def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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o Preliminary Proxy Statement
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o Confidential, for Use of the Commission Only |
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(as permitted by Rule 14a-6(e)(2)) |
þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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o Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12 |
SUNTRON CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Aggregate number of securities to which transaction applies: |
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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
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Fee paid previously with preliminary materials. |
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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. |
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Form, Schedule or Registration Statement No.: |
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 9, 2005
To Our Stockholders:
The 2005 Annual Meeting of Stockholders of Suntron Corporation will be held at 10:00 a.m.,
local time, on Friday, September 9, 2005 at Suntrons corporate headquarters located at 2401 West
Grandview Road, Phoenix, Arizona 85023. At the meeting, stockholders will vote on the following
matters:
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To elect four Class I directors, each for a term expiring in 2008; and |
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To transact such other business as may properly come before the meeting and any
postponement or adjournment thereof. |
Stockholders of record as of the close of business on July 29, 2005 are entitled to notice of,
and to vote at the meeting and any postponement or adjournment thereof.
Whether or not you expect to be present please sign, date, and return the enclosed proxy card
in the enclosed pre-addressed envelope as promptly as possible. No postage is required if mailed
in the United States.
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By Order of the Board of Directors, |
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Phoenix, Arizona
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/s/ Peter W. Harper |
August 18, 2005
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Secretary |
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON.
THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY URGED TO EXECUTE AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY
NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY, AND VOTE THEIR SHARES IN PERSON.
TABLE OF CONTENTS
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i
SUNTRON CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement contains information related to our annual meeting of stockholders to be
held on Friday, September 9, 2005, beginning at 10:00 a.m. local time, at Suntrons corporate
headquarters located at 2401 West Grandview Road, Phoenix, Arizona 85023 and at any adjournments or
postponements thereof. The purpose of this proxy statement is to solicit proxies from the holders
of our common stock for use at the meeting. This proxy statement, the accompanying notice of
annual meeting, and the enclosed form of proxy are being sent to stockholders on or about August
18, 2005. You should review this information in conjunction with our 2004 Annual Report to
Stockholders, which accompanies this proxy statement.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the annual meeting, stockholders will vote on the election of directors. In addition, our
management will report on our performance during 2004 and respond to questions from our
stockholders.
Who is entitled to vote at the meeting?
Only stockholders of record at the close of business on the record date, July 29, 2005, are
entitled to receive notice of the annual meeting and to vote the shares of our common stock that
they held on that date at the meeting, or any postponements or adjournments of the meeting. Each
outstanding share of common stock entitles its holder to cast one vote on each matter to be voted
upon.
Who may attend the meeting?
All stockholders as of the record date, or their duly appointed proxies, may attend the
meeting. Please note that if you hold shares in street name (that is, through a broker or other
nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as
of the record date.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority of all of the
shares of common stock outstanding on the record date will constitute a quorum, permitting the
board of directors to conduct its business. As of the record date, 27,415,221 shares of our common
stock were outstanding. Proxies received but marked as abstentions and broker non-votes will be
included in the calculation of the number of shares considered to be present at the meeting but
will not be counted as votes cast for or against any given matter.
If less than a majority of the outstanding shares of common stock entitled to vote are
represented at the meeting, a majority of the shares present at the meeting may adjourn the meeting
to another date, time, or place, and notice need not be given of the new date, time, or place if
the new date, time, or place is announced at the meeting before an adjournment is taken.
How do I vote?
If you complete and properly sign the accompanying proxy card and return it to us, it will be
voted as you direct. If you are a registered stockholder and attend the meeting, you may deliver
your completed proxy card in person. Street name stockholders who wish to vote at the meeting
will need to obtain a proxy form from the institution that holds their shares.
1
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote at any time before
the proxy is exercised by filing with us either a notice of revocation or a duly executed proxy
bearing a later date. The powers of the proxy holders will be suspended if you attend the meeting
in person and so request, although attendance at the meeting will not by itself revoke a previously
granted proxy.
What are the boards recommendations?
Unless you give other instructions on your proxy card, the persons named as proxy holders on
the proxy card will vote in accordance with the recommendations of our board of directors. Each of
the boards recommendations is set forth together with the description of each item in this proxy
statement. In summary, the board recommends a vote for election of its nominees for directors.
Our board of directors does not know of any other matters that may be brought before the
meeting nor does it foresee or have reason to believe that the proxy holders will have to vote for
substitute or alternate board nominees for directors. In the event that any other matter should
properly come before the meeting or any nominee for director is not available for election, the
proxy holders will vote as recommended by the board of directors or, if no recommendation is given,
in accordance with their best judgment.
What vote is required to approve each item?
Election of Directors. The affirmative vote of a plurality of the votes cast at the meeting
by each holder of common stock (either in person or by proxy) is required for the election of
directors. A properly executed proxy marked WITHHOLD AUTHORITY with respect to the election of
one or more directors will not be voted with respect to the director or directors indicated,
although it will be counted for purposes of determining whether there is a quorum. Stockholders do
not have the right to cumulate their votes for directors.
Other Items. For each other item, the affirmative vote of a majority of the votes cast at the
meeting by each holder of common stock (either in person or by proxy) will be required for
approval. A properly executed proxy marked ABSTAIN with respect to any such matter will not be
voted, although it will be counted for purposes of determining whether there is a quorum.
Accordingly, an abstention will have the effect of a negative vote.
What are the effects of broker non-votes?
If you hold your shares in street name through a broker or other nominee, your broker or
nominee may not be permitted to exercise voting discretion with respect to some of the matters to
be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares
may not be voted on those matters. Shares represented by these broker non-votes will, however,
be counted in determining whether there is a quorum. As a result, broker non-votes will have the
effect of a negative vote on some matters.
Who will pay for the preparation of the proxy?
We will pay the cost of preparing, assembling, and mailing the proxy statement, notice of
meeting, and enclosed proxy card. In addition to the use of mail, our employees may solicit
proxies personally and by telephone. Our employees will receive no compensation for soliciting
proxies other than their regular salaries. We may request banks, brokers, and other custodians,
nominees, and fiduciaries to forward copies of the proxy material to the beneficial owners of our
common stock and to request authority for the execution of proxies, and we may reimburse such
persons for their expenses incurred in connection with these activities.
Our principal executive offices are located at 2401 West Grandview Road, Phoenix, Arizona
85023 and our telephone number is (602) 789-6600. A list of stockholders entitled to vote at the
annual meeting will be available at our offices for a period of 10 days prior to the meeting and at
the meeting itself for examination by any stockholder.
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ELECTION OF DIRECTORS
Directors and Nominees
Our board of directors is divided into three classes and each class of directors serves for a
three-year term or until successors of that class have been elected and qualified. At the annual
meeting, our stockholders will elect four Class I directors, each of whom will serve for a term
expiring at the 2008 annual meeting, or until his successor has been duly elected and qualified.
Our board of directors has no reason to believe that any nominee will refuse to act or be
unable to accept election. However, if any of them are unable to accept election or if any other
unforeseen contingencies should arise, our board of directors may designate a substitute nominee.
If our board of directors designates a substitute nominee, the persons named as proxies will vote
for the substitute nominee designated by our board of directors.
Our board of directors has nominated Allen S. Braswell, Jr., James J. Forese, Jesse Hermann
and Hargopal (Paul) Singh, each of whom are currently serving as directors, to stand for
re-election. The terms of Ivor J. Evans, Douglas P. McCormick, Jose S. Medeiros, and James C. Van
Horne will expire at the annual meeting of stockholders in 2006. The terms of Jeffrey W. Goettman,
John C. Walker, Thomas B. Sabol, and Enrique Zambrano will expire at the annual meeting of
stockholders in 2007.
The following table, together with the accompanying text, sets forth certain information, with
respect to each of our directors.
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Position(s) Held |
Allen S. Braswell, Jr.
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46 |
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Director |
Ivor J. Evans
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62 |
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Vice Chairman of the Board and Director |
James J. Forese
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Director |
Jeffrey W. Goettman
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46 |
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Chairman of the Board and Director |
Jesse Hermann
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43 |
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Director |
Douglas P. McCormick
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Director |
Jose S. Medeiros
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Director |
Thomas B. Sabol
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Director |
Hargopal Singh
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Chief Executive Officer, President, and Director |
James C. Van Horne
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70 |
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Director |
John C. Walker
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Director |
Enrique Zambrano
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Director |
Allen S. Braswell, Jr. has served as a director since October 2001. Mr. Braswell has engaged
in private investment activities as his principal occupation since December 2000. From September
1999 until such time, Mr. Braswell served as President of Jabil Global Services, a subsidiary of
Jabil Circuit, Inc. engaged in electronic product service and repair, which was purchased by EFTC
from affiliates of Mr. Braswell in September 1997 and sold to Jabil Circuit in September 1999. Mr.
Braswell also served as President of the predecessors of Jabil Global Services since October 1996.
Ivor J. (Ike) Evans has served as a director since June 2005. He has been an
Operating Partner of Thayer Capital Partners, a private equity investment firm, since May 2005. He
served as a director of both Union Pacific Corporation and Union Pacific Railroad since 1999 and he
served as vice chairman of the board of directors from January 2004 until his retirement in
February 2005. From 1998 until his election as vice chairman, Mr. Evans served as the president and
chief operating officer of Union Pacific Railroad. From 1990 until 1998, Mr. Evans served in
various executive positions at Emerson Electric Company. Mr. Evans is also a director of Cooper
Industries, Ltd., Textron, Inc., ArvinMeritor, Inc. and Spirit Aerosystems, Inc.
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James J. Forese has served as a director since July 2004. He has been Operating Partner and
Chief Operating Officer of Thayer Capital Partners, a private equity investment firm, since July
2003. He was Chairman of the Board of IKON Office Solutions, Inc. (IKON) from 2000 until his
retirement in February 2003. He was President and Chief Executive Officer of IKON from 1998 to
2002, Executive Vice President and President of International Operations of IKON from 1997 to 1998,
and Executive Vice President and Chief Operating Officer of IKON from 1996 to 1997. Prior to
joining IKON, he spent 36 years with IBM Corporation (IBM) in numerous executive positions,
including two years as Chairman and Chief Executive Officer of IBM Credit Corporation, three years
as Vice President Finance of IBM, and six years as Vice President and Controller of IBM. He is
also a director of Anheuser-Busch, BFI Canada Inc., and Spherion Corporation.
Jeffrey W. Goettman has served as our Chairman of the Board and a director since May 2001. Mr.
Goettman has served as a Managing Partner of Thayer Capital Partners, a private equity investment
company, since April 2001. Mr. Goettman joined Thayer Capital Partners in February 1998. From
February 1994 to February 1998, Mr. Goettman served as a Managing Director and founder of the EMS
group at Robertson Stephens & Co., Inc., an investment banking firm. Mr. Goettman also has served
as the Chairman of the Board and a director of TTM Technologies, Inc. and its predecessor companies
since July 1999.
Jesse Hermann has served as a director since July 2004. Mr. Hermann has served as the
President and Chief Executive Officer of icarz, Inc., a privately held company that develops and
sells store and distributor management computer systems, since January 2000. Mr. Hermann became
President and CEO of General Automotive Specialty Co., Inc., which manufactured automotive, marine
and industrial switches and locks for both OEM applications and aftermarket distribution, in 1993,
having previously served as VP of Operations and then VP of Sales and Marketing of General
Automotive. Following the sale of General Automotive to Echlin Inc. in 1998, Mr. Hermann managed
General Automotive as a division for Echlin/Dana until December 1999, when he left to found icarz.
Douglas P. McCormick has served as a director since October 2001. Mr. McCormick has served as
a Managing Director of Thayer Capital Partners since January 2001 and was a Vice President of that
company since January 1999. From June 1997 to January 1999, Mr. McCormick served as an associate at
Morgan Stanley & Co. Incorporated, an investment banking firm. From September 1995 to June 1997,
Mr. McCormick attended Harvard Business School. Mr. McCormick also serves as a director of TTM
Technologies, Inc.
Jose S. Medeiros has served as a director since October 2001. Mr. Medeiros has been a Partner
with Blum Capital Partners, L.P., a San Francisco-based private equity and strategic block
investment firm, since August 2000 and Vice President since August 1998. From June 1996 to August
1998, Mr. Medeiros served as a Vice President in the Technology Mergers & Acquisitions group of
Robertson Stephens & Co., Inc. From January 1990 to June 1996, Mr. Medeiros served as an associate
at McKinsey & Company.
Thomas B. Sabol has served as a director since July 2004. Since March 31, 2005, Mr. Sabol has
served as Chief Financial Officer for Wolverine Tube, Inc., a manufacturer and distributor of
copper and copper alloy tube products. From December 2004 to March 2005, Mr. Sabol served as
Senior Vice President, Finance & Accounting for Wolverine Tube, Inc. Mr. Sabol served as an
independent business consultant from January 2004 to November 2004. Previously, Mr. Sabol served
as the Executive Vice President and Chief Operating Officer of Plexus Corp., an EMS company, from
July 2002 to November 2003 and as the Chief Financial Officer of Plexus from January 1996 to June
2002. Prior to joining Plexus Corp., Mr. Sabol served as Vice President and General Auditor for
Kemper Corporation, and before that as Business Assurance Manager for Coopers & Lybrand.
Hargopal (Paul) Singh has served as our Chief Executive Officer and President since May 2005
and as a director since June 2005. From July 2004 to May 2005, Mr. Singh was vice president in
charge of our largest manufacturing facility in Sugar Land, Texas. From 1995 until 2003, Mr. Singh
was employed in various leadership capacities, at Pemstar Inc., a publicly-held EMS company, most
recently serving as Executive Vice President New Business Ventures. Mr. Singh served as a
director of Pemstar Inc. from 1998 to 2002. From 1994 to 1995, Mr. Singh was employed by Microsoft
Corporation as a Director of Business Planning, Tools and Technology in Microsofts product support
services division. From 1979 to 1994, Mr. Singh was employed by IBM in various technical and
management positions. Mr. Singh holds a B.E. in Mechanical Engineering from Osmania University in
India and an M.S. in Engineering Management from Oklahoma State University.
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James C. Van Horne has served as a director since October 2001. Mr. Van Horne has served as
the A.P. Giannini Professor of Finance at the Stanford University Graduate School of Business since
1979, and has taught at such institution since 1965. Mr. Van Horne also serves as a director of
Montgomery Street Income Securities, Inc. (an investment company), and Bailard Fund Group (a family
of four mutual funds).
John C. Walker, CFA, has served as a director since May 2001. Since April 1997, Mr. Walker has
been a Partner with Blum Capital Partners, L.P., a San Francisco-based private equity and strategic
block investment firm. From 1992 until April 1997, Mr. Walker served as the Vice President of Pexco
Holdings, Inc., a private investment holding company. Mr. Walker is a former director of Smarte
Carte, Inc., a company providing products and services to travelers to efficiently store or move
their belongings, and Playtex Products, Inc., a manufacturer and distributor of a diversified
portfolio of consumer and personal products.
Enrique Zambrano has served as a director since April 2004. Mr. Zambrano has served as Chief
Executive Officer and a director of Proeza, S.A. de C.V., a diversified international company that
has operations primarily in the automotive and citrus juice processing industries, since 1988. Mr.
Zambrano is also a director of Grupo IMSA, S.A. de C.V., a steel processing company; XIGNUX, S.A.
de C.V., a Mexican private industrial conglomerate, and Instituto Tecnologico y de Estudios
Superiores de Monterey, the largest private university in Mexico.
There are no family relationships between any of the directors, nominees, or any of our
executive officers.
Information Relating to Corporate Governance and the Board of Directors
Our board of directors has determined, after considering all the relevant facts and
circumstances, that Messrs. Braswell, Hermann, Sabol, Van Horne, and Zambrano are independent
directors, as independence is defined by the listing standards of the National Association of
Securities Dealers (NASD).
Thayer-Blum Funding III, L.L.C. owns 24,582,191 shares of our common stock, or 89.7% of our
outstanding shares. See Security Ownership of Principal Stockholders, Directors and Officers
below beginning on page 8. Accordingly, our company is deemed to be a controlled company, which
is defined by the NASD listing standards as a company of which more than 50% of the voting power is
held by an individual, group, or another company. As a controlled company, we are not required
to have a compensation committee or a nominating committee comprised solely of independent
directors nor is our board of directors required to be comprised of a majority of independent
directors.
Our board of directors has established three standing committees: an audit committee, a
compensation committee, and a nominating and corporate governance committee. Our board of
directors has adopted charters for the audit and the nominating and corporate governance committees
describing the authority and responsibilities delegated to each committee by the board of
directors. Our board of directors has also adopted a Whistle Blower Policy and a Code of Ethics
for the CEO and Senior Financial Officers. We post on our website at www.suntroncorp.com, the
charters of the audit and the nominating and corporate governance committees; our Whistle Blower
Policy and Code of Ethics for the CEO and Senior Financial Officers, and any amendments or waivers
thereto; and any other corporate governance materials contemplated by SEC or NASD regulations.
These documents are also available in print to any stockholder requesting a copy in writing from
our corporate secretary at our executive offices set forth in this proxy statement. In addition,
the Charter of the Audit Committee as currently in effect is attached as Appendix A to this
proxy statement.
We intend to schedule each year at least two executive sessions at which independent directors
meet without the presence or participation of management. During 2004, the independent directors
met in four executive sessions.
Interested parties may communicate with our board of directors or specific members of our
board of directors, including the members of our various board committees, by submitting a letter
addressed to the Board of Directors of Suntron Corporation c/o any specified individual director or
directors at the address listed herein. Any such letters will be forwarded to the indicated
directors.
5
Meetings of the Board of Directors
Our board of directors held five meetings during the fiscal year ended December 31, 2004.
Except for Mr. Sabol, all of our directors attended more than 75% of the meetings of the board of
directors and the committees of the board of directors held during fiscal year 2004.
Committees of the Board of Directors
Audit Committee. The purpose of the audit committee is to oversee the accounting and
financial reporting processes of our company and the audits of the financial statements of our
company and to provide assistance to our board of directors with respect to the oversight of the
integrity of the financial statements of our company, our companys compliance with legal and
regulatory matters, the independent auditors qualifications and independence, and the performance
of our companys internal audit function and our independent auditors. The primary
responsibilities of the audit committee are set forth in its charter and include various matters
with respect to the oversight of our companys accounting and financial reporting process and
audits of the financial statements of our company on behalf of our board of directors. The audit
committee also selects the independent certified public accountants to conduct the annual audit of
the financial statements of our company; reviews the proposed scope of such audit; reviews
accounting and financial controls of our company with the independent public accountants and our
financial accounting staff; and reviews and approves transactions between us and our directors,
officers, and their affiliates. The current members of the audit committee are Messrs. Hermann,
Sabol, and Van Horne (chairman), each of whom qualifies as an independent director under NASD
listing standards as well as under rules adopted by the Securities and Exchange Commission (SEC)
pursuant to the Sarbanes-Oxley Act of 2002. Our board of directors has determined that Messrs.
Sabol and Van Horne each qualify as an audit committee financial expert in accordance with
applicable SEC rules and regulations. The audit committee met eight times during fiscal year 2004,
including three telephonic meetings.
Compensation Committee. The compensation committee reviews and monitors our compensation and
benefit plans to ensure that they meet corporate objectives, including the administration of our
stock option plan. In fulfilling this function, the compensation committee will review the
recommendations of the chief executive officer regarding changes to the major compensation policies
and practices and the compensation provided to our officers. Its current members include Messrs.
Goettman, Walker (chairman), and Zambrano. The compensation committee met once during fiscal year
2004.
Nominating and Corporate Governance Committee. The purpose and responsibilities of the
nominating and corporate governance committee include the oversight of the selection and
composition of committees of the board of directors, the oversight of the evaluations of the board
of directors and management, the identification of individuals qualified to become board members,
the selection or recommendation to the board of directors of nominees to stand for election as
directors at each election of directors, the development and recommendation to the board of
directors of a set of corporate governance principles applicable to our company, and the
establishment of board of director compensation levels.
The nominating and corporate governance committee will consider persons recommended by
stockholders for inclusion as nominees for election to our board of directors if the names,
biographical data, and qualifications of such persons are submitted in writing in a timely manner
addressed and delivered to our companys secretary at the address listed herein. The nominating
and corporate governance committee identifies and evaluates nominees for our board of directors,
including nominees recommended by stockholders, based on numerous factors it considers appropriate,
some of which may include strength of character, mature judgment, career specialization, relevant
technical skills, diversity, and the extent to which the nominee would fill a present need on our
board of directors. The current members of the nominating and corporate governance committee
include Messrs. Braswell, Goettman (chairman), and Walker. Messrs. Goettman and Walker may not be
considered independent for purposes of the NASDs listing requirements. The nominating and
corporate governance committee met twice during 2004.
Director Compensation and Other Information
We pay each of our independent directors an annual fee of $15,000, which is paid quarterly.
We also pay each independent director $500 per board meeting. Each independent director is
entitled to receive, in lieu of the
6
cash retainer fee, quarterly stock options having a Black-Scholes value as of the grant date
equal to $3,750. During 2004, none of the independent directors elected to receive stock options
in lieu of cash compensation.
Additionally, we pay members of our audit committee and independent members of our
compensation committee a fee for each committee meeting they attend. Each audit committee member
receives $1,000 per meeting ($500 in the case of telephonic meetings), and the Chairman receives an
additional $500 per meeting ($250 in the case of telephonic meetings). Each independent member of
the nominating and corporate governance committee and the compensation committee receives $500 per
meeting ($250 in the case of telephonic meetings), and the Chairman receives no additional payment.
We will also pay $10,000 to each member of any special committee created to represent the
interests of the minority stockholders. Finally, we reimburse our independent directors for all
out-of-pocket expenses incurred in the performance of their duties as directors.
All of our independent directors are eligible to receive grants of stock options under our
stock option plan. Upon election to our board of directors, each independent director receives an
option to purchase 15,000 shares of our common stock at an exercise price per share equal to the
closing price on the grant date. The initial options granted to non-employee directors vest for
20% of the shares at the end of each calendar year. At the end of each calendar quarter, each
independent director also receives an option to purchase 1,000 shares of our common stock at an
exercise price per share equal to the closing price on the grant date, provided the director has
served as an independent director for at least two months. The options granted to independent
directors at the end of each calendar quarter vest for 20% of the shares upon each anniversary of
the grant date.
In May 2005, we entered into a consulting arrangement with Ivor J. Evans, who was recently
appointed to our board of directors. Mr. Evans will be paid an annual consulting fee of $200,000
for his services.
7
|
|
|
|
|
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS, AND OFFICERS |
The following table sets forth information with respect to our common stock beneficially owned
as of June 30, 2005 by (a) each person known by us to own beneficially more than five percent of
our outstanding common stock, (b) each of our directors, (c) each of our executive officers, and
(d) all of our directors and executive officers as a group.
Beneficial Ownership Table
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned |
Name of Beneficial Owner(1) |
|
Number |
|
Percent (2) |
Thayer-Blum Funding III, L.L.C. (3)
|
|
|
24,582,191 |
|
|
|
89.7 |
% |
Allen S. Braswell, Jr. (4)
|
|
|
229,045 |
|
|
|
* |
|
Ivor J. Evans (5)
|
|
|
24,582,191 |
|
|
|
89.7 |
% |
James J. Forese (5)
|
|
|
24,582,191 |
|
|
|
89.7 |
% |
Jeffrey W. Goettman (5)
|
|
|
24,582,191 |
|
|
|
89.7 |
% |
Jesse Hermann (13)
|
|
|
3,000 |
|
|
|
* |
|
Douglas P. McCormick (5)
|
|
|
24,582,191 |
|
|
|
89.7 |
% |
Jose S. Medeiros (5)
|
|
|
24,582,191 |
|
|
|
89.7 |
% |
Thomas B. Sabol (13)
|
|
|
3,000 |
|
|
|
* |
|
Hargopal Singh (8)
|
|
|
6,250 |
|
|
|
* |
|
James C. Van Horne (7)
|
|
|
15,378 |
|
|
|
* |
|
John C. Walker (5)
|
|
|
24,582,191 |
|
|
|
89.7 |
% |
Enrique Zambrano (6)
|
|
|
3,200 |
|
|
|
* |
|
James A. Doran (9)
|
|
|
37,593 |
|
|
|
* |
|
Oscar A. Hager (10)
|
|
|
39,938 |
|
|
|
* |
|
Peter W. Harper (11)
|
|
|
86,125 |
|
|
|
* |
|
John H. Kulp (12)
|
|
|
45,719 |
|
|
|
* |
|
All directors and executive officers as a
group (16 persons) (5)(14)
|
|
|
25,051,438 |
|
|
|
90.6 |
% |
|
|
|
* |
|
Represents less than 1% of our outstanding common stock. |
|
(1) |
|
Except as otherwise indicated, the address of each person listed on the table is 2401 West
Grandview Road, Phoenix, Arizona 85023. |
|
(2) |
|
We have determined beneficial ownership in accordance with the rules of the Securities and
Exchange Commission. In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, we have included the shares of common stock subject to
options and convertible securities held by that person that are currently exercisable or
convertible or will become exercisable or convertible within 60 days after June 30, 2005, but
we have not included those shares for purposes of computing percentage ownership of any other
person. We have assumed unless otherwise indicated that the persons and entities named in the
table have sole voting and investment power with respect to all shares beneficially owned,
subject to community property laws where applicable. Beneficial ownership is based on
27,415,221 shares of our common stock outstanding as of June 30, 2005. |
|
(3) |
|
Thayer-Blum Funding III, L.L.C. is owned as follows: 59.94% by Thayer Equity Investors IV,
L.P., 0.04% by TC Manufacturing Holdings, L.L.C., 0.02% by TC KCo, L.L.C., 34.4% by Blum
Strategic Partners, L.P., and 5.6% by Blum (K*TEC) Co-Investment Partners, L.P. |
|
|
|
TC Manufacturing Holdings, L.L.C. is controlled by limited liability companies, the managing
members of which are Frederick Malek, Carl Rickersten and Paul Stern. |
|
|
|
Thayer Equity Investors IV, L.P. is controlled by a limited liability company, the managing
members of which are Frederick Malek and Carl Rickersten. |
|
|
|
TC KCo, L.L.C. is controlled by a limited liability company, the managing members of which are
Frederik Malek and Carl Rickertsen. |
8
|
|
Blum Strategic Partners, L.P. is controlled by a limited liability company, a managing member
of which is Richard C. Blum. |
|
|
|
Blum (K*TEC) Co-Investment Partners, L.P. is controlled by a limited liability company, a
managing member of which is Richard C. Blum. |
|
|
|
Messrs. Goettman and McCormick, both directors of ours, are managing directors of the limited
liability company that controls Thayer Equity Investors IV, L.P. Mr. Forese, one of our
directors, is an Operating Partner and Chief Operating Officer of the company that controls
Thayer Equity Investors IV, L.P. Mr. Evans, one of our directors, is an Operating Partner of
the company that controls Thayer Equity Investors IV, L.P. Messrs. Walker and Medeiros, both
directors of ours, are members of the general partner of Blum Strategic Partners, L.P. |
|
|
|
The address of Thayer-Blum Funding III, L.L.C. is 1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, D.C. 20004. |
|
(4) |
|
Includes 37,520 shares beneficially owned by the Allen S. Braswell, Jr. Family Limited
Partnership #1; 24,455 shares beneficially owned by the Allen S. Braswell, Jr. EFTC Limited
Partnership, of which Allen S. Braswell is a general partner; 2,750 shares beneficially owned
by the Allen S. Braswell, Sr. Trust, of which Allen S. Braswell, Sr., Allen S. Braswell, Jr.s
father, is the trustee; 8,750 shares beneficially owned by Circuit Test International, L.P.,
of which Braswell Investment Corporation (BIC) is a general partner; 136,522 shares
beneficially owned by Braswell GRIT Limited Partnership, of which BIC is a general partner;
and 6,820 shares issuable pursuant to options that are exercisable within 60 days of June 30,
2005. Allen S. Braswell, Jr. is president of BIC. |
|
(5) |
|
Reflects 24,582,191 shares held by Thayer-Blum Funding III, L.L.C. See footnote 3. Messrs.
Evans, Forese, Goettman, McCormick, Medeiros, and Walker disclaim beneficial ownership of
these securities, except to the extent of any pecuniary interest therein. |
|
(6) |
|
Consists of 3,200 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(7) |
|
Includes 12,878 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(8) |
|
Consists of 6,250 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(9) |
|
Includes 37,501 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(10) |
|
Includes 39,813 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(11) |
|
Consists of 86,125 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(12) |
|
Consists of 45,719 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(13) |
|
Consists of 3,000 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
|
(14) |
|
Includes 244,306 shares issuable pursuant to options that are currently exercisable or
exercisable within 60 days of June 30, 2005. |
9
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, officers, and persons who own more
than 10% of a registered class of our securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Directors, officers, and greater than 10%
stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. During 2004, we believe that our directors, executive officers and 10 percent
stockholders complied with all Section 16(a) filing requirements, except that John H. Kulp
inadvertently failed to file a Form 4 for a grant of 10,000 stock options with an exercise price of
$10.52 on June 1, 2004.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid by Suntron (including
EFTC and K*TEC) for the fiscal years ended December 31, 2002, 2003, and 2004 to our Chief Executive
Officer and each of the four other most highly compensated individuals who served as executive
officers of Suntron at the end of 2004, as well as their titles with Suntron.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Compensation |
|
|
|
|
Annual Compensation |
|
Awards |
|
Payouts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual |
|
Securities |
|
LTIP |
|
|
Name and Principal |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
Underlying |
|
Payouts |
|
All Other |
Position |
|
Year |
|
Salary($) |
|
Bonus($) |
|
($)(1) |
|
Options(#) |
|
($) |
|
Compensation($) |
James K. Bass (3) |
|
|
2002 |
|
|
$ |
300,000 |
|
|
$ |
¾ |
|
|
$ |
¾ |
|
|
|
227,000 |
|
|
$ |
¾ |
|
|
$ |
¾ |
|
Chief Executive |
|
|
2003 |
|
|
|
300,000 |
|
|
|
31,000 |
|
|
|
¾ |
|
|
|
60,000 |
|
|
|
¾ |
|
|
|
¾ |
|
Officer and President |
|
|
2004 |
|
|
|
300,000 |
|
|
|
280,200 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Eblin (3) |
|
|
2002 |
|
|
|
200,000 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
132,500 |
|
|
|
¾ |
|
|
|
¾ |
|
Chief Operating |
|
|
2003 |
|
|
|
219,231 |
|
|
|
24,000 |
|
|
|
¾ |
|
|
|
27,000 |
|
|
|
¾ |
|
|
|
¾ |
|
Officer |
|
|
2004 |
|
|
|
220,000 |
|
|
|
143,000 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oscar A. Hager |
|
|
2002 |
|
|
|
147,692 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
22,250 |
|
|
|
¾ |
|
|
|
¾ |
|
Vice President of
Information Technology |
|
|
2003 |
|
|
|
150,000 |
|
|
|
15,000 |
|
|
|
¾ |
|
|
|
15,000 |
|
|
|
¾ |
|
|
|
¾ |
|
and Administration |
|
|
2004 |
|
|
|
165,000 |
|
|
|
77,000 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter W. Harper |
|
|
2002 |
|
|
|
200,000 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
65,000 |
|
|
|
¾ |
|
|
|
¾ |
|
Chief Financial |
|
|
2003 |
|
|
|
200,000 |
|
|
|
15,000 |
|
|
|
¾ |
|
|
|
15,000 |
|
|
|
¾ |
|
|
|
¾ |
|
Officer and Secretary |
|
|
2004 |
|
|
|
210,000 |
|
|
|
97,847 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John H. Kulp |
|
|
2002 |
|
|
|
170,000 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
40,750 |
|
|
|
¾ |
|
|
|
70,707 |
(2) |
Vice President of |
|
|
2003 |
|
|
|
170,000 |
|
|
|
15,000 |
|
|
|
¾ |
|
|
|
12,000 |
|
|
|
¾ |
|
|
|
¾ |
|
Sales and Marketing |
|
|
2004 |
|
|
|
195,000 |
|
|
|
91,450 |
|
|
|
¾ |
|
|
|
10,000 |
|
|
|
¾ |
|
|
|
¾ |
|
|
|
|
(1) |
|
Except as otherwise provided in this table, no amounts for perquisites and other personal
benefits received by any of the named executive officers are shown because the aggregate
dollar amounts were lower than the reporting requirements established by the rules of the SEC. |
|
(2) |
|
Represents payment to defray moving expenses for relocation to Phoenix, Arizona in connection
with employment by the Company. |
|
(3) |
|
Effective May 6, 2005, Messrs. Bass and Eblin were no longer employed by Suntron. |
Stock Option Grants
Suntron did not grant any stock appreciation rights in 2004. The following table sets forth
information concerning the grant of stock options in 2004 to Suntrons Chief Executive Officer and
the other executive officers named in the Summary Compensation Table above.
10
Option Grants In Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants |
|
|
|
|
Number of |
|
% of Total |
|
|
|
|
|
Grant |
|
|
|
|
|
Potential Realizable Value at |
|
|
Securities |
|
Options |
|
|
|
|
|
Date |
|
|
|
|
|
Assumed Annual Rates of Stock Price |
|
|
Underlying |
|
Granted to |
|
Exercise or |
|
Market |
|
|
|
|
|
Appreciation for Option Terms (3) |
|
|
Options |
|
Employees in |
|
Base Price |
|
Value |
|
Expiration |
|
|
|
|
Name |
|
Granted (#) |
|
Fiscal Year (2) |
|
($/Share) |
|
($/Share) |
|
Date |
|
5%($) |
|
10%($) |
John H. Kulp |
|
|
10,000 |
(1) |
|
|
5.1 |
% |
|
$ |
10.52 |
|
|
$ |
8.00 |
|
|
|
5-31-14 |
|
|
$ |
25,112 |
|
|
$ |
102,299 |
|
|
|
|
(1) |
|
Represents options to purchase shares of Suntron common stock that become exercisable for 25%
of the underlying shares on the first anniversary of the date of grant and 12.5% in
semi-annual installments thereafter, so long as the executive remains employed with Suntron. |
|
(2) |
|
The percentages shown above are based on an aggregate of 194,900 options for shares of
Suntron common stock that were granted to employees for the year ended December 31, 2004. |
|
(3) |
|
Potential realizable value assumes that the stock price increases from the date of the grant
until the end of the option term (10 years) at the annual rate specified (5% and 10%). The 5%
and 10% assumed annual rates of appreciation are mandated by SEC rules and do not represent
our estimate or projection of the future price of our common stock. We do not believe this
method accurately illustrates the potential value of a stock option. |
Stock Option Exercises and Values for Fiscal 2004
The following table sets forth information with respect to Suntrons Chief Executive Officer
and the executive officers named in the Summary Compensation Table concerning options exercised in
2004 and unexercised options held by them as of the end of such fiscal year:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Unexercised |
|
|
Acquired |
|
|
|
|
|
Number of Options at |
|
In-the-Money Options at |
|
|
on |
|
Value |
|
December 31, 2004 |
|
December 31, 2004($)(1) |
Name |
|
Exercise |
|
Realized |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
James K. Bass |
|
|
|
|
|
$ |
|
|
|
|
325,376 |
|
|
|
200,374 |
|
|
$ |
|
|
|
$ |
|
|
Michael Eblin |
|
|
|
|
|
|
|
|
|
|
131,688 |
|
|
|
111,562 |
|
|
|
|
|
|
|
84,510 |
|
Oscar A. Hager |
|
|
|
|
|
|
|
|
|
|
34,438 |
|
|
|
34,812 |
|
|
|
|
|
|
|
46,950 |
|
Peter W. Harper |
|
|
|
|
|
|
|
|
|
|
70,125 |
|
|
|
62,375 |
|
|
|
|
|
|
|
46,950 |
|
John H. Kulp |
|
|
|
|
|
|
|
|
|
|
36,875 |
|
|
|
50,875 |
|
|
|
|
|
|
|
37,560 |
|
|
|
|
(1) |
|
The closing sales price per share for Suntron common stock as reported by the Nasdaq National
Market on December 31, 2004 was $3.14. The option value is calculated by multiplying (a) the
positive difference, if any, between $3.14 and the option exercise price by (b) the number of
shares of common stock underlying the option. |
11
Equity Compensation Plan Information
The following table sets forth certain information, as of December 31, 2004, regarding shares
of our common stock that may be issued upon the exercise of options under our only stock option
plan (the Amended and Restated 2002 Stock Option Plan).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
(b) |
|
(c) |
|
|
Number of |
|
Weighted |
|
Number of Securities |
|
|
Securities to be |
|
Average |
|
Remaining Available for |
|
|
Issued Upon |
|
Exercise |
|
Future Issuance Under Equity |
|
|
Exercise of |
|
Price of |
|
Compensation Plans |
|
|
Outstanding |
|
Outstanding |
|
(Excluding Securities |
Plan Category |
|
Options |
|
Options |
|
Reflected in Column (a)) |
Equity Compensation
Plans Approved by
Stockholders |
|
|
2,081,014 |
|
|
$ |
9.81 |
|
|
|
2,913,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation
Plans Not Approved
by Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,081,014 |
|
|
$ |
9.81 |
|
|
|
2,913,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Agreements and Change of Control Arrangements
Hargopal Singh, our Chief Executive Officer and President, has entered into an employment
agreement that provides for his employment for a term that ends on December 31, 2006, which term
automatically extends for successive one-year periods until the agreement is terminated, unless
timely notice of non-renewal is given by either the Company or Mr. Singh. The Employment Agreement
provides that Mr. Singh will receive a base salary of $300,000, which may be increased from time to
time at the discretion of the Companys Board of Directors. In addition, the Employment Agreement
provides that Mr. Singh is entitled to receive bonus compensation based on the Companys attainment
of performance goals, including EBITDA and other goals determined from time to time by the
Compensation Committee or the Board of Directors of the Company. Mr. Singh also received an initial
award of stock options to purchase up to 700,000 shares of the Companys common stock (the
Options) at an exercise price equal to the closing sale price of the Companys stock on May 6,
2005. The Options will vest 25% on each anniversary of the grant date, beginning on May 6, 2006,
subject to acceleration in the event of a change of control (as defined in the Employment
Agreement).
The Employment Agreement further provides that, in the event of termination of Mr. Singhs
employment with the Company, the Company will pay to Mr. Singh one-years base salary and pro-rated
bonus through the date of termination if he is terminated by the Board without cause (as defined
in the Employment Agreement) or if he terminates his employment with good reason (as defined in
the Employment Agreement). If Mr. Singhs employment is terminated by the Company without cause
or by Mr. Singh for good reason within six months prior to a change of control or within one
year after a change of control, the Company will pay to Mr. Singh a bonus to the extent that the
value of the Options is less $600,000 at the time of termination. Such bonus, if any, will be equal
to the difference between $600,000 and the value of the Options. The Employment Agreement also
includes certain restrictive covenants which limit Mr. Singhs ability to compete with the Company
or divulge certain confidential information concerning the Company.
12
REPORT OF THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee, the Report of the Audit Committee, and
Performance Graph included elsewhere in this proxy statement do not constitute soliciting material
and should not be deemed filed or incorporated by reference in any other filing of ours under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we
specifically incorporate either Report or the Performance Graph by reference therein.
Under rules established by the Securities and Exchange Commission, we are required to provide
a report explaining the rationale and considerations that led to fundamental compensation decisions
affecting our executive officers (including the executive officers named in the Summary
Compensation Table above) during the past fiscal year. The report of our compensation committee is
set forth below.
James K. Bass served as our President and Chief Executive Officer from May 2001 until May 6,
2005. In July 2000, Mr. Bass entered into an employment contract with EFTC Corporation, which we
assumed as part of the business combination of EFTC Corporation and K*TEC Electronics Holding
Corporation. The initial term of the agreement expired in December 2003, but automatically
extended for successive one-year periods until it was terminated on May 6, 2005. The employment
agreement provided for a minimum base salary of $300,000, which the committee believes was
consistent with industry parameters, and incentive-based bonus compensation determined by the
compensation committee. Mr. Bass received $280,200 in bonus compensation based on our company
achieving certain financial performance targets established by the compensation committee. The
compensation committee believes that the attributes of Mr. Bass compensation package provided
appropriate performance-based incentives.
Hargopal Singh has served as our President and Chief Executive Officer since May 6, 2005, when
we entered into an employment agreement with him. The agreement terminates in December 2006. The
employment agreement provides for a minimum base salary of $300,000, which the committee believes
is consistent with industry parameters, and incentive-based bonus compensation based on our company
achieving certain financial performance targets determined by the compensation committee. The
compensation committee believes that the attributes of Mr. Singhs compensation package will
provide appropriate performance-based incentives.
The compensation committees general philosophy with respect to the compensation of our other
executive officers has been to recommend competitive compensation programs designed to attract and
retain key executives critical to our long-term success and to recognize an individuals
contribution and personal performance. In addition, we have a stock option plan designed to
attract and retain executive officers and other employees and to reward them for delivering
long-term value to us. In fiscal year 2004 the compensation committee awarded cash bonuses to the
executive officers in recognition of our companys improved financial performance and granted stock
options to certain executive officers.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a federal
income tax deduction to public companies for certain compensation in excess of $1 million paid to a
corporations chief executive officer or any of its four other most highly compensated executive
officers. Qualifying performance-based compensation will not be subject to the deduction limit if
certain requirements are met. Our equity-based compensation plan does not satisfy these
requirements as the members of our compensation committee do not satisfy the definition of an
outside director under Section 162(m). Accordingly, the compensation income deemed to be
received upon the exercise of stock options granted under the plan does not qualify as
performance-based compensation and may be subject to the deduction limit. The compensation
committee intends to review the potential effects of Section 162(m) periodically and in the future
may decide to structure additional portions of our compensation programs in a manner designed to
permit unlimited deductibility for federal income tax purposes. We are not currently subject to
the limitations of Section 162(m) because none of our executive officers received compensation
during 2004 in excess of $1 million.
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Dated as of: June 30, 2005 |
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John C. Walker, Chairman |
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Jeffrey W. Goettman |
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Enrique Zambrano |
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13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2004, our compensation committee consisted of
Messrs. Goettman, Walker, and Zambrano. None of these individuals had any contractual or other
relationships with us during such fiscal year except as directors and those transactions discussed
elsewhere in this Proxy Statement. See Certain Relationships and Related Transactions. No
interlocking relationship exists between any member of our compensation committee and any member of
any other companys board of directors or compensation committee.
14
REPORT OF THE AUDIT COMMITTEE
The board of directors has appointed an audit committee consisting of three directors. All
members of the audit committee are able to read and understand fundamental financial statements,
including our balance sheet, income statement, and cash flow statement. At least one member of the
audit committee has past employment experience in financial or accounting, requisite professional
certification in accounting, or other comparable experience or background which results in the
individuals financial sophistication, including being or having been a chief executive officer,
chief financial officer, or other senior officer with financial oversight responsibility. Our
board of directors has determined that Messrs. Van Horne, Hermann and Sabol are independent, as
defined by Rule 4200(a)(14) of the NASDs listing standards.
The primary responsibility of the audit committee is to assist our board of directors in
fulfilling its responsibility to oversee managements conduct of our financial reporting process,
including overseeing the financial reports and other financial information that we submit to
governmental or regulatory bodies (such as the Securities and Exchange Commission), the public, and
other users thereof; our systems of internal accounting and financial controls; and the annual
independent audit of our financial statements.
Management has the primary responsibility for the financial statements and the reporting
process, including the system of internal controls. The independent auditors are responsible for
auditing the financial statements and expressing an opinion on the conformity of those audited
financial statements with U.S. generally accepted accounting principles.
In fulfilling its oversight responsibilities, the audit committee reviewed the audited
financial statements with management and the independent auditors. The audit committee discussed
with the independent auditors the matters required to be discussed by Statement of Auditing
Standards No. 61, as amended. This included a discussion of the auditors judgments as to the
quality and the acceptability of the companys accounting principles and such other matters as are
required to be discussed with the audit committee under generally accepted auditing standards. In
addition, the audit committee received from the independent auditors written disclosures and the
letter required by Independence Standards Board Standard No. 1. The audit committee also discussed
with the independent auditors the auditors independence from us and our management, including the
matters covered by the written disclosures and letter provided by the independent auditors.
The audit committee discussed with the companys independent auditors the overall scope and
plans for their audits. The audit committee met with the independent auditors, with and without
management present, to discuss the results of their quarterly reviews and annual audits, their
evaluations of the company, the internal controls, and the overall quality of the financial
reporting. The audit committee met eight times, including three telephonic meetings, during the
fiscal year ended December 31, 2004.
Based on the reviews and discussions referred to above, the audit committee recommended to the
board of directors, and the board or directors approved, that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2004 for filing with the
SEC.
The Board of Directors has amended and restated our audit committee charter from time-to-time
to reflect, among other things, the requirements of recently adopted federal legislation, including
the Sarbanes-Oxley Act of 2002, new rules adopted by the SEC, and amended NASD listing standards.
A copy of the Audit Committee Charter, as amended and restated, is included as Appendix A
in this proxy statement. We certify that it is in compliance with Rule 4350(d)(1) of the NASDs
listing standards.
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Dated as of: June 30, 2005 |
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James C. Van Horne, Chairman |
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Jesse Hermann |
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Thomas B. Sabol |
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15
PERFORMANCE GRAPH
Our common stock has been listed on the Nasdaq National Market since March 1, 2002.
Accordingly, the following graph compares, for the period from March 1, 2002 to December 31, 2004,
the cumulative total stockholder return on our common stock against the cumulative total return of:
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the Nasdaq Composite Index; and |
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a peer group consisting of us and six other publicly traded electronic manufacturing
services companies that we have selected. |
The graph assumes $100 was invested in our common stock on March 1, 2002, the date on which
our common stock became listed on the Nasdaq National Market and an investment in each of the peer
group and the Nasdaq Composite Index, and the reinvestment of all dividends. The companies
included in the peer group were Benchmark Electronics, Inc. (NYSE: BHE), IEC Electronics Corp.
(Nasdaq NM: IECE), Jabil Circuit, Inc. (NYSE: JBL), Plexus Corp. (Nasdaq NM: PLXS), Sanmina-SCI
Corporation (Nasdaq NM: SANM), and Solectron Corporation (NYSE: SLR).
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sale/Leaseback Transaction
Richard L. Monfort, formerly a member of our board of directors, entered into a sale/leaseback
transaction with EFTC in December 1998 whereby EFTC sold manufacturing facilities located in
Newberg, Oregon and Tucson, Arizona to Mr. Monfort for $10.5 million. Mr. Monfort leased these
manufacturing facilities back to us for a term of five years through December 2003. The
Tucson lease provided for monthly payments of $32,000 and the Newberg lease provided for monthly
payments of $58,000. Honeywell International, Inc. subleased the Tucson facility under a
month-to-month agreement that required monthly payments of $32,000 through expiration of the Tucson
lease in December 2003. In July 2003, we renewed the Newberg lease through December 2008 at an
average monthly payment of $47,000.
Thayer-Blum Management Fees
During 2004, we incurred $750,000 for management fees to affiliates of Thayer-Blum Funding
L.L.C. The services provided under this arrangement consist primarily of management and consulting
services related to corporate development activities.
Purchase and Sale of Material
For the year ended December 31, 2004, we purchased raw materials to support our production
requirements for $506,000 from TTM Technologies, Inc. For the year ended December 31, 2004, we
purchased raw materials to support our production requirements for $326,000 from Cosmotronic
Corporation. In addition, we sold products for $300,000 to Cosmotronic Corporation during the year
ended December 31, 2004. During 2004, two members of our Board of Directors served on the Boards of
Directors of TTM Technologies, Inc. and Cosmotronic Corporation.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP served as our independent registered public accounting firm for each of the years in
the three-year period ended December 31, 2004. We anticipate that representatives of KPMG LLP will
be present at the meeting, will have the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
Fees Charged By Independent Registered Public Accounting Firm
The following is a summary of fees, all of which were approved by the audit committee, billed
by KPMG LLP for audit and other professional services during the years ended December 31, 2003 and
2004:
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2003 |
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2004 |
Audit fees |
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235,000 |
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$ |
230,000 |
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Audit-related fees |
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9,630 |
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Income tax fees |
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64,839 |
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29,164 |
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All other fees |
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Total fees |
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$ |
299,839 |
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$ |
268,794 |
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Audit-related fees include fees related to Section 404 of the Sarbanes-Oxley Act of 2002.
Income tax fees include tax return preparation and consultation on various tax-related issues.
Pre-Approval Policy for Independent Registered Public Accounting Firms Fees
In 2003 our Audit Committee adopted a formal policy concerning pre-approval of audit and
non-audit services to be provided by our independent auditors. The policy requires that all
proposed services to be provided by KPMG LLP must be pre-approved by the audit committee before any
services are performed. This policy includes
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all audit, tax and consulting services that KPMG LLP may provide to the Company. In evaluating
whether to engage KPMG LLP for non-audit services, our Audit Committee considers whether the
performance of services other than audit services is compatible with maintaining the independence
of KPMG LLP.
ANNUAL REPORT AND OTHER MATTERS
We have mailed with this proxy statement a copy of our 2004 annual report to each stockholder
of record as of July 29, 2005. If a stockholder requires an additional copy of our annual report,
we will provide one, without charge, on the written request of any such stockholder addressed to
our Secretary at Suntron Corporation, 2401 West Grandview Road, Phoenix, Arizona 85023. Any
exhibits listed in the annual report also will be furnished upon written request at the actual
expense we incur in furnishing such exhibit.
Our 2004 annual report to stockholders is not incorporated into this proxy statement and is
not to be considered a part of these proxy soliciting materials or subject to Regulations 14A or
14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended. The
information contained in the Report of the Compensation Committee, Report of the Audit
Committee, and Performance Graph above shall not be deemed filed with the SEC, or subject to
Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act.
STOCKHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING
We must receive stockholder proposals that are intended to be presented at our annual meeting
of stockholders to be held during calendar year 2006 no later than April 20, 2006, in order to be
included in the proxy statement and form of proxy relating to such meeting. Pursuant to Rule 14a-4
under the Securities Exchange Act of 1934, we intend to retain discretionary authority to vote
proxies with respect to stockholder proposals for which the proponent does not seek to have us
include the proposed matter in the proxy statement for the annual meeting to be held during
calendar 2006, except in circumstances where (a) we receive notice of the proposed matter no later
than April 20, 2006, and (b) the proponent complies with the requirements set forth in Rule 14a-4.
OTHER MATTERS
As of the date of this proxy statement, we know of no matter that will be presented for
consideration at the annual meeting other than the election of directors. If, however, any other
matter should properly come before the annual meeting for action by stockholders, proxies in the
enclosed form returned to us will be voted in accordance with the recommendation of the board of
directors or, in the absence of such a recommendation, in accordance with the judgment of the proxy
holder.
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By Order of the Board of Directors, |
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/s/ Peter W. Harper |
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Secretary |
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Phoenix, Arizona |
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August 18, 2005 |
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18
APPENDIX A
Suntron Corporation
Charter of the Audit Committee of the Board of Directors
(Amended and Restated as of December 13, 2004)
Purpose
The purpose of the Audit Committee is to:
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oversee the Companys accounting and financial reporting processes and the
audits of the Companys financial statements; |
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assist the Board in monitoring (1) the integrity of the Companys financial
statements, (2) the independent auditors qualifications and independence, (3) the
performance of the Companys internal audit function and independent auditors, and (4)
the Companys compliance with legal and regulatory requirements; and |
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prepare the Audit Committee report required by the rules of the Securities and
Exchange Commission (the Commission) to be included in the Companys annual
proxy statement. |
Committee Membership
The Audit Committee shall consist of no fewer than three members. The members of the Audit
Committee shall meet the independence and experience requirements of the Nasdaq Stock Market,
Section 10A(m)(3) of the Securities Exchange Act of 1934 (the Exchange Act) and the rules
and regulations of the Commission. At least one member of the Audit Committee shall be a financial
expert as defined by the Commission.
The members of the Audit Committee shall be appointed by the Board on the recommendation of the
Boards Corporate Governance/Nominating Committee. Audit Committee members may be replaced by the
Board.
Chairman
Unless a Chairman is appointed by the full Board, the members of the Audit Committee shall
designate a Chairman by the majority vote of the Audit Committee members. The Chairman shall chair
all meetings of the Audit Committee and establish the agendas for such meetings.
Meetings
The Audit Committee shall meet as often as it determines, but not less frequently than quarterly.
The Audit Committee shall meet periodically with management, the internal auditors and the
independent auditor in separate executive sessions. The Audit Committee may request any officer or
employee of the Company or the Companys outside counsel or independent auditor to attend a meeting
of the Committee or to meet with any members of, or consultants to, the Committee. Meetings of the
Committee may be held telephonically.
All non-employee directors who are not members of the Audit Committee may attend meetings of the
Audit Committee, but may not vote.
Committee Authority and Responsibilities
The Audit Committee shall be directly responsible for the appointment, compensation, retention and
oversight of the work of the independent auditor (including resolution of disagreements between
management and the independent
A - 1
auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services or related work. The independent auditor shall
report directly to the Audit Committee. The Audit Committee shall also have the authority to
direct the Companys internal audit department as it deems necessary or appropriate.
The Audit Committee shall pre-approve all auditing services and permitted non-audit services
(including the fees and terms thereof) to be performed for the Company by its independent auditor
as set forth in Section 10A(i) of the Exchange Act.
The Audit Committee shall at least annually (i) request and receive from the independent auditor a
formal written statement delineating all relationships between the independent auditor and the
Company, consistent with Independence Standards Board Standard 1, (ii) actively engage in a
dialogue with the independent auditor with respect to any disclosed relationships or services that
may impact the objectivity and independence of the independent auditor, and (iii) take, or
recommend that the Companys Board take, appropriate action to oversee the independence of the
independent auditor.
The Audit Committee shall establish procedures for (i) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting controls or auditing
matters, and (ii) the confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
The Audit Committee shall have the authority, to the extent it deems necessary to carry out its
duties, to retain independent legal, accounting or other advisors. The Company shall provide for
appropriate funding, as determined by the Audit Committee, for payment of (i) compensation to the
independent auditor for the purpose of preparing or issuing an audit report or performing other
audit, review or attest services, (ii) compensation to any advisors employed by the Audit Committee
pursuant to the preceding sentence, and (iii) ordinary administrative expenses of the Audit
Committee that are necessary or appropriate to carry out its duties.
The Audit Committee shall make regular reports to the Board. The Audit Committee shall review and
reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for
approval.
The Audit Committee may form and delegate authority to subcommittees consisting of one or more
members when appropriate, including the authority to grant pre-approvals of audit and permitted
non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be
presented to the full Audit Committee at its next scheduled meeting.
The Audit Committee, to the extent it deems necessary or appropriate, shall:
Financial Statement and Disclosure Matters
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Review and discuss with management and the independent auditor the Companys annual audited
financial statements, including disclosures made in managements discussion and analysis, and
recommend to the Board whether the audited financial statements should be included in the
Companys Form 10-K. |
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Review and discuss with management and the independent auditor the Companys quarterly
financial statements prior to the filing of its Form 10-Q, including the results of the
independent auditors review of the quarterly financial statements. |
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Discuss with management and the independent auditor significant financial reporting issues
and judgments made in connection with the preparation of the Companys financial statements,
including any significant changes in the Companys selection or application of accounting
principles, any major issues as to the adequacy of the Companys internal controls, and any
special steps adopted in light of material control deficiencies. |
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Review and discuss quarterly reports from the independent auditors on: |
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All critical accounting policies and practices to be used. |
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All alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management, ramifications of the
use of such alternative disclosures and treatments, and the treatment preferred by the
independent auditor. |
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Other material written communications between the independent auditor and
management, such as any management letter or schedule of unadjusted differences. |
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Review and discuss the Companys earnings press releases, including the use of non-GAAP
financial measures, as well as financial information and earnings guidance provided to
analysts and rating agencies, at regularly scheduled Audit Committee meetings. The Audit
Committee Chairman shall approve the Companys earnings press releases. Such discussion may
be done generally (consisting of discussing the types of information to be disclosed and the
types of presentations to be made). |
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Discuss with management and the independent auditor the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the Companys financial statements. |
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Discuss with the independent auditor the matters required to be discussed by Statement on
Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties
encountered in the course of the audit work, any restrictions on the scope of activities or
access to requested information, and any significant disagreements with management. |
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Review disclosures made to the Audit Committee by the Companys CEO and CFO during their
certification process for the Form 10-K and Form 10-Q about any significant deficiencies in
the design or operation of internal controls, material weaknesses therein, and any fraud
involving management or other employees who have a significant role in the Companys internal
controls. |
Oversight of the Companys Relationship with the Independent Auditor
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Obtain and review a report from the independent auditor at least annually regarding (a) the
independent auditors internal quality control procedures, (b) any material issues raised by
the most recent internal quality control review, or peer review, of the firm, or by any
material inquiry or investigation by governmental or professional authorities within the
preceding five years respecting one or more independent audits carried out by the firm, and
(c) any steps taken to deal with any such issues. |
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Evaluate the qualifications, performance and independence of the independent auditor,
including considering whether the auditors quality controls are adequate and the provision of
permitted non-audit services is compatible with maintaining the auditors independence, and
taking into account the opinions of management and internal auditors. The Audit Committee
shall present its conclusions with respect to the independent auditor to the Board in
connection with each annual audit engagement. |
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Meet with the independent auditor prior to the audit to discuss the planning and staffing of
the audit. |
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Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility
for the audit and the audit partner responsible for reviewing the audit as required by law. |
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Recommend to the Board policies for the Companys hiring of employees or former employees of
the independent auditor who participated in any capacity in the audit of the Company. |
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Consider whether, in order to assure continuing auditor independence, it is appropriate to
adopt a policy of rotating the independent auditing firm on a regular basis. |
Oversight of the Companys Internal Audit Function
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Review the appointment and replacement of the Companys senior internal auditing executive. |
A - 3
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Review the significant reports to management prepared by the internal auditing department and
managements responses. |
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Discuss with the independent auditor and management the internal audit department
responsibilities, budget and staffing and any recommended changes in the planned scope of
internal audits. |
Compliance Oversight Responsibilities
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Discuss with management and the independent auditor any correspondence with regulators or
governmental agencies and any published reports which raise material issues regarding the
Companys financial statements or accounting policies. |
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Discuss with the Companys general counsel legal matters that could reasonably be expected to
have a material impact on the financial statements or the Companys compliance policies. |
20. Review and approve all related party transactions.
Other
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Carry out additional functions and adopt additional policies and procedures as may be
appropriate in light of changing business, legal or other conditions. |
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Maintain minutes or other records of meetings and activities of the Committee. |
Limitation of Audit Committees Role
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not
the duty of the Audit Committee to plan or conduct audits or to determine that the Companys
financial statements and disclosures are complete and accurate and are in accordance with generally
accepted accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditor.
A - 4
SUNTRON CORPORATION
2005 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, a holder of Common Stock, $0.01 par value (Common Stock) of SUNTRON CORPORATION, a Delaware corporation (the
Company) hereby appoints Hargopal Singh and Peter W. Harper, and each of them, as proxies for the undersigned, each with full power of
substitution, and hereby authorizes them to represent and vote, as designated below and on the reverse, all the shares of Common Stock
held of record by the undersigned at the close of business on July 29, 2005 at the 2005 Annual Meeting of Stockholders of the Company to
be held at the Companys corporate headquarters located at 2401 West Grandview Road, Phoenix, Arizona 85023 on September 9, 2005, and at
any adjournment or postponement thereof.
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1. ELECTION OF DIRECTORS:
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FOR all nominees listed
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WITHHOLD AUTHORITY to |
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below (except as indicated)
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vote for all nominees listed below. |
If you wish to withhold authority to vote for any individual nominee, strike a line through that nominees name in the list below:
Allen S. Braswell, Jr., James J. Forese, Jesse Hermann, and Hargopal (Paul) Singh
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Upon such other matters as may properly come before such Annual Meeting or any adjournments or postponements thereof. In their discretion, the
proxies are authorized to vote upon such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. |
(Continued, and to be signed and dated, on the reverse side.)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS; AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
The undersigned hereby acknowledges receipt of (1) the Notice of Annual Meeting and proxy statement relating to the 2005 Annual Meeting,
and (2) the Companys 2004 Annual Report to Stockholders.
A majority of such proxies or substitutes as shall be present and shall act at said meeting or any adjournment or adjournments thereof
(or if only one shall be present and act, then that one) shall have and may exercise all of the powers of said proxies hereunder.
Signature
Signature
(Please date and sign exactly as
the name appears hereon. When shares are held by joint tenants,
all should sign. When signing a
fiduciary (e.g., attorney,
executor, administrator,
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