<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SIGMATRON INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
SIGMATRON INTERNATIONAL, INC.
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
SIGMATRON INTERNATIONAL, INC.
2201 LANDMEIER ROAD
ELK GROVE VILLAGE, IL 60007
August 21, 2000
Notice of Annual Stockholders Meeting:
You are hereby notified that the 2000 Annual Meeting of Stockholders of
SigmaTron International, Inc. (the "Company") will be held at the Holiday Inn
located at 1000 Busse Road, Elk Grove Village, Illinois at 10:00 a.m. local
time, on Monday, September 25, 2000, for the following purposes:
1. To elect three Class I directors to hold office until the 2003 Annual
Meeting.
2. To consider and act upon a proposal to approve the adoption of the
SigmaTron International, Inc. 2000 Directors' Stock Option Plan.
3. To consider and act upon a proposal to approve the adoption of the
SigmaTron International, Inc. 2000 Employee Stock Option Plan.
4. To consider a proposal to ratify the selection of Ernst & Young LLP
as independent auditors of the Company for the fiscal year ending
April 30, 2001.
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 28, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Meeting.
You are urged to attend the Meeting in person. Whether or not you expect to
be present in person at the Meeting, please mark, date, sign and return the
enclosed proxy in the envelope provided.
By Order of the Board of Directors
LINDA K. BLAKE
Secretary
<PAGE> 3
SIGMATRON INTERNATIONAL, INC.
2201 LANDMEIER ROAD
ELK GROVE VILLAGE, IL 60007
2000 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 25, 2000
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying proxy are furnished to
stockholders of SigmaTron International, Inc. (the "Company") in connection with
the solicitation of proxies by the Company's Board of Directors for use at the
2000 Annual Meeting of Stockholders (the "Meeting") to be held at the Holiday
Inn located at 1000 Busse Road, Elk Grove Village, Illinois, at 10:00 a.m. local
time, on Monday, September 25, 2000, for the purposes set forth in the
accompanying Notice of Meeting. The Proxy Statement, the form of proxy included
herewith and the Company's Annual Report to Stockholders for the fiscal year
ended April 30, 2000 are being mailed to stockholders on or about August 21,
2000.
Stockholders of record at the close of business on July 28, 2000 are
entitled to notice of and to vote at the Meeting. On such date there were
outstanding 2,881,227 shares of common stock, par value $.01 per share (the
"Common Stock"). The presence, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding and entitled to vote at the
Meeting is necessary to constitute a quorum. In deciding all questions, each
holder of Common Stock shall be entitled to one vote, in person or by proxy, for
each share held on the record date.
Votes cast by proxy or in person at the Meeting will be tabulated by the
election inspector appointed for the Meeting and will determine whether or not a
quorum is present. The election inspectors will treat abstentions as shares that
are present and entitled to vote but as not voted for purposes of determining
the approval of any matter submitted to the stockholders for a vote. Abstentions
will have the same effect as negative votes. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
Properly executed proxies will be voted in the manner directed by the
stockholders. If no direction is made, such proxies will be voted FOR the
election of all nominees named under the caption "Election of Directors" as set
forth therein as directors of the Company, FOR approval of the SigmaTron
International, Inc. 2000 Directors' Stock Option Plan, FOR approval of the
SigmaTron International, Inc. 2000 Employee Stock Option Plan and FOR the
ratification of the selection of Ernst & Young LLP as the Company's Independent
Auditors. The approval of the option plans and ratification of the selection of
auditors each requires an affirmative vote by holders of a majority of the
shares present at the Meeting in person or by proxy and entitled to vote. Any
proxy may be revoked by the stockholder at any time prior to the voting thereof
by notice in writing to the Secretary of the Company, either prior to the
Meeting (at the above address) or at the Meeting if the stockholder attends in
person. A later dated proxy will revoke a prior dated proxy.
As of the date of this Proxy Statement, the Board of Directors knows of no
other business which will be presented for consideration at the Meeting. If
other proper matters are presented at the Meeting, however, it is the intention
of the proxy holders named in the enclosed form of proxy to take such actions as
shall be in accordance with their best judgment.
The information contained in this Proxy Statement relating to the
occupations and security holdings of directors and officers of the Company and
their transactions with the Company is based upon information received from each
individual as of July 28, 2000.
<PAGE> 4
HOLDINGS OF DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of July 28, 2000 by (i) each director of the
Company, (ii) each executive officer of the Company, (iii) each person
(including any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934) who is known by the Company to own beneficially more than 5% of the
outstanding Common Stock, and (iv) all directors and executive officers as a
group.
BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES(1) PERCENT
---- --------- -------
<S> <C> <C>
Circuit Systems, Inc.(2).................................... 488,413 14.9%
2350 E. Lunt Elk Grove Village, IL 60007
Tang Foundation for the Research of Traditional Chinese 242,000 7.4%
Medicine (3)..............................................
3773 Howard Hughes Pkwy., Ste. 350N
Las Vegas, NV 89109
Cyrus Tang Foundation (3)................................... 179,413 5.5%
3773 Howard Hughes Pkwy., Ste. 350N
Las Vegas, NV 89109
Fidelity Low-Price Stock Fund (13).......................... 218,000 6.7%
82 Devonshire St Boston, MA 02109
Gary R. Fairhead (4) (5).................................... 190,429 5.8%
2201 Landmeier Road Elk Grove Village, IL 60007
Gregory A. Fairhead (5)..................................... 77,741 2.4%
John P. Sheehan (5)......................................... 71,542 2.2%
Linda K. Blake (5).......................................... 23,617 *
Nunzio A. Truppa (5)........................................ 4,767 *
Andrew J. Saarnio (5)(6).................................... 3,834 *
Daniel P. Camp (5).......................................... 9,900 *
Stephen H. McNulty (5)...................................... 4,334 *
Thomas F. Rovtar (12)....................................... 0 *
Dilip S. Vyas (7)(8)........................................ 25,500 *
John P. Chen (7)(8)......................................... 25,700 *
William C. Mitchell (7)(8).................................. 25,700 *
D.S. Patel (2)(8)(9)........................................ 15,000 *
Thomas W. Rieck (4)(8)...................................... 15,000 *
Franklin D. Sove (8)(10).................................... 16,000 *
Steven A. Rothstein (8)..................................... 15,100 *
All directors and executive officers as a group(11)......... 524,164 16.0%
</TABLE>
---------------
* Less than 1 percent.
(1) Unless otherwise indicated in the footnotes to this table, the Company
believes the persons named in this table have sole voting and investment
power with respect to all shares of Common Stock reflected in this table.
(2) Circuit Systems, Inc. ("CSI") is a publicly held corporation which
manufactures printed circuit boards. D.S. Patel owns approximately 33% of
the outstanding common stock of CSI. Other officers and Directors of the
Company also own shares of CSI common stock.
(3) Both Tang Foundation for the Research of Traditional Chinese Medicine and
Tang Family Foundation are not-for-profit corporations. Each of these
entities, whose combined ownership represents in excess of 5% of the
outstanding Common Stock, is controlled by Cyrus Tang.
(4) Thomas W. Rieck and Gary R. Fairhead serve on the Board of Directors of
CSI.
(5) The number of shares includes 69,017, 66,084, 67,100, 22,467, 4,567, 3,834,
9,900 and 4,334 of currently exercisable stock options for Gary R.
Fairhead, Gregory A. Fairhead, John P. Sheehan, Linda K. Blake,
2
<PAGE> 5
Nunzio A. Truppa, Andrew A. Saarnio, Daniel P. Camp and Stephen H. McNulty
respectively. The options are included solely for the purpose of showing
total shares owned.
(6) Vice President of Elk Grove Village Operations since November 1998.
(7) Includes 3,500 shares of Common Stock subject to options granted in
September 1994 under the 1994 Directors' Stock Option Plan ("Directors'
Plan"), 3,500 shares granted in September 1995 and 3,500 granted in
September 1996. Such options are deemed exercised solely for purposes of
showing total shares owned by such non-employee directors.
(8) Includes 5,000 shares of common stock subject to options granted in
September 1997 under the 1997 Directors' Stock Option Plan ("Directors'
Plan"), and 5,000 shares granted in September 1998 and 1999. Such options
are deemed exercised solely for purposes of showing total shares owned by
such non-employee directors.
(9) D.S. Patel is the Chairman of the Board of Directors, President and Chief
Executive Officer of CSI and owns approximately 33% of CSI's outstanding
common stock.
(10) Franklin D. Sove is Vice President of Tang Industries, Inc.
(11) See also footnotes (4)-(13). Excludes shares held by CSI and the Tang
entities.
(12) Vice President Information Technology since July 2000.
(13) Number of shares owned by Fidelity Low-Price Stock Fund as filed on Form
13G on February 14, 2000.
I ELECTION OF DIRECTORS
Pursuant to the Company's Certificate of Incorporation, the Board of
Directors is divided into three classes of directors serving three-year terms.
The terms of Class I directors (Messrs. Mitchell, Rieck and Rothstein) expire in
2000; the term of Class II directors (Messrs. Chen and Patel) expire in 2001;
and the terms of Class III directors (Messrs. Fairhead, Sove and Vyas) expire in
2002. All directors of each class will hold their positions until the annual
meeting of stockholders at which time the terms of the directors in such class
expire, or until their respective successors are elected and qualify.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS AT THE MEETING
Three Class I directors are to be elected by a plurality of the stockholder
votes cast at the Meeting, to serve until the 2003 Annual Meeting of
Stockholders or until their successors shall be elected and shall qualify. The
following persons have been nominated:
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS COMPANY
NAME AGE AND OTHER PUBLIC DIRECTORSHIPS SINCE
---- --- ---------------------------------------------- -----------
<S> <C> <C> <C>
William C. Mitchell......... 74 Consultant to Lake Shore Bankcorp,Inc., 1993. 1994
Class I
Thomas W. Rieck............. 55 Attorney and President of Rieck and Crotty, P.C. 1994
Class I Director of CSI and director of LEXON Technologies,
Inc.
Steven A. Rothstein......... 49 Chairman of the Board of Directors of National 1994
Class I Securities Corporation of Seattle, Washington since
1995 and Chairman of the Board of Directors and Chief
Executive Officer of Olympic Cascade Financial
Corporation, the parent holding company of National
Securities, since its inception in 1997. Mr.
Rothstein is a member of the boards of directors of
Gateway Data Sciences, Inc., Vita Food Products,
Inc., in addition to being a member of the board of
directors of the Company.
</TABLE>
3
<PAGE> 6
The Board of Directors knows of no reason why any of the foregoing nominees
will be unavailable to serve, but, in the event of any such unavailability, the
proxies received will be voted for such substitute nominees as the Board of
Directors may recommend. THE ENCLOSED PROXY CANNOT BE VOTED FOR A GREATER NUMBER
OF PERSONS THAN THREE, THE NUMBER OF NOMINEES NAMED IN THIS PROXY STATEMENT.
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS EXTEND BEYOND THE MEETING DIRECTOR OF
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS COMPANY
NAME AGE AND OTHER PUBLIC DIRECTORSHIPS SINCE
---- --- ----------------------------------------------- -----------
<S> <C> <C> <C>
John P. Chen................ 46 Chief Financial Officer of National Material L.P. 1994
Class II since 1994.
D.S. Patel.................. 59 Chairman of the Board of Directors President and 1994
Class II Chief Executive Officer of CSI since 1987. Director
of Olympic Cascade Financial Corporation since March
1998.
Gary R. Fairhead............ 48 President of the Company and Director since February 1994
Class III 1990. Director of CSI.
Franklin D. Sove............ 66 Mr. Sove has been Vice President of Tang Industries, 1994
Class III Inc. since 1996. Mr. Sove was CEO of National
Material L.P. from September 1996 and Executive Vice
President of Tang Industries, Inc. from May 1989.
Dilip S. Vyas............... 52 Mr. Vyas has been self employed since August 1998. 1994
Class III Prior, Mr. Vyas was Director and Vice
President -- Business Development of CSI from 1987.
</TABLE>
DIRECTOR COMMITTEES; BOARD MEETINGS
The Board of Directors has established an Audit Committee, a Compensation
Committee and a Nominating Committee. Each committee is composed of at least two
independent directors who together constitute a majority of each committee.
The functions of the Audit Committee are to recommend annually to the Board
of Directors the appointment of the independent public accountants of the
Company, discuss and review the scope and the fees of the prospective annual
audit and review the results thereof with the independent public accountants,
review and approve non-audit services of the independent public accountants,
review compliance with existing major accounting and financial policies of the
Company, review the adequacy of the financial organization of the Company and
review management's procedures and policies relative to the adequacy of the
Company's internal accounting controls. Messrs. Mitchell, Rieck, and Sove are
members of the Audit Committee, of which Mr. Sove is the Chairman.
The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for all executive officers and review, approve and
recommend to the Board of Directors the terms and conditions of all employee
benefit plans or changes thereto and administer the Company's 1993, 1994 and
1997 Stock Option Plans and proposed 2000 Stock Option Plans. Messrs. Mitchell,
Rieck and Rothstein are members of the Compensation Committee, of which Mr.
Mitchell is the Chairman.
The functions of the Nominating Committee are to review and recommend to
the Board of Directors a slate of nominees for each election of members to the
Board of Directors, to review and recommend changes to the number,
classification, and term of directors and to receive and review nominations by
Stockholders with regard to the nomination process. The nominating committee
will accept nominees recommended by stockholders. However, the Company's bylaws
establish an advance notice procedure for such nominations. Generally, such
notice must be received by the Secretary of the Company not less than 60 and no
more than 90 days prior to a regularly scheduled annual meeting of stockholders,
or within 10 days after receipt of notice of an annual meeting of stockholders
if the date of such meeting has not been publicly disclosed within 70 days prior
to the meeting date. Messrs. Mitchell, Rieck and Rothstein are members of the
Nominating Committee.
4
<PAGE> 7
The Board of Directors held six meetings during the fiscal year ended April
30, 2000. The Compensation Committee held three meetings and the Audit Committee
held one meeting during fiscal 2000. The Nominating Committee held one meeting
during fiscal 2000.
COMPENSATION OF DIRECTORS
Non-employee directors are paid $1,000 per month. Directors that serve on
the Audit or the Compensation Committee are paid an additional $125 per month
for each committee upon which they serve. In addition, under the 1997 Directors'
Stock Option Plan each non-employee director received a grant of options for
5,000 options at each of the 1997, 1998 and 1999 annual stockholders' meetings.
Such options are exercisable for ten years from the respective date of grant at
a price based on the price of the Common Stock on the respective grant dates. If
the 2000 Directors' Stock Option Plan is approved, nonemployee directors will be
entitled to receive options to acquire 7,500 shares of Common Stock at each
annual shareholders meeting in 2000, 2001 and 2002.
II APPROVAL OF 2000 DIRECTORS' STOCK OPTION PLAN
On July 10, 2000, the Board of Directors of the Company adopted, subject to
stockholder approval, the SigmaTron International, Inc. 2000 Directors' Stock
Option Plan (the "2000 Directors' Plan"). The purpose of the 2000 Directors'
Plan is to advance the interests of the Company by affording directors who are
not employees of the Company the opportunity to acquire equity interests or
increase their equity interests in the Company, as well as to encourage them to
continue service as Directors of the Company. The 2000 Directors' Plan is
intended to replace the 1997 Directors' Stock Option Plan. All options that are
available to be granted under the 1997 Directors' Stock Option Plan have been
granted. If the 2000 Directors' Plan is not approved by the stockholders, there
will not be any options available to grant to the Company's directors.
SUMMARY OF 2000 DIRECTORS' PLAN
Under the 2000 Directors' Plan, the Committee will grant options for an
aggregate maximum 157,500 shares of the Company's Common Stock to Directors of
the Company. Each non-employee director of the Company in office at the annual
meetings of stockholders held in the years 2000, 2001 and 2002 will
automatically be granted options to acquire 7,500 shares of Common Stock. The
options are fully vested. The number of shares available for grant of options
and the number of shares included in each outstanding option are subject to
adjustment upon recapitalizations, stock splits or other similar events that
cause changes in the Company's Common Stock. The Company must retain sufficient
authorized but unissued shares of Common Stock to assure itself of its ability
to perform its obligations under the 2000 Directors' Plan. Shares of Common
Stock underlying options that expire unexercised will be available for future
option grants under the 2000 Directors' Plan.
The option exercise price per share for each option granted under the 2000
Directors' Plan shall be equal to the closing price of the Common Stock on the
NASDAQ National Market on the trading day immediately preceding the date of
grant. An option may be exercised by the payment of the exercise price (i) in
cash or by check, (ii) through the exchange of shares of Common Stock already
owned by the optionee have a fair market value equal to the exercise price,
(iii) through a broker-assisted "cashless" exercise transaction or (iv) by any
other payment means approved by the Committee.
The exercise period for options granted under the Plan is ten years.
Options shall continue to be exercisable pursuant to their terms notwithstanding
the death, disability or retirement of the optionee; provided, however, that if
an optionee's directorship is terminated for one of the reasons set forth in the
2000 Directors' Plan (similar to termination for cause), the optionee must
exercise the options within three months after the date of termination or within
the original exercise period, whichever is shorter. Also, all options must be
exercised in full within thirty days before the closing of a Corporate
Transaction (as defined in the Plan and generally covering a sale of the
Company); any options not exercised within that period expire.
5
<PAGE> 8
Options granted under the 2000 Directors' Plan shall not be transferable
unless (a) the transfer is (i) by will or the laws of descent and distribution,
(ii) pursuant to a qualified domestic relations order, (iii) to a Permitted
Transferee, (as defined in the 2000 Directors' Plan), or (iv) to a trust or
other entity controlled by the optionee or a Family Member (as defined in the
2000 Directors' Plan; generally family members or trusts or other entities
controlled by the optionee or a family member); (b) the transfer is a gift; and
(c) the option continues to be subject to the same terms as before the transfer.
INCOME TAX CONSEQUENCES
Options granted under the 2000 Directors' Plan will be non-statutory
options not entitled to special tax treatment under Section 422 of the Code. The
discussion of the tax treatment of the Non-Statutory Options in the section
below entitled "Approval of 2000 Employee Plan" applies to options granted under
the 2000 Directors' Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE 2000 DIRECTORS' PLAN.
III APPROVAL OF 2000 EMPLOYEE STOCK OPTION PLAN
On July 10, 2000, the Board of Directors of the Company adopted, subject to
stockholder approval, the SigmaTron International, Inc. 2000 Employee Stock
Option Plan (the "2000 Employee Plan"). The purpose of the 2000 Employee Plan is
to permit the Company and its subsidiaries to attract and retain as employees
people of initiative and ability and to provide additional employee incentives.
If the 2000 Employee Plan is approved by the Stockholders, no new options will
be granted under the 1993 Employee Stock Option Plan. If the 2000 Employee Plan
is not approved by the stockholders, options will be granted under the 1993
Employee Stock Option Plan to the extent options are available.
SUMMARY OF 2000 EMPLOYEE PLAN
The 2000 Employee Plan will be construed, interpreted and administered by
the Compensation Committee ("the Committee"). The Committee has the discretion
to determine the individuals to whom options are granted, the number of shares
subject to the options, the exercise price of the options (but in no event less
than the minimum required in order to comply with applicable law), the period
over which the options become exercisable, the term of the options (including
the period after termination of employment during which an option may be
exercised) and certain other provisions related to the options. Individuals who
are selected to receive options will sign an option agreement with the Company
setting forth the terms and restrictions applicable to their options.
Under the 2000 Employee Plan, the Committee may grant options for an
aggregate maximum of 342,500 shares of the Company's Common Stock to employees
of the Company and its subsidiaries. The number of shares available for grant
options under the Plan and the number of shares included in each outstanding
option are subject to adjustment upon recapitalizations, stock splits or other
similar events that cause changes in the Company's Common Stock. The Company
must retain sufficient authorized but unissued shares of Common Stock to assure
itself of its ability to perform its obligations under the 2000 Employee Plan.
Shares of Common Stock underlying options that expire unexercised will be
available for future option grants under the Plan.
The plan provides for the grant of incentive stock options ("Incentive
Options") within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and non-statutory stock options that do not
qualify as Incentive Options.
The option exercise price per share for each option granted under the 2000
Employee Plan shall be not less than the closing price of the Common Stock on
the NASDAQ National Market on the trading day immediately preceding the date of
grant. An option may be exercised by the payment of the exercise price (i) in
cash or by check, (ii) through the exchange of shares of Common Stock already
owned by the optionee
6
<PAGE> 9
having a fair market value equal to the exercise price, (iii) through a
broker-assisted "cashless" exercise transaction or (iv) by any other payment
means approved by the Committee.
The maximum term of options granted under the Plan is ten years. Subject to
that limitation, the Committee has discretion to decide the period over which
options may be vested and exercised. In addition, unvested options will
terminate immediately upon termination of employment, disability or death. All
outstanding options granted under the Plan shall immediately become exercisable
in full upon a Corporate Transaction (as defined in the Plan and generally
covering a sale of the Company); provided that the Corporate Transaction closes.
Any options not exercised within that period expire.
An optionee may exercise a Non-Statutory Option that has vested if the
optionee has been employed by the Company continuously since the date the option
was granted. If an optionee's employment is terminated for cause (as defined in
the 2000 Employee Plan), the optionee has three months (or the remainder of the
original term of the exercise period, whichever is shorter) to exercise any
Non-Statutory Options vested as of the date of termination; all unvested
Non-Statutory Options expire. If an optionee's employment is terminated for a
reason other than for cause, including voluntary termination, death or
disability, all unvested Non-Statutory Options expire while all vested
Non-Statutory Options may be exercised for the remainder of their terms. The
same provisions apply to Incentive Options except that an optionee whose
employment is terminated must exercise vested Incentive Options within three
months after the date of termination or the expiration of the original exercise
period, whichever is shorter.
Except as otherwise provided in the applicable option agreement, all
options granted under the 2000 Employee Plan shall not be transferable unless
(a) the transfer is (i) by will or the laws of descent and distribution, (ii)
pursuant to a qualified domestic relations order, (iii) to a Permitted
Transferee, (as defined in the 2000 Employee Plan), or (iv) to a trust or other
entity controlled by the optionee or a Family Member (as defined in the 2000
Employee Plan; generally family members or trusts or other entities controlled
by the optionee or a family member); (b) the transfer is a gift; and (c) the
option continues to be subject to the same terms as before the transfer.
The Committee is authorized to condition the grant of options upon the
receipt of the agreement by the optionee not to compete with the Company during
the term of employment and for such period thereafter and containing such other
terms as are determined by the Committee.
INCOME TAX CONSEQUENCES
Generally, for federal income tax purposes, Non-Statutory Options will not
result in any taxable income to the optionee at the time of grant. The optionee
will realize ordinary income, however, at the time of the exercise of the
option, in an amount measured by the excess of the fair market value of the
optioned shares at the time of exercise over the option exercise price,
regardless of whether the exercise price is paid in cash or shares.
Where ordinary income is recognized in connection with the exercise of an
option, the Company will be entitled to a deduction in the amount of ordinary
income so recognized, provided, among other things, that the Company complies
with applicable tax withholding requirements.
No income is recognized for federal income tax purposes when an Incentive
Option is exercised and no deduction is available to the Company. Incentive
Options will be taxed as Non-Statutory Options if shares of Common Stock
purchased upon exercise of the Incentive Option are sold within one year after
the exercise or two years after the date the Incentive Option is granted.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE 2000 EMPLOYEE PLAN.
7
<PAGE> 10
IV PROPOSAL TO RATIFY SELECTION OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of Ernst & Young LLP has audited the books and records of the
Company since its inception and the Board of Directors desires to continue the
services of this firm for the current fiscal year ending April 30, 2001.
Accordingly, the Board of Directors will recommend at the Meeting that the
stockholders ratify the appointment of the firm of Ernst & Young LLP to audit
the accounts of the Company for the current fiscal year. Representatives of that
firm 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.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP.
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation paid by the
Company for its fiscal years ended April 30, 2000, 1999 and 1998 to the
Company's Chief Executive Officer and each executive officer of the Company
whose total annual salary and bonus for such year exceeded $100,000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------
SALARY BONUS
NAME AND PRINCIPAL POSITION ($) ($)
--------------------------- ------ -----
<S> <C> <C> <C>
Gary R. Fairhead............................................ 2000 155,232 15,000(1)
President and Chief Executive Officer 1999 148,400 85,000(2)
1998 145,600 2,800(3)
Gregory A. Fairhead......................................... 2000 140,902 15,000(1)
Executive Vice President and General Manager-Mexican 1999 134,035 80,500(2)
Operations and Assistant Secretary 1998 127,017 2,350(3)
John P. Sheehan............................................. 2000 103,791 15,000(1)
Vice President-Director of Materials 1999 98,712 55,000(2)
and Assistant Secretary 1998 93,548 1,731(3)
Linda K. Blake.............................................. 2000 89,941 15,000(1)
Chief Financial Officer, Vice President-Finance, 1999 85,554 50,000(2)
Treasurer and Secretary 1998 81,075 1,500(3)
Nunzio A. Truppa............................................ 2000 120,015 15,000(1)
Vice President-Las Vegas Operations 1999 298,642(4) 0
1998 290,239(4) 1,950(3)
Andrew J. Saarnio........................................... 2000 121,838 0
Vice President-Elk Grove Operations 1999 96,750 20,000(2)
Daniel P. Camp.............................................. 2000 116,538 15,000(1)
Vice President-Mexican Operations 1999 98,381 4,150(2)
1998 90,140 5,000(3)
</TABLE>
---------------
(1) Represents bonus earned in fiscal 2000 and paid in fiscal 2001.
(2) Represents bonus earned in fiscal 1999 and paid in fiscal 2000.
(3) Represents one week bonus paid to all SigmaTron employees (U.S.).
(4) The 1999 and 1998 salary amounts for Mr. Truppa includes sales commissions
of $190,124 and $184,841, respectively.
8
<PAGE> 11
OPTION GRANT AND EXERCISES IN LAST FISCAL YEAR
The following tables provide certain specified information concerning
options granted to, exercised by and held at April 30, 2000 under the 1993 stock
option plan by each Named Executive Officer of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE OF
ASSUMED ANNUAL RATE
OF STOCK
% OF TOTAL OPTIONS APPRECIATION FOR
NUMBER OF SHARES GRANTED TO EXERCISE OR BASE OPTION TERM
UNDERLYING OPTIONS EMPLOYEES IN FISCAL PRICE EXPIRATION --------------------
GRANTED (#) YR. ($ PER SHARE) DATE 5% ($) 10% ($)
------------------ ------------------- ---------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Gary R. Fairhead.......... 66,800 19.6 6.25 02/03/10 262,524 665,328
Gregory A. Fairhead....... 60,400 17.7 6.25 02/03/10 237,372 601,584
John P. Sheehan........... 50,400 14.8 6.25 02/03/10 198,072 501,984
Linda K. Blake............ 47,000 13.7 6.25 02/03/10 184,710 468,120
Nunzio A. Truppa.......... 13,700 4.0 6.25 02/03/10 53,841 136,452
Andrew J. Saarnio......... 7,000 2.0 6.25 02/03/10 27,510 69,720
Daniel P. Camp............ 23,700 6.9 6.25 02/03/10 93,141 236,052
Stephen H. McNulty........ 7,000 2.0 6.25 02/03/10 27,510 69,720
Stephen H. McNulty........ 7,000 2.0 5.625 01/04/10 24,745 62,755
</TABLE>
On August 2, 1999, the Board of Directors authorized the cancellation of
330,000 option shares under the 1993 Employee Plan, including the following:
Gary R. Fairhead 90,000; Gregory A. Fairhead 80,000; John P. Sheehan 65,000;
Linda K. Blake 60,000; Nunzio A. Truppa 10,000 and additional 25,000 option
shares were cancelled. The cancelled options were granted on July 1, 1997 with
an exercise price of $12.25.
9
<PAGE> 12
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information with respect to each
named executive officer of the Company concerning the exercise of options during
the fiscal year ended April 30, 2000, as well as any unexercised options held as
of the end of such fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#)(1) AT FY-END($)(1)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------------------- --------------------
<S> <C> <C> <C> <C>
Gary R. Fairhead.......... -- -- 69,017/50,533 0/0
Gary A. Fairhead.......... -- -- 66,084/45,066 0/0
John P. Sheehan........... -- -- 67,100/37,800 0/0
Linda K. Blake............ -- -- 22,467/35,533 0/0
Nunzio A. Truppa.......... -- -- 4,567/9,133 0/0
Andrew J. Saarnio......... -- -- 3,834/10,666 0/0
Daniel P. Camp............ -- -- 9,900/18,800 0/0
Stephen H. McNulty........ -- -- 4,334/14,666 0/0
Thomas F. Rovtar.......... -- -- 0/10,000 0/0
</TABLE>
---------------
(1) These options are service-based options. A portion of these options vest
over a five-year period which began in February 1995 and the remaining
options vest over a three and five-year period beginning in July 1998.
10
<PAGE> 13
STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
period from May 1, 1995 through April 30, 2000 with the cumulative total return
on (i) a group consisting of the Company's peer corporations on a
line-of-business basis (the "Peer Group") and (ii) the NASDAQ Composite Index
(Total Return). The comparison assumes $100 was invested on May 1, 1995 in the
Company's Common Stock, the Peer Group (allocated equally among each of the Peer
Group members) and the NASDAQ Composite Index and assumes reinvestment of
dividends, if any. The Peer Group consists of Benchmark Electronics, Inc., DII
Group, Inc.(formerly known as Dovatron International, Inc.), IEC Electronics
Corp., Plexus Corp., SCI Systems, Inc. and Solectron Corp.
Comparison of Five year cumulative Total Among SigmaTron International,
Inc. the Peer Group and the Nasdaq Composite Index (Total Return)
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
APR 95 APR 96 APR 97 APR 98 APR 99 APR 00
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
SIGMATRON INTERNATIONAL INC 100 112.73 243.64 128.17 58.18 63.40
------------------------------------------------------------------------------------------------------------
NASDAQ - INDEX 100 142.55 150.90 225.63 309.43 469.13
------------------------------------------------------------------------------------------------------------
PEER GROUP 100 163.21 214.15 317.03 544.80 1154.75
------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Company's executive compensation policy is to provide compensation and
benefit programs to enable it to attract and retain talented executives. Total
compensation includes base salary, annual cash bonuses, long-term incentives and
employee benefits. Guiding principles include offering competitive base salary
and employee benefit packages compared to similarly capitalized companies with
comparable operating results; annual cash bonuses based on individual
contributions to financial results and strategic planning and long-term stock
based incentives, helping to assure that management's interests are closely
aligned with those of shareholders. The Company seeks to reward outstanding
executive performance contributing to superior operating results and enhanced
shareholder value.
The Board of Directors administers the Company's executive compensation
policy through its Compensation Committee and the Compensation Committee's
supervision of the determinations of the Company's senior executive officer on
compensation matters. The base salary of the President and the Chief Executive
Officer and the executive officers of the Company is determined by the Board of
Directors acting on the recommendations of its Compensation Committee. The
President and Chief Executive Officer recommends to the Compensation Committee
the base salaries to be paid to all other executive officers.
Annual cash bonuses are determined by action of the Board of Directors on
recommendations made to it by its Compensation Committee. Stock options may be
granted to key employees of the Company as determined by the Compensation
Committee pursuant to the Company's 1993 Stock Option Plan.
REPORT OF 2000 COMPENSATION OF EXECUTIVE OFFICERS
The President and Chief Executive Officer recommended to the Compensation
Committee the base salaries and bonuses to be paid to the executive officers.
The Compensation Committee approved the base salaries and bonuses recommended,
and the entire Board of Directors adopted the recommendation. During the course
of the year, the Committee granted additional stock options to executive
officers under the Company's 1993 Stock Option Plan. The Committee is of the
opinion that stock options continue to provide substantial incentive to increase
shareholder value and expects to grant additional options in the near future.
REPORT OF 2000 COMPENSATION OF CHIEF EXECUTIVE OFFICER AND PRESIDENT
The compensation for the Company's President and Chief Executive Officer is
set within the philosophy and policy identified above for all executive
officers. In setting the salary and determining the bonus of the President and
Chief Executive Officer of the Company, the Compensation Committee considered
many factors, and paid particular attention to the Company's most recent
financial results. Keeping in mind the philosophy of emphasis on
performance-based compensation, during the course of the year, the Committee
granted additional options to Mr. Fairhead. Further, the Committee is of the
opinion that the only change in Mr. Fairhead's base salary should be one
commensurate with the percentage increase for all executive officers of the
Company; the Committee is of the opinion that Mr. Fairhead's present salary
level is approximately at the level of base compensation paid to the chief
executive officers and presidents of comparable companies with comparable
operating results.
This report is submitted by the members of the Committee.
William C. Mitchell (Chairman)
Thomas W. Rieck
Steven A. Rothstein
Deductibility of Certain Executive Compensation. Section 162(m), added to
the federal Internal Revenue Code by the Omnibus Budget Reconciliation Act of
1993 (the "Act"), denies publicly held corporations a deduction for compensation
in excess of $1 million per year paid or accrued with respect to
12
<PAGE> 15
certain executives in taxable years beginning on or after January 1, 1994,
except to the extent that such compensation qualifies for an exemption from that
limitation.
The deduction limitation has no effect on the Company's ability to deduct
payments made (or deemed made for tax purposes) in fiscal 2000 to the named
executive officers listed in the summary compensation table. The limitation,
however, could affect the ability of the Company and its subsidiaries to deduct
compensation paid to such officers in fiscal 2001 and subsequent years. The
Company intends to take appropriate action to comply with the Act so that
deductions will be available to it for all compensation paid to its executive
officers to the extent practicable in fiscal 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All members of the Board of Directors participated in deliberations
concerning executive officers' compensation, except for Gary R. Fairhead and
D.S. Patel. Gary R. Fairhead did not participate in votes or deliberations
concerning his compensation.
Gary R. Fairhead, the President and Chief Executive Officer of the Company,
is a member of CSI's Board of Directors. CSI is a shareholder of the Company and
Messrs. Vyas and Patel are executive officers of CSI and directors of both CSI
and the Company, and Mr. Rieck is a director of CSI and the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the copies of such reports furnished to the
Company of written representations that no other reports were required, the
Company believes that during the 2000 fiscal year all filing requirements were
complied with except as follows: during the fiscal year a Form 3 for Daniel P.
Camp and Stephen H. McNulty to disclose his ownership and becoming an officer of
the Company was filed late.
13
<PAGE> 16
CERTAIN TRANSACTIONS
During the fiscal year ended April 30, 2000, the Company purchased raw
materials and leased operating and storage space in Elk Grove Village, Illinois
from CSI, which owns beneficially approximately 14.9% of the Company's
outstanding Common Stock. Purchases of raw materials were approximately
$6,660,000 for the year ended April 30, 2000, with a net amount in trade
accounts payable related to these purchases of approximately $875,000 at April
30, 2000. The Company leases space in Elk Grove Village, Illinois from CSI at a
base rental of approximately $36,000 per month with an additional $7,000 per
month for real estate taxes. The lease requires the Company to pay maintenance
and utility expenses. Rent and property tax expense totaled approximately
$495,000 for the year ended April 30, 2000.
The Company has a 42.5% ownership interest in SMTU, which was formed on
September 15, 1994, in Fremont, California, as a joint venture to provide
surface mount technology assembly services primarily to electronic original
equipment manufacturers. The Company also owns 50% of the outstanding stock of
SMT Unlimited, Inc. (SMT, Inc.), which is the general partner of SMTU. One of
the limited partners of SMTU is also an equal shareholder of SMT, Inc., along
with the Company. The Company holds subordinated debentures totaling $1,050,000
from SMTU. Debentures totaling $650,000 outstanding at April 30, 2000, bear
interest at 8%, and debentures totaling $400,000 bear interest at 12%. All
debentures are to be repaid on May 1, 2002. Interest is to be paid quarterly
beginning January 1, 2001. The Company guarantees lease payments of
approximately $1,169,000 for SMTU. The Company has been indemnified by one of
the other limited partners in the amount of $584,530 for the guaranteed lease
payments. SMTU incurs a $12,500 monthly administrative fee for administrative
services provided by the Company.
In August 1999, SigmaTron entered into a guaranty agreement with SMTU's
lender to guaranty the obligation of SMTU under its revolving line of credit to
maximum of $2,000,000 plus interest and related costs associated with the
enforcement of the guaranty. In connection with the guaranty agreement, one of
the limited partners of SMTU and the Chairman of SMTU have each executed a
guaranty to the lender to reimburse SigmaTron for up to $500,000 of payments
made by SigmaTron under its guaranty to the lender in excess of $1,000,000. In
addition, the limited partner has agreed to indemnify SigmaTron for 50% of all
the Company's payments to the lender. The limited partner's obligation to
SigmaTron under the indemnity is reduced dollar for dollar to the extent the
limited partner would otherwise be obligated to pay more than $1,000,000 as a
result of his guaranty to the lender.
During 1996, the Company invested $1,200 in exchange for a 12% limited
partnership interest in Lighting Components, L.P. (LC) and invested $1,300 in
Lighting Components, Inc., which is the general partner of LC, in exchange for
13% of its capital stock. At April 30, 1998, the Company had also made advances
to LC in exchange for subordinated debentures and promissory notes totaling
$280,000. Approximately $60,000 in subordinated debentures are due at various
dates beginning on October 15, 2000, and approximately $220,000 of promissory
notes are due on August 1, 2000. Both the subordinated debentures and promissory
notes bear interest at 12% with interest payments beginning on August 1, 2000.
The subordinated debentures and promissory notes totaling $280,000.
Approximately $60,000 in subordinated debentures are due at various dates
beginning on October 15,2000, and approximately $220,000 of promissory notes are
due on August 1, 2000. Both the subordinated debentures and promissory notes
bear interest at 12% with interest payments beginning on August 1, 2000. The
subordinated debentures and promissory notes totaling $280,000 were reserved to
a net realizable value of $0 at April 30, 1998. The accrued interest on these
subordinated debentures and promissory notes totaling approximately $122,000 is
included in other long-term assets in the accompanying balance sheet. In
addition, the Company also has miscellaneous and trade receivables recorded in
the accompanying balance sheet from LC at April 30, 2000, totaling approximately
$1,437,000.
The Company's miscellaneous and trade receivables are secured by a security
interest in substantially all LC's assets. In fiscal 2000 and 1999, the Company
reduced the carrying value of assets recorded in the Company's balance sheet to
net realizable value by approximately $789,000 and $550,000, respectively.
The Company's 2000 Annual Report to Stockholders is being mailed to
stockholders contemporaneously with this Proxy Statement.
14
<PAGE> 17
COST OF SOLICITATION
All expenses incurred in the solicitation of proxies will be borne by the
Company. In addition to the use of the mail, proxies may be solicited on behalf
of the Company by directors, officers and employees of the Company by telephone
or telecopy. The Company will reimburse brokers and others holding Common Stock
as nominees for their expenses in sending proxy material to the beneficial
owners of such Common Stock and obtaining their proxies.
PROPOSALS OF STOCKHOLDERS
In accordance with the rules of the Securities and Exchange Commission, any
proposal of a stockholder intended to be presented at the Company's 2001 Annual
Meeting of Stockholders must be received by the Secretary of the Company before
April 24, 2001 in order for the proposal to be considered for inclusion in the
Company's notice of meeting, proxy statement and proxy relating to the 2001
Annual Meeting.
Stockholders may present proposals that are proper subjects for
consideration at an annual meeting, even if the proposal is not submitted by the
deadline for inclusion in the proxy statement. The stockholder must comply with
the procedures specified by the Company's by-laws which require all stockholders
who intend to make proposals at an annual stockholders meeting to send a proper
notice which is received by the Secretary not less than 120 or more than 150
days prior to the first anniversary of the date of the Company's consent
solicitation or proxy statement released to stockholders in connection with the
previous year's election of directors or meeting of stockholders; provided, that
if no annual meeting of stockholders or election by consent was held in the
previous year, or if the date of the annual meeting has been changed from the
previous year's meeting, a proposal must be received by the Secretary within 10
days after the Company has publicly disclosed the date of such meeting.
The by-laws also provide that nominations for director may only be made by
or at the direction of the Board of Directors or by a stockholder entitled to
vote who send a proper notice which is received by the Secretary no less than 60
or more than 90 days prior to the meeting; provided, however, that if the
Company has not publicly disclosed the date of the meeting at least 70 days
prior to the meeting date, notice may be timely made by a stockholder if
received by the Secretary no later than the close of business on the 10th day
following the day on which the Company publicly disclosed the meeting date.
ADDITIONAL INFORMATION
The summaries of the 2000 Directors Stock Option Plan, the 2000 Employee
Stock Option Plan and certain by-law provisions are qualified by reference to
the full text of such documents. The Plans are being filed electronically with
the Securities and Exchange Commission's EDGAR system and are not included in
the printed version of this proxy statement. Copies of the Plans and the by-laws
are available, without charge, upon written request to the Secretary.
By order of the Board of Directors
Linda K. Blake
Secretary
Dated: August 21, 2000
15
<PAGE> 18
APPENDIX 1
The 2000 Directors Stock Option Plan is filed herewith pursuant to Instruction 3
to Item 10 of Schedule 14A and is not part of the proxy statement.
SIGMATRON INTERNATIONAL, INC.
2000 DIRECTORS' STOCK OPTION PLAN
1. PURPOSE. This Stock Option Plan ("the Plan") is intended to encourage
stock ownership by Non-Employee Directors of SigmaTron International, Inc., a
Delaware corporation (the "Company"), so that they may acquire or increase their
proprietary interest in the success of the Company, and to encourage them to
remain as Directors of the Company.
2. ELIGIBILITY. An Option is a right to purchase shares of common stock,
$0.01 par value, of the Company (the "Shares"), subject to adjustments as
provided herein, pursuant to the terms and conditions of the Plan ("Option").
The persons who shall be eligible to receive Options shall be Directors of the
Company (the "Eligible Directors") who are not full-time employees of or
consultants to the Company.
3. SHARES. Subject to the provisions of Section 9 (relating to the
adjustment upon changes in Shares), there will be reserved for issuance upon the
exercise of Options to be granted from time to time under the Plan an aggregate
of one hundred fifty-seven thousand five hundred (157,500) Shares. If an Option
granted under the Plan expires, terminates or is canceled, the unissued Shares
subject to such Option shall again be available under the Plan.
4. ADMINISTRATION. This Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"), comprised
solely of Non-Employee Directors as defined by Rule 16b-3(b)(3)(i) of the
Securities and Exchange Act of 1934 (the "1934 Act"). The interpretation and
construction by the Committee of the provisions of the Plan, of any Option
granted under it and any related agreement shall be final except as otherwise
determined by the Board of Directors. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
5. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the Plan
shall be evidenced by agreements in such form as the Committee shall from time
to time recommend and the Board of Directors shall from time to time approve,
which agreements shall comply with and be subject to the following terms and
conditions:
(a) On each of the regular annual stockholders meetings for each of the
years 2000, 2001 and 2002 (each such date is hereafter the "Date of
Grant"), each Eligible Director ("Optionee") shall receive an Option
for 7,500 Shares, and such Options shall vest immediately upon grant.
(b) Each Option shall state the exercise price of the Option (the "Option
price") which shall be 100% of the fair market value of the Shares on
the applicable Date of Grant. The fair market value for purposes of
this paragraph 5(b) is defined as the closing price of the Shares as
reported in the NASDAQ listing in The Wall Street Journal or such other
reported value of the Shares as shall be specified by the Committee on
the day preceding the Date of Grant, or if such day is not a trading
day, then on the immediately preceding trading day.
(c) The Option shall be exercised by giving written notice to the Company,
accompanied by full payment of the Option price. The Option price shall
be paid in cash or by check upon the exercise of the Option, or in lieu
thereof an Option holder may make payment in whole or in part by
tendering to the Company the number of Shares valued at fair market
value equal to the Options to be exercised on such date of exercise.
For purposes of this paragraph 5(c), fair market value is defined as
the closing price of the Shares as reported in the NASDAQ listing in
The Wall Street Journal or such other reported value of the Shares as
shall be specified by the Committee on the day preceding the exercise
of the Option, or if such day is not a trading day, then on the
immediately preceding trading day. The Optionee may tender Shares only
if the Optionee has not acquired any Shares (including
1
<PAGE> 19
the Shares being tendered), other than in an acquisition exempt from
Section 16(b) of the 1934 Act and rules and regulations promulgated
thereunder, for a period of at least six months prior to the tender. In
addition, such exercise may include a cashless exercise if the Options
are tendered to a Broker in exchange for the number of Shares the fair
market value of which is equal to the aggregate difference between the
Option price and the fair market value of the Options so tendered.
(d) The term of any Option shall be ten (10) years from the Date of Grant.
(e) In no event shall any Option be exercisable prior to the approval of
this Plan by the holders of a majority of the Shares present, or
represented and entitled to vote, at the Company's next annual
stockholders meeting duly held in accordance with the applicable laws
of the State of Delaware.
(f) The Committee shall retain the authority and discretion to permit an
Option to be transferable as long as such transfers are made only to a
Permitted Transferee (as herein defined); provided that (i) such
transfer is a bona fide gift and the Optionee receives no value for the
transfer, as provided in the instructions to Form S-8 of the Securities
and Exchange Commission, (ii) that the Options that are transferred
continue to be subject to the same terms and conditions that were
applicable to the Options immediately prior to the transfer, and (iii)
that the Option may not be otherwise or subsequently sold, pledged,
assigned or transferred in any manner except by will or the laws of
descent or distribution or pursuant to a domestic relations order.
"Permitted Transferee" shall mean any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, of
the Optionee (a "Family Member"), any person sharing the Optionee's
household (other than as a tenant or employee), or a trust or other
entity in which Family Members and the Optionee have more than fifty
percent of the beneficial or voting interest. In the event of the
Optionee's death, the Option may be exercised only by a person who
acquired the right to exercise it by reason of the death of the
Optionee. Neither the Optionee, any Permitted Transferee, nor any
person who acquires the right to exercise the Option by reason of the
death of the Optionee will be deemed to be a holder of any Shares
subject to the Option unless and until certificates for those shares
are issued to such person. The designation of a beneficiary shall not
constitute a transfer.
(g) An Option shall remain exercisable pursuant to its terms if the
Optionee ceases to be a Director of the Company for any reason, and may
be exercised by the Optionee or his successor or assign after his
death, in each case to the extent and in the manner exercisable by
Optionee. Notwithstanding the foregoing, if an Optionee's directorship
is terminated on account of any act of: (1) fraud; (2) intentional
misrepresentation; (3) embezzlement; or (4) misappropriation or
conversion of assets or opportunities of the Company or any direct or
indirect majority-owned subsidiary of the Company, the Optionee or his
successors or assigns may exercise his Option at any time within three
months after termination of his directorship, or at any time prior to
the expiration date of such Option, whichever is the shorter period,
but only to the extent that it was exercisable by Optionee on the date
of termination of his office. The Company assumes no responsibility and
is under no obligation to notify a Permitted Transferee of early
termination of an Option on account of a Director's termination of
office. During the applicable exercise period, the Option may not be
exercised for more than the number of vested Shares (if any) for which
it is exercisable at the time of the Optionee's cessation of Board
service.
(h) Neither an Optionee nor his Permitted Transferee, legal representative,
heir, legatee, or distributee shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any Shares
subject to such Option unless and until he has paid the Company the
full purchase price of such Shares and received a certificate or
certificates therefor. Except as provided in Section 9 hereof, no
adjustments will be made for dividends, whether ordinary or
extraordinary, whether in cash, securities, or other property, or for
distributions for which the record date is prior to the date on which
the Option is exercised.
2
<PAGE> 20
(i) The minimum number of Shares with respect to which an Option may be
exercised in part at any time is 100.
6. RESTRICTIONS ON SHARES. The certificate or certificates representing the
Shares to be issued or delivered upon exercise of an Option may bear such
legends required by any applicable securities laws. Furthermore, nothing herein
or any Option granted hereunder will require the Company to issue any stock upon
exercise of any Option if the issuance would, in the opinion of counsel for the
Company, constitute a violation of the Securities Act of 1933, as amended (the
"1933 Act"), the Illinois securities laws, or any other applicable rule or
regulation then in effect, and the Company shall have no liability for failure
to issue Shares upon any exercise of Options because of a delay pending the
meeting of any such requirements. No Shares shall be delivered pursuant to the
exercise of any Option, in whole or in part, until the Shares are qualified for
delivery under such securities laws and regulations as may be deemed by the
Committee to be applicable thereto, and such Shares are listed on each
securities exchange on which Shares may then be listed.
7. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the Options
granted hereunder and the obligation of the Company to sell and deliver Shares
under such Options, will be subject to all applicable federal and state laws,
rules, regulations and to such approvals by any government or regulatory
authority or investigative agency as may be required.
8. NO IMPLIED COVENANTS. Neither this Plan nor any action taken hereunder
shall be construed as giving any Director any right to be retained in office.
9. ADJUSTMENTS UPON CHANGES IN SHARES. If any change is made in the Shares
subject to the Plan or subject to any Option granted under the Plan (through
reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split, combination of shares, dividend payable in Shares
or otherwise, adjustments as it deems appropriate shall be made by the Committee
in the number and kind of Shares available for awards under the Plan. In
addition, the Committee shall make adjustments as it deems appropriate in the
number and kind of Shares as to which outstanding Options, or portions thereof
then unexercised, shall be exercisable, to the end that the Optionee's
proportionate interest is maintained as before the occurrence of such event.
10. AMENDMENT OF THE PLAN. The Board of Directors at any time, and from
time to time, may amend the Plan, subject to the limitation, however, that,
except as provided in Section 9 (relating to adjustments upon changes in
Shares), no amendment shall be made, except upon approval by vote of a majority
of the outstanding shares of the Company, which will:
(a) increase the number of shares reserved for Options under the Plan; or
(b) reduce the Option price below 100% of fair market value of the Shares
at the time an Option is granted; or
(c) change the requirements for eligibility for participation under the
Plan; or
(d) extend the term of the Plan;
and provided further that the Plan shall not be amended more than once every six
months, other than to comport with changes in applicable law.
11. TERMINATION OR SUSPENSION OF THE PLAN. The Board of Directors at any
time, and from time to time, may suspend or terminate the Plan. Unless
previously terminated by the Board, this Plan shall terminate on, and no further
Options will be granted after the tenth anniversary of the Effective Date of the
Plan, as described in Section 12 hereof. Rights and obligations under any Option
granted while the Plan is in effect shall not be altered or impaired by
suspension or termination of the Plan, except by consent of the person to whom
the Option was granted.
12. EFFECTIVE DATE. This Plan shall become effective on the date it is
adopted by the Company's Board of Directors, provided that the stockholders
approve the Plan within twelve months thereafter.
3
<PAGE> 21
13. MODIFICATION, EXTENSION AND RENEWAL. Subject to the conditions of, and
within the limitations prescribed in, Section 10 hereof, the Committee may
cancel, modify, extend or renew outstanding Options. Notwithstanding the
foregoing, no modification will, without the prior written consent of the
Optionee, alter, impair or waive any rights or obligations associated with any
Option earlier granted under the Plan. Further, but subject to Section 9, the
Committee may not change the number of Shares or the class of persons who are
eligible to participate in the Plan.
14. USE OF PROCEEDS FROM SHARES. Cash proceeds from the sale of Shares
pursuant to Options granted under the Plan shall constitute general funds of the
Company.
15. CORPORATE REORGANIZATIONS. "Corporate Transaction" shall mean the
dissolution or liquidation of the Company, or a reorganization, merger or
consolidation of the Company as a result of which the outstanding securities of
the class then subject to Options hereunder are changed into or exchanged for
cash or property or securities not of the Company's issue, or a sale of
substantially all the property of the Company to, or the acquisition of stock
representing more than eighty percent (80%) of the voting power of the stock of
the Company then outstanding, by another corporation or person. Any Options that
are not exercised as of the date of a Corporate Transaction shall terminate and
cease to be outstanding effective as of the date of the Corporate Transaction,
except that the exercise of any Option that was exercised in anticipation of the
Corporate Transaction shall be conditioned upon the consummation of the
Corporate Transaction. The Committee may also grant Options under the Plan
having terms, conditions and provisions that vary from those specified in the
Plan, provided that any such awards are granted in substitution for, or in
connection with the assumption of, existing Options issued by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, plan of exchange, acquisition of property or stock, separation,
reorganization or liquidation to which the Company is a party.
16. FINANCIAL ASSISTANCE. The Company may assist any Optionee in the
payment of the Option price payable on exercise of an Option, by lending the
amount of such Option price to such Optionee on such terms and at such rates of
interest and upon such security (or unsecured) as is authorized by the Board.
17. GOVERNING LAW. All questions arising with respect to the provisions of
the Plan will be determined by application of the Code and the laws of the state
of Illinois except to the extent that Illinois laws are preempted by any federal
law.
18. OTHER COMPENSATION ARRANGEMENTS. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
19. ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to the
participation of Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the 1934 Act,
the Plan shall be administered in compliance with the requirements, if any, of
Rule 16b-3. An Insider is an officer or a director of the Company or any other
person whose transactions in stock are subject to Section 16 of the 1934 Act.
20. INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as members of the Board, members of the Board to whom authority to
act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at the Company's own expense
to handle and defend same.
4
<PAGE> 22
21. EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the foregoing,
if the exercise of an Option within the applicable time periods set forth in
Paragraph 5 is prevented by the provisions of Paragraph 6, the Option shall
remain exercisable until three months (or such longer period of time as
determined by the Board, in its discretion) after the date the Optionee is
notified by the Company that the Option is exercisable, but in no event later
than the Option expiration date.
5
<PAGE> 23
IN WITNESS WHEREOF, this Plan is executed this day of
to be effective as of the Effective Date.
SIGMATRON INTERNATIONAL, INC.,
a Delaware corporation
BY:
-----------------------------------
Gary R. Fairhead, President and CEO
6
<PAGE> 24
APPENDIX A
<TABLE>
OPTIONEE NUMBER OF OPTIONS
-------- ------------------------------------------------------------
<S> <C>
</TABLE>
7
<PAGE> 25
APPENDIX 2
The 2000 Employee Stock Option Plan is filed herewith pursuant to Instruction 3
to item 10 of Schedule 14A and is not part of the proxy statement.
SIGMATRON INTERNATIONAL, INC.
2000 EMPLOYEE STOCK OPTION PLAN
1. PURPOSE. The purpose of this Employee Stock Option Plan (the "Plan") is
to enable SigmaTron International, Inc. (the "Company") and any of its
subsidiaries (within the meaning of Section 424(f) of the Internal Revenue Code
of 1986, as amended (the "Code")) to attract and retain as employees people of
initiative and ability, and to provide additional incentives to employees.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below and
in Paragraph 7, the shares to be offered under the Plan shall consist of common
stock, $0.01 par value, of the Company ("Shares"), and the total number of
Shares that may be issued under the Plan shall not exceed three hundred
forty-two thousand five hundred (342,500) Shares. An Option is a right to
purchase Shares, subject to adjustments as provided herein, pursuant to the
terms and conditions of the Plan ("Option"). If an Option granted under the Plan
expires, terminates or is canceled, the unissued Shares subject to such Option
shall again be available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) Effective Date. The Plan shall become effective on September 25, 2000,
the date of its adoption by the Board of Directors of the Company (the
"Effective Date"). However, no Option granted under the Plan shall
become exercisable until the Plan is approved by the affirmative vote
of the holders of a majority of the Shares present at, or represented
and entitled to vote at, a stockholders meeting duly held in accordance
with the applicable laws of the state of Delaware, and any awards under
the Plan prior to such approval shall be conditioned on and subject to
such approval. Subject to this limitation, Options may be granted at
any time after the Effective Date and before termination of the Plan.
(b) Duration. Unless terminated earlier, the Plan shall continue in effect
until all Shares available for issuance under the Plan have been
issued, but in any event the Plan shall terminate on September 25,
2010, which is ten years from the earlier of the date of its adoption
by the Board of Directors of the Company or the date on which the Plan
is approved by the stockholders of the Company, and no Option shall be
granted hereunder after termination of the Plan. The Board of Directors
may suspend or terminate the Plan at any time except with respect to
Options then outstanding under the Plan. Termination shall not affect
any outstanding Options.
4. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of the Company. The Committee
shall be not less than two members and comprised solely of Non-employee
Directors, as defined by Rule 16b-3(b)(3)(i) of the Securities and Exchange Act
of 1934 (the "1934 Act"), or any successor definition adopted by the Securities
and Exchange Commission, and who shall each also qualify as an Outside Director
for purposes of Section 162(m) of the Code. The Committee shall determine and
designate from time to time the employees to whom awards shall be made, the
amount of the awards and the other terms and conditions of the awards, except
that only the Board of Directors may amend or terminate the Plan as provided in
Paragraphs 3 and 12. Subject to the provisions of the Plan, the Committee may
from time to time adopt and amend rules and regulations relating to
administration of the Plan, advance the lapse of any waiting period, accelerate
any exercise date, waive or modify any restriction applicable to Shares (except
those restrictions imposed by law) and make all other determinations in the
judgment of the Committee necessary or desirable for the administration of the
Plan. The interpretation and construction by the Committee of the provisions of
the Plan, any Option granted under the Plan and any related agreement shall be
final except as otherwise determined by the Board of Directors. The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any related
<PAGE> 26
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency.
No member of the Board of Directors or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
5. ELIGIBILITY. Any awards may be made to employees, including employees
who are officers or directors, of the Company or a subsidiary thereof; provided,
however, no member of the Committee shall be eligible for selection as a person
to whom awards may be made. The Committee shall select the employees to whom
awards shall be made. The Committee shall specify the action taken with respect
to each employee to whom an award is made under the Plan. At the discretion of
the Committee, an employee may be given an election to surrender an award in
exchange for the grant of a new award. The number of Shares subject to Options
granted in a fiscal year to each executive officer whose compensation is subject
to reporting in the Company's annual proxy statement (an "Executive Officer")
shall not exceed 100,000 Shares for any fiscal year in which such person serves
as an Executive Officer.
6. OPTION GRANT.
(a) Grant. An Optionee is an individual that has been granted an Option by
the Company ("Optionee"). The Committee has the authority and
discretion to grant Options under the Plan. With respect to each Option
grant, and subject to the terms of the Plan, the Committee shall
determine the number of Shares subject to the Option, the price at
which the Option may be exercised (the "Option price"), the period of
the Option, and the time or times at which the Option may be exercised.
The Option price for a particular Option shall be such price as may be
fixed by the Committee, but in no event less than the minimum required
in order to comply with any applicable law, rule or regulation. Options
shall be evidenced by written agreements, the form of which shall be
approved by the Committee, which shall, among other things (i)
designate the Option as either an Incentive Stock Option under Section
422 of the Code ("ISO") or a Nonqualified Stock Option ("NSO"), (ii)
specify the number of Shares covered by the Option; (iii) specify the
Option price, determined in accordance with Paragraph 6 hereof, for the
Shares subject to the Option; (iv) specify the Option period determined
in accordance with Paragraph 6 hereof; (v) set forth specifically or
incorporate by reference the applicable provisions of the Plan; and
(vi) contain such other terms and conditions consistent with the Plan
as the Committee may, in its discretion, prescribe. In addition, the
Committee may provide for any further restrictions or provisions in the
Option which it deems appropriate. Subject to the conditions of, and
within the limitations prescribed in, Paragraph 12 hereof, the
Committee may cancel, modify, extend or renew outstanding Options.
Notwithstanding the foregoing, no modification will, without the prior
written consent of the Optionee, alter, impair or waive any rights or
obligations associated with any Option earlier granted under the Plan.
Options shall be either ISOs or NSOs. ISOs shall meet all of the
requirements of this Paragraph 6 other than Subparagraph 6(d). NSOs
shall meet the requirements of Subparagraphs 6(a) and 6(c) through
6(g).
(b) Incentive Stock Options. ISOs shall be subject to the following terms
and conditions (references in this Subparagraph 6(b) to "employee"
shall not include advisors or consultants; only common law employees
may receive ISOs):
(i) ISOs may be granted under the Plan to an employee possessing more
than ten percent of the total combined voting power of all classes of stock
of the Company only if the Option price is at least 110 percent of the fair
market value of the Shares subject to the Option on the date it is granted,
as described in Subparagraph 6(b)(iii), and the Option by its terms is not
exercisable after the expiration of five years from the date it is granted.
(ii) Subject to Subparagraphs 6(b)(i) and 6(c), ISOs granted under the
Plan shall continue in effect for the period fixed by the Committee, except
than no ISO shall be exercisable after the expiration of ten years from the
date it is granted.
PAGE -2-
<PAGE> 27
(iii) The Option price per Share shall be determined by the Committee
at the time of grant. Subject to Subparagraph 6(b)(i), the Option price
shall not be less than 100 percent of the fair market value of the Shares
covered by the ISO at the date the Option is granted. The fair market value
shall be deemed to be the closing price of the Shares as reported in the
NASDAQ listing in The Wall Street Journal or such other reported value of
the Shares as shall be specified by the Committee on the day preceding the
grant of the Option, or if such day is not a trading day, then on the
immediately preceding trading day.
(iv) No ISO shall be granted on or after the tenth anniversary of the
Effective Date of the Plan.
(v) No ISO shall provide any person with a right to purchase Shares to
the extent that such right first becomes exercisable during a prescribed
calendar year and the sum of (i) the fair market value (determined as of
the date of grant) of the Shares subject to such ISO which first become
available for purchase during such calendar year plus (ii) the fair market
value (determined as of the date of grant) of all Shares subject to ISOs
previously granted to such person under all plans of the Company first
become available for purchase during such calendar year exceeds $100,000.
If the Code is amended to provide for a different limitation from that set
forth in this Paragraph, such different limitation shall be deemed
incorporated herein effective as of the effective date of such amendment
and with respect to such Options as required or permitted by such amendment
to the Code.
(vi) Without written notice to the Committee, an Optionee may not
dispose of Shares acquired pursuant to the exercise of an ISO until after
the later of (i) the second anniversary of the date on which the ISO was
granted, or (ii) the first anniversary of the date on which the Shares were
acquired. An Optionee shall make appropriate arrangements with the Company
for any taxes which the Company is obligated to collect in connection with
any disposition of Shares acquired pursuant to the exercise of an ISO,
including any federal, state or local withholding taxes.
(vii) Should Section 422 of the Code be amended during the term of the
Plan, the Committee may modify the Plan consistently with such amendment.
(c) Exercise of Options. Except as provided in Subparagraph 6(f), no Option
granted under the Plan to an employee may be exercised unless at the
time of such exercise the Optionee is employed by the Company and shall
have been so employed continuously since the date such Option was
granted. Absence on leave or on account of illness or disability under
rules established by the Committee shall not, however, be deemed an
interruption of employment for this purpose. Except as provided in
Subparagraphs 6(f), 7 and 8, Options granted under the Plan may be
exercised from time to time over the period stated in each Option in
such amounts and at such times as shall be prescribed by the Committee,
provided that Options shall not be exercised for fractional shares, and
the election to exercise an Option shall be made in accordance with
applicable federal and state laws and regulations. Unless otherwise
determined by the Committee, if the Optionee does not exercise an
Option in any one year with respect to the full number of Shares to
which the Optionee is entitled in that year, the Optionee's rights
shall be cumulative and the Optionee may purchase those Shares in any
subsequent year during the term of the Option. No Option shall be
exercisable after the expiration of ten years from the date it is
granted.
(d) Transferability. The Committee shall retain the authority and
discretion to permit an NSO to be transferable as long as such
transfers are made only to a Permitted Transferee (as herein defined);
provided that (i) such transfer is a bona fide gift and accordingly,
the Optionee receives no value for the transfer, as provided in the
instructions to SEC Form S-8, (ii) that the NSOs transferred continue
to be subject to the same terms and conditions that were applicable to
the NSOs immediately prior to the transfer, and (iii) that the NSOs may
not be otherwise or subsequently sold, pledged, assigned or transferred
in any manner except by will or the laws of descent or distribution or
pursuant to a domestic relations order. "Permitted Transferee" shall
mean any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, of the Optionee (a
"Family Member"), any person sharing the Optionee's
PAGE -3-
<PAGE> 28
household (other than as a tenant or employee), or a trust or other
entity in which Family Members and the Optionee have more than fifty
percent of the beneficial or voting interests. In the event of the
Optionee's death, the NSO may be exercised only by a person who
acquired the right to exercise it by reason of the death of the
Optionee. Neither the Optionee, any Permitted Transferee, nor any
person who acquires the right to exercise the NSO by reason of the
death of the Optionee will be deemed to be a holder of any Shares
subject to the NSO unless and until certificates for those Shares are
issued to such person. A Permitted Transferee may not subsequently
transfer an NSO. The designation of a beneficiary shall not constitute
a transfer.
(e) Vesting. Options granted under the Plan shall vest according to such
schedule as the Committee may prescribe at the time of grant, which may
include full and immediate vesting. Reference to "Option" in this Plan
means all vested and non-vested Options unless otherwise specifically
stated.
(f) Termination of Employment or Death.
(i) With respect to ISOs:
(A) If the employment of an employee is terminated, any then
outstanding Options held by such employee to the extent vested at
termination of employment shall be exercisable, in accordance with the
provisions of the Option agreement, by such employee at any time prior to
the expiration date of such Option or within three months after the date of
termination of employment, whichever is the shorter period.
(B) Notwithstanding the provisions of Subparagraph 6(f)(i)(A), and
unless the Board of the Directors of the Company determines otherwise, if
the employee's employment is terminated because of a disability described
in Section 422(c)(6) of the Code ("Disability"), any then outstanding
Options held by such employee to the extent vested at termination of
employment shall be exercisable, in accordance with the Option agreement,
by such employee at any time prior to the expiration date of such Option or
within one year after the date of termination of employment, whichever is
the shorter period.
(C) Notwithstanding the provisions of Subparagraph 6(f)(i)(A), if the
employee dies while employed by the Company, any then outstanding Options
held by such employee to the extent vested on the date of death shall be
exercisable, in accordance with the provisions of the Option agreement, by
the duly appointed representative of the employee's estate at any time
prior to the expiration date of such Option or within one year after the
date of death, whichever is the shorter period.
(ii) If a termination under Subparagraph 6(f)(i)(B) or (C) occurs, any
unvested portion of the Option held by the employee shall become vested,
provided that the aggregate value of Shares with respect to which any ISO
first becomes exercisable in the calendar year of the termination of
employment does not exceed $100,000. If the value of Shares which become
fully vested under an ISO exceed $100,000, such excess shall be treated as
stock subject to an NSO. For purposes of the $100,000 limitation, the fair
market value of the Shares on the date the ISO was granted shall be used in
determining the value of the Shares, with fair market value to be
determined in accordance with Subparagraph 6(b)(iii). If the Code is
amended to provide for a limitation different from the one set forth in
this Paragraph, such different limitation shall be deemed incorporated
herein effective as of the effective date of such amendment and with
respect to such Options as required or permitted by such amendment to the
Code.
(iii) With respect to NSOs:
(A) If the employment of an Optionee is terminated "for cause," then
the unvested portion of any then outstanding Options held by such Optionee
shall be immediately canceled and the unexercised, vested portion of any
then outstanding Options held by such Optionee shall be exercisable (to the
extent then exercisable), by the Optionee or Permitted Transferee (defined
in Section 6(d)) at any time prior to the expiration date or within three
months after the date of termination of employment, whichever is the
shorter period. A termination "for cause" means any termination due to (i)
conviction of a felony; (ii) Optionee's refusal, after at least 30 days
advance written notice from the Company's Board of
PAGE -4-
<PAGE> 29
Directors, to carry out a direct order of the Board of Directors (other
than an order to relocate Optionee more than 25 miles from his place of
employment); or (iii) a finding by the Board of Directors that Optionee has
defrauded the Company or any affiliate of the Company.
(B) If the employment of an Optionee is terminated by the Company, but
such termination is not "for cause," as defined above, then the unvested
portion of any then outstanding Options held by such Optionee shall be
immediately canceled and the vested portion of any then outstanding Options
held by such Optionee shall continue in effect after the Optionee's
termination of employment under the terms of the Option. This subparagraph
shall also apply to an Optionee who voluntarily terminates employment with
the Company.
(C) If the employment of Optionee is terminated because of the death
or permanent disability (as described in Section 422 (c)(6) of the Internal
Revenue Code of 1986, as amended (the "Code")) of the Optionee when
employed, then the unvested portion of any then outstanding Options held by
such Optionee shall be immediately vested and the unexercised vested
portion of any then outstanding Options held by such Optionee at the time
of death shall be exercisable in full (including the portion which, but for
this provision, would not be exercisable) by the person or persons entitled
to do so under the will of the Optionee, or if the Optionee shall fail to
make testamentary disposition of the Option or shall die intestate, by the
legal representative of the Optionee or by a permitted transferee, at any
time prior to the expiration date of such Option.
(iv) For all Options issued hereunder, to the extent that the Option
of any deceased Optionee or any Optionee whose employment terminates is not
exercised within the applicable period, all further rights to purchase
Shares pursuant to such Option shall cease and terminate.
(g) Purchase of Shares. Unless the Committee determines otherwise, Shares
may be acquired pursuant to an Option granted under the Plan only upon
receipt by the Company of notice in writing from the Optionee of the
Optionee's intention to exercise, specifying the number of Options the
Optionee desires to exercise and the date on which the Optionee desires
to complete the transaction, and such other documentation as may be
required by the Company. Unless the Committee determines otherwise, on
or before the date specified for completion of the purchase of Shares
pursuant to an Option, the Optionee must have paid the Company the full
purchase price of such Shares in cash or by check, or, with the consent
of the Committee, in whole or in part, by tendering to the Company the
number of Shares valued at fair market value equal to the Options to be
exercised. The Optionee may tender Shares only if the Optionee has not
acquired any Shares (including the Shares being tendered), other than
in an acquisition exempt from Section 16(b) of the 1934 Act and rules
and regulations promulgated thereunder, for a period of at least six
months prior to the tender. The fair market value of the Shares
provided in payment of the Option price shall be deemed to be the
closing price of the Shares as reported in the NASDAQ listing in The
Wall Street Journal or such other reported value of the Shares as shall
be specified by the Committee on the day preceding the exercise of the
Option, or if such day is not a trading day, then on the immediately
preceding trading day. No Shares shall be issued until full payment
therefor has been made. No Shares shall be delivered pursuant to the
exercise of any Option, in whole or in part, until the Shares are
qualified for delivery under such securities laws and regulations as
may be deemed by the Committee to be applicable thereto, and such
Shares are listed on each securities exchange on which Shares may then
be listed. With the consent of the Committee, an Optionee may request
the Company to apply automatically the Shares to be received upon the
exercise of a portion of a Option (even though stock certificates have
not yet been issued) to satisfy the purchase price for additional
portions of the Options. If the Company is required to withhold on
account of any present or future tax imposed as a result of an
exercise, the Committee shall have the sole discretion to determine
whether such withholding shall be satisfied by a cash payment from
Optionee or by withholding Shares having a fair market value equal to
the amount of the required withholding. (Fair market value shall be
determined using the closing price of the Shares as reported in the
NASDAQ listing in The Wall Street Journal or such other reported value
of the shares as shall be specified by the Committee on the day prior
to the date the amount of withholding is determined.) However, no such
withholding of
PAGE -5-
<PAGE> 30
Shares shall occur until the Company has been subject to the
requirements of Section 13(a) of the 1934 Act for at least one year
prior to the exercise of the Option, and the Company regularly releases
its quarterly and annual summary statements of sales and earnings for
publication. Such exercise may include a cashless exercise if the
Options are tendered to a broker in exchange for the number of Shares
the fair market value of which is equal to the aggregate difference
between the Option price and the fair market value of the Options so
tendered.
7. CHANGES IN CAPITAL STRUCTURE. If any change is made in the Shares
subject to the Plan or subject to the Options granted under the Plan (through
reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split, combination of shares or dividend payable in
Shares or otherwise), adjustments as it deems appropriate shall be made by the
Committee in the number and kind of Shares available for awards under the Plan,
provided that this Paragraph 7 shall not apply with respect to transactions
referred to in Paragraph 8. In addition, the Committee shall make such
adjustments as it deems appropriate in the number and kind of Shares as to which
outstanding Options, or portions thereof then unexercised, shall be exercisable
to the end that the Optionee's proportionate interest is maintained as before
the occurrence of such event. The Committee may also require that any securities
issued in respect of or in exchange for Shares issued hereunder that are subject
to restrictions be subject to similar restrictions. Notwithstanding the
foregoing, the Committee shall have no obligation to effect any adjustment that
would or might result in the issuance of fractional shares, and any fractional
shares resulting from any adjustment may be disregarded or provided for in any
manner determined by the Committee. Any such adjustments made by the Committee
shall be conclusive.
8. SPECIAL ACCELERATION IN CERTAIN EVENTS.
(a) Notwithstanding any other provisions of the Plan, upon the occurrence
of any of the following events (each, a "Corporate Transaction"):
(i) any consolidation, merger, plan of exchange, or transaction
involving the Company ("Merger") in which the Company is not the continuing
or surviving corporation or pursuant to which the Shares would be converted
into cash, securities or other property, other than a Merger involving the
Company in which the holders of the Shares immediately prior to the Merger
have the same proportionate ownership of common stock of the surviving
corporation after the Merger, or
(ii) any sale, lease, exchange, or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the
assets of the Company or the adoption of any plan or proposal for the
liquidation or dissolution of the Company.
(iii) a "person" within the meaning of Section 13(d) of the 1934 Act
(other than the Company) becomes the beneficial owner (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, in one or more
transactions, of shares of common stock of the Company representing 50% or
more of the total number of votes that may be cast by all stockholders of
the Company voting as a single class, or the first day on which shares of
the Company's common stock are purchased pursuant to a tender offer or
exchange offer,
all Options shall vest and become fully exercisable as to all of the Shares
subject to the Options as of the date thirty (30) days prior to the date of
the Corporate Transaction. The exercise or vesting of any Option and any
Shares acquired upon the exercise thereof that was permissible solely by
reason of this Paragraph 8 shall be conditioned upon the consummation of
the Corporate Transaction. Any Options that are not exercised as of the
date of the Corporate Transaction shall terminate and cease to be
outstanding effective as of the date of the Corporate Transaction.
(c) Other than upon the occurrence of any of the events described in this
Paragraph 8, the Committee shall have the authority at any time or from
time to time to accelerate the vesting of any individual Option and to
permit any Option not theretofore exercisable to become immediately
exercisable.
9. CORPORATE MERGERS, ACQUISITIONS, ETC. The Committee may also grant
Options under the Plan having terms, conditions and provisions that vary from
those specified in this Plan, provided that any such awards are
PAGE -6-
<PAGE> 31
granted in substitution for, or in connection with the assumption of, existing
Options, issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a transaction involving
a corporate merger, consolidation, plan of exchange, acquisition of property or
stock, separation, reorganization or liquidation to which the Company is a
party.
10. ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to the
participation of Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the 1934 Act,
the Plan shall be administered in compliance with the requirements, if any, of
Rule 16b-3. An Insider is an officer or a director of the Company or any other
person whose transactions in Shares are subject to Section 16 of the 1934 Act.
11. INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as members of the Board of Directors or officers or employees of
the Company, any director, officer or employee of the Company to whom authority
to act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at the Company's own expense
to handle and defend same.
12. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors at any time,
and from time to time, may amend or terminate the Plan in such respects as it
shall deem advisable because of changes in the law while the Plan is in effect
or for any other reason. Except as provided in Paragraphs 6(f), 7 and 8,
however, no change in an award already granted shall be made without the written
consent of the holder of such award (unless such termination or amendment is
required to enable an Option designated as an ISO to qualify as an incentive
stock option or is necessary to comply with any applicable law, regulation or
rule), and no amendment or termination shall be made which without the approval
of the stockholders of the Company would cause the Plan to no longer comply with
Rule 16b-3 under the 1934 Act, Section 422 of the Code or any other regulatory
requirements. Notwithstanding the immediately foregoing, no amendment of the
Plan which increases the aggregate number of Shares available under the Plan
except to reflect events described in Paragraph 7 hereof, changes the class of
employees eligible to participate in the Plan, extends the term of the Plan, or
reduces the minimum permissible exercise price of an Option under the Plan that
is approved by the Board of Directors shall be effective unless, within 12
months of the date of adoption of such amendment, the amendment is approved by
the stockholders of the Company.
13. APPROVALS. The obligations of the Company under the Plan are subject to
the approval of state and federal authorities or agencies with jurisdiction in
the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange or trading
system on which the Company's shares may then be listed or admitted for trading,
in connection with grants under the Plan. The foregoing notwithstanding, the
Company shall not be obligated to issue or deliver Options or Shares under the
Plan if such issuance or delivery would violate applicable state or federal
securities law, or any other state or federal law or regulation.
14. EMPLOYMENT RIGHTS. Nothing in the Plan or any award pursuant to the
Plan shall confer upon any employee any right to be continued in the employment
of the Company or shall interfere in any way with the right of the Company to
terminate an employee's employment at any time, for any reason, with or without
cause, or to increase or decrease an employee's compensation or benefits or to
alter the terms of employment.
15. RIGHTS AS A STOCKHOLDER. The recipient of any award under the Plan
shall have no rights as a stockholder with respect to any Shares until the date
of issue to the recipient of a stock certificate for such
PAGE -7-
<PAGE> 32
Shares. Except as otherwise expressly provided in the Plan, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued.
16. GOVERNING LAW. All questions arising with respect to the provisions of
the Plan shall be determined by application of the laws of the state of Illinois
except to the extent that Illinois laws are preempted by any federal statute,
regulation, judgment or court order, including but not limited to, the Code.
17. MISCELLANEOUS.
(a) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases.
(b) The Committee shall condition any grant of any Option under the Plan
upon the recipient's execution and delivery to the Company of an
agreement not to compete with the Company during the recipient's
employment with the Company and for such period thereafter as shall be
determined by the Committee. Such covenant against competition shall be
in a form satisfactory to the Committee.
IN WITNESS WHEREOF, this Plan is executed this day of
to be effective as of the Effective Date.
SIGMATRON INTERNATIONAL, INC.,
a Delaware corporation
BY:
-----------------------------------
Gary R. Fairhead, President and CEO
PAGE -8-
<PAGE> 33
APPENDIX A
<TABLE>
OPTIONEE NUMBER OF OPTIONS
-------- ------------------------------------------------------------
<S> <C>
</TABLE>
PAGE -9-
<PAGE> 34
SIGMATRON INTERNATIONAL, INC.
2201 LANDMEIER ROAD
ELK GROVE VILLAGE, IL 60007
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary R. Fairhead, Linda K. Blake and Henry
J. Underwood, Jr., and each of them, with full power of substitution, attorneys
and proxies to represent the undersigned at the 2000 Annual Meeting of
Stockholders of SIGMATRON INTERNATIONAL, INC. (the "Company") to be held at the
Holiday Inn located at 1000 Busse Road, Elk Grove Village, Illinois at 10:00
a.m. local time, on Monday, September 25, 2000 or at any adjournment thereof,
with all power which the undersigned would possess if personally present, and to
vote all shares of stock of the Company which the undersigned may be entitled to
vote at said Meeting as follows:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below
(UNLESS NAME OF NOMINEE IS CROSSED OUT).
William C. Mitchell Thomas W. Rieck Steven A. Rothstein
2. TO ADOPT THE 2000 DIRECTORS' STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO ADOPT THE 2000 EMPLOYEE STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING (which the Board of Directors does not know of prior to August 21,
2000)
Management recommends your vote FOR all proposals.
(Continued and to be Signed on Other Side)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
<PAGE> 35
(Continued from Other 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 THE ELECTION OF ALL NOMINEES FOR DIRECTORS, FOR ADOPTION OF 2000
DIRECTORS' STOCK OPTION PLAN, FOR ADOPTION OF 2000 EMPLOYEE STOCK OPTION PLAN,
AND FOR THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS, AND WILL CONFER THE AUTHORITY IN PARAGRAPH 3.
Receipt is hereby acknowledged of the Notice of the Meeting and Proxy
Statement dated August 21, 2000, as well as a copy of the 2000 Annual Report to
Stockholders.
When signing as attorney,
executor, administrator, trustee
or guardian, please give title.
Each joint owner is requested to
sign. If a corporation or
partnership, please sign by an
authorized officer or partner.
Please sign in the same manner as
your certificate(s) is (are)
registered.
Dated , 2000.
----------------------------------
(Signature of Stockholder(s))
Please complete, date, sign and
return this proxy in the envelope
provided.
