a former reporting officer, failed to
file one report with respect to one transaction, which transaction was reported
on a Form 5; (iii) Robert A. Kosciusko, Vice President -- Human Resources of the
Company, failed to file on a timely basis a Form 3 and failed to file one report
with respect to two transactions, which transactions were reported on a Form 5;
(iv) Michael F. Jarko failed to file on a timely basis one report with respect
to one transaction; and (v) Michael O. and Joanie L. Flatt each failed to file
on a timely basis one report with respect to seven transactions. In making these
disclosures, the Company has relied solely on written representations of its
directors, executive officers and holders of more than 10% of its Common Stock
and copies of the reports that they have filed with the Commission.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of ten meetings during the fiscal
year ended July 31, 1996. No director attended fewer than 75% of the aggregate
of all meetings of the Board and any committee on which such
7
<PAGE> 10
director served during the period of such service. The Board of Directors
currently has an Audit Committee, a Compensation Committee and a Nominating
Committee.
The Audit Committee currently consists of Messrs. Flatt, Nance and
DeCaro, and met two times in fiscal 1996. The Audit Committee reviews the
financial affairs and procedures of the Company with management and meets the
Company's auditors to review financial statements and procedures.
The Compensation Committee currently consists of Messrs. Jarko, Irato
and Wetmore, and met one time in fiscal 1996. The Compensation Committee reviews
the Company's executive compensation programs and makes specific compensation
recommendations to the Board of Directors with respect to the salaries, bonuses
and benefit plans for the Company's executive officers.
The Nominating Committee currently consists of Messrs. McNamee, Flatt
and Jarko, and met one time in fiscal 1996. The Nominating Committee makes
recommendations to the Board of Directors regarding nominations of persons to be
directors of the Company.
EXECUTIVE COMPENSATION
The following table sets forth, with respect to the years ended July
31, 1994, 1995 and 1996, compensation awarded to, earned by or paid to (i) the
Chief Executive Officer of the Company, (ii) the four most highly compensated
executive officers who were serving as executive officers of the Company at July
31, 1996 whose total salary and bonus for fiscal 1996 exceeded $100,000, and
(iii) one additional person who served as an executive officer during fiscal
1996 whose total salary and bonus for such year exceeded $100,000 ("Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------------- ------------
Securities
Underlying
Fiscal Other Annual Options/SARs All Other
Name and Principal Position Year Salary($) Bonus($)(1) Compensation($) (2)(#) Compensation(3)
--------------------------- ---- --------- ----------- --------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frederick G. McNamee, III...... 1996 178,365 -0- (5) -0- 2,356
Chairman of the Board 1995 154,807 95,000 (5) 200,000 2,044
President and Chief
Executive Officer (4)
John W. Maddux................. 1996 140,962 -0- (5) 20,000 3,231
Vice President-- Quality and 1995 125,000 15,000 (5) 0 3,060
Engineering 1994 122,980 5,000 (5) 0 2,598
Mark R. Hollinger (6).......... 1996 125,097 -0- (5) 20,000 2,744
Vice President-- Operations 1995 84,811 15,000 (5) 20,000 2,254
Lee A. Small................... 1996 163,731 -0- (5) 20,000 3,631
Vice President-- Sales and 1995 150,000 20,000 (5) 0 3,457
Marketing 1994 148,654 5,000 (5) 0 3,020
Thomas E. Linnen (7)........... 1996 137,673 -0- (5) 20,000 1,296
Vice President-- Finance 1995 120,000 20,000 (5) 0 1,709
Secretary and Treasurer 1994 124,903 5,000 (5) 0 1,726
</TABLE>
- -------------
(1) Bonus earned in respect of indicated fiscal year and paid in subsequent
fiscal year.
(2) Consists entirely of stock options.
(3) Employer matching contributions pursuant to the Company's 401(k) plan
and life insurance premiums paid by the Company in the amount of $108
per month in fiscal 1996, $108 per month in fiscal 1995, and $92 per
month in fiscal 1994.
(4) Mr. McNamee commenced employment in September 1994.
(5) Auto allowance in an amount less than 10% of the total annual salary
and bonus.
(6) Mr. Hollinger commenced employment on September 26, 1994.
(7) Mr. Linnen terminated employment on June 11, 1996.
8
<PAGE> 11
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
The following table sets forth for each Named Executive Officer certain
information concerning individual grants of stock options during the 1996 fiscal
year.
<TABLE>
<CAPTION>
Potential Realized Value at
Assumed Rates of Annual
Stock Price Appreciation
for Option Term (2)
Individual Grants
-------------------------------------------------------------------------------------------------------
Number of
Securities % of Total Options/
Underlying SARs Granted to Exercise
Options/SARs Employees Price Expiration
Name Granted in Fiscal Year ($/Sh) Date 5%($) 10%($)
- --------------------------- --------- --------------- -------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Frederick G. McNamee, III -0- -0- -0- __ $-0- $-0-
Mark R. Hollinger 20,000(3) 18.2% $15.00 8/23/2002 $122,100 $284,700
John W. Maddux 20,000(3) 18.2% $15.00 8/23/2002 $122,100 $284,700
Lee A. Small 20,000(3) 18.2% $15.00 8/23/2002 $177,100 $284,700
Thomas E. Linnen (4) 20,000(5) 18.2% $15.00 8/23/2002 $122,100 $284,700
</TABLE>
- ---------------------------
(1) Consists entirely of stock options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based on assumed rates of stock appreciation of 5% or 10%
compounded annually from the date the respective options were granted
to their expiration date and are not presented to forecast possible
future appreciation, if any, in the price of the Common Stock. The
potential realizable value of the foregoing options is calculated by
assuming that the market price of the underlying security appreciates
at the indicated rate for the entire term of the option and that the
option is exercised at the exercise price and sold on the lst day of
its term at the appreciated price.
(3) The option may be exercised for 40% of the underlying stock beginning
on August 23, 1998, for another 20% beginning on August 23, 1999, for
another 20% beginning on August 23, 2000 and for the final 20%
beginning on 8/23/2001.
(4) Terminated employment on June 11, 1996.
(5) Canceled in connection with termination of employment on June 11, 1996.
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth information with respect to each Named
Executive Officer concerning option exercises during the last fiscal year and
the number and value of options outstanding at the end of the last fiscal year.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-The-Money Options/SARs
Year End at Fiscal Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable(2)
- ---- ------------------------- ----------------------------
<S> <C> <C>
Frederick G. McNamee, III..................... 30,000/170,000 $211,800/$1,200,200
Mark R. Hollinger............................. 0/40,000 $0/$141,200
John W. Maddux................................ 0/20,000 $0/$0
Lee A. Small.................................. 0/20,000 $0/$0
Thomas E. Linnen (3).......................... 0/0 $0/$0
</TABLE>
- --------------------
(1) No SARs are outstanding.
(2) Value is based on the difference between the exercise price of such
options and the closing price of the Company's Common Stock on the
Nasdaq National Market on July 31, 1996 of $10.31 per share.
(3) Mr. Linnen terminated employment on June 11, 1996.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL
ARRANGEMENTS
Frederick G. McNamee, III entered into an employment agreement with the
Company dated August 25, 1994, as amended, pursuant to which he was employed as
President and Chief Executive Officer. Under the agreement, Mr. McNamee is
entitled to an annual base salary of $175,000 per year, plus a bonus based on
the Company's pre-tax profits of up to $125,000 for fiscal 1995, $175,000 for
fiscal 1996 and $200,000 for fiscal 1997. In addition, the Company agreed to
grant Mr. McNamee options to purchase 200,000 shares of the Company's stock at
$3.25 per share under the 1987 Stock Option Plan, which options are exercisable
to the extent of 15% after one year and an additional 15% each year thereafter.
All options expire on the earlier of three months after any cessation of
employment (one year in the case of death or disability) or the eighth
anniversary of the date of grant. The agreement does not specify an employment
term.
Mark R. Hollinger entered into an employment agreement with the Company
dated September 26, 1994, pursuant to which he was employed as Vice President --
Operations. The agreement grants Mr. Hollinger a base salary of $105,000 plus a
monthly car allowance and a bonus based on the Company's cycle times and scrap
rates as of June 1995. In addition, the Company granted Mr. Hollinger options to
purchase 20,000 shares of the Company's stock at $3.25 per share under the 1987
Stock Option Plan which options are exercisable to the extent of 40% after three
years and an additional 20% each year thereafter. The agreement does not specify
an employment term.
The Company entered into a termination agreement on July 23, 1996 with
Thomas E. Linnen, the former Vice President -- Finance, Chief Financial Officer,
Secretary and Treasurer of the Company. The agreement
10
<PAGE> 13
provides that the Company's relationship with Mr. Linnen was terminated as of
June 11, 1996, with no continuing duties beyond that date. Pursuant to the
agreement, Mr. Linnen is entitled to receive an amount equal to 12 months base
salary over a 12 month period, medical benefits for 90 days after June 11, 1996,
automobile expenses until July 31, 1996, and up to $10,000 for costs of
outplacement services incurred within 90 days of June 11, 1996. The agreement
also provides that as of June 11, 1996, 6,000 of Mr. Linnen's outstanding stock
options were fully vested, and contains release, confidentiality and
non-competition provisions.
The Company's 1987 Stock Option Plan provides that in the event of a
merger, consolidation or reorganization with another corporation in which the
Company is not the surviving corporation, appropriate provision may be made with
respect to outstanding and unexercised options to either (a) substitute on an
equitable basis appropriate shares of the surviving corporation or (b) cancel
such options upon payment of the fair market value of such options to the
respective holders.
PROFIT SHARING PLAN
The Company's Board of Directors has established a discretionary profit
sharing plan providing for the payment of bonuses to all eligible employees
based on the Company's pre-tax profit. The profit sharing plan is reviewed
annually by the Board of Directors. The Company paid bonuses to eligible
employees in the aggregate amount of $364,700 or 3.5% of the Company's pre-tax
profit in fiscal 1996 and as of January 31, 1996, there were 894 eligible
employees. The Board of Directors, in its discretion, terminated the profit
sharing plan in February, 1996.
1987 STOCK OPTION PLAN
The Company's 1987 Stock Option Plan (the "1987 Plan") was adopted by
the Board of Directors and approved by the Company's stockholders in September
1987.
The description of the 1987 Plan below is only a summary and is
qualified in its entirety by reference to the text of the 1987 Plan, a copy of
which is available to any stockholder of the Company upon request directed to
the Secretary of the Company. Capitalized terms not otherwise defined shall have
the meanings assigned to such terms in the 1987 Plan.
Purpose. The purpose of the 1987 Plan is to attract and retain the best
available directors and employees for positions of substantial responsibility,
to provide additional incentive to such directors and employees of the Company
or any successor or any parent or subsidiary of the Company which now exists or
hereafter is organized or acquired by or acquires the Company, and to promote
the success of the business of the Company.
Administration. The 1987 Plan is administered by the Board of Directors
or a Committee of the Board of Directors appointed by the Board and constituted
so as to permit the 1987 Plan to comply with the "disinterested administration"
provisions under Rule 16b-3 ("Rule 16-3") under the Securities Exchange Act of
1934, as amended. The administering body is referred to herein as the
"Committee." The Committee determines the persons to whom stock options will be
granted, the terms of such grants and the number of shares subject to options.
The 1987 Plan provides for the grant of options which qualify as "Incentive
Stock Options" (sometimes referred to herein as "ISOs") under Section 422 of the
Internal Revenue Code (the "Code") and nonstatutory stock options which do not
specifically qualify for favorable income tax treatment under the Code
(sometimes referred to herein as "NSOs").
Eligibility. Any employee of the Company or any of its subsidiaries is
eligible to receive options under the 1987 Plan. Nonemployee directors are
eligible to receive only NSOs under the 1987 Plan while employee directors are
eligible for both ISOs and NSOs.
Stock Subject to the 1987 Plan. The aggregate number of shares which
may be issued pursuant to the exercise of options granted under the 1987 Plan is
750,000 shares of the Company's Common Stock, subject to
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<PAGE> 14
adjustments in certain circumstances, including reorganizations,
recapitalizations, stock splits, reverse stock splits, stock dividends and the
like. If any outstanding option grant under the 1987 Plan for any reason expires
or is terminated, the shares of Common Stock allocable to the unexercised
portion of the option grant shall again be available for options under the 1987
Plan as if no options had been granted with respect to those shares.
Terms and Conditions of Options. Stock options granted under the 1987
Plan may have a maximum term of 10 years (five years in the case of ISOs granted
to a holder of more than 10% of the Company's stock, and 11 years in the case of
NSOs). The per share exercise price of options granted under the 1987 Plan may
not be less than the fair market value of the Common Stock (110% of the fair
market value in the case of an ISO granted to a holder of more than 10% of the
Company's Common Stock) on the date of grant. The aggregate fair market value of
shares with respect to which ISOs are exercisable for the first time, during any
calendar year by any holder of ISOs, cannot exceed $100,000, with the fair
market value of such shares determined as of the time the ISOs for such shares
were granted. Options are not transferable other than by will or the laws of
descent and distribution. Options can be exercised only by the optionee, his
guardian or legal representative and only while the optionee is providing
services for the Company or any parent or subsidiary, except that an option may
be exercised within certain periods of time after termination of employment
other than for cause and in the event of death or permanent disability.
Within the foregoing guidelines, the 1987 Plan provides the Committee
with the discretion to determine the employees (including officers) and
directors to whom options are granted as well as the term of such options,
including without limitation, the exercise price, the number of shares subject
to the option and when options granted shall become exercisable; provided,
however, that options granted to directors and officers of the Company may not
vest until at least one year has elapsed from the date of grant and may only be
exercised, once vested, during the 10-day period following the release of
quarterly or annual financial information by the Company. Generally, options are
exercisable cumulatively, beginning on the third anniversary of the date of
grant. After three years from the date of grant, the optionee may purchase 40%
of the shares granted, and an additional 20% each year thereafter.
Payment of the exercise price may be made in cash, or, if permitted by
the grant, by transferring to the Company shares of the Company's Common Stock
at fair market value on the date of exercise. Subject to certain limitations,
the Committee may modify, extend or renew outstanding options, accept surrender
of outstanding options and grant new options in substitution. Each option may
have additional terms and conditions consistent with the 1987 Plan as determined
by the Committee.
Accelerating Events. The options granted under the 1987 Plan become
fully exercisable if the Company is dissolved or liquidated, subject to certain
reorganizations, mergers, or consolidations, is acquired or subject to a hostile
takeover attempt, undergoes a change in control or if there is an announcement
or proxy solicitation relating to such events.
Termination or Amendment of the 1987 Plan. The Committee may at any
time terminate the 1987 Plan. With respect to options granted to employees other
than directors and officers, the Committee may at any time amend the 1987 Plan
provided that, without approval of the stockholders, there shall be no increase
in the total number of shares covered by the 1987 Plan (unless as a result of a
capital event), no change in the class of persons eligible to receive options
under the 1987 Plan, no reduction in the exercise price of options granted under
the 1987 Plan, and no extension of the latest date upon which options may be
exercised; and provided further that, without the consent of the optionee, no
amendment may adversely affect any outstanding option or any unexercised portion
thereof. With respect to options granted to directors and officers of the
Company, the 1987 Plan may not be amended in any material respect (except for
automatic adjustment as to the number of available shares resulting from a
capital event) without prior stockholder approval.
Notwithstanding any other provision to the contrary, any provision in
the 1987 Plan may be amended by the Committee as required to obtain necessary
approvals of government agencies if (i) such change would not materially alter
the rights and interests of stockholders of the Company and (ii) such change
would not result in
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<PAGE> 15
failure of options granted under the 1987 Plan to comply with the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended.
Unless sooner terminated by the Committee, the 1987 Plan will expire on
December 31, 1996 with respect to ISOs and on December 31, 1997 with respect to
NSOs.
Option Grants. As of July 31, 1996, Frederick J. McNamee, III, Mark R.
Hollinger, John W. Maddux and Lee A. Small have been granted options for an
aggregate of 200,000 shares, 40,000 shares, 20,000 shares and 20,000 shares
under the 1987 Plan, respectively; all executive officers as a group (five
persons) have been granted options for 300,000 shares under the 1987 Plan; all
directors (who are not executive officers) as a group (six persons) have been
issued no options under the 1987 Plan; and all employees as a group (not
including executive officers or nonexecutive directors) have been issued options
for 103,360 shares under the 1987 Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The discussion that follows is a summary, based upon current law, of
some of the significant federal income tax considerations relating to awards
under the 1987 Plan. The following discussion does not address state, local or
foreign tax consequences.
A Participant will not recognize taxable income upon the grant or
exercise of an ISO. However, upon the exercise of an ISO, the excess of the fair
market value of the shares received on the date of exercise over the exercise
price of the shares will be treated as a tax preference item for purposes of the
alternative minimum tax. In order for the exercise of an ISO to qualify for the
foregoing tax treatment, the Participant generally must be an employee of the
Company from the date the ISO is granted through the date three months before
the date of exercise, except in the case of death or disability, where special
rules apply. The Company will not be entitled to any deduction with respect to
the grant or exercise of an ISO.
If shares acquired upon exercise of an ISO are not disposed of by the
Participant within two years from the date of grant or within one year after the
transfer of such shares to the Participant (the "ISO Holding Period"), then (i)
no amount will be reportable as ordinary income with respect to such shares by
the Participant and (ii) the Company will not be allowed a deduction in
connection with such ISO or the Common Stock acquired pursuant to the exercise
of the ISO. If a sale of such Common Stock occurs after the ISO Holding Period
has expired, then any amount recognized in excess of the exercise price will be
reportable as a long-term capital gain, and any amount recognized below the
exercise price will be reportable as a long-term capital loss. The exact amount
of tax payable on a long-term capital gain will depend upon the tax rates in
effect at the time of the sale. The ability of a Participant to utilize a
long-term capital loss will depend upon the statutory limitations on capital
loss deductions not discussed herein.
A "disqualifying disposition" will generally result if Common Stock
acquired upon the exercise of an ISO is sold before the ISO Holding Period has
expired. In such case, at the time of a disqualifying disposition, the
Participant will recognize ordinary income in the amount of the difference
between the exercise price and the lesser of (i) the fair market value on the
date of exercise or (ii) the amount realized on disposition. The Participant
will report as a capital gain any amount recognized in excess of the fair market
value on the date of exercise, and the Company will be allowed a deduction on
its federal income tax return in the year of the disqualifying disposition equal
to the ordinary income recognized by the Participant. If the amount realized on
the sale is less than the exercise price, then the Participant will recognize no
ordinary income, and the recognized loss will be reportable as a capital loss.
In general, a Participant to whom a Nonqualified Option is granted will
recognize no taxable income at the time of the grant. Upon exercise of a
Nonqualified Option, the Participant will recognize ordinary income in an amount
equal to the amount by which the fair market value of the Common Stock on the
date of exercise exceeds the exercise price of the Nonqualified Option, and the
Company will generally be entitled to a deduction equal to
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<PAGE> 16
the ordinary income recognized by the Participant in the year the Participant
recognizes ordinary income, subject to the limitations of Section 162(m) of the
Code.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company currently receive
$10,000 per year plus $1,000 per meeting attended ($2,000 for the Chairman of
the Board of Directors), plus reimbursement for reasonable expenses incurred in
attending meetings. Officers are elected annually by and serve at the discretion
of the Board of Directors. There are no family relationships among any of the
officers and directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Compensation Committee of the Board of
Directors consisted of Messrs. Jarko, Irato and Wetmore. Mr. Jarko was a
Director of the Company from 1978 to 1987, and was re-elected to the Board in
December 1988, Mr. Irato was elected to the Board in September 1995, and Mr.
Wetmore was elected to the Board in December 1995. The Compensation Committee
reviews the Company's executive compensation programs and makes specific
compensation recommendations to the Board of Directors with respect to the
salaries, bonuses and benefit plans for the Company's officers and other
salaried employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Michael O. Flatt. Pursuant to a consulting agreement, the Company
agreed to compensate Mr. Flatt, a director of the Company, for consulting
services at the rate of $1,925 per week for the year beginning October 2, 1994,
$1,445 per week for the year beginning October 2, 1995, and $965 per week for
the year beginning October 2, 1996. This agreement by its terms terminated upon
the completion of the Company's initial public offering of its Common Stock in
March 1995.
Robert F. Lutz. The Company entered into an employment agreement in
June 1993 with Mr. Lutz, a director and officer of the Company at that time,
pursuant to which Mr. Lutz was entitled to receive $175,000 per year for a
five-year period beginning October 26, 1992. This agreement terminated in March
1995 upon the completion of the Company's initial public offering of Common
Stock, Mr. Lutz's resignation as a Director, and the effectiveness of a
Confidentiality and Non-Competition Agreement between the Company and Mr. Lutz.
Under the Confidentiality and Non-Competition Agreement, Mr. Lutz is entitled to
receive $100,000 per year from the effective date of the agreement through
December 31, 1999 in exchange for his agreement not to compete with the Company
or disclose certain confidential information. The agreement also provides that
Mr. Lutz will receive medical insurance benefits extended to the Company's
salaried employees.
Registration of Common Stock. In August 1995, C.W. Jackson (a former
director of the Company) and others exercised their right to cause the Company
to register their Common Stock as provided in a Registration Rights Agreement
entered into with the Company in October 1993 in connection with the settlement
of certain litigation against the Company and certain of its officers and
directors. As a result of this exercise, in September 1995, the Company filed a
Registration Statement on Form S-1 pursuant to the Securities Act of 1933, as
amended, to register the stock beneficially owned by several stockholders,
including Mr. Jackson, John A. Carr (a former director of the Company), Michael
O. and Joanie L. Flatt, Michael F. Jarko, John W. Nance and John W. Maddux (the
Company's Vice President - Quality and Engineering). The Registration Statement
was declared effective on October 2, 1995. The Company agreed to pay the
estimated $150,000 of expenses associated with this registration.
Indemnification Agreements. Delaware law authorizes a Delaware
corporation to eliminate or limit the personal liability of a director to the
corporation and its stockholders for monetary damages for breach of certain
fiduciary duties as a director. The Company believes that such a provision is
beneficial in attracting and retaining qualified directors, and accordingly the
Certificate includes a provision eliminating liability for monetary damages
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<PAGE> 17
for any breach of fiduciary duty as a director, except: (1) for any breach of
the duty of loyalty to the Company or its stockholders; (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) for any transaction from which the director derived an
improper personal benefit; (4) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation law. Thus, pursuant to Delaware law, directors of the
Company are not insulated from liability for breach of their duty of loyalty
(requiring that, in making a business decision, directors act in good faith and
in the honest belief that the action was taken in the best interests of the
corporation) or for claims arising under the federal securities laws. The
Company has entered into indemnity agreements with all of its directors and
officers for the indemnification of and advancing of expenses to such persons to
the full extent permitted by law. The Company intends to execute such indemnity
agreements with its future officers and directors.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Committee Role. The Compensation Committee of the Board of Directors
reviews the Company's executive compensation programs and makes specific
compensation recommendations to the Board of Directors with respect to the
salaries, bonuses and benefit plans for the Company's officers and other
salaried employees. The Committee is composed of the individuals listed at the
end of this report, each of whom is not currently employed by the Company.
Compensation Philosophy. The Committee's objective is to develop a
total compensation program that is competitive in the marketplace and which
provides significant incentive to increase shareholder value. The Committee
reviews the executive compensation policies with respect to market
competitiveness of the program and then determines what changes, if any, are
appropriate in the compensation program. Compensation of the Company's executive
officers currently consists of three key elements: salary, bonus and stock
options.
Base Salary. To determine the salary for executives, the Committee may
consult an executive search firm to ascertain competitive pay standard for the
industry. In reviewing executive salaries, the Committee considers management's
recommendations for the particular executive officer and the executive's
experience, expertise and demonstrated performance. Mr. McNamee's base salary
was set at $175,000. See "Executive Compensation Employment Agreement." Base
salary increases for executives other than Mr. McNamee were approved by the
Committee in August 1995.
Since the Company's initial public offering in March 1995, the
Committee has from time to time utilized an independent consultant who has
provided data regarding compensation practices in United States manufacturing
companies.
Cash Bonuses. In making determinations to award incentive payments, the
Committee reviews a variety of Company performance measures as well as an
individual's objectives and accomplishments. The source and amount of the annual
incentives to be paid to the Company's executives is subjective, with
consideration to revenue, net income and other assessments unique to individual
executives such as manufacturing scrap rates, first pass yield, employee
turnover, days sales outstanding, inventory turnover and cycle times. No
specific weight is applied to any item individually; however, the annual
incentive payment for the Chief Executive Officer is set by employment contract
through fiscal 1997. See "Executive Compensation - Employment Contracts,
Termination of Employment and Change in Control Arrangements."
Stock Options. Granting stock options is the Company's current method
of providing long-term incentive compensation opportunities to its executive
officers and other key employees, The Committee authorizes the issuance of all
stock options to executive officers and approves all other option grants. Stock
options allow the recipient to purchase shares of the Company's common stock
during a fixed period of time following the grant date at a specified price that
is not less that its fair market value on the grant date. See "1987 Stock Option
Plan." The period has typically been five years. The Company believes that this
form of long-term incentive is presently the
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<PAGE> 18
best vehicle by which to link stockholder and management interests, since value
is provided to recipients only if the stock price increases. The level of stock
options granted is subjective and reflects relative impact which a recipient is
expected to have on future corporate results. In making this determination, the
Committee considers the number of options held by the executive officer and the
dilution effect new grants may have on existing stockholders.
Section 162(m) of the Internal Revenue Code. The Committee has reviewed
the Company's compensation plans in light of changes to the Internal Revenue
Code relating to the disallowance of deductions for compensation in excess of
$1.0 million to certain executive officers. All compensation paid to executive
officers for fiscal 1996 is fully deductible. The Committee does not believe
that Section 162(m) limitations will be exceeded for compensation to be paid in
fiscal 1996.
COMPENSATION COMMITTEE DURING FISCAL 1996
<TABLE>
<S> <C> <C> <C>
Michael F. Jarko, Chairman Albert A. Irato David C. Wetmore John A. Carr
(until his term expired
in December 1995)
</TABLE>
16
<PAGE> 19
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total stockholder
return on the Company's Common Stock to the cumulative total return of (i) the
Nasdaq Stock Market Index (which includes the Company) and (ii) the Nasdaq Stock
SIC 3670-3679 Index ("Peer Group"), through July 31, 1996. The Nasdaq SIC
3670-3679 Index covers the electronic component and accessories industry and
includes the Company's SIC of 3672, printed circuit boards.
The graph is generated by assuming that $100 was invested on March 14,
1995 (the day on which the Company's Common Stock was registered under Section
12 of the Securities and Exchange Act of 1934, as amended) in the Company's
Common Stock, the Nasdaq Stock Market and the Nasdaq Stock SIC 3670-3679
Indices. The data further assumes the reinvestment of all cash dividends and the
cash value of other distributions. Stock price performance shown in the graph is
not necessarily indicative of future stock price performance.
COMPARISON OF TOTAL RETURNS AMONG CONTINENTAL CIRCUITS CORP.,
NASDAQ STOCK MARKET AND NASDAQ STOCKS SIC 3670-3679
INDICES FROM 3/14/95 TO 7/31/96
<TABLE>
Peer Group
Continental Nasdaq Stock (Companies
Measurement Period Circuits Market (US & of SIC 3670-3679)
(Fiscal Year Covered) Corp. Foreign)
<S> <C> <C> <C>
3/14/95 100.00 100.00 100.00
7/31/95 148.00 124.00 158.00
7/31/96 98.00 134.00 149.00
</TABLE>
17
<PAGE> 20
PROPOSAL 2
APPROVAL OF THE CONTINENTAL
CIRCUITS CORP. EMPLOYEE
STOCK PURCHASE PLAN
The complete text of the Continental Circuits Corp. Employee Stock
Purchase Plan (the "Stock Purchase Plan") is set forth as Exhibit A to this
Proxy Statement. The following summary of the material features of the Stock
Purchase Plan does not purport to be complete and is qualified in its entirety
by reference to Exhibit A.
The Stock Purchase Plan was adopted by the Board of Directors on
January 1, 1996. A total of 200,000 shares of Common Stock have been reserved
for issuance under the Stock Purchase Plan.
SUMMARY OF STOCK PURCHASE PLAN
Purpose. The purpose of this Employee Stock Purchase Stock Purchase
Plan is to provide employees with an opportunity to share in the growth of the
Company through a convenient, affordable and systematic method of investment in
the voting common stock of the Company. The Company believes that the Stock
Purchase Plan will advance the participating employees' realization that their
longer-range economic rewards are in some measure directly tied to their
individual performance on the job, and that it will provide a greater community
of interest between the shareholders and employees of the Company and any future
affiliates. The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Code. The provisions of the Stock
Purchase Plan shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that Section of the Code.
Administration. The Stock Purchase Plan is to be administered by the
Company or a party or entity appointed by the Company (the "Plan
Administrator"). The Stock Purchase Plan Administrator is to maintain Stock
Purchase Plan records and periodically provide statements of account to the
Participants, individually, and to the Company in the aggregate. All questions
of interpretation and construction are to be determined by the Company in its
sole discretion. The Company has the authority to issue, amend, and revoke rules
and regulations under the Stock Purchase Plan, to prescribe forms, and to
establish reasonable notice periods, including the revisions of any such periods
described in the Stock Purchase Plan, and to take any other action necessary or
desirable to administer the Stock Purchase Plan to accomplish its purposes.
Eligibility. Participation in the Stock Purchase Plan is completely
voluntary. Any person who is employed by the Company who is regularly scheduled
to work at least 20 hours per week and who has completed at least six months of
continuous service with the Company is eligible to participate in the Stock
Purchase Plan. No employee is to participate in the Stock Purchase Plan if (a)
such employee owns stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company, or (b) such employee's
rights to purchase stock under all employee stock purchase plans of the Company
would accrue at a rate which exceeds $25,000 in fair market value of the stock
for the calendar year.
Enrollment Dates. Any eligible employee may elect to participate in the
Stock Purchase Plan as of the first day of each calendar quarter (i.e., January
1, April 1, July 1 and October 1).
Participation in the Stock Purchase Plan. Eligible employees become
participants in the Stock Purchase Plan by completing a payroll deduction
authorization on the form provided by the Company and filing it with the
personnel office in accordance with rules established by the Company prior to
the applicable enrollment date. Payroll deductions for a participant will
commence on the first pay period following the enrollment date on which the
participant elects to purchase shares, and will end on the last day of the final
pay period of the three month period commencing on such enrollment date, unless
earlier terminated by the participant as provided in the Stock
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<PAGE> 21
Purchase Stock Purchase Plan. See "Continuation of Participation" and
"Withdrawal from the Stock Purchase Plan." The payroll deduction authorization
form must include the amount which the participant authorizes the Company to
withhold for the applicable quarterly investment period to be applied to the
purchase of shares of the common stock of the Company. The minimum payroll
deduction allowed is 1% of the participant's compensation (but not less than $20
for each quarterly investment period) and the maximum deduction allowed is 10%
of the participant's compensation. After the final pay period of the applicable
quarterly investment period, the Plan Administrator will make the share
investments, and shares shall be allocated to each participant's account in full
and fractional shares to three decimal places.
Purchase Price. The price of stock purchased with payroll deductions
made during the quarterly investment period is 85% of the fair market value of
the shares on the last business day of the quarterly investment period. The fair
market value of the shares at any date shall be (i) the reported closing price
of such stock on the New York Stock Exchange or other established stock exchange
or National Market System on such date, or if no sale of such stock shall have
been made on such exchange on that date, on the preceding date on which there
was such a sale, (ii) if such stock is not then listed on an exchange or the
National Market System, the average of the closing bid and asked prices per
share for such stock in the over-the-counter market as quoted on NASDAQ or the
pink sheets or successor publication of the National Quotation Bureau on such
date, or (iii) if such stock is not then listed or quoted as referenced above,
an amount determined in good faith by the Board of Directors of the Company or
the Plan Administrator.
Treatment of Dividends and Plan Expenses. Any quarterly cash dividends
declared by the Company will be calculated on both full and fractional shares in
the participant's account as of the dividend record date, and all dividends on
shares purchased under and held in the plan will be automatically reinvested in
shares. The Company will assume the cost of all brokerage commissions or service
charges for purchases of shares under the Stock Purchase Plan, and will pay all
costs incurred in the establishment and administration of the Stock Purchase
Plan. However, costs incurred by the Company or the Plan Administrator (e.g.,
brokerage commissions or other fees) for the sale of shares at the request of a
participant or in compliance with any other provisions established herein, will
be charged against the account of the participant.
Use of Funds. All payroll deductions received and/or temporarily held
by the Company pending the purchase of shares may be used by the Company for any
corporate purpose and the Company is not obligated to segregate such payroll
deductions. The Stock Purchase Plan makes no provision for the payment of
interest on a participant's payroll deductions.
Continuation of Participation. A participant's payroll deduction
authorization remains in effect for successive quarterly investment periods
unless modified by the Participant. A participant may modify a payroll deduction
authorization by completing an amended form and filing it with the personnel
office in accordance with rules established by the Company. The revised
authorization will be effective as of the next enrollment date. In the event a
participant terminates employment prior to the end of the quarterly investment
period, no additional shares shall be issued on behalf of the participant and
any payroll deductions held for the participant's benefit, and not yet applied
to the purchase of shares, will be appropriately distributed. An eligible
employee may terminate a payroll deduction authorization during a quarterly
investment period by completing the form provided by the Company and filing it
with the personnel office in accordance with rules established by the Company.
In such event, the participant may elect to have the payroll deductions then
held for the participant's benefit applied to purchase shares or appropriately
distributed.
Withdrawal from Stock Purchase Plan. In the event of a participant's
death, the person or persons specified as beneficiary may give notice to the
Company within 60 days of the death of the participant electing to sell all or
part of the shares in the participant's account and receive distribution of the
cash proceeds, net of any brokerage commissions or other fees incurred in the
sale transaction. If no such notice is received by the Company within said 60
days, the Plan Administrator will be directed to issue a certificate for whole
shares and a cash payment for any fractional share in the participant's account.
Upon termination of the participant's employment for any reason
19
<PAGE> 22
other than the death of the participant, the participant may give notice to the
Plan Administrator within 60 days of the effective termination date requesting
the sale of all or part of the whole shares in the participant's account and
receive distribution of the cash proceeds, net of any brokerage commissions or
other fees incurred in the sale transaction. If no such request is received by
the Plan Administrator within 60 days, the Plan Administrator will be directed
to issue a certificate for whole shares and a cash payment for any fractional
share in the participant's account. A participant may withdraw a portion or all
of the whole shares from his or her account at any time by filing a written
request for a certificate with the Plan Administrator. The Plan does not provide
for automatic reinvestment of future dividends on any shares withdrawn from the
Stock Purchase Plan. A participant may request the sale of a portion or all of
the whole shares in the participant's account by filing a written request with
the Plan Administrator. Expenses incurred in connection with the requested sale
of shares will be borne by the participant. See "Treatment of Directors and Plan
Expenses." The account of a Participant who ceases to be an eligible employee,
although still employed by the Company, shall remain in the Stock Purchase Plan;
subject to the Participant's right to request a withdrawal or sale.
Number of Shares Available. The maximum number of shares available to
be issued under the Stock Purchase Plan, subject to adjustment upon changes in
capitalization of the Company, is 200,000 shares. See "Capital Changes." If the
total number of shares to be purchased during a quarterly investment period
exceeds the maximum number of shares, the Company is to make a pro rata
allocation of the shares available for delivery and distribution in an nearly a
uniform manner as is practicable and equitable, and the balance of payroll
deductions credited to the account of each participant under the Stock Purchase
Plan will be returned to such participant as promptly as possible.
Capital Changes. If the outstanding shares of the Company have
increased, decreased, changed into, or been exchanged for a different number or
kind of shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split or similar
transaction, appropriate and proportionate adjustments may be made by the Plan
Administrator in the number and/or kind of shares which are subject to purchase
under outstanding options and on the option exercise price or prices applicable
to such outstanding options.
Designation of Beneficiary. A participant may file a written
designation of beneficiary (in form prescribed by the Company) who shall receive
payment of any accumulated payroll deductions and who may elect either to
receive a certificate evidencing the participant's shares or to sell the shares
in the participant's account in the event of such participant's death prior to
distribution of such shares and cash. Such designation of beneficiary may be
changed by the participant at any time by written notice delivered to the
Company in form prescribed by the Company. If upon the death of a participant
there is no surviving beneficiary duly designated as provided, the Company will
deliver accumulated payroll deductions, if any, and the Plan Administrator will
deliver a certificate for whole shares and a cash payment for any fractional
shares, to the executor or administrator of the estate of the participant.
Nontransferability. Neither payroll deductions effected by the Company
pending the purchase of shares nor the shares held in a participant's account
may be transferred, assigned, or pledged by the participant while those assets
are held in or appropriated for such account. If a participant wishes to
transfer or pledge shares held in a such participant's account, the participant
must first request that a certificate be issued for the number of account shares
which the participant wishes to transfer or pledge. Upon receipt of such
certificate, a transfer or pledge of the shares represented by the certificate
may be made by the participant in the usual manner of transfer.
Amendment or Termination. The Board of Directors of the Company may at
any time amend or terminate the Stock Purchase Plan. Upon termination,
certificates for whole shares held in the participant's account will be issued,
a cash payment will be made for any fraction of a share and the account will be
closed.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan is intended to qualify as an Employees' Stock
Purchase Plan under Section 423 of the Code. Accordingly, a participant will not
recognize taxable income at the time Shares are acquired under the Purchase
Plan. If the participant disposes of the Shares within two years after the date
of acquisition, the employee must recognize compensation income in the year of
disposition equal to the difference between the fair market value of the Shares
on the date of acquisition and the purchase price. The difference between the
amount received upon disposition and the participant's basis in the Shares (the
amount paid for the Shares plus the amount included in gross income as
compensation) will be treated as a capital gain or loss. If the participant
disposes of the Shares more than two years after the date of acquisition, the
participant must recognize compensation income in the year of disposition equal
to the lesser of (i) the excess of the fair market value of the stock at the
time of disposition over the purchase price or (ii) the excess of the fair
market value of the stock at the time of acquisition over the purchase price.
The difference between the amount received upon disposition and the
participant's basis in the Shares (the sum of the amount paid for the Shares
plus the amount included in gross income as compensation) will be treated as
long-term capital gain or loss.
The Company is generally not entitled to a deduction with respect to
Shares purchased under a Section 423 plan. The Company will be entitled to a
corresponding deduction, however, if an employee disposes of the stock before
the expiration of the two year holding period described above. In such case, the
Company will be entitled to a deduction equal to the amount of compensation
income recognized by the participant.
This summary description is based upon the presently applicable
provisions of the Code and is subject to change in the event of a change in
either the Code or interpretations thereof. Each Purchase Plan participant is
urged to consult his personal tax advisor as to the tax effects in his
individual situation of his participation in the Purchase Plan, including the
effects under state income tax or other tax laws which may be applicable.
VALUATION
As of October 24, 1996, the last sale price of the Company's Common
Stock as reported on the Nasdaq National Market was $11.25 per share.
STOCK PURCHASES
As of October 1, 1996, a total of 18,019 shares have been purchased by
employees of the Company pursuant to the Stock Purchase Plan. No individual
employee of the Company may participate if such employee owns 5% or more of the
voting power or value of all classes of the Company's securities, or has rights
to purchase securities under all Company employee stock purchase plans which
would accrue at a rate which exceeds $25,000 in fair market value for the
calendar year.
RECOMMENDATION
The Board of Directors unanimously recommends that the stockholders
vote FOR approval of this Proposal approving the Company's Stock Purchase Plan.
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PROPOSAL 3
APPROVAL OF THE CONTINENTAL
CIRCUITS CORP. 1996 STOCK
OPTION PLAN
The complete text of the Continental Circuits Corp. 1996 Stock Option
Plan (the "1996 Plan") is set forth as Exhibit B to this Proxy Statement. The
following summary of the material features of the 1996 Plan does not purport to
be complete and is qualified in its entirety by reference to Exhibit B.
The 1996 Plan was adopted by the Board of Directors on October 29,
1996. A total of 1,000,000 shares of Common Stock have been reserved for
issuance under the 1996 Plan.
SUMMARY OF THE 1996 PLAN
Purposes. The purpose of the 1996 Plan is to attract and retain the
best available directors and employees of the Company or any parent or
subsidiary or affiliate of the Company which now exists or hereafter is
organized or acquired by or acquires the Company, as well as appropriate third
parties who can provide valuable services to the Company, to provide additional
incentive to such persons and to promote the success of the business of the
Company.
Administration. The 1996 Plan is administered by the Board of Directors
or a Committee of the Board of Directors appointed by the Board and constituted
so as to permit the 1996 Plan to comply with Rule 16b-3. The administering body
is referred to herein as the "Committee." The Committee determines the persons
to whom stock options will be granted, the terms of such grants and the number
of shares subject to options. The 1996 Plan provides for the grant of options
which qualify as "Incentive Stock Options" (sometimes referred to herein as
"ISOs") under Section 422 of the Code and nonstatutory stock options which do
not specifically qualify for favorable income tax treatment under the Code
(sometimes referred to herein as "NSOs").
Eligibility and Participation. Any employee of the Company or any of
its subsidiaries is eligible to receive options under the 1996 Plan. Nonemployee
directors are eligible to receive only NSOs under the 1996 Plan while employee
directors are eligible for both ISOs and NSOs. In addition, any other individual
whose participation the Committee determines is in the best interests of the
Company is eligible to receive only NSOs under the 1996 Plan. The Committee has
complete discretion to determine which eligible individuals are to receive
option grants. In general, the only consideration received by the Company for
the grant of an award will be past services or the expectation of future
services, or both. The 1996 Plan does not confer on any participant in the 1996
Plan (a "Participant") any right with respect to continued employment or other
services to the Company and will not interfere in any manner with the right of
the Company to terminate a Participant's employment or other services.
Stock Subject to the 1996 Plan. The aggregate number of shares which
may be issued pursuant to the exercise of options granted under the 1996 Plan is
1,000,000 shares of the Company's Common Stock, subject to adjustments in
certain circumstances, including reorganizations, recapitalizations, stock
splits, reverse stock splits, stock dividends and the like. If any outstanding
option grant under the 1996 Plan for any reason expires or is terminated, the
shares of Common Stock allocable to the unexercised portion of the option grant
shall again be available for options under the 1996 Plan as if no options had
been granted with respect to those shares.
Limitations on Awards. No grants are required to be made during any
calendar year. No ISO may be exercised more than ten years from the date of
grant (five years in the case of a grant to a Participant owning more than 10%
or more of the total combined voting power of all classes of stock of the
Company or any ISO Group member), immediately after the date the Participant
ceases to perform services for the Company or any ISO Group member (for reasons
other than death or disability), one year after the date the Participant ceases
to perform services
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for the Company or any ISO Group member if cessation is due to death or
disability, or the date the Participant ceases to perform services for the
Company or any ISO Group member if cessation is for cause. No NSO may be
exercised more than ten years from the date of grant, one year after the date
the Participant ceases to perform services for the Company or any Affiliated
Group member (for reasons other than death, disability, retirement or cause),
two years after the date the Participant cease to perform services for the
Company or any Affiliated Group member if cessation is due to death, disability
or retirement, or the date the Participant ceases to perform services for the
Company or any Affiliated Group member if cessation is for cause.
Pricing and Payment of Options. The per share exercise price of each
stock option granted under the 1996 Plan will be established by the Committee at
the time of grant. Subject to the provisions of the Internal Revenue Code of
1986, as amended, grants to Participants may be either ISOs or NSOs. In the case
of an ISO, the per share exercise price may be no less than 100% of the fair
market value of a share of Common Stock on the date of grant (110% in the case
of a Participant who owns, directly or indirectly, 10% or more of the
outstanding voting power of all classes of stock of the Company). The per share
exercise price of a Nonqualified Stock Option may be any amount determined in
good faith by the Committee. With respect to ISOs, the aggregate fair market
value of the Common Stock for which one or more options granted to a Participant
may become exercisable during any one calendar year may not exceed $100,000. The
fair market value of the Common Stock equals the closing price on the date in
question as reported by the Nasdaq National Market.
Under the 1996 Plan, the purchase price of an option is payable upon
exercise: (i) in cash; (ii) by check; (iii) to the extent permitted by the
particular option grant, by transferring to the Company shares of Common Stock
of the Company at their fair market value as of the option exercise date
(provided that the Participant held the shares of stock for at least six
months); or (iv) through a sale and remittance procedure by which a Participant
delivers concurrent written instructions to a Company-designated brokerage firm
to sell immediately the purchased Common Stock and remit to the Company
sufficient funds to pay for the options exercised and by which the certificates
for the purchased Common Stock are delivered directly to the brokerage firm. The
Company may also extend and maintain, or arrange for the extension and
maintenance of, credit to a Participant to finance the purchase of shares
pursuant to the exercise of options, on such terms as may be approved by the
Board of Directors or the Committee, subject to applicable regulations of the
Federal Reserve Board and any other applicable laws or regulations in effect at
the time such credit is extended.
The Committee may require, as a condition to exercise of an option,
that the Participant pay to the Company, in cash or in shares of the Common
Stock of the Company, the entire amount of taxes which the Company is required
to withhold by reason of such exercise, in such amount as the Committee or the
Board of Directors may determine. Alternatively, the Participant may elect,
subject to rules adopted by the Committee or the Board of Directors, or the
Company may require that the Company withhold from the shares to be issued that
number of shares having a fair market value equal to the amount which the
Company is required to withhold.
Exercise. As described above, the Committee has the authority to
determine the vesting and exercise provisions of all grants under the 1996 Plan.
In general under the 1996 Plan, no option shall be exercisable during the
lifetime of a Participant by any person other than the Participant, his or her
guardian or legal representative.
Accelerating Events. The options granted under the 1996 Plan become
fully exercisable if the Company is dissolved or liquidated, subject to certain
reorganizations, mergers, or consolidations, is acquired or subject to a hostile
takeover attempt, undergoes a change in control or if there is an announcement
or proxy solicitation relating to such events.
Restricted Stock. The Committee, at any time, may grant awards of
restricted stock under the 1996 Plan; provided, however, that no more than
75,000 shares of restricted stock may be granted in the aggregate during any
calendar year. The Committee may condition the grant of restricted stock upon
the attainment of specified levels of revenue, earnings per share, net income,
return on assets, return on sales, customer satisfaction, stock price, costs,
individual performance measures or such other factors or criteria as the
Committee shall determine. The
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provisions of various restricted stock awards need not be identical; provided,
however, that such restricted stock awards shall be subject to the following
terms and conditions: (i) until all applicable restrictions lapse, the grantee
shall not be permitted to sell, assign, transfer, pledge, or otherwise encumber
the shares of restricted stock; (ii) the grantee shall have all of the rights of
a shareholder of the Company with respect to the shares of restricted stock
(including the right to vote the shares and the right to receive any cash
dividends); (iii) unless otherwise provided in the applicable restricted stock
agreement or pursuant to (iv) below, all shares of restricted stock shall be
forfeited by the grantee upon termination of employment; (iv) in the event of a
hardship or other special circumstances under which a grantee's employment is
involuntarily terminated (other than for cause), the Committee may waive in
whole or in part any or all remaining restrictions attendant to shares of
restricted stock held by such grantee; (v) upon the lapse of all applicable
restrictions, unlegended certificates for such shares shall be delivered to the
grantee; and (vi) each award shall be subject to the terms of a restricted stock
agreement. All grantees of restricted stock shall be issued a certificate in
respect of such shares, registered in such grantee's name and bearing an
appropriate legend. In its discretion, the Committee may require that the
certificates evidencing such shares of restricted stock be held in custody by
the Company until the restrictions thereon have lapsed.
Termination or Amendment of the 1996 Plan. The Board of Directors may
amend or modify the 1996 Plan at any time; provided, that shareholder approval
shall be obtained for any action for which shareholders approval is required in
order to comply with Rule 16b-3, the Code, or other applicable laws or
regulatory requirements within such time periods prescribed. The 1996 Plan will
terminate on December 13, 2006, unless sooner terminated by the Board of
Directors.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The discussion that follows is a summary, based upon current law, of
some of the significant federal income tax considerations relating to awards
under the 1996 Plan. The following discussion does not address state, local or
foreign tax consequences.
A Participant will not recognize taxable income upon the grant or
exercise of an ISO. However, upon the exercise of an ISO, the excess of the fair
market value of the shares received on the date of exercise over the exercise
price of the shares will be treated as a tax preference item for purposes of the
alternative minimum tax. In order for the exercise of an ISO to qualify for the
foregoing tax treatment, the Participant generally must be an employee of the
Company from the date the ISO is granted through the date three months before
the date of exercise, except in the case of death or disability, where special
rules apply. The Company will not be entitled to any deduction with respect to
the grant or exercise of an ISO.
If shares acquired upon exercise of an ISO are not disposed of by the
Participant within two years from the date of grant or within one year after the
transfer of such shares to the Participant (the "ISO Holding Period"), then (i)
no amount will be reportable as ordinary income with respect to such shares by
the Participant and (ii) the Company will not be allowed a deduction in
connection with such ISO or the Common Stock acquired pursuant to the exercise
of the ISO. If a sale of such Common Stock occurs after the ISO Holding Period
has expired, then any amount recognized in excess of the exercise price will be
reportable as a long-term capital gain, and any amount recognized below the
exercise price will be reportable as a long-term capital loss. The exact amount
of tax payable on a long-term capital gain will depend upon the tax rates in
effect at the time of the sale. The ability of a Participant to utilize a
long-term capital loss will depend upon the statutory limitations on capital
loss deductions not discussed herein.
A "disqualifying disposition" will generally result if Common Stock
acquired upon the exercise of an ISO is sold before the ISO Holding Period has
expired. In such case, at the time of a disqualifying disposition, the
Participant will recognize ordinary income in the amount of the difference
between the exercise price and the lesser of (i) the fair market value on the
date of exercise or (ii) the amount realized on disposition. The Participant
will report as a capital gain any amount recognized in excess of the fair market
value on the date of exercise, and the Company will be allowed a deduction on
its federal income tax return in the year of the disqualifying disposition
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equal to the ordinary income recognized by the Participant. If the amount
realized on the sale is less than the exercise price, then the Participant will
recognize no ordinary income, and the recognized loss will be reportable as a
capital loss.
In general, a Participant to whom a Nonqualified Option is granted will
recognize no taxable income at the time of the grant. Upon exercise of a
Nonqualified Option, the Participant will recognize ordinary income in an amount
equal to the amount by which the fair market value of the Common Stock on the
date of exercise exceeds the exercise price of the Nonqualified Option, and the
Company will generally be entitled to a deduction equal to the ordinary income
recognized by the Participant in the year the Participant recognizes ordinary
income, subject to the limitations of Section 162(m) of the Code.
VALUATION
As of October 24, 1996, the last trade price for the Company's Common
Stock, as reported by the Nasdaq National Market, was $11.25 per share.
RECOMMENDATION
The Board of Directors unanimously recommends that the stockholders
vote FOR approval of this Proposal approving the Company's 1996 Stock Option
Plan.
INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors to audit the consolidated financial statements of the Company for the
fiscal year ending July 31, 1997. Ernst & Young LLP has audited the Company's
financial statements annually since fiscal 1992. Its representatives are
expected to be present at the Meeting with the opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matter properly comes before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy card to vote the shares
represented as the Board of Directors may recommend.
STOCKHOLDER PROPOSALS
Proposals of the stockholders of the Company which are intended to be
presented by such stockholders at the Company's Annual Meeting for the fiscal
year ended July 31, 1997 must be received by the Company no later than July 16,
1997 in order that they may be considered for inclusion in the proxy statement
and form of proxy relating to that meeting. Additionally, if a stockholder
wishes to present to the Company an item for consideration as an agenda item for
a meeting, the stockholder must timely give notice to the Secretary and give a
brief description of the business desired to be discussed. To be timely for this
Annual Meeting, such notice must be delivered to or mailed to and received by
the Company no later than 5:00 p.m. local time on November 13, 1996.
The foregoing notice and Proxy Statement are sent by order of the Board
of Directors.
CONTINENTAL CIRCUITS CORP.
Joseph G. Andersen
Secretary
Phoenix, Arizona
November 1, 1996
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APPENDIX A
CONTINENTAL CIRCUITS CORP.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
Purpose
The purpose of this Employee Stock Purchase Plan is to provide employees with an
opportunity to share in the growth of Continental Circuits Corp. through a
convenient, affordable and systematic method of investment in the voting common
stock of Continental Circuits Corp. It is believed the Plan will advance the
participating employees' realization that their longer-range economic rewards
are in some measure directly tied to their individual performance on the job,
and that it will provide a greater community of interest between the
shareholders and employees of Continental Circuits Corp. and any future
affiliates. It is the intention of the Company to have the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The provisions of the Plan shall be construed so
as to extend and limit participation in a manner consistent with the
requirements of that Section of the Code.
ARTICLE II
Definitions
2.1 "Plan" means the Continental Circuits Corp. Employee Stock Purchase
Plan.
2.2 "Company" means Continental Circuits Corp. and any of its Affiliates
which are authorized by Continental Circuits Corp. to participate in
this Plan.
2.3 "Affiliate" means any corporation, partnership, joint venture or other
entity, domestic or foreign, in which Continental Circuits Corp.,
either directly or through another affiliate or affiliates, has a 50%
or more ownership interest.
2.4 "Employee" means any person who is employed by the Company.
2.5 "Eligible Employee" means an Employee who is regularly scheduled to
work at least 20 hours per week and who has completed at least six (6)
months of continuous service with the Company.
2.6 "Participant" means an Eligible Employee who has elected to participate
in the Plan in accordance with Article III.
2.7 "Enrollment Date" means the first day of each subsequent calendar
quarter (i.e., January 1, April 1, July 1 and October 1).
2.8 "Quarterly Investment Period" means the three month period beginning on
each Enrollment Date over which Eligible Employees may elect to
purchase Shares.
2.9 "Plan Administrator" shall mean the Company, or the party or entity
appointed by the Company to administer this Plan.
2.10 "Shares" shall mean common stock of Continental Circuits Corp.
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ARTICLE III
Eligibility and Participation
3.1 Any Eligible Employee may elect to participate in the Plan as of any
Enrollment Date by completing a payroll deduction authorization on the
form provided by the Company and filing it with the personnel office in
accordance with rules established by the Company.
3.2 Notwithstanding any provisions of the Plan to the contrary, no Employee
shall participate in the Plan if:
(a) such Employee owns stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the
Company (for purposes of this paragraph, the rules of Section
424(d) of the Code shall apply in determining stock ownership
of any employee and stock which the Employee may purchase
under outstanding options shall be treated as stock owned by
the Employee); or
(b) his rights to purchase stock under all employee stock purchase
plans of the Company would accrue at a rate which exceeds
$25,000 in fair market value of the stock for the calendar
year.
ARTICLE IV
Stock Offering
4.1 The price of stock purchased with payroll deductions made during the
Quarterly Investment Period shall be equal to 85% of the fair market
value of the Shares on the last business day of the Quarterly
Investment Period.
4.2 For purposes of the Plan, "fair market value" at any date shall be (i)
the reported closing price of such stock on the New York Stock Exchange
or other established stock exchange or National Market System on such
date, or if no sale of such stock shall have been made on such exchange
on that date, on the preceding date on which there was such a sale,
(ii) if such stock is not then listed on an exchange or the National
Market System, the average of the closing bid and asked prices per
share for such stock in the over-the-counter market as quoted on NASDAQ
or the pink sheets or successor publication of the National Quotation
Bureau on such date, or (iii) if such stock is not then listed or
quoted as referenced above, an amount determined in good faith by the
Board or the Plan Administrator.
ARTICLE V
Payroll Deductions
5.1 The payroll deduction authorization completed by the Participant shall
state the amount which the Participant authorizes the Company to
withhold from the Participant's compensation over the Quarterly
Investment Period and to be applied to the purchase of Shares. The
minimum payroll deduction shall be 1% of the Participant's compensation
(but not less than $20 per Quarterly Investment Period) and the maximum
deduction shall be 10% of the Participant's compensation.
5.2 All payroll deductions made for Participants shall be recorded by the
Company through the final pay period of the Quarterly Investment
Period, after which time the Company shall transfer all Participants'
deductions to the Plan Administrator for the sole purpose of making the
Share investments provided hereunder. Following the investment, Shares
shall be allocated to each Participant's account in full and fractional
Shares to three decimal places.
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5.3 A payroll deduction authorization shall remain in effect for successive
Quarterly Investment Periods unless modified by the Participant. A
Participant may modify a payroll deduction authorization by completing
an amended form and filing it with the personnel office in accordance
with rules established by the Company. The revised authorization shall
be effective as of the next Enrollment Date.
5.4 In the event a Participant terminates employment prior to the end of
the Quarterly Investment Period, no additional Shares shall be issued
on behalf of the Participant and any payroll deductions held for the
Participant's benefit, and not yet applied to the purchase of Shares,
shall be appropriately distributed.
5.5 An Eligible Employee may terminate a payroll deduction authorization
during a Quarterly Investment Period by completing the form provided by
the Company and filing it with the personnel office in accordance with
rules established by the Company. In such event, the Participant may
elect to have the payroll deductions then held for the Participant's
benefit applied to purchase Shares or appropriately distributed.
ARTICLE VI
Treatment of Dividends
6.1 Any quarterly cash dividends declared by the Company will be calculated
on both full and fractional Shares in the Participant's account as of
the dividend record date.
6.2 All dividends on Shares purchased under and held in the Plan will be
automatically reinvested in Shares.
ARTICLE VII
Treatment of Plan Expenses
7.1 The Company shall assume the cost of all brokerage commissions or
service charges for purchases of Shares under the Plan. In addition,
the Company shall pay all costs incurred in the establishment and
administration of the Plan.
7.2 Costs incurred by the Company or the Plan Administrator (e.g.,
brokerage commissions or other fees) for the sale of Shares at the
request of a Participant or in compliance with any other provisions
established herein, will be charged against the account of the
Participant.
ARTICLE VIII
Death, Withdrawal or Termination
8.1 In the event of a Participant's death, the person or persons specified
as beneficiary in Article XII may give notice to the Company within 60
days of the death of the Participant electing to sell all or part of
the Shares in the Participant's account and receive distribution of the
cash proceeds, net of any brokerage commissions or other fees incurred
in the sale transaction. The Plan Administrator will effect the sale as
soon as practicable after receipt of the written request. If no such
notice is received by the Company within said 60 days, the Plan
Administrator will be directed to issue a certificate for whole Shares
and a cash payment for any fractional share in the Participant's
account.
8.2 Upon termination of the Participant's employment for any reason other
than the death of the Participant, the Participant may give notice to
the Plan Administrator within 60 days of the effective termination date
requesting the sale of all or part of the whole Shares in the
Participant's account and receive distribution
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of the cash proceeds, net of any brokerage commissions or other fees
incurred in the sale transaction. The Plan Administrator will effect
the sale as soon as practicable after receipt of the written request.
If no such request is received by the Plan Administrator within 60
days, the Plan Administrator will be directed to issue a certificate
for whole Shares and a cash payment for any fractional share in the
Participant's account.
8.3 A Participant may withdraw a portion or all of the whole Shares from
his or her account at any time by filing a written request for a
certificate with the Plan Administrator. The Plan shall not provide for
automatic reinvestment of future dividends on any Shares withdrawn from
the Plan.
8.4 A Participant may request the sale of a portion or all of the whole
Shares in the Participant's account by filing a written request with
the Plan Administrator. As provided in Section 7.2, expenses incurred
in connection with the requested sale of Shares will be borne by the
Participant.
8.5 The account of a Participant who ceases to be an Eligible Employee,
although still employed by the Company, shall remain in the Plan;
subject to the Participant's right to request a withdrawal or sale
under Section 8.3 or 8.4 above.
ARTICLE IX
Amendment of the Plan
9.1 The Board of Directors of Continental Circuits Corp. may at any time
amend or terminate the Plan. Upon termination, certificates for whole
Shares held in the Participant's account under the Plan will be issued,
a cash payment will be made for any fraction of a Share and the account
will be closed.
ARTICLE X
Nontransferability
10.1 Neither payroll deductions effected by the Company pending the purchase
of Shares nor the Shares held in a Participant's Plan account may be
transferred, assigned, or pledged by the Participant while those assets
are held in or appropriated for the Plan account.
10.2 If a Participant wishes to transfer or pledge Shares held in a Plan
account, the Participant must first request that a certificate be
issued for the number of Plan account Shares which the Participant
wishes to transfer or pledge. Upon receipt of such certificate, a
transfer or pledge of the Shares represented by the certificate may be
made by the Participant in the usual manner of transfer.
ARTICLE XI
Use of Funds
11.1 All payroll deductions received and/or temporarily held by the Company
pending the purchase of Shares under this Plan may be used by the
Company for any corporate purpose and the Company shall not be
obligated to segregate such payroll deductions.
11.2 The Plan makes no provision for the payment of interest on a
Participant's payroll deductions, since the Plan provides for and
anticipates the regular investment of the Participant's funds in Shares
of the Company's stock.
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ARTICLE XII
Beneficiary Designation
A Participant may file a written designation of beneficiary (in form prescribed
by the Company) who shall receive payment of any accumulated payroll deductions
and who may elect either to receive a certificate evidencing the Participant's
Shares or to sell the Shares in the Participant's account in the event of such
Participant's death prior to distribution of such Shares and cash. Such
designation of beneficiary may be changed by the Participant at any time by
written notice delivered to the Company in form prescribed by the Company. If
upon the death of a Participant there is no surviving beneficiary duly
designated as provided, the Company shall deliver accumulated payroll
deductions, if any, and the Plan Administrator shall deliver a certificate for
whole Shares and a cash payment for any fractional Shares, to the executor or
administrator of the estate of the Participant.
ARTICLE XIII
Registration of Shares
The offering of the Shares hereunder may be subject to the effecting by
Continental Circuits Corp. of registration or qualification of the Shares under
any federal or state law or the obtaining of the consent or approval of any
governmental regulatory body which Continental Circuits Corp. shall determine,
in its sole discretion, is necessary or desirable as a condition to, or in
connection with, the offering or the issue or purchase of the Shares covered
thereby. Continental Circuits Corp. shall make every reasonable effort to effect
such registration or qualification or to obtain such consent or approval.
ARTICLE XIV
Voting of Shares
A proxy card will be forwarded to each Participant prior to any Shareholders'
Meeting representing both the number of Shares registered in the Participant's
name and the number of full Shares credited to the Participant's Plan account.
All such Shares will be voted in accordance with the Participant's instructions
on the proxy cards.
ARTICLE XV
Administration
15.1 The Plan shall be administered by the Plan Administrator. The Plan
Administrator shall maintain Plan records and periodically provide
statements of account to the Participants, individually, and to the
Company in the aggregate.
15.2 The Plan shall be interpreted and construed by the Company in its sole
discretion. The Company shall have the authority to issue, amend, and
revoke rules and regulations under the Plan, to prescribe forms, and to
establish reasonable notice periods, including the revisions of any
such periods described in the Plan, and to take any other action
necessary or desirable to administer the Plan to accomplish its
purposes.
ARTICLE XVI
Number of Shares
16.1 The maximum number of shares which shall be issued under the Plan,
subject to adjustment upon changes in capitalization of the Company as
provided in Section 16.2, shall be 200,000 Shares. If the total number
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of Shares to be purchased during a Quarterly Investment Period in
accordance with Article V exceeds the maximum number of Shares, the
Company shall make a pro rata allocation of the Shares available for
delivery and distribution in an nearly a uniform manner as shall be
practicable and as it shall determine to be equitable, and the balance
of payroll deductions credited to the account of each Participant under
the Plan shall be returned to him as promptly as possible.
16.2 If the outstanding Shares of the Company have increased, decreased,
changed into, or been exchanged for a different number or kind of
shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split or
similar transaction, appropriate and proportionate adjustments may be
made by the Committee in the number and/or kind of Shares which are
subject to purchase under outstanding options and on the option
exercise price or prices applicable to such outstanding options.
ARTICLE XVII
Miscellaneous
17.1 This Plan is adopted as of January 1, 1996; provided, however that the
Plan shall only be treated as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code if the Plan is approved by the
holders of the majority of the common stock of the Company on or before
December 31, 1996.
17.2 Participation in the Plan does not constitute a guaranty or contract of
employment with the Company and shall, in no way, interfere with any
rights of the Company to determine the Employee's employment with the
Company.
17.3 The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each
employee participating in the Plan, including, without limitation, such
employee's estate and the executors, administrators or trustees
thereof, heirs and legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such employee.
17.4 The law of the State of Arizona will govern all matters relating to
this Plan except to the extent it is superseded by the laws of the
United States.
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APPENDIX B
CONTINENTAL CIRCUITS CORP.
1996 STOCK OPTION PLAN
1. PURPOSE
The purposes of the 1996 Stock Option Plan (the "Plan") of Continental
Circuits Corp., a Delaware corporation (the "Company"), are to attract and
retain the best available employees and directors of the Company or any parent
or subsidiary or affiliate of the Company which now exists or hereafter is
organized or acquired by or acquires the Company, as well as appropriate third
parties who can provide valuable services to the Company, to provide additional
incentive to such persons and to promote the success of the business of the
Company. This Plan is intended to comply with Rule 16b-3 under Section 16 of the
Securities Exchange Act of 1934, as amended or any successor rule ("Rule
16b-3"), and the Plan shall be construed, interpreted and administered to comply
with Rule 16b-3 and Section 162(m) of the Code ("Section 162(m)").
2. DEFINITIONS
(a) "Affiliate" means any corporation, partnership, joint venture or
other entity, domestic or foreign, in which the Company, either directly or
through another affiliate or affiliates, has a 50% or more ownership interest.
(b) "Affiliated Group" means the group consisting of the Company and
any entity that is an "affiliate," a "parent" or a "subsidiary" of the Company.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the Compensation or Stock Option Committee of the
Board (as designated by the Board), if such a committee has been appointed.
(e) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(f) "Incentive Stock Options" means options intended to qualify as
incentive stock options under Section 422 of the Code, or any successor
provision.
(g) "ISO Group" means the group consisting of the Company and any
corporation that is a "parent" or a "subsidiary" of the Company.
(h) "Nonemployee Director" shall have the meaning assigned in Section
4(a)(ii) hereof.
(i) "Nonqualified Stock Options" means options that are not intended to
qualify for favorable income tax treatment under Sections 421 through 424 of the
Code.
(j) "Parent" means a corporation that is a "parent" of the Company
within the meaning of Code Section 424(e).
(k) "Section 16" means Section 16 of the Securities Exchange Act of
1934, as amended.
(l) "Subsidiary" means a corporation that is a "subsidiary" of the
Company within the meaning of Code Section 424(f).
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<PAGE> 35
3. INCENTIVE AND NONQUALIFIED STOCK OPTIONS
Two types of options (referred to herein as "options," without
distinction between such two types) may be granted under the Plan: Incentive
Stock Options and Nonqualified Stock Options.
4. ELIGIBILITY AND ADMINISTRATION
(a) Eligibility. The following individuals shall be eligible to receive
grants pursuant to the Plan as follows:
(i) Any employee (including any officer or director who is an
employee) of the Company or any ISO Group member shall be eligible to receive
either Incentive Stock Options or Nonqualified Stock Options under the Plan. An
employee may receive more than one option under the Plan.
(ii) Any director who is not an employee of the Company or any
Affiliated Group member (a "Nonemployee Director") shall be eligible to receive
only Nonqualified Stock Options.
(iii) Any other individual whose participation the Board or
the Committee determines is in the best interests of the Company shall be
eligible to receive Nonqualified Stock Options.
(b) Administration. The Plan may be administered by the Board or by a
Committee appointed by the Board which is constituted so to permit the Plan to
comply under Rule 16b-3 and Section 162(m). The Company shall indemnify and hold
harmless each director and Committee member for any action or determination made
in good faith with respect to the Plan or any option. The Board or the Committee
shall have full and final authority to waive, in whole or in part, any
limitations, restrictions or conditions previously imposed on any option.
Determinations by the Committee or the Board shall be final and conclusive upon
all parties.
5. SHARES SUBJECT TO OPTIONS
The stock available for grant of options under the Plan shall be shares
of the Company's authorized but unissued or reacquired voting common stock. The
aggregate number of shares that may be issued pursuant to exercise of options
granted under the Plan shall be 1,000,000 shares. If any outstanding option
grant under the Plan for any reason expires or is terminated, the shares of
common stock allocable to the unexercised portion of the option grant shall
again be available for options under the Plan as if no options had been granted
with respect to such shares. No individual may be granted options covering more
than 200,000 shares in any calendar year.
6. TERMS AND CONDITION OF OPTIONS
Option grants under the Plan shall be evidenced by agreements in such
form and containing such provisions as are consistent with the Plan as the Board
or the Committee shall from time to time approve. Each agreement shall specify
whether the option(s) granted thereby are Incentive Stock Options or
Nonqualified Stock Options. Such agreements may incorporate all or any of the
terms hereof by reference and shall comply with and be subject to the following
terms and conditions:
(a) Shares Granted. Each option grant agreement shall specify the
number of Incentive Stock Options and/or Nonqualified Stock Options being
granted; one option shall be deemed granted for each share of stock. In
addition, each option grant agreement shall specify the exercisability and/or
vesting schedule of such options, if any.
(b) Purchase Price. The purchase price for a share subject to (i) a
Nonqualified Stock Option may be any amount determined in good faith by the
Committee, and (ii) an Incentive Stock Option shall not be less than 100% of the
fair market value of the share on the date the option is granted, provided,
however, the option price
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of an Incentive Stock Option shall not be less than 110% of the fair market
value of such share on the date the option is granted to an individual then
owning (after the application of the family and other attribution rules of
Section 424(d) or any successor rule of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any ISO Group
member. For purposes of the Plan, "fair market value" at any date shall be (i)
the reported closing price of such stock on the New York Stock Exchange or other
established stock exchange or Nasdaq National Market on such date, or if no sale
of such stock shall have been made on that date, on the preceding date on which
there was such a sale, (ii) if such stock is not then listed on an exchange or
the Nasdaq National Market, the last trade price per share for such stock in the
over-the-counter market as quoted on Nasdaq or the pink sheets or successor
publication of the National Quotation Bureau on such date, or (iii) if such
stock is not then listed or quoted as referenced above, an amount determined in
good faith by the Board or the Committee.
(c) Termination. Unless otherwise provided herein or in a specific
option grant agreement which may provide for accelerated vesting and/or longer
or shorter periods of exercisability, no option shall be exercisable after the
expiration of the earliest of
(i) in the case of an Incentive Stock Option:
(1) 10 years from the date the option is granted, or five
years from the date the option is granted to an individual owning
(after the application of the family and other attribution rules of
Section 424(d) of the Code) at the time such option was granted, more
than 10% of the total combined voting power of all classes of stock of
the Company or any ISO Group member,
(2) immediately after the date the optionee ceases to
perform services for the Company or any ISO Group member, if such
cessation is for any reason other than death, disability (within the
meaning of Code Section 22[e][3]), or cause,
(3) one year after the date the optionee ceases to perform
services for the Company or any ISO Group member, if such cessation is
by reason of death or disability (within the meaning of Code Section
22[e][3]), or
(4) the date the optionee ceases to perform services for
the Company or any ISO Group member, if such cessation is for cause, as
determined by the Board or the Committee in its sole discretion;
(ii) in the case of a Nonqualified Stock Option;
(1) 10 years from the date the option is granted,
(2) one year after the date the optionee ceases to perform
services for the Company or any Affiliated Group member, if such
cessation is for any reason other than death, permanent disability,
retirement or cause,
(3) two years after the date the optionee ceases to perform
services for the Company or any Affiliated Group member, if such
cessation is by reason of death, permanent disability or retirement, or
(4) the date the optionee ceases to perform services for
the Company or any Affiliated Group member, if such cessation is for
cause, as determined by the Board or the Committee in its sole
discretion;
provided, that, unless otherwise provided in a specific option grant agreement,
an option shall only be exercisable for the periods above following the date an
optionee ceases to perform services to the extent the option was exercisable on
the date of such cessation.
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(d) Method of Payment. The purchase price for any share purchased
pursuant to the exercise of an option granted under the Plan shall be paid in
full upon exercise of the option by any of the following methods, (i) by cash,
(ii) by check, or (iii) to the extent permitted under the particular grant
agreement, by transferring to the Company shares of stock of the Company at
their fair market value as of the date of exercise of the option as determined
in accordance with paragraph 6(b), provided that the optionee held the shares of
stock for at least six months. Notwithstanding the foregoing, the Company may
arrange for or cooperate in permitting broker-assisted cashless exercise
procedures. The Company may also extend and maintain, or arrange for the
extension and maintenance of, credit to an optionee to finance the optionee's
purchase of shares pursuant to the exercise of options, on such terms as may be
approved by the Board or the Committee, subject to applicable regulations of the
Federal Reserve Board and any other applicable laws or regulations in effect at
the time such credit is extended.
(e) Exercise. Except for options which have been transferred pursuant
to paragraph 6(f), no option shall be exercisable during the lifetime of an
optionee by any person other than the optionee, his or her guardian or legal
representative. The Board or the Committee shall have the power to set the time
or times within which each option shall be exercisable and to accelerate the
time or times of exercise; provided, however, except as provided in paragraph
12, no options may be exercised prior to the later of the expiration of six
months from the date of grant thereof or shareholder approval, unless otherwise
provided by the Board or Committee. To the extent that an optionee has the right
to exercise one or more options and purchase shares pursuant thereto, the
option(s) may be exercised from time to time by written notice to the Company
stating the number of shares being purchased and accompanied by payment in full
of the purchase price for such shares. Any certificate for shares of outstanding
stock used to pay the purchase price shall be accompanied by a stock power duly
endorsed in blank by the registered owner of the certificate (with the signature
thereon guaranteed). If the certificate tendered by the optionee in such payment
covers more shares than are required for such payment, the certificate shall
also be accompanied by instructions from the optionee to the Company's transfer
agent with respect to the disposition of the balance of the shares covered
thereby.
(f) Transferability. No Incentive Stock Option shall be transferable by
an optionee otherwise than by will or the laws of descent and distribution. No
Nonqualified Stock Option shall be transferable by an optionee otherwise than by
will or the laws of descent and distribution; provided that the Committee in its
discretion may grant Nonqualified Stock Options that are transferable, without
payment of consideration, to immediate family members of the optionee or to
trusts or partnerships for such family members; the Committee may also amend
outstanding Nonqualified Stock Options to provide for such transferability.
(g) ISO $100,000 Limit. If required by applicable tax rules regarding a
particular grant, to the extent that the aggregate fair market value (determined
as of the date an Incentive Stock Option is granted) of the shares with respect
to which an Incentive Stock Option grant under this Plan (when aggregated, if
appropriate, with shares subject to other Incentive Stock Option grants made
before said grant under this Plan or another plan maintained by the Company or
any ISO Group member) is exercisable for the first time by an optionee during
any calendar year exceeds $100,000 (or such other limit as is prescribed by the
Code), such option grant shall be treated as a grant of Nonqualified Stock
Options pursuant to Code Section 422(d).
(h) Investment Representation. Unless the shares of stock covered by
the Plan have been registered with the Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933, as amended, each optionee
by accepting an option grant represents and agrees, for himself or herself and
his or her transferees by will or the laws of descent and distribution, that all
shares of stock purchased upon the exercise of the option grant will be acquired
for investment and not for resale or distribution. Upon such exercise of any
portion of any option grant, the person entitled to exercise the same shall upon
request of the Company furnish evidence satisfactory to the Company (including a
written and signed representation) to the effect that the shares of stock are
being acquired in good faith for investment and not for resale or distribution.
Furthermore, the Company may if it deems appropriate affix a legend to
certificates representing shares of stock purchased upon exercise of options
indicating
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<PAGE> 38
that such shares have not been registered with the Securities and Exchange
Commission and may so notify its transfer agent.
(i) Rights of Optionee. An optionee or transferee holding an option
grant shall have no rights as a shareholder of the Company with respect to any
shares covered by any option grant until the date one or more of the options
granted thereunder have been properly exercised and the purchase price for such
shares has been paid in full. No adjustment shall be made for dividends
(ordinary or extraordinary, whether cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such share certificate is issued, except as provided for in paragraph 6(k).
Nothing in the Plan or in any option grant agreement shall confer upon any
optionee any right to continue performing services for the Company or any
Affiliated Group member, or interfere in any way with any right of the Company
or any Affiliated Group member to terminate the optionee's services at any time.
(j) Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of an option. The value of any fractional
share subject to an option grant shall be paid in cash in connection with an
exercise that results in all full shares subject to the grant having been
exercised.
(k) Reorganizations, Etc. Subject to paragraph 9 hereof, if the
outstanding shares of stock of the class then subject to this Plan are increased
or decreased, or are changed into or exchanged for a different number or kind of
shares or securities, as a result of one or more reorganizations, stock splits,
reverse stock splits, stock dividends, spin-offs, other distributions of assets
to shareholders, appropriate adjustments shall be made in the number and/or type
of shares or securities for which options may thereafter be granted under this
Plan and for which options then outstanding under this Plan may thereafter be
exercised. Any such adjustments in outstanding options shall be made without
changing the aggregate exercise price applicable to the unexercised portions of
such options.
(l) Option Modification. Subject to the terms and conditions and within
the limitations of the Plan, the Board or the Committee may modify, extend or
renew outstanding options granted under the Plan, accept the surrender of
outstanding options (to the extent not theretofore exercised), reduce the
exercise price of outstanding options, or authorize the granting of new options
in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification of an option (either directly or
through modification of the Plan) shall, without the consent of the optionee,
alter or impair any rights of the optionee under the option.
(m) Grants to Foreign Optionees. The Board or the Committee in order to
fulfill the Plan purposes and without amending the Plan may modify grants to
participants who are foreign nationals or performing services for the Company or
an Affiliated Group member outside the United States to recognize differences in
local law, tax policy or custom.
(n) Other Terms. Each option grant agreement may contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Board or the Committee, such as without limitation
discretionary performance standards, tax withholding provisions, or other
forfeiture provisions regarding competition and confidential information.
7. TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time terminate or amend the Plan; provided, that
shareholder approval shall be obtained of any action for which shareholder
approval is required in order to comply with Rule 16b-3, the Code or other
applicable laws or regulatory requirements within such time periods prescribed.
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8. SHAREHOLDER APPROVAL AND TERM OF THE PLAN
The Plan shall be effective as of December 13, 1996, subject to
ratification by the shareholders of the Company within (each of) the time
period(s) prescribed under Rule 16b-3, the Code, and any other applicable laws
or regulatory requirements, and shall continue thereafter until terminated by
the Board. Unless sooner terminated by the Board, in its sole discretion, the
Plan will expire on December 13, 2006 solely with respect to the granting of
Incentive Stock Options or such later date as may be permitted by the Code for
Incentive Stock Options, provided that options outstanding upon termination or
expiration of the Plan shall remain in effect until they have been exercised or
have expired or been forfeited.
9. ACCELERATION OF EXERCISE DATE
(a) All options theretofore granted under the Plan shall immediately
become fully exercisable upon the earliest of (i) the occurrence of an
Accelerating Event, or (ii) the dissemination to the shareholders of the Company
of a proxy statement seeking shareholder approval of an Accelerating Event of
the type described in (b)(ii) below, or (iii) the publication or dissemination
of an announcement of action intended to result in an Accelerating Event of the
type described in (b)(iii) below.
(b) Each of the following shall constitute an "Accelerating Event" as
used herein:
(i) the dissolution or liquidation of the Company;
(ii) the reorganization, merger or consolidation of
the Company with one or more corporations as a result of which
the outstanding shares of the class of securities then subject
to the Plan are exchanged for or converted into cash or
property or securities not issued by the Company, unless the
reorganization, merger or consolidation shall have been
affirmatively recommended to the Company's shareholders by a
majority of the members of the Company's Board and provision
shall have been made for options and stock appreciation rights
then outstanding under this 1996 Plan to be continued in
effect; or
(iii) the Company agrees to be acquired, the Company
is subject to a non-negotiated takeover attempt, or there is a
change in control of the Company.
(c) For purposes of Paragraph (b) above, "change in control" shall mean
a change in control of a nature that would be required to be reported in
response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition,
"change in control" shall be deemed to have occurred if (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), is or
becomes the "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then outstanding securities;
or (ii) during any period of two consecutive calendar years, individuals who at
the beginning of such period constitute the Board of Directors of the Company
cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company shareholders, of each
director who is not a director at the beginning of such period has been approved
in advance by directors representing at least two-thirds of the directors then
in office who were directors at the beginning of such period.
10. RESTRICTED STOCK
(a) Administration. Shares of restricted stock may be issued either
alone or in addition to other awards granted under the Plan; provided that a
maximum of 75,000 shares of restricted stock may be granted in any calendar
year. The Board or the Committee shall determine the eligible person to whom and
the time or times at which grants of restricted stock will be made, the number
of shares to be awarded, the time or times within which
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such awards may be subject to forfeiture and any other terms and conditions of
the awards. The Board or the Committee may condition the grant of restricted
stock upon the attainment of specified levels of revenue, earnings per share,
net income, return on assets, return on sales, customer satisfaction, stock
price, costs, individual performance measures or such other factors or criteria
as the Board or the Committee shall determine. The provisions of restricted
stock awards need not be the same with respect to each recipient.
(b) Awards and Certificates. Each individual receiving a restricted
stock award shall be issued a certificate in respect of such shares of
restricted stock. Such certificate shall be registered in the name of such
individual and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Continental Circuits Corp. 1996 Stock Option Plan
and a Restricted Stock Agreement. Copies of such Plan and Agreement
are on file at the offices of Continental Circuits Corp."
The Board or Committee may require that the certificates evidencing such shares
be held in custody by the Company until the restrictions thereon shall have
lapsed and that, as a condition of any restricted stock Award, the Grantee shall
have delivered a stock power, endorsed in blank, relating to the Company Stock
covered by such Award.
(c) Terms and Conditions. Shares of restricted stock shall be subject
to the following terms and conditions:
(i) Until the applicable restrictions lapse, the grantee shall not
be permitted to sell, assign, transfer, pledge or otherwise
encumber shares of restricted stock.
(ii) The grantee shall have, with respect to the shares of
restricted stock, all of the rights of a stockholder of the
Company, including the right to vote the shares and the right
to receive any cash dividends. Unless otherwise determined by
the Board or the Committee, cash dividends shall be
automatically paid in cash and dividends payable in the
Company's common stock shall be paid in the form of additional
restricted stock.
(iii) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and (d) below, all shares still
subject to restriction shall be forfeited by the Grantee upon
termination of a grantee's employment for any reason.
(iv) In the event of hardship or other special circumstances of a
grantee whose employment is involuntarily terminated (other
than for cause), the Board or the Committee may waive in whole
or in part any or all remaining restrictions with respect to
such grantee's shares of restricted stock.
(v) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the
grantee.
(vi) Each award shall be confirmed by, and be subject to the terms
of, a Restricted Stock Agreement.
11. WITHHOLDING TAXES
(a) General Rule. Pursuant to applicable federal and state laws, the
Company is or may be required to collect withholding taxes upon the exercise of
an option. The Company may require, as a condition to the exercise of an option
or the issuance of a stock certificate, that the optionee concurrently pay to
the Company (either in cash or, at the request of optionee but in the discretion
of the Board or the Committee and subject to such rules
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<PAGE> 41
and regulations as the Board or the Committee may adopt from time to time, in
shares of Common Stock of the Company) the entire amount or a portion of any
taxes which the Company is required to withhold by reason of such exercise, in
such amount as the Committee or the Board in its discretion may determine.
(b) Withholding from Shares to be Issued. In lieu of part or all of any
such payment, the optionee may elect, subject to such rules and regulations as
the Board or the Committee may adopt from time to time, or the Company may
require that the Company withhold from the shares to be issued that number of
shares having a fair market value (as defined in paragraph 6[b]) equal to the
amount which the Company is required to withhold.
(c) Special Rule for Insiders. Any such request or election (to satisfy
a withholding obligation using shares) by an individual who is subject to the
provisions of Section 16 shall be made in accordance with the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
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CONTINENTAL CIRCUITS CORP.
PROXY FOR 1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Frederick G. McNamee, III and Joseph G.
Andersen, and each or either of them, proxies, with full power of substitution,
to vote all shares of stock which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Continental Circuits Corp. to be held at The
Buttes Resort, 2000 Westcourt Way, Tempe, Arizona 85282 on Friday, December 13,
1996 at 8:00 a.m. (Arizona Time), or at any adjournment thereof, as follows,
hereby revoking any proxy previously given:
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS: [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as specified to the contrary to vote for all nominees listed below
below) for terms expiring in 1999
</TABLE>
ANGELO A. DECARO, JR., ALBERT A. IRATO AND JOHN W. NANCE
(INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name on the following line)
---------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
(2) APPROVAL OF THE CONTINENTAL CIRCUITS CORP.
EMPLOYEE STOCK PURCHASE PLAN: [ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) APPROVAL OF THE CONTINENTAL CIRCUITS CORP.
1996 STOCK OPTION PLAN: [ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(4) In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof; all as set out in the Notice and Proxy
Statement relating to the meeting, receipt of which is hereby acknowledged.
(Continued and to be signed on reverse side)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" EACH OF THE NOMINEES LISTED IN PROPOSAL (1) AND "FOR" PROPOSAL (2) and
(3), IN EACH CASE AS RECOMMENDED BY THE BOARD OF DIRECTORS.
Please sign exactly as name appears below. When shares are
held by more than one owner, all must sign. When signing as
attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please
sign in full corporate name by President or authorized
officer. If a partnership, please sign in partnership name
by authorized person.
Dated:_________________________________, 1996
(Be sure to date this proxy)
---------------------------------------------
Signature
---------------------------------------------
Signature
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
