<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ACT Manufacturing, Inc.
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X]No fee required.
[_]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: not
applicable
(2) Aggregate number of securities to which transactions applies: not
applicable
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: not applicable
(4) Proposed maximum aggregate value of transaction: not applicable
(5) Total fee paid: not applicable
[_]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: not applicable
(2) Form, Schedule or Registration Statement No.: not applicable
(3) Filing party: not applicable
(4) Date filed: not applicable
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ACT MANUFACTURING, INC.
2 Cabot Road
Hudson, Massachusetts 01749
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of ACT Manufacturing, Inc., a
Massachusetts corporation (the "Corporation"), will be held on Monday, May 15,
2000 at 10:00 A.M., local time, at Testa, Hurwitz & Thibeault, LLP, Conference
Center, 125 High Street, High Street Tower, Boston, Massachusetts 02110 for
the following purposes:
1. To elect two members of the Board of Directors to serve for three-year
terms as Class II Directors.
2. To approve an amendment to the Second Restated Articles of
Organization of the Corporation to increase the number of authorized shares
of the Corporation's common stock, $0.01 par value per share, from
50,000,000 to 100,000,000.
3. To ratify the selection of the firm Deloitte & Touche LLP as
independent auditors for the fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only stockholders of record at the close of business on Friday, March 24,
2000, the record date fixed by the Board of Directors for such purpose, are
entitled to notice of and to vote at the meeting and any adjournments thereof.
By Order of the Board of Directors
Jeffrey B. Lavin
Clerk
Hudson, Massachusetts
April 4, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED
IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
ACT MANUFACTURING, INC.
2 Cabot Road
Hudson, Massachusetts 01749
----------------
PROXY STATEMENT
----------------
April 4, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ACT Manufacturing, Inc. (the
"Corporation") for use at the Annual Meeting of Stockholders to be held on
Monday, May 15, 2000 at 10:00 A.M., local time, at Testa, Hurwitz & Thibeault,
LLP, Conference Center, 125 High Street, High Street Tower, Boston,
Massachusetts 02110, and at any adjournments thereof.
Only stockholders of record as of the close of business on March 24, 2000
(the "Record Date") will be entitled to vote at the meeting and any
adjournments thereof. As of that date, 16,326,422 shares of common stock, $.01
par value per share (the "Common Stock"), of the Corporation were issued and
outstanding. The holders of Common Stock are entitled to one vote per share on
any proposal presented at the meeting. Stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right
to attend the meeting and vote in person. Any stockholder giving a proxy has
the right to revoke it by written notice to the Clerk of the Corporation at
any time before it is exercised.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended December 31, 1999, is being mailed together with this Proxy
Statement to all stockholders entitled to vote. This Proxy Statement and the
form of proxy were first mailed to stockholders on or about April 4, 2000.
Quorum and Votes Required
The representation, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the meeting is
necessary to constitute a quorum for the transaction of business. Shares
represented by proxies pursuant to which votes have been withheld from any
nominee for election as director, or which contain one or more abstentions or
broker "non-votes," are counted as present or represented for purposes of
determining the presence or absence of a quorum for the meeting. A "non-vote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because, with respect to such
other proposal, the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
In the election of the Class II Directors, the two nominees receiving the
highest number of affirmative votes of the shares present or represented and
entitled to vote at the meeting shall be elected as Class II Directors.
Approval of the amendment to the Corporation's Second Restated Articles of
Organization will require an affirmative vote of the holders of a majority of
the shares of the Corporation's Common Stock outstanding on the record date
and entitled to vote thereon. On all other matters being submitted to
stockholders, an affirmative vote of the holders of a majority of the shares
present, in person or represented by proxy, and voting on each such matter is
required for approval. An automated system administered by the Corporation's
transfer agent tabulates the votes. The vote on each matter submitted to
stockholders is tabulated separately. Abstentions will have the practical
effect of voting against each such matter, other than the election of
directors, since they are
1
<PAGE>
included in the number of shares present and voting on each such matter.
Broker "non-votes" will have the practical effect of voting against the
proposal to approve the amendment to the Corporation's Second Restated
Articles of Organization, but will have no impact on each other matter since
they are not included in the number of shares present and voting on each such
matter.
Each of the persons named as attorneys in the proxies is an officer of the
Corporation. All properly executed proxies returned in time to be counted at
the meeting will be voted. Any stockholder giving a proxy has the right to
withhold authority to vote for any individual nominee to the Board of
Directors by writing that nominee's name in the space provided on the proxy.
In addition to the election of the Class II Directors, the stockholders will
consider and vote upon proposals to amend the Corporation's Second Restated
Articles of Organization to increase the authorized number of shares of the
Corporation's common stock and to ratify the selection of auditors, as further
described in this proxy statement. Where a choice has been specified on the
proxy with respect to the foregoing matters, the shares represented by the
proxy will be voted in accordance with the specifications and will be voted
FOR if no specification is indicated.
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter upon which a vote may properly be taken
should be presented at the Annual Meeting, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
2
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 24, 2000 certain information
regarding beneficial ownership of the Corporation's Common Stock by: (i) each
person who, to the knowledge of the Corporation, owned beneficially more than
5% of the shares of Common Stock of the Corporation outstanding at such date;
(ii) each director or nominee for director of the Corporation; (iii) each
executive officer identified in the Summary Compensation Table set forth below
under the heading "Executive Compensation Summary"; and (iv) all directors,
nominees for election to the Board of Directors and executive officers of the
Corporation as a group.
<TABLE>
<CAPTION>
Amount and Nature Percentage of Common
Name and Address of Beneficial Owner of Ownership(1) Stock Outstanding(2)
- ------------------------------------ ----------------- --------------------
<S> <C> <C>
Putnam Investments, Inc. (3)........... 1,052,700 6.45%
One Post Office Square
Boston, MA 02109
Douglas R. Ederle(4)................... 817,957 5.01%
c/o Pell Rudman & Co., Inc.
100 Federal Street
Boston, MA 02110
John A. Pino(5)........................ 4,719,972 28.91%
c/o ACT Manufacturing, Inc.
2 Cabot Road
Hudson, MA 01749
Matthew G. Landa(6).................... 137,350 *
Jack O'Rear(7)......................... 31,065 *
Jeffrey B. Lavin(8).................... 20,000 *
Blaise E. Scioli(9).................... 100,633 *
Edward T. Cuddy(10).................... 22,000 *
Bruce R. Gardner(11)................... 18,332 *
Frederick W. Gibbs(12)................. 26,622 *
David S. Lee(13)....................... 688,145 4.21%
Donald G. Polich(14)................... 17,332 *
All directors and executive officers as 5,781,451 34.65%
a group (10 persons)(15)..............
</TABLE>
- --------
* Less than 1% of the outstanding shares of Common Stock.
(1) Except as otherwise noted, to our knowledge, each person or entity named
in the table has sole voting and investment power with respect to their
shares of Common Stock, except to the extent authority is shared by
spouses under applicable law. The address of each of our directors and
executive officers is c/o ACT Manufacturing, Inc., 2 Cabot Road, Hudson,
MA 01749.
(2) The number of shares of Common Stock deemed outstanding on March 24, 2000
with respect to a person or group includes: (i) 16,326,422 shares of
Common Stock outstanding on such date and (ii) all options that are
currently exercisable or will become exercisable within 60 days of March
24, 2000 by the person or group in question.
(3) According to a Form 13G filed by Putnam Investments, Inc. ("Putnam") on
February 7, 2000. Putnam has shared voting power as to 384,400 shares of
Common Stock and shared dispositive power as to 1,052,700 shares. Putnam
Investment Management, Inc., a wholly owned subsidiary of Putnam and an
3
<PAGE>
investment adviser, has shared dispositive power as to 470,700 shares of
Common Stock. The Putnam Advisory Company, Inc., a wholly owned
subsidiary of Putnam and an investment adviser, has shared voting power
as to 384,400 shares of Common Stock and shared dispositive power as to
582,000 shares.
(4) Consists of (a) 420,879 shares held by the 1998 John A. Pino Grantor
Retained Annuity Trust dated June 15, 1998, of which Mr. Ederle is a co-
trustee, (b) 96,166 shares held by Mr. Ederle as trustee of the Pino
Family Trust, a trust for the benefit of Janet M. Pino, Mr. Pino's wife,
his children and his issue, (c) 150,456 shares held by Mr. Ederle as
trustee of the John M. Pino Trust, a trust for the benefit of John M.
Pino, Mr. Pino's son, and (d) 150,456 shares held by Mr. Ederle as
trustee of the Melissa A. Pino Trust, a trust for the benefit of Melissa
A. Pino, Mr. Pino's daughter. Mr. Ederle disclaims beneficial ownership
of all such shares.
(5) Includes 420,879 shares held by the 1998 John A. Pino Grantor Retained
Annuity Trust dated June 15, 1998, of which Mr. Pino is a co-trustee.
Excludes (a) 96,166 shares held by Douglas R. Ederle, as trustee of the
Pino Family Trust, a trust for the benefit of Janet M. Pino, Mr. Pino's
wife, his children and his issue, (b) 150,456 shares held by Mr. Ederle,
as trustee of the John M. Pino Trust, a trust for the benefit of John M.
Pino, Mr. Pino's son, and (c) 150,456 shares held by Mr. Ederle, as
trustee of the Melissa A. Pino Trust, a trust for the benefit of Melissa
A. Pino, Mr. Pino's daughter.
(6) Includes 135,204 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(7) Consists of 31,065 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(8) Consists of 20,000 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(9) Consists of 100,633 shares issuable upon the exercise of outstanding
stock options exercisable on the Record Date or within 60 days
thereafter.
(10) Includes 20,000 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(11) Includes 12,666 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(12) Includes 12,172 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(13) Includes 12,172 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
Excludes 2,500 shares owned by Mr. Lee's children. Mr. Lee disclaims all
beneficial ownership of such shares.
(14) Consists of 17,332 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(15) Includes 361,244 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Corporation's Amended and Restated By-laws, the
Corporation's Board of Directors is divided into three classes. Each class
serves for three years, with the terms of office of the respective classes
expiring in successive years. John A. Pino and Frederick W. Gibbs are Class II
Directors whose terms expire at the Annual Meeting of Stockholders to be held
in 2000. The Board is also composed of two Class III Directors (Bruce R.
Gardner and David S. Lee) and two Class I Directors (Edward T. Cuddy and
Donald G. Polich) whose terms will expire upon the election and qualification
of directors at the Annual Meeting of Stockholders to be held in 2001 and
2002, respectively.
The nominees for Class II Directors are John A. Pino and Frederick W. Gibbs,
who are each currently serving as Class II Directors. Shares represented by
all proxies received by the Board of Directors and not so marked as to
withhold authority to vote for Messrs. Pino and Gibbs will be voted FOR the
election of both nominees. Messrs. Pino and Gibbs will be elected to hold
office until the Annual Meeting of Stockholders to be held in 2003 and until
their respective successors are duly elected and qualified, or until their
earlier removal or resignation. Messrs. Pino and Gibbs have indicated their
willingness to serve, if elected; however, if either should be unable or
unwilling to serve, the proxies will be voted for the election of a substitute
nominee designated by the Board of Directors or for fixing the number of
directors at a lesser number.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE NOMINEES LISTED BELOW.
The following table sets forth, for the nominees to be elected at the
meeting and for each director whose term of office will extend beyond the
meeting, the year each such nominee or director was first elected a director,
the positions currently held by each nominee or director with the Corporation,
the year each nominee's or director's term will expire and the class of
director of each nominee or director.
<TABLE>
<CAPTION>
Nominee's or Director's Name
and Year
Nominee or Director First Year Term Class of
Became Director Position(s) Held Will Expire Director
---------------------------- ---------------- ----------- --------
<S> <C> <C> <C>
Nominees:
John A. Pino (1988).......... Chief Executive Officer and 2000 II
Chairman of the Board
Frederick W. Gibbs (1999).... Director 2000 II
Continuing Directors:
Bruce R. Gardner (1994)...... Director 2001 III
David S. Lee (1999).......... Director 2001 III
Edward T. Cuddy (1995)....... Director 2002 I
Donald G. Polich (1982)...... Director 2002 I
</TABLE>
5
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met fourteen (14) times and took action by unanimous
written consent ten (10) times during the fiscal year ended December 31, 1999.
The Audit Committee of the Board of Directors, presently comprised of
Messrs. Gardner and Polich, both outside directors of the Corporation, was
established on March 29, 1995. The Audit Committee is responsible for
reviewing the result and scope of audits and other services provided by the
Corporation's independent auditors and reviewing the Corporation's internal
accounting control policies and procedures. The Audit Committee met once
during the fiscal year ended December 31, 1999.
The Compensation Committee of the Board of Directors, presently comprised of
Messrs. Polich and Cuddy, both outside directors of the Corporation, was
established on March 29, 1995. The Compensation Committee reviews and makes
recommendations concerning the salaries and incentive compensation of senior
executives and employees of, and consultants to, the Corporation, and oversees
the administration of the Corporation's 401(k) plan. The Compensation
Committee met once during the fiscal year ended December 31, 1999.
The Stock Option Committee of the Board of Directors, presently comprised of
Messrs. Gardner and Cuddy, both outside directors of the Corporation, was
established on March 29, 1995. The Stock Option Committee oversees and
administers the Corporation's 1993 Stock Option Plans, Amended and Restated
1995 Stock Plan, 1995 Non-Employee Director Stock Option Plan and Amended and
Restated 1990 Equity Incentive Plan. During the fiscal year ended December 31,
1999, the Stock Option Committee took action by written consent six (6) times.
The Board of Directors does not currently have a nominating committee. Each
of the directors attended at least 75% of the total number of meetings of the
Board of Directors and all committees of the Board of Directors on which he
served during the fiscal year ended December 31, 1999.
6
<PAGE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Class II nominees to be elected at the
meeting, the current directors who will continue to serve as directors beyond
the meeting, and the executive officers of the Corporation, their ages, and
the positions currently held by each such person with the Corporation.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John A. Pino.................... 52 Chief Executive Officer and
Chairman of the Board
Matthew G. Landa................ 35 President
Jack O'Rear..................... 58 Vice President of Operations and
Chief Operating Officer
Jeffrey B. Lavin................ 45 Vice President of Finance, Chief Financial
Officer, Treasurer and Clerk
Blaise E. Scioli................ 42 Vice President and General Manager
of Cable Division
Edward T. Cuddy(1)(3)........... 64 Director
Bruce R. Gardner(2)(3).......... 57 Director
Frederick W. Gibbs.............. 68 Director
David S. Lee.................... 62 Director
Donald G. Polich(1)(2).......... 65 Director
</TABLE>
- --------
(1) Member of Compensation Committee
(2) Member of Audit Committee
(3) Member of Stock Option Committee
Directors to be Elected at the Meeting
John A. Pino joined the Corporation as President and a Director in February
1988. He also became Executive Vice President of Automated Component
Technologies, Inc. ("ACT II"), the Corporation's printed circuit board
assembly predecessor, in March 1991, and President of that company in March
1992. Mr. Pino became Chairman of the Board and Chief Executive Officer of the
Corporation in January 1993, served as President of the Corporation until
September 1999, and served as Treasurer of the Corporation from January 1993
to February 1995. Prior to joining the Corporation, he had served as Vice
President of Finance for New Balance Athletic Shoe, Inc. and Visual
Technology, Inc. and as Corporate Controller for Datacon, Inc.
Frederick W. Gibbs has been a Director of the Corporation since July 1999.
Prior to that, he served as a director of CMC Industries, Inc. ("CMC") since
September 1993. Mr. Gibbs has been an attorney in private practice since 1989
and a partner with Gibbs and Gregory, Attorneys at Law since 1995. In 1988,
Mr. Gibbs founded Mulberry Hill Enterprises, a consulting firm which
specializes in telecommunications and electronics, business acquisition
analysis and international business. From 1986 to 1988, Mr. Gibbs served as a
consultant with ITT Corporation ("ITT"), a diversified, global enterprise
engaged in three major business areas: insurance, industry and hospitality,
entertainment and information services. From 1980 to 1986, Mr. Gibbs served as
Executive Vice President of ITT and Senior Group Executive of
Telecommunications and Electronics, a division of ITT. From 1965 to 1980, Mr.
Gibbs served in various management positions with ITT.
7
<PAGE>
Directors Whose Terms Extend Beyond the Meeting
Bruce R. Gardner has been a Director of the Corporation since December 1994.
Mr. Gardner has been the President since November 1997 of Datawatch
Corporation, a provider of personal computer software, and has been a director
of Datawatch since co-founding that corporation in 1985. Since 1985, Mr.
Gardner also served Datawatch as a Senior Vice President until June 1993,
Executive Vice President until November 1997, and Chief Financial Officer and
Treasurer from 1985 until November 1997.
David S. Lee has been a Director of the Corporation since July 1999. Prior
to that, Mr. Lee founded CMC in July 1990 and served as its Chairman until
1993. He assumed the positions Acting President and Chief Executive Officer
from May 1995 until November 1995 and was Chairman of the Board from May 1995
until July 1999. Mr. Lee is the Chairman of eOn Communications Corporation and
Cortelco, Inc., a telecommunications company, and serves as a director of
Centigram Communications Corporation, a communications company, and of Linear
Technology Corporation, a manufacturer of high performance linear integrated
circuits. From 1983 to 1985, he served as a Vice President of ITT and as Group
Executive and Chairman of its Business Information Systems Group.
Edward T. Cuddy joined the Corporation as a Director in April 1995. In
August 1995, Mr. Cuddy retired from his position as Vice President of
Manufacturing and Member of the Senior Staff at GTECH Corporation, a firm
which designs, manufactures, installs and services customized computer
equipment for state and local governments. In addition to serving on the
Corporation's board, Mr. Cuddy currently serves as a director of Terascape
Software, Inc., a privately-held software company which optimizes database
storage and management, a director of Worldwide Interchange Network, Inc., a
privately-held consulting company assisting companies wishing to manufacture
in or export to Southeast Asia, and as a member of the Executive Advisory
Board of The Register Company, a privately-held worldwide provider of training
and consulting in the quality field.
Donald G. Polich has been an independent consultant since January 1993,
following the sale by him of all of the outstanding stock of the Corporation
and ACT II to Mr. Pino. Mr. Polich has served as a Director of the Corporation
since he founded it in 1982. Mr. Polich also served as the President and Chief
Executive Officer of the Corporation from inception until February 1988, and
was President and Chief Executive Officer and a director of ACT II from its
inception in December 1986 until March 1992.
Executive Officers
Matthew G. Landa has been President of the Corporation since September 1999.
Prior to joining the Corporation in July 1999, he was a director since
November 1995 and President and Chief Executive Officer since October 1995 of
CMC. From July 1995 to October 1995, Mr. Landa was the interim Chief Executive
Officer of CMC. Prior to that from January 1995 to July 1995, Mr. Landa was a
consultant to Sky Line Capital Fund. From 1991 to 1994, Mr. Landa served as
Chief Operating Officer and a member of the Board of Directors of Silicon
Valley Technology, an electronics manufacturing services firm. From 1986 to
1989, Mr. Landa worked as a consultant at Monitor Company, a strategic
management consulting firm, and in 1990 as an associate at Morgan Stanley &
Co., an investment bank.
Jack O'Rear has been Vice President of Operations and Chief Operating
Officer of the Corporation since September 1999. Prior to joining the
Corporation in July 1999, he was Chief Operating Officer of CMC since August
1996 and Vice President since August 1994. Mr. O'Rear became President of the
Mississippi operations of CMC in November 1994. From 1989 until joining CMC,
Mr. O'Rear served as Vice President of North American Operations for AVEX
Electronics, an electronics manufacturing services company.
8
<PAGE>
Jeffrey B. Lavin joined the Corporation as Vice President of Finance, Chief
Financial Officer, Treasurer and Clerk in December 1998. Prior to joining the
Corporation, Mr. Lavin was Corporate Controller for Wyman-Gordon Company, a
publicly-traded international manufacturer of highly-engineered components,
primarily for the aerospace industry, from 1994 to November 1998. Mr. Lavin
also served as Senior Consultant with Siegel & Dunn, a management consulting
firm providing a broad range of services, including turnaround management,
from 1991 to 1994 and as Chief Financial Officer, Controller and Chief
Accounting Officer with Patten Corporation, a publicly-traded retail real
estate and mortgage banking company, from 1986 to 1991.
Blaise E. Scioli has been the Vice President and General Manager of the
Corporation's Cable Division since April 1998 and was the Vice President of
Sales and Marketing from 1991 through April 1998. He was held several other
management positions in the Corporation since joining in June 1986. Prior to
joining the Corporation, Mr. Scioli held various sales and marketing positions
for AMP, Inc., a manufacturer of electronic interconnection products, from
August 1981 to June 1986.
Executive officers of the Corporation are elected by the Board of Directors
on an annual basis and serve until their successors have been duly elected and
qualified, or until his earlier removal or resignation. There are no family
relations among any of the executive officers or directors of the Corporation.
9
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation Summary
The following table shows certain information with respect to the annual and
long-term compensation of the Corporation's Chief Executive Officer and each
of the Corporation's four other most highly compensated executive officers
(collectively, the "Named Executive Officers") for the fiscal years ended
December 31, 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-Term
Compensation(1) Compensation(2)
--------------------- ---------------
Awards
Commission Securities
Name and Principal and Underlying All Other
Position Year Salary($) Bonus($)(3) Options/SARs(#) Compensation($)(4)
- ------------------ ---- --------- ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
John A. Pino............ 1999 $237,115 $ -- -- $196,090(5)
Chief Executive Officer
and 1998 200,000 -- -- 196,630(5)
Chairman of the Board 1997 200,000 -- -- 196,685(5)
Matthew G. Landa(6)..... 1999 240,532 83,774 -- 203
President 1998 229,243 60,000 30,000(7) 119
1997 195,481 -- 20,833(7) 119
Jack O'Rear(8).......... 1999 213,706 72,538 45,000 7,054(9)
Vice President of
Operations and 1998 202,138 40,000 20,000(7) 6,612(9)
Chief Operating Officer 1997 182,079 16,000 7,500(7) 8,233(9)
Jeffrey B. Lavin(10).... 1999 161,491 48,594 -- 540
Vice President of
Finance, Chief 1998 11,560 20,000 100,000 --
Financial Officer,
Treasurer and Clerk
Blaise E. Scioli........ 1999 180,000 45,000 -- 540
Vice President and
General 1998 125,000 120,000 112,000 540
Manager of Cable
Division 1997 100,000 -- 12,000 484
</TABLE>
- --------
(1) Excludes perquisites and other personal benefits, if any, the aggregate
annual amount of which for each officer was less than the lesser of
$50,000 or 10% of the total of annual salary and commission and bonus
reported.
(2) The Corporation did not grant any restricted stock awards or stock
appreciation rights ("SARs") or make any long-term incentive plan payouts
during the fiscal years 1999, 1998 or 1997.
(3) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(4) Consists of premiums for term life insurance paid by the Corporation on
behalf of the Named Executive Officer and the Corporation's matching
contributions related to the Corporation's 401(k) Plan.
(5) Includes life insurance premiums paid by the Corporation on behalf of Mr.
Pino in fiscal 1999, 1998 or 1997, as applicable, on a split-dollar life
insurance policy as described below under "Split-Dollar Life Insurance
Agreement."
10
<PAGE>
(6) Mr. Landa's employment with the Corporation began in July 1999. Prior to
that he was employed by CMC Industries, Inc. Mr. Landa's salary of
$240,532 for fiscal 1999 consists of $111,504 paid by CMC prior to the
July 1999 merger with CMC and $129,028 paid by the Corporation following
the merger. Mr. Landa's bonus of $83,774 for fiscal 1999 consists of
$68,774 paid by CMC prior to the July 1999 merger and $15,000 paid by
the Corporation following the merger.
(7) The options were granted by CMC prior to the July 1999 merger. The
number of shares underlying the options set forth in the Summary
Compensation Table have been adjusted to reflect the merger exchange
ratio.
(8) Mr. O'Rear's employment with the Corporation began in July 1999. Prior
to that he was employed by CMC. Mr. O'Rear's salary of $213,706 for
fiscal 1999 consists of $99,552 paid by CMC prior to the July 1999
merger and $114,154 paid by the Corporation following the merger. Mr.
O'Rear's bonus of $72,538 for fiscal 1999 consists of $59,288 paid by
CMC prior to the July 1999 merger and $13,250 paid by the Corporation
following the merger.
(9) Includes automobile expense allowance.
(10) Mr. Lavin's employment with the Corporation began in December 1998. Mr.
Lavin's fiscal 1998 base salary was $152,500.
11
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table shows information regarding grants of stock options to
the Named Executive Officers pursuant to the Corporation's stock plans during
the year ended December 31, 1999. The Corporation did not grant any stock
appreciation rights in fiscal 1999.
Option/SAR Grants in 1999
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------
Potential
Percent of Realizable Value at
Total Assumed
Number of Options / Annual Rates of
Securities SARs Stock Price
Underlying Granted to Appreciation for
Options / Employees Exercise Option Term (2)
SARs in Fiscal Price Expiration -------------------
Name Granted (#) Year (%) ($/Share)(1) Date 5%($) 10%($)
---- ----------- ---------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John A. Pino............ -- -- -- -- -- --
Chief Executive Officer
and Chairman of the
Board
Matthew G. Landa........ -- -- -- -- -- --
President
Jack O'Rear............. 45,000(3) 11.68% $15.325 7/29/09 $433,701 $1,099,085
Vice President of
Operations and Chief
Operating Officer
Jeffrey B. Lavin........ -- -- -- -- -- --
Vice President of
Finance,
Chief Financial
Officer, Treasurer and
Clerk
Blaise E. Scioli........ -- -- -- -- -- --
Vice President and
General Manager of
Cable Division
</TABLE>
- --------
(1) All options were granted at fair market value as determined by the Board
of Directors of the Corporation on the date of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the market value of the Corporation's Common Stock on the date of
option grant over the term of the options. These numbers are calculated
based on rules promulgated by the Securities and Exchange Commission and
do not reflect the Corporation's estimate of future stock price growth.
Actual gains, if any, on stock option exercises and Common Stock holdings
are dependent on the timing of such exercise and the future performance
of the Corporation's Common Stock. There can be no assurance that the
rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the Named Executive Officers.
(3) The options become exercisable at the rate of 33 1/3% per annum.
12
<PAGE>
Option Exercises and Fiscal Year-End Values
The following table sets forth information with respect to options to
purchase the Corporation's Common Stock granted to the Named Executive
Officers under the Corporation's stock plans, including (i) the number of
shares of Common Stock purchased upon exercise of options during the fiscal
year ended December 31, 1999; (ii) the net value realized upon such exercise;
(iii) the number of unexercised options outstanding at December 31, 1999; and
(iv) the value of such unexercised options at December 31, 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year and
Option/SAR Values at December 31, 1999
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Value December 31, 1999 (#) December 31, 1999 ($)(2)
Acquired Realized ------------------------- -------------------------
Name on Exercise (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John A. Pino............ -- -- -- --
Matthew G. Landa........ 3,129 $ 58,271 135,204/0 $ 3,330,518/$0
Jack O'Rear............. 13,804 276,950 28,014/63,182 690,931/1,379,316
Jeffrey B. Lavin........ -- -- 20,000/80,000 573,800/2,295,200
Blaise E. Scioli........ 19,900 294,437 96,633/70,661 3,242,567/2,069,258
</TABLE>
- --------
(1) Amounts disclosed in this column were calculated based on the difference
between the fair market value of the Corporation's Common Stock on the
date of exercise and the exercise price of the options in accordance with
regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and do not necessarily reflect amounts
received by the Named Executive Officers.
(2) Value is based on the difference between the option exercise price and
the fair market value at December 31, 1999, the last day during fiscal
year 1999 for which market prices are available ($37.50 per share as
quoted on the Nasdaq National Market), multiplied by the number of shares
underlying the options. The actual gains, if any, on the stock option
exercises will depend on the future performance of the Common Stock, the
optionholder's continued employment through the date on which the options
are exercised and the date on which the underlying shares of Common Stock
are sold.
Employment Arrangements
In July 1999, the Corporation entered into a three year employment agreement
with Jack O'Rear, the Corporation's Vice President of Operations and Chief
Operating Officer, with a base salary of $212,000 per year. If the Corporation
terminates Mr. O'Rear's employment without Cause (as defined in the agreement)
prior to the end of the three-year period from the date of the agreement (the
"Employment Period"), the Corporation has agreed to pay Mr. O'Rear his monthly
base salary for the lesser of 12 months or the remainder of the Employment
Period. Pursuant to the agreement, Mr. O'Rear was also granted an option to
purchase 45,000 shares of common stock vesting in three equal annual
installments. Mr. O'Rear's employment agreement contains one year non-
competition and employee and customer non-solicitation provisions.
13
<PAGE>
Compensation Committee and Stock Option Committee Report on Executive
Compensation
The Corporation's executive compensation program is administered by the
compensation committee (the "Compensation Committee") and the Stock Option
Committee (the "Stock Option Committee") of the Board of Directors. Pursuant
to authority delegated by the Board of Directors, the Compensation Committee
is responsible for establishing and administering the Corporation's executive
compensation plans and policies (other then with respect to the Corporation's
stock plans). The Compensation Committee is comprised of two outside
directors. The Stock Option Committee, which is also comprised of two outside
directors, makes recommendations and awards under, and administers, the
Corporation's stock plans.
Compensation Philosophy
The Corporation's compensation policy for executive officers is reviewed and
approved by the Compensation Committee and the Stock Option Committee. The
Corporation's executive compensation program is designed to promote the
following objectives:
. To enhance profitability of the Corporation and increase stockholder
value.
. To provide competitive levels of compensation that will attract, retain,
motivate and reward highly qualified executives.
. To recognize individual initiative and achievement.
. To align the interests of the Corporation's management with those of
stockholders by including long-term equity incentives.
Executive Compensation Program
The Corporation's executive compensation program consists of three elements:
(i) cash compensation in the form of base salary, (ii) annual incentive
compensation in the form of cash bonuses and (iii) long-term equity incentives
in the form of stock options. Elements (i) and (ii) are administered by the
Compensation Committee, and element (iii) is administered by the Stock Option
Committee. Executive officers are also eligible to participate in certain
benefit programs which are generally available to all employees of the
Corporation, including life insurance and other employee benefits and a 401(k)
retirement savings plan. In all cases, the Compensation Committee's and Stock
Option Committee's decisions involving executive officer compensation are
ultimately based on each committee's judgment regarding the best interests of
the Corporation and its stockholders.
Base Salary
Base salary compensation levels for each of the Corporation's executive
officers, including the Chief Executive Officer, are generally determined by
evaluating (i) the experience of and the responsibilities to be held by the
individual, (ii) the Corporation's past financial performance and future
expectations and (iii) individual performance. The Compensation Committee does
not assign relative weights or rankings to these factors, but instead makes a
determination based upon consideration of all of these factors, as well as the
progress made with respect to the Corporation's long-term goals and
strategies. The Compensation Committee also considers generally available
information regarding salaries paid to executive officers with comparable
qualifications, experience and responsibilities at companies in the same or
similar business and has generally set base salary in the mid-range level of
executive compensation that the Compensation Committee believes are paid to
such
14
<PAGE>
executive officers. Base salary levels for each of the Corporation's executive
officers, other than the Chief Executive Officer, are also based upon
evaluations and recommendations made by the Chief Executive Officer. With
respect to executive officers who first joined the Corporation in 1999,
special consideration was given to each officer's compensation package at
his/her prior place of employment.
Annual Incentive Compensation
Each executive officer, including the Chief Executive Officer, is entitled
to receive annual incentive compensation, in the form of cash bonuses based on
the achievement by the Corporation of predetermined revenue and earnings
objectives, as well as the performance of the individual executive officer.
Cash bonuses are intended to constitute a significant portion of an executive
officer's incentive and total compensation package. Cash bonuses for each of
the Corporation's executive officers, other than the Corporation's Chief
Executive Officer, are also based upon recommendations of the Chief Executive
Officer.
Long-Term Incentive Compensation
Long-term incentive compensation, in the form of stock options, provide a
stock-based incentive to improve the Corporation's financial performance by
allowing the executive officers to share in any appreciation in the value of
the Corporation's Common Stock. Accordingly, the Compensation and the Stock
Option Committees believe that stock option participation aligns the interests
of executive officers with those of the Corporation's stockholders by
encouraging executive officers to maximize the value of the Corporation. Stock
options also assist in the recruitment, motivation and retention of key
professional and managerial personnel. Stock options are granted to executive
officers from time to time based primarily upon the individual's actual and/or
potential contributions to the Corporation, competitive market practices, and
the Corporation's financial performance. When establishing stock option grant
levels for executive officers, the Stock Option Committee considers existing
levels of stock ownership, previous grants of stock options, vesting schedules
of previously granted options and the current market value of the
Corporation's Common Stock. Stock options granted under the Corporation's
Amended and Restated 1995 Stock Plan and 1993 Stock Option Plans have an
exercise price equal to the fair market value of the stock on the date of
grant.
In the year ended December 31, 1999, Jack O'Rear, the Corporation's Vice
President of Operations and Chief Operating Officer, was granted an option to
purchase up to 45,0000 shares of Common Stock at an exercise price of $15.375
per share. No stock options were granted during the year ended December 31,
1999 to the Chief Executive Officer or any other executive officer.
Compensation of the Chief Executive Officer
Consistent with the executive compensation policies described above, Mr.
Pino received salary compensation of $237,115 and no incentive compensation
for the fiscal year ended December 31, 1999. In 1999, as in prior years, Mr.
Pino did not receive any long-term equity incentives in the form of stock
options pursuant to the Corporation's stock plans.
15
<PAGE>
Deductibility of Executive Compensation Expenses
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction for compensation in excess of $1
million paid to any of the executive officers named in the Summary
Compensation Table above. The Compensation Committee has considered the
requirements of Section 162(m) of the Code and the related regulations. It is
the Compensation Committees' present belief that, so long as it is consistent
with its overall compensation objectives, substantially all executive
compensation will be deductible for all income tax purposes.
Respectfully submitted by the Respectfully submitted by the
Compensation Committee, Stock Option Committee,
Edward T. Cuddy Edward T. Cuddy
Donald G. Polich Bruce R. Gardner
Compensation Committee Interlocks and Insider Participation
The Corporation's Board of Directors established a Compensation Committee in
March 1995. The Compensation Committee currently consists of Messrs. Cuddy and
Polich. Mr. Polich was formerly an officer of the Corporation.
Certain Relationships and Related Transactions
Agreements with Donald G. Polich
The Corporation is a party to two separate Consulting Agreements dated as of
August 4, 1993, as amended, with Re-Act Consulting, a consulting company of
which Mr. Polich, a Director of the Corporation, and Nelva Polich, Mr.
Polich's wife, are the owners and employees (the "Consulting Agreements").
Each of the Consulting Agreements terminate on August 4, 2003. The Consulting
Agreements provide for initial monthly consulting fees of approximately
$16,500 which increase by eight percent (8%) per annum. The Corporation paid
consulting fees under the Consulting Agreements of $319,143 during 1999.
The Corporation is a party to two separate Noncompetition Agreements dated
as of January 1, 1993, as amended, with Mr. Polich (the "Noncompetition
Agreements"). Each of the Noncompetition Agreements terminate on January 1,
2003. Under these agreements, Mr. Polich agreed not to engage in any business
activity in the United States which is directly or indirectly in competition
with the Corporation, including businesses relating to cable and harness
assembly, printed circuit board assembly, subassembly and assembly of final
products. Mr. Polich is prohibited from soliciting any employee of the
Corporation to become an employee of any competing organization during the
term of such agreements. Pursuant to the Noncompetition Agreements, the
Corporation paid to Mr. Polich $72,731 during 1999.
Pursuant to a Stock Purchase Agreement dated as of January 1, 1993, as
amended, among the Corporation, Mr. Pino and Mr. Polich, Mr. Pino agreed to
vote his shares in the Corporation in favor of electing Mr. Polich as a
director of the Corporation until the earlier of: (i) January 1, 2003 or (ii)
the date on which all payments required by the Corporation under the
Consulting Agreements and Noncompetition Agreements have been paid in full. In
addition, the Corporation agreed that during such time that Mr. Polich is
entitled to be elected a director (i) Mr. Polich will receive annual director
fees from the Corporation in the amount of $7,500 (provided, that such fees
shall be applied to Mr. Polich's $70,686 loan, as of such date, from the
Corporation to him), (ii) the
16
<PAGE>
Corporation will maintain a $1,000,000 term life insurance policy on his life
payable to his spouse, and (iii) the Corporation will provide Mr. and Mrs.
Polich with health insurance pursuant to the standard health insurance
benefits provided to employees of the Corporation. During 1999, the
Corporation applied the $7,500 director fees against Mr. Polich's loan from
the Corporation described below, paid $6,480 in premiums for the insurance
policy on Mr. Polich's life and paid $4,624 in health insurance premiums for
Mr. and Mrs. Polich.
Mr. Polich is the obligor on a promissory note in the original principal
amount of $70,686 payable to the Corporation. The obligation is evidenced by a
note dated December 31, 1992 which bears interest at six percent per annum,
and the $7,500 in annual director's fees which are paid to Mr. Polich are
applied to the principal and interest due on such note. All unpaid principal
and accrued interest is due December 31, 2002. As of December 31, 1999, the
principal and accrued interest outstanding on the promissory note was $26,834.
Re-Act Realty Trust
The Corporation leases two facilities in Hudson, Massachusetts from Re-Act
Realty Trust, a Massachusetts nominee trust ("Re-Act Realty Trust"), of which
Mr. Pino is trustee and the beneficiaries of which are Mr. Pino and Janet M.
Pino, Mr. Pino's wife. The two facility leases provide for terms expiring in
2003, and provided for total base monthly rent during 1999 of $32,333. The
Corporation assumes the cost of all taxes, betterment assessments, insurance
costs, utility costs and all other operating and maintenance expenses for the
facilities. Under the leases, the Corporation paid Re-Act Realty Trust a total
of $387,996 during 1999.
Split-Dollar Life Insurance Agreement
In September 1996, the Corporation entered into a "split-dollar" life
insurance agreement with a trust established by John A. Pino and his wife,
Janet M. Pino. Under the terms of the agreement, the Corporation and the trust
will share in the premium costs of a whole life insurance policy on the joint
lives of Mr. and Mrs. Pino. The Corporation is entitled to reimbursement of
the amounts advanced, without interest, upon the first to occur of: (a) the
death of the later of Mr. or Mrs. Pino or (b) the surrender of the policy.
These advances are secured by a collateral assignment of the policy to the
Corporation. In 1999, the Corporation advanced $196,090 toward the payment of
the premiums.
Other Transactions
The Corporation has entered into a Registration Rights Agreement dated
February 8, 1995 with Mr. Pino and certain trusts previously established by
Mr. Pino pursuant to which the Corporation, under certain circumstances, will
be required to register their shares of Common Stock under the Securities Act
of 1933, as amended.
The Corporation's wholly-owned subsidiary, CMC, has had numerous
transactions with its former affiliate and customer, Cortelco Systems Holding
Corp. ("Cortelco"), including the transfer of certain assets and related
liabilities associated with the telephone business to Cortelco in exchange for
1,000,000 shares of Preferred Stock of Cortelco in August 1993 and the
execution of an agreement to provide certain products and related support
services to customers of Cortelco. In addition, Mr. Lee, a Director of the
Corporation, is also a director of Cortelco. Mr. Lee holds more than 5% of the
Corporation's outstanding Common Stock and is the largest stockholder of
Cortelco.
In March 1999, CMC consented to a restructuring of certain assets of
Cortelco. In connection with this restructuring, Cortelco distributed common
stock of Cortelco Systems, Inc. to its stockholders on a pro rata basis.
17
<PAGE>
Pursuant to this distribution, CMC and Cortelco entered into a Stock
Distribution Agreement and CMC received its pro rata share which was equal to
6,125,302 shares of common stock of Cortelco Systems. CMC also entered into a
Stock Purchase Agreement with Mr. Lee under which, through a series of "put"
and "call" rights, Mr. Lee effectively guaranteed CMC's right to receive not
less than approximately $5.9 million in respect of the common stock of
Cortelco Systems and the Preferred Stock of Cortelco by May 2002. In
consideration for the receipt of Mr. Lee's guarantee, CMC consented to an
amendment to Cortelco's Certificate of Incorporation which, among other
things, delays the date on which the Preferred Stock may be tendered for
redemption by CMC.
Furthermore, Cortelco's wholly-owned subsidiary, Cortelco Puerto Rico,
merged into Cortelco Systems in connection with the above mentioned
distribution. Finally, Cortelco Systems merged with BCS Technologies, Inc.,
with Cortelco Systems being the surviving entity. In April 1999, Cortelco
Systems filed a Form S-1 for its initial public offering of common stock.
During the forth quarter of 1999, Cortelco effected a 10-for-1 stock split.
Our investment in Cortelco was 612,530 shares of common stock as a result of
this stock split. (In November 1999, Cortelco Systems changed its corporate
name to eOn Communications Corporation.). In February 2000, eOn completed its
initial public offering. The Corporation sold 575,000 shares of common stock
in eOn's initial public offering with net proceeds to the Corporation of
$6,417,000.
In July 1998, CMC converted certain older accounts receivable from Cortelco
totaling $2.0 million into a note receivable. Under the terms of the note,
Cortelco agrees to pay the balance over a three-year term with monthly
payments of $50,000 plus interest and a final installment of $200,000 due at
the end of the three-year period. Interest accrues on the note at a rate of
9.0% per annum. As of December 31, 1999, Cortelco had made all payments
required at that date under the terms of the note. The Corporation continues
to provide credit for manufacturing services sold to Cortelco in the form of
trade receivables, and as of December 31, 1999, had approximately $6,808,000
in trade receivables from Cortelco. Cortelco's payments on its trade accounts
with CMC have in the past been late, and there can be no assurances that such
payments or payments on the note will in the future be made on a timely basis,
if at all.
The Corporation has adopted a policy whereby all material future
transactions between the Corporation and its officers, directors and
affiliates will be on terms no less favorable to the Corporation than could be
obtained from unrelated third parties and will be approved by a majority of
the disinterested members of the Corporation's Board of Directors.
Compensation of Directors
As compensation for serving on the Board of Directors, the Corporation pays
each non-employee director $5,000 annually and an additional $1,000 for each
meeting of the Board of Directors that they attend. Non-employee directors
also receive $500 for their attendance at each meeting of any Board committees
on which they serve unless such committee meeting is held on the same date as
a meeting of the Board, and will be reimbursed for their reasonable out-of-
pocket expenses incurred in attending Board and committee meetings. Non-
employee directors are also automatically granted options to purchase shares
of the Corporation's Common Stock pursuant to the 1995 Non-Employee Director
Stock Option Plan. Mr. Polich receives minimum annual director's fees, payable
quarterly, of $7,500 for his service on the Board of Directors. Directors who
are officers or employees of the Corporation do not receive any additional
compensation for their services as directors.
18
<PAGE>
Stock Performance Graph
The following graph compares the percentage change in the cumulative total
stockholder return on the Corporation's Common Stock during the period from
the Corporation's initial public offering on March 30, 1995 through December
31, 1999, with the cumulative total return for the Nasdaq Market Index and an
SIC Index that includes all organizations in the Corporation's Standard
Industrial Classification (SIC) Code 367-Electronic Components & Accessories.
The comparison assumes $100 was invested on March 30, 1995, the date the
Corporation's Common Stock began publicly trading, in the Corporation's Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends, if any.
Comparison of Cumulative Total Return(1)(2)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement period Act Nasdaq Electronic
(Fiscal Year Covered) Manufacturing Market Company
- --------------------- ------------- ------ ----------
<S> <C> <C> <C>
Measurement PT -
3/30/95 $100.00 $100.00 $100.00
12/29/95 $ 92.71 $120.91 $125.76
12/31/96 $219.79 $150.25 $190.66
12/31/97 $117.75 $183.79 $202.87
12/31/98 $119.25 $259.22 $296.95
12/31/99 $312.50 $457.20 $628.51
</TABLE>
- --------
(1) Prior to March 30, 1995, the Corporation's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date.
This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Corporation under the Securities Act of
1933, as amended or the Securities Exchange Act of 1934, as amended
whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
(2) The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on the graph was
obtained from Media General Financial Services, Richmond, Virginia, a
source believed to be reliable, but the Corporation is not responsible
for any errors or omissions in such information.
19
<PAGE>
PROPOSAL 2
INCREASE IN AUTHORIZED COMMON STOCK
The Corporation's Second Restated Articles of Organization presently provide
that the number of authorized shares of Common Stock, par value $0.01 per
share, is 50,000,000 shares. To provide a sufficient number of authorized
shares for the Corporation's corporate purposes in the future, the Board of
Directors has determined that it is in the best interests of the Corporation
to increase the number of authorized shares of Common Stock to 100,000,000. On
February 15, 2000, the Board of Directors resolved to recommend to the
Corporation's stockholders that the Corporation's Second Restated Articles of
Organization be amended to increase the number of authorized shares of Common
Stock from 50,000,000 to 100,000,000 shares. The full text of the proposed
amendment to the Second Restated Articles of Organization is included as Annex
A attached to this proxy statement.
As of the Record Date, there were approximately 16.3 million shares of the
Corporation's Common Stock issued and outstanding. In addition, approximately
3.5 million shares have been reserved for issuance under the Corporation's
1993 Incentive Stock Option Plan, the 1995 Non-Employee Director Stock Option
Plan, the Amended and Restated 1995 Stock Plan and the Amended and Restated
1990 Equity Incentive Plan, of which options were outstanding to purchase
approximately 1.8 million shares of Common Stock of the Corporation on
December 31, 1999. An increase in the authorized but unissued shares of the
Corporation's Common Stock to 100,000,000 shares will provide a sufficient
number of authorized but unissued shares of Common Stock to satisfy the
Corporation's need for additional shares to be available for various corporate
purposes. These purposes may include, without limitation:
. additional acquisitions;
. raising capital through the sale of our Common Stock;
. attracting and retaining valuable employees by the issuance of
additional stock or stock options;
. possible future stock splits or stock dividends; and
. other transactions involving the use of the Corporation's Common Stock.
The Corporation has no present commitments, agreements or undertakings to
issue any additional shares for any such purpose. The Corporation's Board does
not presently intend to secure any further approval from the stockholders
prior to authorizing or issuing such Common Stock, except where such approval
is required by law or applicable stock exchange rules.
Although we have no such intentions, the additional authorized but unissued
shares of Common Stock could also be used to make more difficult a change in
control of the Corporation. Under certain circumstances, the Corporation could
use such shares to create voting impediments, or to discourage third parties
seeking to effect a takeover or otherwise gain control of the Corporation. The
Corporation could also place such shares with purchasers who might support the
Corporation's Board in opposing a hostile takeover bid.
The affirmative vote of the holders of a majority of the shares of Common
Stock issued and outstanding on the Record Date and entitled to vote thereon
will be required to approve the amendment to the Corporation's Second Restated
Articles of Organization.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO
THE CORPORATION'S SECOND RESTATED ARTICLES OF ORGANIZATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK FROM 50,000,000 TO 100,000,000 SHARES.
20
<PAGE>
PROPOSAL 3
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP
("Deloitte & Touche"), independent certified public accountants, to serve as
auditors for the fiscal year ending December 31, 2000. Deloitte & Touche has
served as the Corporation's auditors since 1985. It is expected that a member
of the firm will be present at the Annual Meeting of Stockholders with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions from the stockholders. The ratification of this
selection is not required under the laws of the Commonwealth of Massachusetts,
where the Corporation is incorporated, but the results of this vote will be
considered by the Board of Directors in selecting auditors for future years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THIS SELECTION.
SECTION 16 REPORTING
Section 16(a) of the Exchange Act, requires the Corporation's directors,
executive officers and holders of more than 10% of the Corporation's Common
Stock (collectively, the "Reporting Persons") to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Corporation. Such persons are required by
regulations of the Commission to furnish the Corporation with copies of all
such filings. All of the Directors, with the exception of the Chairman of the
Board, each reported one Section 16(a) exempt transaction late for the fiscal
year ended December 31, 1999. Based on its review of the copies of such
filings received by it with respect to the fiscal year ended December 31,
1999, the Corporation believes that all other Reporting Persons complied with
all Section 16(a) filing requirements in the fiscal year ended December 31,
1999.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting
of stockholders of the Corporation must be received at the Corporation's
principal executive offices not later than December 6, 2000. The deadline for
providing timely notice to the Corporation of matters that stockholders
otherwise desire to introduce at the next annual meeting of stockholders of
the Corporation is February 19, 2001. Any such proposal must comply with the
rules and regulations of the Securities and Exchange Commission. In order to
curtail controversy as to the date on which a proposal was received by the
Corporation, it is suggested that proponents submit their proposals by
Certified Mail, Return Receipt Requested to ACT Manufacturing, Inc., 2 Cabot
Road, Hudson, MA 01749, Attention: Jeffrey B. Lavin, Clerk.
21
<PAGE>
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation. In
addition to soliciting stockholders by mail and through its regular employees,
the Corporation may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Corporation
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Corporation
may also be made of some stockholders in person or by mail, telephone or
telegraph following the original solicitation.
By Order of the Board of Directors
Jeffrey B. Lavin
Clerk
22
<PAGE>
Annex A
The Commonwealth of Massachusetts
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
We, John A. Pino,* President
and Jeffrey B. Lavin ,* Clerk
of ACT Manufacturing, Inc. ,
(Exact name of corporation)
located at: 2 Cabot Road, Hudson, MA 01749 ,
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered:
3____________________________________________________________________
(Number those articles 1, 2, 3, 4, 5, and/or 6 being amended)
of the Articles of Organization were duly adopted at a meeting held on May 15,
2000, by vote of:
shares of Common Stock, $.01 par value of 16,326,422 shares
outstanding,
(type, class & series, if any)
shares of of shares outstanding, and
(type, class & series, if any)
shares of of shares outstanding.
(type, class & series, if any)
/1/**being at least a majority of each type, class or series outstanding and
entitled to vote thereon
*Delete the inapplicable words. **Delete the inapplicable clause.
/1/For amendments adopted pursuant to Chapter 156B, Section 70.
/2/For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on one side only of separate 8 1/2 x
11 sheets of paper with a left margin of at least 1 inch. Additions to more
than one article may be made on a single sheet so long as each article
requiring each addition is clearly indicated.
A-1
<PAGE>
To change the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common: 0 Common: 50,000,000 $.01
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Preferred: 0 Preferred: 5,000,000 $.01
- ------------------------------------------------------------------
</TABLE>
Change the total authorized to:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common: 0 Common: 100,000,000 $.01
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Preferred: 0 Preferred: 5,000,000 $.01
- ------------------------------------------------------------------
</TABLE>
A-2
<PAGE>
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B, Section 6
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
Later effective date: ____________________
SIGNED UNDER THE PENALTIES OF PERJURY, this day of May, 2000.
__________________________, *President
__________________________, *Clerk
*Delete the inapplicable words.
A-3
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
----------------------------------------------------------
----------------------------------------------------------
I hereby approve the within Articles of Amendment, and the filing fee in the
amount of $ having been paid, said article is deemed to have been filed
with me this day of May, 2000.
Effective date:
------------------------
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Kelly R. Whiting, Esq.
- -------------------------------------------------------------------------------
Testa, Hurwitz & Thibeault, LLP
- -------------------------------------------------------------------------------
High Street Tower
- -------------------------------------------------------------------------------
125 High Street
- -------------------------------------------------------------------------------
Boston, MA 02110
- -------------------------------------------------------------------------------
A-4
<PAGE>
[FRONT SIDE OF PROXY CARD]
ACT MANUFACTURING, INC.
PROXY FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of ACT Manufacturing, Inc., a Massachusetts
corporation (the "Corporation"), hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement, each dated April 4, 2000 and
hereby appoints John A. Pino and Jeffrey B. Lavin, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of the Corporation to be held at Testa, Hurwitz & Thibeault, LLP,
Conference Center, 125 High Street, High Street Tower, Boston, Massachusetts
02110 on May 15, 2000 at 10:00 a.m., local time, and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side.
<PAGE>
1. To elect two (2) Directors, each to serve for a three-year term as a
Class II Director.
FOR all nominees WITHHOLD
listed at right. AUTHORITY to vote for
(except as written all nominees listed
to the contrary at right Nominees: John A. Pino
below) Frederick W. Gibbs
[_] [_]
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the name(s) of the nominee(s) below:
- --------------------------------------------------------------------------------
2. To approve an amendment to the Second Restated Articles of Organization of
the Corporation to increase the number of authorized shares of the
Corporation's common stock, $0.01 par value per share, from 50,000,000 to
100,000,000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the selection of the firm of Deloitte & Touche LLP as independent
auditors for the fiscal year ending December 31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To transact upon such business as may properly come before the meeting or any
adjournment of adjournments thereof, including without limitation potential
postponements or adjournments for the purpose of soliciting additional proxies
in order to approve any of the above proposals.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS, FOR THE APPROVAL OF
THE AMENDMENT TO THE SECOND RESTATED ARTICLES OF ORGANIZATION OF THE
CORPORATION, FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THERETO.
Dated: ________________ , 2000
______________________________
Signature
______________________________
Signature
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
