-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WTSlS4mWrEnT8VvJq1NVEaOrw2bGYt0+6ldlv35KkmuT9lmmIbSQZZgmJlfPGnEe njZAAu+c9uJrLXf3UFS3nA== 0001017062-01-500147.txt : 20010501 0001017062-01-500147.hdr.sgml : 20010501 ACCESSION NUMBER: 0001017062-01-500147 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010601 FILED AS OF DATE: 20010430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DDI CORP CENTRAL INDEX KEY: 0001104252 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 061576013 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-30241 FILM NUMBER: 1616468 BUSINESS ADDRESS: STREET 1: 1220 SAMON CIRCLE CITY: AHAMEIM STATE: CA ZIP: 92806 BUSINESS PHONE: 7145887200 MAIL ADDRESS: STREET 1: 1220 SIMON CIRCLE CITY: AHAHEIM STATE: CA ZIP: 92806 DEF 14A 1 ddef14a.txt DDI ANNUAL MEETING OF STOCKHOLDERS ================================================================================ SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to 240.14a-12 DDi Corp. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: The Proxy must be an Appendix to the Proxy Statement. DDi Corp. 1220 Simon Circle Anaheim, California 92806 ---------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ---------------- We cordially invite you to attend our 2001 Annual Meeting of Stockholders. This Annual Meeting will be held at 10:00 A.M., California time, on Friday, June 1, 2001, at the corporate headquarters of DDi Corp. located at 1220 Simon Circle, Anaheim, California 92806, for the following purposes: 1. To elect three Class I Directors to the Board of Directors to hold office for a term of three years and until their respective successors are elected and qualified. 2. To consider a proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors. 3. To transact such other business as may properly come before this Annual Meeting or any adjournment thereof. The Board of Directors has nominated Prescott Ashe, Charles D. Dimick and David Dominik as the nominees for election to the Board of Directors as Class I Directors. The Board of Directors has fixed the close of business on April 6, 2001, as the record date for the determination of stockholders entitled to notice of, and to vote at, this Annual Meeting. You are cordially invited to be present and to vote at this Annual Meeting in person. However, you are also requested to sign, date and return the enclosed proxy in the enclosed postage-paid and addressed envelope, whether or not you expect to attend. In the event you have returned a signed proxy, but elect to attend this Annual Meeting and vote in person, you will be entitled to vote. By Order of the Board of Directors, /s/ JOSEPH P. GISCH Joseph P. Gisch Secretary Anaheim, California April 30, 2001 DDi Corp. 1220 Simon Circle Anaheim, California 92806 ---------------- PROXY STATEMENT ---------------- The Board of Directors of DDi Corp. (the "Company") is soliciting proxies to be voted at the Annual Meeting of Stockholders of the Company to be held on Friday, June 1, 2001, at the corporate headquarters of DDi Corp. located at 1220 Simon Circle, Anaheim, California 92806, at 10:00 A.M., California time, and at any adjournments thereof (the "Annual Meeting" or the "Meeting"), for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders and described herein. This Proxy Statement describes issues on which we would like you, as a stockholder, to vote. It also gives you information on these issues so that you can make an informed decision. The approximate date on which this Proxy Statement and the enclosed form of proxy are first being sent or given to stockholders is May 9, 2001. VOTING RIGHTS AND SOLICITATION OF PROXIES Who May Vote The Board of Directors of the Company (the "Board of Directors" or the "Board") has fixed the close of business on April 6, 2001, as the record date for the determination of stockholders entitled to receive notice of, and to vote at, the Annual Meeting (the "Record Date"). The only outstanding class of stock of the Company is its common stock, par value $0.01 per share ("Common Stock"). At the Record Date, 47,622,508 shares of Common Stock were outstanding. Each share of Common Stock entitles its record holder on the Record Date to one vote on all matters. With respect to the election of directors only, stockholders may vote in favor of all nominees or withhold their votes as to all nominees or withhold their votes as to specific nominees. Revocability of Proxy You may revoke your proxy prior to its exercise. You may do this by (a) delivering to the Secretary of the Company, Joseph P. Gisch, at or prior to the Annual Meeting, an instrument of revocation or another proxy bearing a date or time later than the date or time of the proxy being revoked or (b) voting in person at the Annual Meeting. Mere attendance at the Annual Meeting will not serve to revoke your proxy. How Your Shares Will Be Voted All proxies received and not revoked will be voted as directed. If no directions are specified, such proxies will be voted "FOR" (a) election of the Board's nominees for Class I Directors and (b) the ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors. As to any other business which may properly come before the Annual Meeting, the persons named in such proxies will vote in accordance with their best judgment, although the Company does not presently know of any other such business. Voting, Quorum and Broker Non-Votes Shares of Common Stock will be counted as present at the Annual Meeting if the stockholder is present and votes in person at the Meeting or has properly submitted a proxy card. A majority of the Company's outstanding shares entitled to vote as of the Record Date must be present at the Annual Meeting in order to hold the Meeting and conduct business. This is called a quorum. Abstentions and non-votes will be counted for purposes of determining the existence of a quorum at the Annual Meeting. The three nominees receiving the highest number of votes "FOR" a director will be elected as directors. This number is called a plurality. The affirmative vote of a majority of the shares of Common Stock present in person or by proxy at the Annual Meeting and entitled to vote on each proposal (other than the election of directors) is required for the adoption 1 of each such proposal. Abstentions will be counted as votes against any of the proposals as to which a stockholder abstains, but non-votes will have no effect on the voting with respect to any proposal as to which there is a non-vote. A non-vote may occur when a nominee holding shares of Common Stock for a beneficial owner does not vote on a proposal because such nominee does not have discretionary voting power and has not received instructions from the beneficial owner. Expenses and Method of Solicitation The expenses of soliciting proxies for the Annual Meeting are to be paid by the Company. Solicitation of proxies may be made by means of personal calls upon, or telephonic or telegraphic communications with, stockholders or their personal representatives by directors, officers and employees of the Company who will not be specially compensated for such services. Although there is no formal agreement to do so, the Company may reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding this Proxy Statement to stockholders whose Common Stock is held of record by such entities. Nominations for Directors for the Annual Meeting The Bylaws of the Company (the "Bylaws") set forth certain procedures relating to the nomination of directors (the "Nomination Bylaw") and no person will be eligible for election as a director unless nominated in accordance with the provisions of the Nomination Bylaw. Under the terms of the Nomination Bylaw, to be timely for Annual Meeting, a stockholder's notice must have been delivered to or mailed and received at the principal executive offices of the Company by no later than April 15, 2001. The presiding officer of the Annual Meeting will, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed by the Nomination Bylaw, and if he should so determine, he will so declare to the Meeting and the defective nomination will be disregarded. Notwithstanding the provisions of the Nomination Bylaw, a stockholder also must comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations thereunder with respect to the matters set forth in the Nomination Bylaw. For information related to application of the Nomination Bylaw for the 2002 Annual Meeting, see the discussion in this Proxy Statement under the caption "Submission of Stockholder Proposals and Director Nominations for the 2002 Annual Meeting." Stockholder Proposals for the Annual Meeting The Bylaws set forth certain procedures relating to the procedures for properly bringing business before an annual meeting of the stockholders (the "Stockholder Proposal Bylaw"). Under the terms of the Stockholder Proposal Bylaw, to be timely for the Annual Meeting, a stockholder must have delivered a notice regarding a proposal delivered to the principal executive offices of the Company by no later than April 15, 2001. The presiding officer of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of the Stockholder Proposal Bylaw, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. For information related to the application of the Stockholder Proposal Bylaw for the 2002 Annual Meeting, see the discussion in this Proxy Statement under the caption "Submission of Stockholder Proposals and Director Nominations for the 2002 Annual Meeting." 2 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Beneficial Ownership Table The following table contains certain information as of the Record Date regarding all persons who were the beneficial owners of more than 5% of the outstanding shares of Common Stock, each of the directors of the Company, each nominee for election to become a director, each of the executive officers named in the Summary Compensation Table set forth below under the caption "Compensation of Executive Officers" (we refer to all these officers as the "Named Executive Officers") and all directors and executive officers as a group. The persons named hold sole voting and investment power with respect to the shares shown opposite their respective names, unless otherwise indicated. The information with respect to each person specified is as supplied or confirmed by such person, based upon statements filed with the Securities and Exchange Commission (the "SEC"), or based upon the actual knowledge of the Company.
Amount and Nature of Beneficial Ownership(1) ----------------------------------- Number of Shares Right to Percent of Name Owned(2) Acquire(3) Class(1)(2)(3) - ---- --------- ---------- -------------- Principal Stockholders: Bain Capital Funds (4)................... 6,695,050 49,162 14.1% Capital Research & Management (5)........ 5,145,000 666,670 12.0% J.P. Morgan Partners (23A SBIC), LLC (6)..................................... 2,738,979 -- 5.8% SMALLCAP World Fund, Inc. (7)............ 2,470,000 -- 5.2% Class I Director Nominees: Prescott Ashe (8)........................ 1,766,838 7,716 3.7% Charles D. Dimick (9).................... 1,125,202 184,245 2.7% David Dominik (10)....................... 1,764,676 7,716 3.7% Class II Directors: Robert Guezuraga......................... -- -- * Murray Kenney............................ 24,513 -- * Bruce D. McMaster........................ 1,043,297 203,899 2.6% Stephen M. Zide (11)..................... 1,764,676 7,716 3.7% Class III Directors: Mark R. Benham (12)...................... 778,678 26,841 1.7% Edward W. Conard (10).................... 1,764,676 7,716 3.7% Stephen G. Pagliuca (10)................. 1,764,676 7,716 3.7% Named Executive Officers: Bruce D. McMaster........................ 1,043,297 203,899 2.6% Charles D. Dimick........................ 1,125,202 184,245 2.7% Joseph P. Gisch.......................... 159,847 58,679 * John Peters (13)......................... 456,447 24,330 1.0% Gregory Halvorson........................ 213,718 97,129 * All Directors and Executive Officers as a group (14 persons)....................... 5,770,136 645,333 13.3%
- -------- * Indicates beneficial ownership of less than 1% of the issued and outstanding common stock. (1) Subject to applicable community property and similar statutes. (2) Includes shares beneficially owned, whether directly or indirectly, individually or together with associates. (3) Shares that can be acquired through conversion of convertible securities, warrant exercises or stock option exercises through June 5, 2001 (within 60 days of the Record Date). (Footnotes continued on the next page.) 3 (Footnotes continued from the preceding page.) - -------- (4) Includes shares of common stock and warrants to purchase shares of common stock, owned by Bain Capital Fund V, L.P. ("Fund V"); Bain Capital Fund V- B, L.P. ("Fund V-B"); BCIP Associates ("BCIP"); and BCIP Trust Associates, L.P ("BCIP Trust"). Fund V beneficially owns 1,365,629 of these shares. Fund V has sole voting and sole dispositive power with respect to such shares. Fund V-B beneficially owns 3,564,745 of these shares. Fund V-B has sole voting and sole dispositive power with respect to such shares. Bain Capital Partners V, L.P. ("Bain Partners V"), as the sole general partner of Fund V and Fund V-B, may be deemed to share voting and dispositive power with respect to the shares currently held by Fund V and Fund V-B. Bain Capital Investors V, Inc. ("Bain Investors V"), as the sole general partner of Bain Partners V, may be deemed to share voting and dispositive power with respect to the shares currently held by Fund V and Fund V-B. BCIP beneficially owns 1,230,148 of these shares. BCIP has sole voting and sole dispositive power with respect to such shares. BCIP Trust beneficially owns 534,528 of these shares. BCIP Trust has sole voting and sole dispositive power with respect to such shares. As members of the Management Committee of each of BCIP and BCIP Trust, W. Mitt Romney and Joshua Bekenstein may be deemed to share voting and dispositive power with respect to the shares held by BCIP and BCIP Trust. The address of the Bain Funds is c/o Bain Capital., Inc., Two Copley Place, Boston, Massachusetts 02116. (5) The address of Capital Research and Management Company is 333 South Hope Street, Los Angeles, CA 90071. Capital Research and Management Company, an investment adviser registered under Section 203 of the Investment Advisers Act of 1940 is deemed to be the beneficial owner of 5,811,670 shares of our Common Stock as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. (6) The address of J.P. Morgan Partners (23A SBIC), LLC is 1221 Avenue of the Americas, New York, New York 10020. (7) The address of SMALLCAP World Fund, Inc. is 333 South Hope Street, Los Angeles, CA 90071. (8) Mr. Ashe directly holds 2,162 shares of common stock. The additional shares of common stock and warrants included in the table represent securities held by BCIP and BCIP Trust. Mr. Ashe is a partner of BCIP and BCIP Trust and accordingly, may be deemed to beneficially own securities owned by such entities. Mr. Ashe has neither investment or voting power over these securities. Mr. Ashe disclaims beneficial ownership of any such shares and warrants in which he does not have a pecuniary interest. (9) Includes 11,230 shares of common stock held by Mr. Dimick's minor child. (10) The shares of common stock and warrants included in the table represent shares held by BCIP and BCIP Trust. Messrs. Conard and Pagliuca are each Managing Directors of Bain Capital, Inc. and general partners of BCIP and BCIP Trust, and Mr. Dominik is a former Managing Director of Bain Capital, Inc. and a general partner of BCIP and BCIP Trust. Accordingly, each of Messrs. Conard, Pagliuca and Dominik may be deemed to beneficially own shares and warrants owned by such entities. None of Messrs. Conard, Pagliuca and Dominik has investment or voting power over these securities. Each of Messrs. Conard, Pagliuca and Dominik disclaims beneficial ownership of any such shares and warrants in which they do not have a pecuniary interest. (11) The shares of common stock and warrants included in the table represent securities held by BCIP and BCIP Trust. Mr. Zide is a partner of BCIP and BCIP Trust and, accordingly, may be deemed to beneficially own securities owned by such entities. Mr. Zide has neither investment or voting power over these securities. Mr. Zide disclaims beneficial ownership of any such shares and warrants in which he does not have a pecuniary interest. (Footnotes continued on the next page.) 4 (Footnotes continued from the preceding page.) - -------- (12) Mr. Benham directly holds 147,592 shares of common stock. Beneficial ownership also includes 631,086 shares of common stock and warrants to purchase 26,841 shares of common stock owned by Celerity Details, L.L.C. and Celerity Liquids, L.L.C. Mr. Benham is a managing member of Celerity Partners, L.L.C., which controls each of Celerity Details, L.L.C. and Celerity Liquids, L.L.C. and, accordingly, may be deemed to have shared investment and voting power with respect to the shares and warrants owned by Celerity Details, L.L.C. and Celerity Liquids, L.L.C. Mr. Benham disclaims beneficial ownership of any such shares and warrants in which he does not have a pecuniary interest. The address of Mr. Benham is c/o Celerity Partners, 11111 Santa Monica Boulevard, Suite 1127, Los Angeles, California 90025. (13) Includes 900 shares of common stock held by Mr. Peters's minor child. 5 ELECTION OF DIRECTORS (Proposal 1) Under the Company's Certificate of Incorporation and Bylaws, which provide for a "classified" board of directors, three persons, Prescott Ashe, Charles D. Dimick and David Dominik, have been nominated by the Board of Directors for election at the Annual Meeting to serve a three year term expiring at the annual meeting in 2004 and until their respective successors are elected and qualified. Directors shall be elected by a plurality of the votes of shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on such election. The Bylaws provide for ten directors. Currently, there are three Class I Directors (Messrs. Ashe, Dimick and Dominik), whose term expires at the Annual Meeting; four Class II Directors (Messrs. Guezuraga, Kenney, McMaster and Zide), whose term expires at the 2002 annual meeting of stockholders; and three Class III directors (Messrs. Benham, Conard and Pagliuca), whose term expires at the 2003 annual meeting of stockholders. Each of the nominees presently serves as a Class I Director and has served continuously as a director of the Company since the Company's inception in March 2000. In addition, each of the nominees served as a director of our predecessor since the date indicated in his biography below. In the event any nominee is unable to or declines to serve as a director at the time of the Annual Meeting (which is not anticipated), the persons named in the proxy will vote for the election of such person or persons as may be designated by the present Board of Directors. Unless otherwise directed in the accompanying proxy, the persons named therein will vote for the election of the three Class I Director nominees listed below. The Board of Directors unanimously recommends a vote for the election of Prescott Ashe, Charles D. Dimick and David Dominik as Class I Directors. 6 Information About the Class I Director Nominees The following table sets forth information regarding the Class I Director nominees, including age on the date of the Annual Meeting and business experience during the past five years.
Director Principal Occupation and Other Name Age Since Information ---- --- -------- ------------------------------ Prescott Ashe............. 33 1997 Mr. Ashe is a managing director of Golden Gate Capital, a private equity investment firm which he co-founded in 2000. He was a principal at Bain Capital Inc., a private equity investment firm that is affiliated with a group of investment funds that is our largest stockholder ("Bain Capital"), from June 1998 until May 2000 and was an associate at Bain Capital from December 1992 to June 1998. Prior to that, he was an analyst at Bain Capital, Inc. and a consultant at Bain & Company, a consulting firm. Mr. Ashe also serves as a director of most of our subsidiaries, including DDi Capital Corp. and Dynamic Details, Incorporated. Mr. Ashe is also a director of ChipPAC, Inc., Integrated Circuit Systems, Inc., and SMTC Corporation. Charles D. Dimick......... 44 1998 Mr. Dimick has been our Chairman, a Director and the President of our subsidiary, Dynamic Details Incorporated, Silicon Valley, since 1998. Mr. Dimick founded Dynamic Circuits, Inc. ("DCI") an electronics manufacturing services company, in 1991 and served as its president and chief executive officer until we merged with DCI in 1998. Mr. Dimick also serves as a director of most of our subsidiaries, including DDi Capital Corp. and Dynamic Details, Incorporated. David Dominik............. 44 1998 Mr. Dominik has been a managing director of Golden Gate Capital, a private equity investment firm he co- founded, since 2000. He has also been a special limited partner of Bain Capital, since 2000. He was a managing director of Bain Capital, Inc. from 1990 until March 2000. From 1986 to 1990, Mr. Dominik was a general partner of Zero Stage Capital, a venture capital firm focused on early-stage companies, and was assistant to the chairman of Genzyme Corporation, a biotechnology firm, from 1984 to 1986. From 1982 to 1984, he worked as a management consultant at Bain & Company, a consulting firm. Mr. Dominik serves as a director of certain of our subsidiaries, including DDi Capital Corp. and Dynamic Details, Incorporated. Mr. Dominik is also a director of ChipPAC, Inc., Integrated Circuit Systems, Inc., Thermawave, Inc. and SMTC Corporation.
7 Information About the Directors Whose Terms Continue The following table sets forth similar information regarding the members of the Board of Directors who are designated either Class II or Class III Directors and are continuing in office as directors of the Company. With the exception of Mssrs. Guezuraga and Kenney, each of our continuing directors has served continuously as a director of the Company since the Company's inception in March 2000. With respect to such directors, the date indicated in their respective biographies below is the date that such director became a director of our predecessor. Class II Directors--Term Expiring at the 2002 Annual Meeting
Director Principal Occupation and Other Name Age Since Information ---- --- -------- ------------------------------ Robert Guezuraga........ 51 2001 Mr. Guezuraga has been Senior Vice President and President, Cardiac Surgery, of Medtronic, Inc. a medical technology company since August 1999. From September 1998 to August 1999, he served as Vice President and General Manager of Medtronic Physio-Control International, Inc., a subsidiary of Medtronic that manufactures, sells and services external defibrillators and related medical equipment and accessories. From August 1994 to September 1998 he served as President and Chief Operating Officer of Physio- Control International, Inc., a medical equipment manufacturer. Prior to that, Mr. Guezuraga served as President and CEO of Positron Corporation from 1987 to 1994 and held various management positions within General Electric Corporation, including GE's Medical Systems division. Murray Kenney........... 44 2001 Mr. Kenney has been a private investor since 1999. From 1992 to 1999, Mr. Kenney was a Managing Director and Co- Founding Partner of Indosuez Capital, the merchant banking unit of Credit Agricole Indosuez, a French financial institution. From 1990 to 1992, Mr. Kenney was with Peter J. Solomon Company, a financial advisory firm. From 1986 to 1990, he was Vice President, Corporate Finance with Drexel Burnham Lambert Incorporated, an investment bank. Bruce D. McMaster....... 39 1997 Mr. McMaster has served as our President since 1991 and as a Director and our Chief Executive Officer since 1997. Before becoming our President, Mr. McMaster worked in various management capacities in our engineering and manufacturing departments. Mr. McMaster also serves as President and Chief Executive Officer of DDi Capital Corp. and Dynamic Details, Incorporated and serves as an executive officer of our other subsidiaries. He also serves as a director of two of our subsidiaries, DDi Sales Corp. and Dynamic Details Incorporated, Virginia. Stephen M. Zide......... 41 1997 Mr. Zide has been a principal at Bain Capital since September 2000. From 1998 to 2000, he was a managing director at Pacific Equity Partners, a private investment firm that specializes in companies located in Australia and New Zealand. He was an associate at Bain Capital from 1997 to 1998. From 1992 to 1995, he was a partner at the law firm of Kirkland & Ellis. Mr. Zide also serves as a director of Alliance Laundry Systems, L.L.C.
8 Class III Directors--Term Expiring at 2003 Annual Meeting
Director Principal Occupation and Other Name Age Since Information ---- --- -------- ------------------------------ Edward W. Conard........ 43 1997 Mr. Conard has been a managing director of Bain Capital since March 1993. From 1990 to 1992, Mr. Conard was a director of Wasserstein Perella, an investment banking firm that specializes in mergers and acquisitions. Prior to that, he was a vice president at Bain & Company, a consulting company, where he headed the firm's operations practice area. Mr. Conard also serves as a director of Waters Corporation, Cambridge Industries, Alliance Laundry Systems, L.L.C., ChipPAC, Inc., Medical Specialties, Inc. and U.S. Synthetic. Stephen G. Pagliuca..... 46 2000 Mr. Pagliuca has been a managing director of Bain Capital since May 1993 and a general partner of Bain Venture Capital, Inc., a private equity investment firm, since 1989. Prior to joining Bain Capital, Mr. Pagliuca was a partner at the consulting firm Bain & Company. Mr. Pagliuca also worked as a senior accountant and international tax specialist for Peat Marwick Mitchell & Company, an accounting firm, in the Netherlands. He is also a director of Gartner Group, Epoch Senior Living and Dade Behring Inc. Mark R. Benham.......... 49 1998 Mr. Benham has been a partner at Celerity Partners, L.L.C., a private equity investment firm that he co- founded, since 1992. Previously he was a senior investment officer of Citicorp Venture Capital, Ltd., a private equity investment firm, and prior to that he was an advisor to Yamaichi UniVen Co., Ltd., the venture capital subsidiary of Yamaichi Securities International. Mr. Benham is a director of Rapid Design Service, Inc., SMTC Corporation and Starcom Holdings, Inc.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD Meetings of the Board and its Committees The Board of Directors manages the business of the Company. It establishes overall policies and standards for the Company and reviews the performance of management. In addition, the Board has established an Audit Committee, a Nominating Committee and a Compensation Committee whose functions are briefly described below. The directors are kept informed of the Company's operations at meetings of the Board and its committees through reports and analyses from, and discussions with, management. During the fiscal year ended December 31, 2000 (the "Fiscal Year" or "Fiscal 2000"), the Board of Directors met on nine (9) occasions. Audit Committee. The Audit Committee evaluates the performance of, and makes recommendations to the Board of Directors regarding the selection, retention and, where appropriate, the replacement of, the independent auditors. The Audit Committee also reviews the independence of the independent auditors, approves the scope of the annual audit activities of the independent auditors, approves the audit fee payable to the independent auditors and reviews such audit results with the independent auditors. The Audit Committee reviews with management and the Company's independent auditors the Company's interim and year-end financial statements, discusses with management and the independent auditors any significant accounting and reporting issues and conformance of the Company's financial statements with applicable accounting and regulatory requirements. The Audit Committee is also responsible for recommending to the Board of Directors 9 whether the Company's audited financial statements should be included in the Company's annual report on Form 10-K. The members of the Audit Committee are Mark R. Benham, Robert Guezuraga and Murray Kenney (Chairman). With the exception of Mark R. Benham, each of the members of the Audit Committee is independent, as defined in Rule 4200(a)(14) of the Nasdaq Stock Market Marketplace Rules (the "Nasdaq Rules"). Mr. Benham does not qualify as an independent director under such definition due to his ownership interest and management position in Celerity Partners, L.L.C., a private equity fund to which the Company has paid approximately $1.9 million in advisory fees over the past three years. The Board of Directors appointed Mr. Benham to the Audit Committee in accordance with section 4320(d)(2)(B) of the Nasdaq Rules, which allows for the appointment of one director to the Audit Committee who is not independent. In so doing, the Board determined that Mr. Benham's position as a long-time financial advisor to the Company, his professional training and experience in private equity and investment banking, and, in particular, his involvement and understanding of the Company's past restructuring and acquisitions, give him a valuable perspective on the Company's history and operations and make him uniquely qualified to analyze and understand the financial and accounting issues which the Company is presented from time to time, and to advise the other Committee members on the accounting and financial reporting functions of the Company. The Audit Committee operates under a written charter adopted by the Board of Directors, which is included in this proxy statement as Appendix A. During the Fiscal Year, the Audit Committee met on one (1) occasion. Compensation Committee. The Compensation Committee provides a general review of our compensation and benefit plans to ensure that they meet corporate objectives; reviews the chief executive officer's recommendations on compensation of our officers; adopts and changes major compensation policies and practices; and reports its recommendations to the Board of Directors for approval and authorization. The Compensation Committee also administers our stock plans. The members of the Compensation Committee are Prescott Ashe, Mark R. Benham, Edward W. Conard (Chairman) and Stephen G. Pagliuca. During the Fiscal Year, the Compensation Committee met on one (1) occasion. Nominating Committee. The Nominating Committee advises and makes recommendations to the Board of Directors on all matters concerning the selection of candidates as nominees for election as directors. The members of the Nominating Committee are Edward W. Conard (Chairman), Stephen G. Pagliuca, Stephen M. Zide, Bruce D. McMaster and Charles D. Dimick. The Nominating Committee did not meet during the Fiscal Year. The Nominating Committee will consider nominees recommended by stockholders, if such recommendation is made in accordance with the Nomination Bylaw. For information regarding the requirements of the Nomination Bylaw, see the discussions in this Proxy Statement under the captions "Nominations for Directors for Annual Meeting" and "Nominations for Directors for the 2002 Annual Meetings." With the exception of Messrs. Benham, Conard, Dominik and Zide, each of the incumbent directors attended at least 75% of the aggregate of the total number of meetings of the Board of Directors held during the Fiscal Year (held during the period for which he has been a director). Each of the incumbent directors who was a member of a Board committee attended at least 75% of the aggregate of the total number of meetings held by all committees of the Board on which he served during the Fiscal Year (held during the period that he served). Compensation of Directors Directors who are also employees of the Company are not paid any fees or remuneration, as such, for their service on the Board or on any Board committee. Prior to March 2001, we did not pay any remuneration to our non- employee directors. Cash Compensation. Effective as of March 2001, each non-employee director who is "independent" under the Nasdaq Rules is entitled to receive $2,000 for each Board meeting that he attended. Each independent non-employee director is also entitled to receive $2,000 for each committee meeting that he attended in person or telephonically. In addition, each independent non-employee director is entitled to be reimbursed for reasonable travel and other expenses incurred in connection with attending Board and committee meetings. 10 Stock Options. Upon their election as non-employee directors in March 2001, Messrs. Guezuraga and Kenney were each granted an option to purchase 20,000 shares of Common Stock at an exercise price of $20.375 per share. The exercise price for all options granted to Messrs. Guezuraga and Kenney was based upon the fair market value of Common Stock on the date of grant. On an ongoing basis, (a) the Company intends to grant to each independent non-employee director an option to purchase 20,000 shares of Common Stock upon such director's initial election to the Board of Directors, which vests over a four- year period, and (b) the Company intends to grant to each independent non- employee director who remains on the Board of Directors an option to purchase an additional 2,500 shares of Common Stock effective at the close of business on each anniversary of the commencement of such director's initial election to the Board. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (Proposal 2) Selection of Independent Auditors Consistent with the recommendation of the Audit Committee, the Board has selected PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal year ending December 31, 2001 and has further directed that management submit the selection of independent auditors for ratification by the stockholders at the Annual Meeting. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. Stockholder ratification of the selection of PricewaterhouseCoopers LLP as the Company's independent auditors is not required by the Company's Bylaws or otherwise. However, the Board is submitting the selection of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Board may, in its discretion, direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of PricewaterhouseCoopers, LLP as the Company's independent auditors. The Board of Directors unanimously recommends a vote in favor of the ratification of appointment of PricewaterhouseCoopers LLP as the Company's independent auditors. Relationship of the Company with Independent Public Accountants During Fiscal 2000, PricewaterhouseCoopers also was engaged by the Company to provide certain consulting services. Audit Fees. The Company paid PricewaterhouseCoopers $367,000 in aggregate fees and expenses for the 2000 annual audit and for review of the Company's financial statements included in its Form 10-Q's for the 2000 fiscal year. Financial Information Systems Design and Implementation Fees. The Company did not make any payments to PricewaterhouseCoopers for financial information systems design and implementation services for the 2000 fiscal year. All Other Fees. The Company paid PricewaterhouseCoopers $2,473,000 for all other services, including preparation of financial statements for our initial public offering and our subsequent public offering, due diligence and auditing services related to some of our acquisitions and tax research and consulting services for the 2000 fiscal year. 11 The Audit Committee considered whether, and determined that, the independent auditors' provision of non-audit services was compatible with maintaining the auditor's independence. Report of the Audit Committee of the Board of Directors Notwithstanding anything to the contrary set forth in any of the Company's previous or future filings under the Securities Act or the Exchange Act that might incorporate this Proxy Statement or future filings with the SEC, in whole or in part, the following report shall not be deemed to be incorporated by reference into any such filing. The Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2000 with the Company's management. The Audit Committee has discussed with PricewaterhouseCoopers LLP, the Company's independent public accountants, the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). The Audit Committee has also received the written disclosures and the letter from PricewaterhouseCoopers LLP required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees) and the Audit Committee has discussed the independence of PricewaterhouseCoopers LLP with that firm. Based on the Audit Committee's review and discussions noted above, the Audit Committee recommended to the Board of Directors that the Company's audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 for filing with the SEC. Submitted by the Audit Committee: Mark R. Benham Robert Guezuraga Murray Kenney (Chairman) 12 COMPENSATION OF EXECUTIVE OFFICERS We are required by the SEC to disclose compensation paid by the Company during the last three fiscal years to (a) the Company's Chief Executive Officer; (b) the Company's four most highly compensated executive officers, other than the Chief Executive Officer, who were serving as executive officers at the end of Fiscal 2000; and (c) up to two additional individuals for whom such disclosure would have been provided under either clause (a) or (b) above but for the fact that the individual was not serving as an executive officer of the Company at the end of Fiscal 2000; provided, however, that no disclosure need be provided for any executive officer, other than the CEO, whose total annual salary and bonus does not exceed $100,000. Accordingly, the following sections disclose information regarding compensation paid by the Company during the last three fiscal years to (a) Mr. McMaster, the Company's Chief Executive Officer; and (b) Messrs. Dimick, Gisch, Peters and Halvorson, the four most highly-compensated executive officers, other than the Chief Executive Officer, who were serving as executive officers at the end of Fiscal 2000 and whose salary and bonus exceeded $100,000. We refer to all of these officers as the "Named Executive Officers." The Company first became a reporting Company, pursuant to Section 13(a) of the Exchange Act, during Fiscal 2000. 13 Summary Compensation Table
Long Term Compensation Annual Compensation Awards ----------------------------------- -------------------------- Restricted Securities Other Annual Stock Underlying All Other Name and Principal Position Year Salary($) Bonus($) Compensation($) Awards($) Options/SARs(#) Compensation($) - --------------------------- ---- --------- --------- --------------- ---------- --------------- --------------- Bruce D. McMaster.......... 2000 476,731 1,232,500 * -- 50,000(4) -- President and Chief 46,000(5) Executive Officer 1999 451,737 42,500 * -- -- -- 1998 432,423 69,694 * -- -- -- Charles D. Dimick ......... 2000 473,846 1,232,500 6,000(1) -- 50,000(4) -- Chairman 7,442(2) 46,000(5) 387,496(3) 1999 447,408 42,500 6,000(1) -- -- -- 5,197(2) 464,994(3) 1998 190,076 31,281 3,000(1) -- 109,521(6) 1,808,248(10) 39,684(2) 5,972(7) 816,721(3) 142,725(8) Joseph P. Gisch............ 2000 288,558 580,000 * -- 30,000(4) -- Chief Financial Officer 27,500(5) 1999 272,057 20,000 * -- -- -- 1998 269,346 18,967 * -- 28,077(9) -- John Peters................ 2000 374,185 1,232,500 6,000(1) -- 30,000(4) -- Vice President, Sales and 128,887(2) 28,000(5) Marketing 147,401(3) 1999 329,926 42,500 6,000(1) -- -- -- 1,411(2) 168,439(3) 1998 126,539 22,104 3,000(1) -- 39,006(6) 521,801(10) 10,547(2) 2,127(7) 168,377(11) 126,363(3) 50,831(8) Gregory Halvorson.......... 2000 311,233 580,000 6,000(1) -- 30,000(4) 8,060(12) Vice President, Operations 1,491,489(2) 27,500(5) 251,133(3) 1999 271,287 20,000 6,000(1) -- -- -- 5,848(2) 313,663(3) 1998 112,692 22,104 3,000(1) -- 145,849(6) 501,214(10) 48,460(2) 7,954(7) 1,272,728(11) 198,975(3) 190,067(8)
- -------- * The aggregate amount of perquisites and other benefits paid did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus of the named executive officer. (1) Reflects payments made in connection with the use of a personal automobile. (2) Represents payments under our cash bonus plan made at the time of the exercise of options to purchase shares of common stock which were granted in connection with the merger of Dynamic Circuits, Inc. ("DCI") with a subsidiary of Dynamic Details, Incorporated, one of our subsidiaries. (Footnotes continued on the next page.) 14 (Footnotes continued from the preceding page.) - -------- (3) Reflects deferred cash distributions made in connection with the exchange of options to purchase shares of common stock of DCI for options to purchase shares of common stock. (4) Options to purchase shares of common stock at an exercise price of $14.00 per share. (5) Options to purchase shares of common stock at an exercise price of $12.00 per share. (6) Options to purchase shares of common stock at an exercise price equal to $0.56 per share issued in connection with the DCI merger to replace options to purchase shares of DCI common stock. (7) Options to purchase shares of common stock at an exercise price equal to $21.79 per share issued in connection with the DCI merger to replace options to purchase shares of DCI common stock. (8) Options to purchase shares of common stock at an exercise price equal to $12.64 per share issued in connection with the DCI merger to replace options to purchase shares of DCI common stock. (9) Options to purchase shares of common stock at an exercise price of $21.79 issued to Mr. Gisch after Mr. McMaster and another executive officer agreed to permit us to cancel options to purchase 16,004 and 12,073 shares of common stock, respectively, at an exercise price of $21.79 per share. (10) Represents amounts payable under our cash bonus plan in connection with the exercise of outstanding options to purchase shares of common stock issued in connection with the DCI merger. Each amount listed excludes amounts actually paid to the named executive officer under our cash bonus plan in 1998, 1999 and 2000. See note 2 to this table. (11) Reflects deferred cash distributions payable in connection with the exchange of options to purchase shares of common stock of DCI for options to purchase shares of common stock and common stock in connection with the DCI merger. The amount listed excludes the amounts of deferred compensation actually paid to the named executive officer in 1998, 1999 and 2000. See note 3 to this table. (12) Reflects realized value of 1,046 shares of common stock acquired under the Employee Stock Purchase Plan. 15 Stock Options Stock Option Grants. The following table shows stock option grants to the Named Executive Officers during Fiscal 2000. Option/SAR Grants in Last Fiscal Year
Potential Realizable Value Number of Percentage At Assumed Annual Securities of Total Rates of Stock Underlying Options/SARs Exercise Price Appreciation Options/SARs Granted to or Base for Option Term(3) Granted Employees in Price Expiration ------------------- Name (#)(1) Fiscal Year ($/sh)(2) Date 5%($) 10%($) ---- ------------ ------------ --------- ---------- -------- ---------- Bruce D. McMaster....... 50,000 2.4% 14.00 04/14/2010 $440,226 $1,115,620 46,000 2.2% 12.00 04/25/2010 347,150 879,746 Charles D. Dimick....... 50,000 2.4% 14.00 04/14/2010 440,226 1,115,620 46,000 2.2% 12.00 04/25/2010 347,150 879,746 Joseph P. Gisch......... 30,000 1.4% 14.00 04/14/2010 264,136 669,372 27,500 1.3% 12.00 04/25/2010 207,535 525,935 John Peters............. 30,000 1.4% 14.00 04/14/2010 264,136 669,372 28,000 1.3% 12.00 04/25/2010 211,309 535,497 Greg Halvorson.......... 30,000 1.4% 14.00 04/14/2010 264,136 669,372 27,500 1.3% 12.00 04/25/2010 207,535 525,935
- -------- (1) These options are incentive stock options for tax purposes and vest as follows: 25% on each of the first and second anniversaries of grant and the remaining 50% in eight equal quarterly installments beginning three months after the second anniversary of grant. Upon a change in control of the Company (as defined in the stock option agreements relating to the respective plans), the options shall, notwithstanding the installment vesting provisions, become immediately exercisable in full. (2) All options were granted at the fair market value on the date of grant. (3) We are required by the SEC to use a 5% and 10% assumed rate of appreciation over the ten year option term. This does not represent our estimate or projection of the future common stock price. If the common stock does not appreciate, the Named Executive Officers will receive no benefit from the options. 16 Option Exercises/Fiscal Year End Value. The following table shows stock option exercises and the value of unexercised stock options held by the Named Executive Officers during Fiscal 2000. Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of Securities Underlying Unexercised Value of Unexercised Options/SARs In-the-Money Options/SARs Value at Fiscal Year-End(#) at Fiscal Year-End($)(1) Shares Acquired Realized ------------------------- ------------------------- Name on Exercise(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable ---- --------------- ---------- ----------- ------------- ----------- ------------- Bruce D. McMaster....... 40,982 $1,016,936 170,398 119,752 $2,481,515 $1,493,686 Charles D. Dimick....... 13,286 354,603 160,245 96,000 2,451,726 1,364,000 Joseph P. Gisch......... 17,269 428,516 40,084 68,049 874,473 218,859 John Peters............. 15,043 280,698 49,830 63,738 839,497 937,089 Greg Halvorson.......... 132,386(2) 1,987,275(2) 103,756 63,439 1,770,114 901,597
- -------- (1) Represents the positive difference between the closing price of the Common Stock on Friday, December 29, 2000 (the last stock trading day of the Fiscal Year) and the exercise price of the options. (2) Does not include 1,046 shares of common stock acquired under the Employee Stock Purchase Plan, with a realized value of $8,060. Employment Contracts and Termination of Employment and Change of Control Arrangements Mr. Dimick is currently employed as our Chairman and as President of Dynamic Details Incorporated, Silicon Valley, one of our operating subsidiaries, pursuant to an agreement dated July 23, 1998 which expires in July 2001. Under this agreement, Mr. Dimick is entitled to an initial annual base salary of $420,000, subject to increases during the remainder of the contract. His 2001 base salary is $505,000. In addition, Mr. Dimick is eligible for an annual bonus based upon the achievement of EBITDA targets and received an award, pursuant to the agreement, of 109,521 Series A cash bonus units valued at $0.5601 per unit and 142,725 Series L cash bonus units valued at $12.6062 per unit, which cash bonus units vest on the same schedule applicable to the vesting of the options to purchase shares of common stock granted in connection with the merger of Dynamic Circuits, Inc. with our subsidiary Dynamic Details, Incorporated and are payable in accordance with the terms of the cash bonus plan. Mr. Dimick also entered into a non-compete agreement with us which contains customary confidentiality provisions and a non-compete clause effective for the duration of the term of the agreement. None of our other Named Executive Officers are currently party to an employment agreement with us. Compensation Committee Interlocks and Insider Participation During fiscal 2000, the Company's Compensation Committee was comprised of Prescott Ashe, Mark R. Benham, Edward W. Conard, and Stephen Pagliuca. In March 2000, we entered into a stockholders agreement with a number of our stockholders, including: (a) Bain Capital Fund V, L P., Bain Capital Fund V-B, L.P., BCIP Associates and BCIP Trust Associates, L.P. (collectively, the "Bain Funds"); (b) Chase Manhattan Capital, L.P.; (c) Celerity Dynamo, L.L.C., Celerity Details, L.L.C., Celerity Liquids, L.L.C. (the "Celerity Funds"); (d) Charles D. Dimick, Bruce McMaster, Lee Muse, John Peters, Terry Wright, Joseph P. Gisch; and (e) former shareholders of MCM Electronics. Under the stockholders agreement, we granted registration rights with respect to the shares of our common stock held by these stockholders. The Bain Funds are our largest stockholders, and three members of the Compensation Committee are or were affiliated with the Bain Funds. Edward W. Conard and Stephen G. Pagliuca are affiliated with the Bain Funds. Prescott Ashe was formerly affiliated with the Bain Funds. The Celerity Funds together were one of our principal stockholders until October 2000, and one member of the Compensation Committee, Mark R. Benham, is a partner of Celerity Partners, LLC. 17 In connection with our initial public offering in April 2000, a management agreement among us, Dynamic Details, Incorporated, one of our operating subsidiaries, and Bain Capital Partners V, L. P. ("Bain V"), pursuant to which Bain V was to provide us with financial advisory services, was terminated by mutual consent of the parties. During 2000, we paid Bain V fees totaling $3 million under the management agreement, including $3 million in connection with our acquisition of MCM Electronics. Bain V is one of the Bain Funds, who together are our largest stockholders. Three members of the Compensation Committee are or were affiliated with the Bain Funds. Edward W. Conard and Stephen G. Pagliuca are affiliated with the Bain Funds, and Prescott Ashe was formerly affiliated with the Bain Funds. In June 1998, our subsidiary DDI Intermediate Holdings Corp. issued approximately $66.8 million in aggregate principal of 13 % Series A Senior Discount Notes due 2008 to Sankaty High Yield Asset Partners, L.P. ("Sankaty"), an affiliate of the Bain Funds. Sankaty subsequently assigned one-half of those notes to a third party that is unaffiliated with the Company. During 2000, we paid Sankaty a total of $25.1 million to redeem the Notes that were retained by Sankaty. Since April 2001, Sankaty has been acting as our agent in connection with our repurchases from time-to-time in the open market of DDi Capital senior discount notes. We have agreed to pay Sankaty a fee equal to 0.5% of the face value of the notes that we repurchase. From the beginning of 2001 through the date of this Proxy Statement, we have paid Sankaty fees totaling $231,300 in connection with such repurchases. Celerity Partners, Inc., an affiliate of Celerity Funds, which was one of our principal stockholders until October 2000, received a fee in September 2000 of $199,000 in connection with our acquisition of Golden Manufacturing, Inc. One member of the Compensation Committee, Mark R. Benham, is a partner of Celerity Partners, LLC. Investment funds associated with Bain Capital, Inc. and Celerity Partners, LLC are also stockholders of SMTC Corporation, one of our customers. Our sales to SMTC Corporation, which totaled approximately $4.1 million or approximately 0.8% of our net sales during fiscal 2000, are on terms equivalent to those made available to our other customers. Two members of the Compensation Committee, Prescott Ashe and Mark R. Benham, also serve as directors of SMTC Corporation. 18 Performance Graph The Company's Common Stock has been publicly traded since April 12, 2000. Prior to such date, there was no established market for the Company's Common Stock. The following graph compares the cumulative total stockholder return on our Common Stock since April 12, 2000 with the cumulative total return on (a) the Nasdaq Composite Index, (b) the S&P 500 Index, and (c) the Standard and Poor Electronics Component Index. The comparison assumes $100 was invested on April 12, 2000, in DDi Corp. stock and in each of the indices shown and assumes that all of the dividends were reinvested. The comparisons in this table are required by the SEC and, therefore, are not intended to forecast or be indicative of possible future performance of the Common Stock. Comparison of Cumulative Total Return [PERFORMANCE GRAPH APPEARS HERE]
S&P Electronics Nasdaq S&P Component Composite DDi Corp. 500 Index Index Index --------- --------- ----------- --------- 4/12/00......................... $100.00 $100.00 $100.00 $100.00 4/28/00......................... $114.16 $ 99.00 $ 85.78 $103.84 5/31/00......................... $101.79 $ 96.84 $ 78.99 $ 91.48 6/30/00......................... $216.89 $ 99.15 $ 60.94 $103.58 7/31/00......................... $167.43 $ 97.52 $ 62.79 $ 99.33 8/31/00......................... $290.14 $103.44 $ 57.11 $112.22 9/29/00......................... $336.76 $ 97.92 $ 52.04 $ 98.27 10/31/00........................ $303.94 $ 97.43 $ 63.16 $ 90.33 11/30/00........................ $167.43 $ 89.63 $ 72.31 $ 68.98 12/29/00........................ $207.38 $ 89.99 $ 72.19 $ 64.45
19 TRANSACTIONS WITH MANAGEMENT AND OTHERS In March 2000, we entered into a stockholders agreement with a number of our stockholders, including: (a) Bain Capital Fund V, L.P., Bain Capital Fund V-B, L.P., BCIP Associates and BCIP Trust Associates, L.P. (collectively, the "Bain Funds"); (b) Chase Manhattan Capital, L.P.; (c) Celerity Dynamo, L.L.C., Celerity Details, L.L.C., Celerity Liquids, L.L.C. (the "Celerity Funds"); (d) Charles D. Dimick, Bruce McMaster, Lee Muse, John Peters, Terry Wright, Joseph P. Gisch; and (e) former shareholders of MCM Electronics. Under the stockholders agreement, we granted registration rights with respect to the shares of our common stock held by these stockholders. The Bain Funds are our largest stockholders, and five of our directors are or were affiliated with the Bain Funds. Edward W. Conard, Stephen G. Pagliuca and Stephen M. Zide are affiliated with the Bain Funds. David Dominik and Prescott Ashe were formerly affiliated with the Bain Funds. The Celerity Funds together were one of our principal stockholders until October 2000, and one of our directors, Mark R. Benham, is a partner of Celerity Partners, LLC. Until January 2001, Chase Manhattan Capital, LLC, was one of our principal stockholders. In connection with our initial public offering in April 2000, a management agreement among us, Dynamic Details, Incorporated, one of our operating subsidiaries, and Bain Capital Partners V, L.P. ("Bain V"), pursuant to which Bain V was to provide us with financial advisory services, was terminated by mutual consent of the parties. During 2000, we paid Bain V fees totaling $3 million under the management agreement, including $3 million in connection with our acquisition of MCM Electronics. Bain V is one of the Bain Funds, who together are our largest stockholders. Five of our directors are or were affiliated with the Bain Funds. Edward W. Conard, Stephen G. Pagliuca and Stephen M. Zide are affiliated with the Bain Funds. David Dominik and Prescott Ashe were formerly affiliated with the Bain Funds. In connection with the exercise of certain options and the purchase of certain shares of restricted stock in 1997, we accepted as payment from Mssrs. McMaster, Gisch and Wright a note bearing interest at 5.57% per annum. Mr. McMaster, Mr. Gisch and Mr. Wright each paid off all amounts due to us under these loans in November 2000. The largest amount due to us during Fiscal 2000 from Mr. McMaster, Mr. Gisch, and Mr. Wright was approximately $197,615, $88,905, and $65,976, respectively. In connection with the exercise of certain options in 2000, we accepted as payment from Mr. Halvorson a note bearing interest at 6.46% per annum. The note has a term of 10 years. The loan is secured by a pledge of the shares purchased by Mr. Halvorson, and Mr. Halvorson is required to use any proceeds he received from the sale of the stock to repay his loan obligations. Mr. Halvorson had an outstanding loan balance due to us, excluding accrued interest, at March 31, 2001 of approximately $100,000. The largest amount due to us during Fiscal 2000 from Mr. Halvorson pursuant to this loan was approximately $100,000. In June 1998, our subsidiary DDI Intermediate Holdings Corp. issued $66,809,593.40 in aggregate principal of 13 1/2% Series A Senior Discount Notes due 2008 to Sankaty High Yield Asset Partners, L.P. ("Sankaty"), an affiliate of the Bain Funds. Sankaty subsequently assigned one-half of those Notes to a third party that is unaffiliated with the Company. During 2000, we paid Sankaty a total of $25.1 million to redeem the Notes that were retained by Sankaty. Since April 2001, Sankaty has been acting as our agent in connection with our repurchases from time-to-time in the open market of DDi Capital senior discount notes. We have agreed to pay Sankaty a fee equal to 0.5% of the face value of the notes that we repurchase. From the beginning of 2001 through the date of this Proxy Statement, we have paid Sankaty fees totaling $231,300 in connection with such repurchases. Chase Manhattan Capital, LLC, which until January 2001 was one of our principal stockholders, is an affiliate of The Chase Manhattan Bank, which serves as the administrative agent and participates as a lender under the senior credit facility of one of our operating subsidiaries, Dynamic Details, Incorporated, and is a counterparty to one of our interest rate exchange agreements, under terms similar to those of the other participants and counterparties. We paid The Chase Manhattan Bank $1.5 million in Fiscal 2000 pursuant to these arrangements. 20 Celerity Partners, Inc., an affiliate of Celerity Funds, which was one of our principal stockholders until October 2000, received a fee in September 2000 of $199,000 in connection with our acquisition of Golden Manufacturing, Inc. One of our directors, Mark R. Benham, is a partner of Celerity Partners, LLC. Investment funds associated with Bain Capital, Inc. and Celerity Partners, LLC are also stockholders of SMTC Corporation, one of our customers. Our sales to SMTC Corporation, which totaled approximately $4.1 million or approximately 0.8% of our net sales during fiscal 2000, are on terms equivalent to those made available to our other customers. Two of our directors, Prescott Ashe and Mark Benham, also serve as directors of SMTC Corporation. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than ten percent of a registered class of our Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater-than-ten-percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on review of the copies of such reports furnished to us and written representations that no other reports were required during Fiscal 2000, and except as disclosed in the following paragraph, our officers, directors and greater-than-ten-percent beneficial owners complied with all Section 16(a) filing requirements. Each of our directors, executive officers and greater-than-ten-percent stockholders filed their initial Form 3, which was due no later than the effective date of our initial public offering, late because the precise number of shares held by each such person was not known until the date of the offering. In addition, the following persons made late filings of reports under Section 16(a) of the Exchange Act that related to transactions that occurred during Fiscal 2000: (a) John Peters, one of our executive officers, filed two late Forms 4--one in connection with three purchases of our common stock in April 2000, and one in connection with two sales of our common stock in October 2000; (b) Greg Halvorson, one of our executive officers, filed one late Form 4 in connection with one sale of our common stock in October 2000; (c) Charles D. Dimick, one of our executive officers and one of our directors, filed one late Form 4 in connection with two sales of our common stock in October 2000; (d) Terry Wright, one of our executive officers, filed one late Form 4 in connection with two sales of our common stock in October 2000; (e) Joseph Gisch, one of our executive officers, filed one late Form 4 in connection with two sales of our common stock in October 2000; (f) Mark Benham, one of our directors, filed one late Form 4 in connection with a sale of our common stock by Celerity Liquids, LLC in October 2000; (g) Stephen G. Pagliuca, one of our directors, filed one late Form 4 in connection with two distributions of shares from partnerships in which he is a partner, on charitable gift of shares of our common stock and four sales of our common stock in October 2000; (h) Edward Conard, one of our directors, filed one late Form 4 in connection with two distributions of shares from partnerships in which he is a partner, one charitable gift of shares of our common stock and four sales of our common stock in October 2000; (i) Stephen Zide, one of our directors, filed one late Form 4 in connection with two distributions of shares from partnerships in which he is a partner and four sales of our common stock in October 2000; and (j) Mitt Romney, on behalf of the Bain Funds, one of greater-than-ten-percent stockholders, directors, filed one late Form 4 in connection with four distributions of shares from partnerships, one charitable gift of shares of our common stock and eight sales of our common stock in October 2000. 21 SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2002 ANNUAL MEETING Nominations for Directors for the 2002 Annual Meeting No person will be eligible for election as a director unless nominated in accordance with the provisions of the Nomination Bylaw. Nominations of persons for election to the Board of Directors may be made by (a) the Board of Directors or a committee appointed by the Board of Directors or (b) any stockholder who (i) is a stockholder of record at the time of giving the notice provided for in the Nomination Bylaw, (ii) will be entitled to vote for the election of directors at the Annual Meeting and (iii) complies with the notice procedures set forth in the Nomination Bylaw. Nominations by stockholders must be made in written form to the Secretary of the Company. Under the Nomination Bylaw, to be timely for an annual meeting, a stockholder's notice must have been delivered to or mailed and received at our principal executive offices not more than 90 days nor less than 60 days prior to the first anniversary of the preceding year's annual meeting provided, however, that in the event that the date of an annual meeting is changed by more than 30 days from such anniversary date, notice by the stockholder to be timely must be received by us not later than the close of business on the 10th day following the day on which public announcement of the date of the meeting is first made. Therefore, in order to be timely for the 2002 Annual Meeting, a stockholder's notice must be delivered to or mailed and received at our principal executive offices not earlier than March 3, 2002 and not later than April 2, 2002. To be effective, the written notice must include (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of our stock which are beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including such person's written consent to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on our books, of such stockholder and (ii) the class and number of our shares which are beneficially owned by such stockholder. We may require any proposed nominee to furnish such other information as may reasonably be required by us to determine the eligibility of such proposed nominee to serve as a director of the Company. Stockholder Proposals for the 2002 Annual Meeting Under the terms of the Stockholder Proposal Bylaw, to be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, (c) otherwise properly brought before an annual meeting by a stockholder. For business (other than the nomination of directors, which is governed by the Nomination Bylaw) to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Company. If you want us to consider including a proposal in the Company's proxy materials relating to the annual meeting of stockholders to be held in the year 2002, you must submit such proposal to the Company no later than December 31, 2001. If such proposal is in compliance with all of the requirements of Rule 14a-8 under the Exchange Act, we will include it in the proxy statement and set it forth on the form of proxy issued for such annual meeting of stockholders. You should direct any such stockholder proposals to the attention of the Secretary of the Company at our address set forth on the first page of this Proxy Statement. With respect to any proposal that one of our stockholders presents at the annual meeting of stockholders to be held in the year 2002 that is not submitted for inclusion in the Company's proxy materials, to be timely, a stockholder's notice must be delivered to or mailed and received at our principal executive offices not less than 22 60 days nor more than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that if the annual meeting is not held within 30 days before or after such anniversary date, then for the notice by the stockholder to be timely it must be so received not later than the close of business on the 10th day following the date on which the notice of the meeting was mailed or such public disclosure was made, whichever occurs first. Therefore, in order to be timely for the 2002 Annual Meeting, a stockholder's notice regarding a proposal not to be included in the Company's proxy materials must be delivered to or mailed and received at our principal executive offices not earlier than March 3, 2002 and not later than April 2, 2002. With respect to any proposal that a stockholder of the Company presents at the annual meeting of stockholders to be held in the year 2002 that is not submitted for inclusion in the Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act, the proxy for such annual meeting of stockholders will confer discretionary voting authority to vote on such stockholder proposal unless (a) we are notified of such proposal no later than April 2, 2002, and (b) the proponent complies with the other requirements set forth in Rule 14a-4 under the Exchange Act. To be effective, the written notice must include, as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Company's books, of the stockholder proposing such business, (c) the class and number of shares of the Company which are beneficially owned by the stockholder and (d) any material interest of the stockholder in such business. AVAILABILITY OF ANNUAL REPORT You may obtain, without charge, a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2000, including the financial statements and the financial statement schedules required to be filed with the SEC pursuant to rule 13a-1 of the Exchange Act. You may also obtain copies of exhibits to the Form 10-K, but we will charge a reasonable fee to stockholders requesting such exhibits. You should direct your request in writing to us at our address set forth on the first page of this Proxy Statement, attention: Joseph P. Gisch, Secretary. OTHER MATTERS The Board of Directors does not intend to present any items of business other than those stated in the Notice of Annual Meeting of Stockholders. If other matters are properly brought before the meeting, the persons named in the accompanying proxy will vote the shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is included in the proxy. By Order of the Board of Directors, /s/ JOSEPH P. GISCH Joseph P. Gisch Secretary Anaheim, California April 30, 2001 23 APPENDIX A AUDIT COMMITTEE CHARTER INTRODUCTION DDi Corp.'s executive management is primarily responsible for the completeness and accuracy of its financial reporting and the adequacy of its internal financial and operating controls. Its Board of Directors has responsibility to oversee management's exercise of these responsibilities. To assist the Board, the Corporation has established, through its bylaws, an Audit Committee whose authority and responsibilities are described by this Charter. PURPOSE This Charter is created in order to define the Audit Committee's objectives, the range of its authority, the scope of its activities and its duties and responsibilities. It is intended to give Audit Committee members, management, external and internal auditors a clear understanding of their respective roles. The Audit Committee and the Board of Directors will review and assess the adequacy of this Charter annually. MISSION STATEMENT Oversight of the (a) financial reporting process, the system of internal controls and the audit process and (b) independent auditors. In carrying out this purpose, the Committee will maintain and facilitate free and open communication between directors, the independent auditors, the internal auditor and the financial management of the Corporation. GENERAL GUIDELINES Size, Composition and Term of Appointment The Audit Committee shall consist of no fewer than three directors each of whom are independent of management and the Corporation. Notwithstanding the preceding sentence, one director who is not independent as defined in Rule 4200 of the Nasdaq Stock Market Marketplace Rules (the "Nasdaq Rules"), and is not a current employee or an immediate family member of such employee, may be appointed to the Audit Committee, if the Board, under exceptional and limited circumstances, determines that membership of the Committee by the individual is required by the best interests of the Company and its stockholders, and the Board discloses, in the next annual proxy statement subsequent to such determination, the nature of the relationship and the reasons for that determination. Each member shall be financially literate and at least one of member shall have accounting or related financial management expertise as defined by the relevant rules promulgated by the Financial Accounting Standards Board ("FASB"), Securities and Exchange Commission ("SEC"), and the National Association of Securities Dealers ("NASD") or other regulatory body. The Board of Directors shall appoint the Audit Committee's Chairperson and members annually. Meetings The Committee will meet on a quarterly basis, prior to the release of earnings, and special meetings may be called when circumstances require. Oversight by the Board of Directors The Committee will report its activities to the full Board on a regular basis so that the Board is kept informed of its activities on a current basis. The Committee will perform all duties determined by the Board. A-1 The Board will determine annually that the Committee's members are independent or are eligible serve on the Committee notwithstanding the fact that they are independent under section 4350(d)(2)(B) of the Nasdaq Rules, as defined by the relevant rules promulgated by FASB, the SEC and the NASD, and that the Committee has fulfilled its duties and responsibilities. Authority The Committee derives its authority from the By-Laws of the Corporation and is hereby given all resources and authority necessary to properly discharge its duties and responsibilities. The Committee acts on the Board's behalf in the matters outlined below. External Auditors The Committee will evaluate the performance of, and make recommendations to the Board of Directors regarding the selection, retention and, where appropriate, the replacement of, the independent public accountants. The Committee will consider management's recommendation of the appointment of the independent public accountants. The Committee will review with management the performance, appointment and/or termination of the independent public accountants. The Committee will ensure that the independent public accountants provide a formal written statement to the Committee setting forth all relationships between the independent public accountants and the Company, consistent with the Independence Standards Board Standard No. 1. The Committee will discuss with the independent public accountants any disclosed relationships or services which may impact the objectivity and independence of the independent public accountants. The Committee will take, or recommend that the full Board take, appropriate action to ensure the independence of the independent public accountants. The Committee will review with management and the independent public accountants the annual audit scope and approach, significant accounting policies, audit conclusions regarding significant accounting estimates/reserves, and proposed fee arrangements for ongoing and special projects. The Committee will review with management and the independent public accountants their assessments of the adequacy of internal controls, and the resolution of identified material weaknesses and reportable conditions in internal controls, including the prevention or detection of management override or compromise of the internal control system. The Committee will review with management and the independent public accountants the Company's compliance with laws and regulations having to do with accounting and financial matters. The Committee and the Board of Directors should consider whether the independent public accountants should meet with the full Board to discuss any matters relative to the financial statements and/or any potentially relevant matters, and to answer any questions that other directors may have. Financial Statements The Committee will review with management and the independent public accountants, the Company's interim and year-end financial statements, including management's discussion and analysis, and audit findings (including any significant suggestions for improvements provided to management by the Internal Audit Director, if any, and the independent public accountants). Such review will include a discussion of significant adjustments recorded or adjustments passed and will conform with the requirements of SAS 61. Following such review, the Committee will recommend to the Board whether the audited financial statements should be included in the Corporation's annual report on Form 10-K. A-2 The Committee will request from financial management and the independent public accountants, a briefing on any significant accounting and reporting issues, including any changes in accounting standards or rules promulgated by the FASB, SEC or other regulatory bodies, that have an effect on the financial statements. The Committee will inquire about the existence and substance of any significant accounting accruals, reserves, or estimates made by management that had a material impact on the financial statements. The Committee will inquire of management and the independent public accountants if there were any significant financial accounting or reporting issues discussed during the accounting period and, if so, how they were resolved or if not resolved, inquire as to the disagreements. The members of the Committee will discuss among themselves, without management or the independent public accountants present, the quality of the accounting principles applied in the preparation of the Company's financial statements and significant judgments affecting the financial statements; and the independent public accountants' view of the quality of those principles and such judgments. Private Discussions with Independent Public Accountants The Committee will meet privately with the independent public accountants to request their opinion on various matters including the quality of the Company's accounting principles as applied in its financial reporting, and the quality and performance of its financial and accounting personnel and the internal audit staff. The Committee will also discuss privately with the independent public accountants any issues required from time to time by rules of the SEC, FASB and NASD. Post-Audit Review The Committee will review with management and the independent public accountants the annual Management Letter comments and management's responses to each. The Committee will ask the independent public accountants what their greatest concerns were (including any serious difficulties encountered) and if they believe anything else should be discussed with the Committee that has not been raised or covered elsewhere. Litigation The Committee will discuss/review with management, company counsel, and the independent public accountants the substance of any significant issues raised by counsel concerning litigation, contingencies, claims or assessments. The Committee should understand how such matters are reflected in the Company's financial statements. Other The Committee will review the internal audit function of the Corporation. The Committee will initiate the investigation of any matter brought to its attention within the scope of its duties, with the power to retain outside counsel for this purpose if, in its judgment, that is appropriate. The Committee will prepare a report for inclusion in the Corporation's proxy statement for its annual meeting of stockholders describing the activities in which it has engaged during the prior year pursuant to its charter. The report will address all issues then required by the rules of the SEC. A-3 PROXY PROXY PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS OF DDI CORP. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE The undersigned stockholder(s) of DDi Corp., a Delaware corporation (the "Company"), hereby appoints Bruce D. McMaster, Joseph P. Gisch, or either of them, proxies, each with full power of substitution, for and in the name of the undersigned at the Annual Meeting of Stockholders of the Company to be held on June 1, 2001, and at any and all adjournments, to vote all shares of the capital stock of said Company held of record by the undersigned on April 6, 2001, as if the undersigned were present and voting the shares. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED. IN THE ABSENCE OF ANY DIRECTION, THE SHARES WILL BE VOTED FOR PROPOSAL 2, FOR THE NOMINEES NAMED IN PROPOSAL 1 ON THE REVERSE SIDE AND IN ACCORDANCE WITH THEIR DISCRETION ON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. (CONTINUED AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE) - -------------------------------------------------------------------------------- FOLD AND DETACH HERE DDI CORP. PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. THE LISTED NOMINEES AND THE PROPOSAL HAVE BEEN PROPOSED BY THE COMPANY. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED AND "FOR" THE LISTED PROPOSAL. 1. ELECTION OF DIRECTORS: For All Except as Indicated Withhold to the For All All Contrary ------- --- -------- Nominees for election to the Board of Directors: Prescott Ashe, Charles D. Dimick and David Dominick [_] [_] [_] (INSTRUCTIONS: To withhold authority to vote for any nominee, write the nominee's name on the space provided below.) ___________________________________________________ 2. RATIFICATION OF INDEPENDENT AUDITORS: For Against Abstain --- ------- ------- Proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors. [_] [_] [_] 3. The proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting. I plan to attend the Annual Meeting [_] Please date this Proxy and sign exactly as your name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If there is more than one trustee, all should sign. All joint owners should sign. ___________________________________________________ Signature Dated: ______________________________________ , 2001 - -------------------------------------------------------------------------------- FOLD AND DETACH HERE -----END PRIVACY-ENHANCED MESSAGE-----