MERRIMAC INDUSTRIES, INC.
41 Fairfield Place
West Caldwell, NJ 07006-6287
Mason N. Carter
Chairman of the Board April 28, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Meeting") of Merrimac Industries, Inc. ("Merrimac") to be held at the
offices of Merrimac, 41 Fairfield Place, West Caldwell, New Jersey, on
Wednesday, June 7, 2000 at 10:00 a.m. Eastern Daylight Time.
In addition to the routine matters that will be the subject of the
Meeting, you will be asked to consider and vote upon a proposal to approve
Merrimac's 2000 Key Employee Incentive Plan.
Additional information about the Meeting and the various matters upon
which shareholders will act is found in the formal Notice of the Meeting and
Proxy Statement on the following pages. The Annual Report to Shareholders for
1999, including financial statements, accompanies this Proxy Statement but does
not constitute a part of the proxy solicitation material.
The Board of Directors has, by vote of all directors except Mason N.
Carter, who abstained, approved the 2000 Key Employee Incentive Plan, believes
the adoption of the plan is in the best interests of Merrimac and its
shareholders and recommends that the shareholders vote in favor of the plan.
Since it is important that your shares be represented at the Meeting,
we urge you to indicate on the enclosed proxy card your choice with respect to
the matters to be voted upon at the Meeting, sign and date the card and return
it promptly in the enclosed envelope. Please do this even if you plan to attend
the Meeting, as the return of a signed proxy will not limit your right to vote
in person but will assure that your vote will be counted in the event your plans
for personal attendance should change.
Sincerely,
/s/ Mason Carter
---------------------
Mason N. Carter
Chairman of the Board
MERRIMAC INDUSTRIES, INC.
41 Fairfield Place
West Caldwell, New Jersey 07006-6287
--------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 7, 2000
To The Shareholders of
Merrimac Industries, Inc.
The Annual Meeting of Shareholders (including any adjournment or
postponement thereof, the "Meeting") of Merrimac Industries, Inc. ("Merrimac")
will be held at the offices of Merrimac, 41 Fairfield Place, West Caldwell, New
Jersey, on Wednesday, June 7, 2000, at 10:00 a.m. Eastern Daylight Time, for the
following purposes:
(1) To elect two members to Merrimac's Board of Directors for a
term of three years;
(2) To approve Merrimac's 2000 Key Employee Incentive Plan;
(3) To ratify and approve the action of the Board of Directors in
appointing Arthur Andersen LLP as independent auditors for the
current fiscal year; and
(4) To transact such other business as may properly come before
the Meeting.
Holders of record of Common Stock, par value $.50 per share, at the
close of business on April 20, 2000, the record date for the Meeting, are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
/s/ Robert V. Condon
-----------------------
ROBERT V. CONDON
Secretary
West Caldwell, New Jersey
April 28, 2000
PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ACCOMPANYING PROXY IN THE
RETURN ENVELOPE FURNISHED FOR THAT PURPOSE, WHETHER OR NOT YOU PLAN TO ATTEND
THE 2000 MEETING.
2
MERRIMAC INDUSTRIES, INC.
41 Fairfield Place
West Caldwell, New Jersey 07006-6287
PROXY STATEMENT
General information
The Board of Directors of Merrimac Industries, Inc. ("Merrimac" or the
"Company") solicits all holders of Common Stock, par value $.50 per share, of
Merrimac to vote by marking, signing, dating and returning their proxies to be
voted at the Annual Meeting of Shareholders (including any adjournment or
postponement thereof, the "Meeting") for the purposes stated in the Notice of
Meeting. If the proxy is properly executed and returned by mail, the shares it
represents will be voted at the Meeting in accordance with the instructions
noted thereon. If no instructions are specified, the shares will be voted for
the election of directors, for the approval of Merrimac's 2000 Key Employee
Incentive Plan, for the appointment of Arthur Andersen LLP as Merrimac's
independent auditors and for such other items of business that come before the
Meeting, in accordance with the Board of Directors' recommendations as set forth
herein. Sending in a signed proxy will not affect a shareholder's right to
attend the Meeting and vote in person. A proxy may be revoked at any time before
it is exercised, and such right is not limited by or subject to compliance with
any specified formal procedure. To revoke a proxy at the Meeting, however, a
shareholder should file a written notice of revocation with the Secretary of the
Company at the Meeting and vote in person. Presence at the Meeting does not of
itself revoke the proxy.
If a shareholder wishes to give a proxy to someone other than the
Company's designees, he or she may cross out the names appearing on the enclosed
proxy, insert the name of such other person, and sign and give the card to that
person for use at the Meeting.
The Proxy Statement and the accompanying form of proxy are first being
mailed to shareholders on or about April 28, 2000.
The cost of solicitation will be paid by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies from shareholders by telephone, letter, e-mail, facsimile or in
person. The Company expects to pay compensation for the solicitation of proxies,
plus expenses, to Corporate Investor Communications, Inc. ("CIC") to supply
brokers and other persons with proxy materials for forwarding to beneficial
holders of Common Stock. The Company expects to pay
CIC a fee of approximately $2,000 for its services. The Company will also
reimburse such brokers and other persons for expenses related to such
forwarding.
Voting rights; votes required for approval
Each holder of Common Stock of record at the close of business on April
20, 2000 (the "Record Date") is entitled to receive notice of and to vote at the
Meeting. At the close of business on the Record Date, there were outstanding and
entitled to vote 2,141,589 shares of Common Stock. Every shareholder of record
on the Record Date is entitled to one vote for each share of Common Stock then
held.
Under Securities and Exchange Commission ("SEC") rules, boxes and a
designated blank space are provided on the proxy card for shareholders to mark
if they wish either to vote "for," "against" or "abstain" on one or more of the
proposals, or to withhold authority to vote for one or more of the Company
nominees for director. New Jersey law and the Company's By-laws require the
presence of a quorum for the Meeting. A quorum is defined as a majority of the
votes entitled to be cast at the Meeting. Votes withheld from director nominees
and abstentions will be counted in determining whether a quorum has been
reached. Broker-dealer non-votes, which are discussed below, are counted for
quorum purposes.
Every shareholder of record on the Record Date is entitled, for each
share held, to one vote on each proposal or item that comes before the Meeting.
In the election of directors, a plurality of the votes cast at the Meeting at
which a quorum is present is sufficient to elect a director. The approval of the
2000 Key Employee Incentive Plan and the ratification of the appointment of the
Company's independent auditors will require the affirmative vote of the holders
of a majority of the votes cast at the Meeting.
Abstentions are not counted in determining the number of votes cast in
connection with the approval of the 2000 Key Employee Incentive Plan or the
appointment of independent auditors. Like abstentions, broker-dealer "non-votes"
on "non-routine" matters are not counted in calculating the number of votes
cast. The American Stock Exchange has advised the Company that the election of
directors and appointment of auditors are considered "routine" items upon which
broker-dealers holding shares in street name for their customers may vote, in
their discretion, on behalf of any customers who do not furnish voting
instructions within 10 days of the Meeting. The proposal to approve the 2000 Key
Employee Incentive Plan is a "non-routine" item for American Stock Exchange
purposes, which means that brokers who have received no voting instructions from
their customers do not have discretion to vote on this matter. As discussed
above, these broker "non-votes" will not be treated as votes cast at the
Meeting.
2
Shareholder proposals for the 2001 annual meeting; advance notice procedures
In order to be included in the proxy statement and proxy card relating
to the 2001 annual meeting of shareholders, shareholder proposals must be
received by the Secretary of the Company at the above address no later than
December 29, 2000. All proposals must meet the requirements set forth in the
rules and regulations of the SEC in order to be eligible for inclusion in the
proxy statement for the 2001 annual meeting of shareholders.
In addition, the Company's By-laws require a shareholder desiring to
nominate persons for election to the Board of Directors or to propose any matter
for consideration of the shareholders at the 2001 annual meeting to notify the
Secretary of the Company in writing at the above address on or after March 10,
2001 and on or before April 9, 2001.
PROPOSAL 1. ELECTION OF DIRECTORS
Nominees
The Company's Restated Certificate of Incorporation provides that the
Board of Directors shall consist of three classes of directors with overlapping
three-year terms. One class of directors is to be elected each year with terms
extending to the third succeeding annual meeting of shareholders after election.
The Restated Certificate of Incorporation also provides that the Board shall
maintain the three classes so as to be nearly equal in number as the then total
number of directors permits. Each of the two nominees, Joel H. Goldberg and
Joseph B. Fuller, to be elected as Class I directors at the Meeting would hold
office until Merrimac's annual meeting in the year 2003 and until his successor
is duly elected and qualified. The two directors in Class II, Edward H. Cohen
and Arthur A. Oliner, and the two directors in Class III, Mason N. Carter and
Albert H. Cohen, are serving terms expiring at Merrimac's annual meeting in 2001
and 2002, respectively.
The persons named in the enclosed form of proxy will vote such proxy
for the election to the Board as Class I directors of Joel H. Goldberg and
Joseph B. Fuller. Joel H. Goldberg has been previously elected by the
shareholders. If no contrary indication is made, proxies in the accompanying
form are to be voted for such nominees or, in the event any such nominee is not
a candidate or is unable to serve as a director at the time of the election
(which is not now expected), for any nominee who shall be designated by the
Board of Directors to fill such vacancy, unless the Board of Directors shall
determine to reduce the number of directors pursuant to the By-laws.
3
Voting
Each holder of Common Stock of record on the Record Date is entitled to
one vote for each share of Common Stock then held. Directors are elected by a
plurality of the votes cast.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
Information about nominees for directors and continuing directors
The following table sets forth certain information as of the Record
Date with respect to each nominee for director and each continuing director.
Name and Other Positions Director of the
With the Company Age Company Since
Class III:
Mason N. Carter
Chairman of the Board, President and
Chief Executive Officer.................. 54 1995
Albert H. Cohen........................... 67 1997
Class II:
Edward H. Cohen........................... 61 1998
Arthur A. Oliner.......................... 78 1961
Class I:
Joel H. Goldberg.......................... 56 1997
Joseph B. Fuller.......................... 43 -
Business experience of directors and nominees for directors during past five
years
Mason N. Carter was elected to the additional position of Chairman of
the Board on July 24, 1997. He has served as President and Chief Executive
Officer of the Company since December 16, 1996. From 1994 to 1996 he was
President of the Products
4
and Systems Group of Datatec Industries, Inc., Fairfield, New Jersey, a leading
provider of data network implementation services.
Albert H. Cohen has been self-employed as a management consultant and
asset (money) manager since 1987. He was the Chairman of the Board and the Chief
Executive Officer of Metex Corporation from 1986 to 1987 and from 1964 to 1986
he was the President and Chief Executive Officer. Metex Corporation is a
manufacturer of industrial and automotive products.
Edward H. Cohen, a senior partner at Rosenman & Colin LLP, a law firm,
has been affiliated with such firm since 1963. He is a director of Phillips-Van
Heusen Corporation, Franklin Electronics Publishers, Inc. and Levcor
International, Inc.
Arthur A. Oliner has been Professor Emeritus of Electrophysics at
Polytechnic University (formerly Polytechnic Institute of Brooklyn) since 1990,
was head of its Electrical Engineering Department from 1966 until 1974, and was
the director of its Microwave Research Institute from 1967 to 1982. He was
elected a member of the National Academy of Engineering and a Fellow of the
IEEE, the AAAS, and the British IEE. Dr. Oliner is the author of three books and
has received many awards. He has been an engineering consultant for such
companies as IBM, Boeing, Raytheon, Hughes and Rockwell.
Joel H. Goldberg has been Chairman and Chief Executive Officer of
Career Consultants, Inc., a management consulting firm, and SK Associates, an
outplacement firm, located in Union, New Jersey since 1972. He is a director of
Phillips-Van Heusen Corporation, Hampshire Group, Limited, Marcal Paper Company
and Modell's, Inc., an advisor to the New Jersey Sports and Exposition Authority
and a member of the Advisory Council for Sports Management of Seton Hall
University. He is also a consultant to the New York Giants and the New Jersey
Nets professional sports teams.
Joseph B. Fuller has been President and Chief Executive Officer of
Monitor Company since June 1998. Monitor Company, of which Mr. Fuller was a
founding director in 1983, is a strategy advisory firm that serves international
clients on a diversified mix of issues related to enhancing competitiveness. Mr.
Fuller is an internationally recognized expert on telecommunications and has
worked extensively in the telecommunications equipment industry. He is also a
director of Phillips-Van Heusen Corporation.
There are no family relationships among the directors or nominees for
directors of the Company. Each of Mr. E. Cohen, Dr. Goldberg and Mr. Fuller
serves on the Board of Directors of Phillips-Van Heusen Corporation.
5
Meetings and committees of the Board
During the fiscal year that ended on January 1, 2000, the Board of
Directors held eleven meetings. Each director during fiscal 1999 attended 75% or
more of the aggregate of the total number of meetings of the Board and of the
committees on which he served.
The Board of Directors has a Stock Option Committee, Stock Purchase
Plan Committee, Audit Committee, Compensation Committee, Management Committee
and Nominating Committee.
The Stock Option Committee, which currently consists of Messrs. A.
Cohen and Oliner, non-employee directors, administers the 1997 Long-Term
Incentive Plan, the 1993 Stock Option Plan and the 1983 Key Employees Stock
Option Plan and determines the recipients and terms of the options awarded
thereunder. Committee members are currently eligible to participate in the 1993
Stock Option Plan. The Stock Purchase Plan Committee, which also consists of
Messrs. A. Cohen and Oliner, administers the Stock Purchase Plan of the Company.
During fiscal 1999 the Stock Option Committee met one time and the Stock
Purchase Plan Committee did not meet.
Messrs. A. Cohen, E. Cohen and Oliner, non-employee directors,
currently serve on the Audit Committee, the function of which is to review the
Company's annual audit with the Company's independent accountants. During fiscal
1999 the Audit Committee met two times.
Messrs. A. Cohen, Goldberg and Oliner, non-employee directors,
currently serve on the Compensation Committee. The Compensation Committee
reviews compensation of all executive officers of the Company. The Compensation
Committee determines compensation levels based on individual performance and
responsibility, as well as overall corporate performance. The predominant
components of executive compensation have been base salary and stock option
grants. When corporate goals are achieved, executive officers as well as other
key employees may also be awarded cash bonuses. During fiscal 1999 the
Compensation Committee met two times.
Messrs. Carter and A. Cohen serve on the Management Committee. The
Management Committee determines strategic business direction for the Company and
evaluates the impact of current changes in the business environment in which the
Company operates. During fiscal 1999 the Management Committee met three times.
Messrs. Carter and Oliner currently serve on the Nominating Committee.
Shareholders wishing to recommend persons for consideration by the Nominating
Committee as nominees for election to the Company's Board of Directors can do so
by writing to the Secretary of the Company (within the time period specified in
the Company's By-laws) at 41 Fairfield Place, West Caldwell, New Jersey 07006,
giving each
6
person's name, biographical data and qualifications. See the description of the
advance notice provisions in the Company's By-laws under the caption
"Shareholder proposals for 2001 annual Meeting; advance notice procedures". Any
such recommendation should be accompanied by a written statement from the person
recommended indicating his or her consent to be considered as a nominee, and if
nominated and elected, to serve as a director. During fiscal 1999 the Nominating
Committee held one meeting.
Information about executive officers
The following table sets forth certain information as of the Record
Date with respect to each executive officer (other than those listed as
directors).
Name and Position With the Company Age
Robert V. Condon
Vice President, Finance, Chief Financial Officer,
Treasurer and Secretary............................... 53
Richard E. Dec
Vice President, New Technology and Business
Development........................................... 56
Brian R. Dornan
Vice President, Advanced Technology and Business
Development........................................... 51
Ronald Gold
Vice President, Materials and Business Processes...... 49
Reynold K. Green
Vice President, RF Microwave Products Group and
General Manager....................................... 41
James J. Logothetis
Vice President, Multi-Mix(TM) Engineering............. 40
Joseph McAndrew
Vice President, Multi-Mix(TM) Operations.............. 45
Michael Pelenskij
Vice President, Operations RF Microwave Products
Group................................................. 39
Dr. Kovilvila N. Ramachandran
President and Technical Director, FMI................. 59
Lawrence S. Ross
Vice President, Quality............................... 31
Craig A. Sutton
Chief Executive Officer, FMI.......................... 42
7
Business experience of executive officers during past five years
Mr. Condon has been Vice President, Finance and Chief Financial Officer
since joining the Company in March 1996 and was appointed Treasurer and
Secretary in January 1997. Prior to joining the Company, he was with Berkeley
Educational Services as Vice President, Finance, Treasurer and Chief Financial
Officer from 1995 to February 1996.
Mr. Dec, effective February 2000, was appointed Vice President, New
Technology and Business Development after serving as Vice President, Marketing
since joining the Company in March 1997. Prior to joining the Company, he was
with Kinley & Manbeck, Inc., a business process re-engineering and systems
implementation consulting company, as Vice President of Business Development
from April 1996 to March 1997. From 1995 to March 1996, he was National Account
Manager, Product and Systems Group for Datatec Industries, Inc.
Mr. Dornan, effective February 2000, was appointed Vice President,
Advanced Technology and Business Development after serving as Vice President,
Research and Development of the Company since February 1998 and was Group Vice
President of Technology and Engineering of the Company from October 1996 to
February 1998. He had been Group Vice President of Manufacturing from 1986 to
October 1996.
Mr. Gold, effective January 2000, was appointed Vice President,
Materials and Business Processes after serving as Director, Materials since
joining the Company in April 1997. Prior to joining the Company, Mr. Gold was
with PrePress Solutions, Inc., an electronic imagesetting design and
manufacturing company, where he held various positions from 1986-1997, including
Materials Manager, Commodity Manager and Manufacturing Engineering Manager.
Mr. Green, effective January 2000, was appointed Vice President, RF
Microwave Products Group and General Manager after serving as Vice President,
Sales of the Company since March 1997. From April 1996 to March 1997 he was Vice
President of Manufacturing of the Company. He was a member of the Board of
Directors of the Company from April 1996 to May 1997, and did not seek
re-election to the Board. Prior to April 1996, Mr. Green held positions of
Director of Manufacturing, National Sales Manager and Director of Quality
Control and High-Reliability Services at the Company.
Mr. Logothetis, effective January 2000, was appointed Vice President,
Multi-Mix(TM) Engineering after serving as Vice President, Advanced Technology
since May 1998 after rejoining the Company in January 1997 as Director, Advanced
Technology. Prior to rejoining the Company, he was a director for
Electromagnetic Technologies, Inc. in 1995 and became Vice President of
Microwave Engineering at such corporation in 1996.
8
Mr. McAndrew was appointed Vice President, Multi-Mix(TM) Operations in
June 1999 after serving as Director of Manufacturing Engineering from 1997 to
1999. From 1984 through 1997, Mr. McAndrew held various engineering positions at
Merrimac including Manager, Manufacturing and Process Engineering.
Mr. Pelenskij, effective January 2000, was appointed Vice President,
Operations RF Microwave Products Group of the Company after serving as Director
of Manufacturing of the Company from January 1999 to January 2000. Mr. Pelenskij
held the positions of Manager of Screened Components, RF Design Engineer, and
District Sales Manager at the Company from 1993 to January 1999.
Dr. Ramachandran has been President of Filtran Microcircuits Inc.
("FMI") since January 1996 and has been Technical Director of FMI since
co-founding FMI in 1983. Dr. Ramachandran served as a member of FMI's Board of
Directors prior to Merrimac's acquisition of FMI. Prior to 1983, Dr.
Ramachandran held a position at the National Research Council of Canada.
Mr. Ross, effective January 2000, was appointed Vice President, Quality
after serving as Director, Quality upon joining the Company in March 1999. Prior
to joining the Company, Mr. Ross served as Manager, Quality & Efficiency from
December 1998 to March 1999 with Philips Consumer Electronics' Digital TV Group,
a corporate design competency. From May 1997 to December 1998, Mr. Ross held the
position of Corporate Quality Assurance Manager with General Bearing
Corporation, a ball and taper roller bearing design and manufacturing company.
From 1995 to 1997, he was Director, Quality and ISO Coordination for Mikron
Instrument Company, a non-contact temperature measurement design and
manufacturing company.
Mr. Sutton has been Chief Executive Officer of FMI since January 1996.
From 1986 to 1996, Mr. Sutton held the position of General Manager of FMI. Prior
to Merrimac's acquisition of FMI, Mr. Sutton served as a member of FMI's Board
of Directors.
There are no family relationships among the executive officers of the
Company.
9
EXECUTIVE COMPENSATION
Compensation summary
The following table sets forth a summary for the last three (3) fiscal
years of the cash and non-cash compensation awarded to, earned by or paid to the
individuals who were (i) the Chief Executive Officer of the Company during
fiscal 1999, (ii) the four other most highly compensated executive officers
serving at the end of the last fiscal year and (iii) any other persons who were
executive officers at any time during 1999 and would have been included under
clause (ii) if they had remained executive officers at January 1, 2000
(collectively, the "named executive officers").
Summary Compensation Table
Annual Compensation Long-Term Compensation
-------------------------------- ---------------------------------
Awards Payouts
-------------------------------- ---------------------------------
Securities All Other
Underlying Compensation ($)
Name and Principal Position(s) Year Salary ($) Bonus ($) Options/SARs (2)(3)(4)(5)
(#)(1)
- ------------------------------------------------------------------------------------------------------
Mason N. Carter 1999 240,000 - 15,000 13,200
Chairman, President and 1998 240,000 - 22,000 49,816
Chief Executive Officer 1997 200,014 39,000 - 27,916
Robert V. Condon 1999 145,000 - 3,500 4,648
Vice President, Finance and 1998 143,750 - 2,750 13,166
Chief Financial Officer, 1997 140,005 19,000 - 16,708
Treasurer and Secretary
Reynold K. Green 1999 126,000 - 3,500 3,680
Vice President, Sales 1998 123,500 - - 6,566
Vice President, Manufacturing 1997 108,253 19,000 - 7,890
Brian R. Dornan 1999 115,000 5,000 1,000 3,625
Vice President, Research and 1998 113,750 5,000 - 3,893
Development 1997 110,011 10,000 - 9,990
Vice President, Engineering
James J. Logothetis(6) 1999 116,000 5,000 3,500 1,745
Vice President, Advanced 1998 107,667 5,000 - 2,885
Technology 1997 80,666 6,000 27,500 4,017
Director, Advanced
Technology
10
(1) The number of securities underlying options and stock appreciation
rights for all prior reporting periods have been restated to reflect
the 10% stock dividend which became effective June 5, 1998.
(2) Includes matching 401(k) amounts contributed by the Company during
1999, 1998 and 1997 (including discretionary amounts for 1997) to the
accounts of the named executive officers pursuant to the Company's
Savings and Investment Plan in the following amounts: Mr. Carter -
$4,800, $4,800 and $9,515; Mr. Condon - $4,648, $4,800 and $9,196; Mr.
Green - $3,680, $4,258 and $6,621; Mr. Dornan - $3,625, $3,893 and
$7,028; Mr. Dec - $3,418, $3,923 and $4,062; Mr. Logothetis - $1,745,
$1,616 and $2,961.
(3) Also includes a $20,000 signing bonus Mr. Carter received in fiscal
1998 in connection with the amendment to his employment agreement with
the Company. See the description of Mr. Carter's amended and restated
employment agreement described under the caption "Employment contracts
and termination of employment and change-in-control arrangements".
(4) Includes contractual automobile allowances to Mr. Carter of $8,400
during 1997, 1998 and 1999.
(5) Includes compensation for vacation earned but not taken during 1998 in
the following amounts: Mr. Carter - $16,616; Mr. Condon - $8,366; Mr.
Green - $2,308; Mr. Dec - $2,539; and Mr. Logothetis - $1,269. Includes
compensation for vacation earned but not taken during 1997 in the
following amounts: Mr. Carter - $10,001; Mr. Condon - $7,539; Mr. Green
- $1,269; Mr. Dornan - $2,962; Mr. Dec - $4,039; and Mr. Logothetis -
$696. As of fiscal 1999, the Company no longer provides employees with
payments for vacation earned but not taken.
(6) Mr. Logothetis re-joined the Company in 1997.
The following table sets forth information concerning individual grants
of stock options made during fiscal 1999 to each of the named executive
officers.
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
- ----------------------------------------------------------------------------------------------------
Number of Securities % of Total
Underlying Options/SARs Exercise
Options/SARs Granted to Employees Price or Expiration
Granted (#) in Fiscal Year Base ($/Sh) Date
- ----------------------------------------------------------------------------------------------------
Mason N. Carter 15,000 10.44% 7.00 6/10/09
Robert V. Condon 3,500 2.44% 7.00 6/10/09
Reynold K. Green 3,500 2.44% 7.00 6/10/09
Brian R. Dornan 1,000 .70% 6.00 5/10/09
Brian R. Dornan 1,000 .70% 7.00 6/10/09
James J. Logothetis 1,000 .70% 6.00 5/10/09
James J. Logothetis 2,500 1.74% 7.00 6/10/09
11
The following table sets forth information concerning each exercise of
stock options during fiscal 1999 by each of the named executive officers and the
fiscal year-end value of unexercised options.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Value of
Number of Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Shares Options/SARs at FY- FY-End($)**
Acquired Value End Exercisable(1)/ Exercisable(1)/
Name on Exercise Realized($) Unerxercisable(2)* Unexercisable(2)
- -------------------------------------------------------------------------------------------------------------
Mason N. Carter -0- -0- 111,800 (1)
Robert V. Condon -0- -0- 17,250 (1)
Reynold K. Green -0- -0- 12,850 (1)
Brian R. Dornan -0- -0- 12,450 (1) 625 (2)
James J. Logothetis -0- -0- 20,000 (1) 625 (2)
* The vesting of unexercisable options may accelerate upon a
change-in-control of the Company.
** Amounts represent difference between the aggregate exercise price of the
options and a $6-5/8 market price of the underlying Common Stock on January
1, 2000.
Employment contracts and termination of
employment and change-in-control arrangements
Mason N. Carter has entered into an amended and restated employment
agreement dated as of January 1, 1998 with the Company pursuant to which Mr.
Carter has agreed to serve as President and Chief Executive Officer of the
Company for a minimum annual salary of $240,000. The initial term of the
agreement ends on December 31, 2002 and automatically renews for successive
12-month periods thereafter unless terminated pursuant to the terms of the
agreement. Upon a change-in-control of the Company, if Mr. Carter is dismissed
without "cause" (as defined in the amended and restated employment agreement)
within 12 months after such change-in-control, the Company has agreed to pay Mr.
Carter the greater of (a) his 12-month salary and benefits (including bonus) or
(b) his salary and benefits from the date of resignation to the end of the then
current term of the agreement.
12
In January 1998, the Company entered into severance agreements with the
named executive officers (other than Mr. Carter and Mr. Niemiec). The severance
agreements provide, among other things, that if an executive is terminated by
the Company without "cause" or the executive resigns for "good reason" (as such
terms are defined therein) within one year following a "change in control" (as
defined therein) the Company is obligated to pay to the executive officer over a
12 month period two times his "annual base salary" (as defined therein) and to
continue to provide health insurance benefits for two years.
In connection with the acquisition of FMI in February 1999, the
Company, through FMI, entered into employment agreements with Dr. Kovilvila N.
Ramachandran, President of FMI, and Craig A. Sutton, Chief Executive Officer of
FMI, that provide each of Dr. Ramachandran and Mr. Sutton with a minimum annual
salary of $130,000 Canadian. The original terms of the agreements end on
February 25, 2002 and automatically renew for successive 12-month periods
thereafter unless terminated pursuant to the terms of the agreements. In
addition, Dr. Ramachandran's agreement provides that he may elect to receive
either a bonus of 10% compensation or a grant of immediately exercisable stock
options as determined pursuant to the terms of the agreement.
On December 31, 1998, Eugene W. Niemiec retired from the position of
Vice Chairman and Chief Technology Officer of the Company. Pursuant to a
separation agreement between the Company and Mr. Niemiec effective on such date,
Mr. Niemiec agreed to terminate his employment agreement with the Company in all
respects except for certain provisions relating to his options to purchase
55,000 shares of Common Stock, the expiration date of which has been extended
under the separation agreement to December 31, 2003. Under the separation
agreement, Mr. Niemiec received a $337,200 payment from the Company in January
1999 and received a final payment of $185,500 in January 2000. In addition, the
separation agreement provides Mr. Niemiec and his spouse with certain ongoing
benefits, such as medical insurance coverage, until December 2009. Mr. Niemiec
continued to serve as a director of the Company until December 1999.
Certain relationships and related transactions
On May 4, 1998, the Company sold 20,000 (22,000 after giving effect to
the 10% stock dividend) shares of Common Stock from its treasury to the
Company's Chairman, President and Chief Executive Officer, Mason N. Carter, at a
price of $12.75 per share, which approximated the average closing price of the
Company's Common Stock during the first quarter of fiscal 1998. The Company
extended to Mr. Carter a loan of $255,000 in connection with the purchase of
these shares and amended a prior loan to Mr. Carter of $105,000. Mr. Carter has
contractually agreed to restrictions on the resale of these shares.
13
The new promissory note for a total of $360,000 is due May 4, 2003 and
interest payments (except as described below) are due quarterly, calculated at a
variable interest rate based on the prime rate of the Company's lending bank.
Payment of interest accrued from November 1998 until November 1999, however, was
deferred until the end of the term of the new promissory note on May 4, 2003.
Payment of the loan is secured by the pledge of 33,000 shares of Common Stock
purchased by Mr. Carter with the proceeds of the loans, as collateral for the
repayment of the loan, pursuant to a pledge agreement between Mr. Carter and the
Company.
The Company is a party to a shareholder's agreement dated as of October
30, 1998 with Charles F. Huber II, a former director and Chairman of the Company
who is also a beneficial owner of more than 5% of the Company's Common Stock.
Pursuant to the shareholder's agreement, Mr. Huber provides the Company with
consulting services for a fee of $5,000 per month. The term of the consulting
arrangement expires on October 2001, unless earlier terminated in accordance
with the terms of the shareholder's agreement.
In addition, the shareholder's agreement contains certain provisions
relating to the purchase and sale by Mr. Huber of the capital stock of the
Company and relating to Mr. Huber's ability to vote his Common Stock at his
discretion. Mr. Huber is generally prohibited from acquiring any securities of
the Company without the Company's prior approval and from selling any such
securities to any person or group that would then hold three percent or more of
the outstanding capital stock of the Company. During the term of the
shareholder's agreement, Mr. Huber is also required to vote his shares of Common
Stock as directed by the Board of Directors or the Chief Executive Officer of
the Company.
During 1999 Mr. A. Cohen was paid $8,250 for services provided to the
Company outside his role as a director of the Company. During 1999, the Company
retained the services of Career Consultants, Inc., and SK Associates to perform
executive searches and to provide outplacement services. Dr. Goldberg is the
Chairman and Chief Executive Officer of these companies. The total amount paid
to these companies was $30,833.
On April 7, 2000, the Company entered into a stock purchase and
exclusivity agreement with Ericsson Microelectronics, A.B. ("Ericsson") and
Ericsson Holding International, B.V. ("EHI") pursuant to which the Company sold
to EHI 375,000 newly issued shares of Company Common Stock, representing
approximately 17.5% of the Company's outstanding Common Stock after giving
effect to the sale, for an aggregate purchase price of $3,375,000 in cash. The
stock purchase and exclusivity agreement also provides that the Company will
design, develop and produce exclusively for Ericsson Multi-Mix(TM) products that
incorporate active RF power transistors for use in wireless
14
base station applications, television transmitters and certain other
applications that are intended for Bluetooth transceivers and that the Company
will generally be the priority supplier for such products. Accordingly, Ericsson
will receive first priority on all Multi-Mix(TM) resources of the Company and
will have priority access to FMI's proprietary technology and manufacturing
capabilities.
In connection with EHI's purchase of the Company's Common Stock, the
Company and EHI also entered into a registration rights agreement which provides
EHI with two demand registrations at any time following April 7, 2002.
Compensation of directors
Directors who are not employees of the Company are paid a monthly fee
of $1,500 and $500 for each meeting of the Board of Directors attended. The
directors are also reimbursed reasonable travel expenses incurred in attending
directors meetings. In addition, pursuant to the 1993 Stock Option Plan, each
non-employee director is granted an immediately exercisable option to purchase
1,650 shares of the Common Stock of the Company on the date he is elected to the
Board of Directors, and on each date that he is re-elected as a director of the
Company. Each such grant is at the fair market value on the date of grant.
In connection with the active role that Dr. Oliner has taken in
assisting the Company in further developing its research and development
capabilities and in making himself available to the Chairman for special
technology assignments, the Company entered into a consulting agreement dated as
of January 1, 1998 with Dr. Oliner. The initial term of the agreement expired on
December 31, 1998 and automatically renews for successive twelve-month periods
unless terminated pursuant to its terms. The agreement provides for the payment
of $36,000 annually.
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN SHAREHOLDERS
The following table sets forth, as of the Record Date, information
concerning Common Stock owned by (i) persons known to the Company who are
beneficial owners of more than five percent of the Common Stock of the Company
(ii) each director, director nominee and named executive officer of the Company,
and (iii) all directors, director nominees and executive officers of the Company
as a group, that was either provided by the person or publicly available from
filings made with the SEC.
15
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except noted) Percent of Class
- -------------------- --------------------- ----------------
Ericsson Holding International, B.V. 375,000 17.51%
c/o Lawrence Lyles
740 East Campbell Road
Richardson, Texas 75081
William D. Witter, Inc. 238,299 11.13%
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Charles F. Huber II 115,500(1) 5.39%
c/o William D. Witter, Inc.
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Arthur A. Oliner 200,668(2) 9.26%
11 Dawes Road
Lexington, MA 02173
Mason N. Carter 161,280(3) 7.16%
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Joel H. Goldberg 26,950(4) 1.26%
c/o C.C.I. / SK Associates, Inc.
1767 Morris Avenue
Union, NJ 07083
Albert H. Cohen 15,200(5) *
1204 Buckingham Circle
Middletown, NJ 07748
Edward H. Cohen 12,300(6) *
c/o Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022
16
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except noted) Percent of Class
- -------------------- --------------------- ----------------
Joseph B. Fuller -0- -0-
c/o Monitor Company
Two Canal Park
Cambridge, MA 02141
Robert V. Condon 21,966(7) 1.02%
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
James J. Logothetis 22,479(8) 1.03%
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Brian R. Dornan 19,864(9) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Reynold K. Green 19,370(10) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
All directors and 572,386(11) 23.69%
executive officers as a group
(17 persons)
- --------------------------------------------------------------------------------
+ "Beneficial Ownership" means the sole or shared voting power to direct
the voting or investment of a security, including securities subject to
options, warrants or other common stock equivalents which are
exercisable within sixty (60) days.
* The percentage of shares beneficially owned does not exceed 1% of the
class.
(1) The number of shares of Common Stock in the table is based upon
information provided to the Company by Mr. Huber. These amounts are not
included in the totals for all directors and executive officers as a
group. Mr. Huber, who is a Managing Director of William D. Witter
Associates, an affiliate of William D.
17
Witter, Inc., disclaims beneficial ownership of the 238,299 shares
owned by William D. Witter, Inc.
(2) Includes 26,400 shares subject to stock options that are exercisable
currently or within 60 days and 9,528 shares owned by Dr. Oliner's wife
as to which he disclaims beneficial ownership.
(3) Includes 111,800 shares subject to stock options that are exercisable
currently or within 60 days.
(4) Includes 4,950 shares subject to stock options that are exercisable
currently or within 60 days.
(5) Includes 6,600 shares subject to stock options that are exercisable
currently or within 60 days.
(6) Includes 3,300 shares subject to stock options that are exercisable
currently or within 60 days.
(7) Includes 17,250 shares subject to stock options and 2,436 shares
subject to the Stock Purchase Plan that are exercisable currently or
within 60 days.
(8) Includes 20,000 shares subject to stock options that are exercisable
currently or within 60 days.
(9) Includes 12,450 shares subject to stock options and 1,932 subject to
the Stock Purchase Plan that are exercisable currently or within 60
days.
(10) Includes 12,850 shares subject to stock options and 2,019 shares
subject to the Stock Purchase Plan that are exercisable currently or
within 60 days.
(11) Includes 274,985 shares subject to stock options and 12,654 shares
subject to the Stock Purchase Plan that are exercisable currently or
within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the SEC initial reports of ownership and reports of changes in ownership of
Common Stock. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file.
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, the Company's officers, directors and greater than ten
percent shareholders
18
complied with these Section 16(a) filing requirements with respect to the
Company's Common Stock during the fiscal year ended January 1, 2000.
PROPOSAL 2. 2000 KEY EMPLOYEE INCENTIVE PLAN
The Board of Directors, by a vote of all directors except Mason N.
Carter, who abstained, adopted the 2000 Key Employee Incentive Plan (the
"Incentive Plan") effective as of February 29, 2000, subject to approval by
Merrimac's shareholders.
The purpose of the Incentive Plan is to give the Company a competitive
advantage in attracting, retaining and motivating officers and employees and to
provide the Company with the ability to provide incentives more directly linked
to the profitability of the Company and increases in shareholder value.
2000 Key Employee Incentive Plan
The following is a summary of certain provisions of the Incentive Plan,
which summary is qualified in its entirety be reference to the full text of the
Incentive Plan attached as Appendix A to this Proxy Statement.
Administration
The Incentive Plan will be administered by the Compensation Committee
or such other committee of two or more members who qualify as "non-employee
directors" within the meaning of applicable Rule 16b-3 under the Exchange Act
and as "outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code, as amended, as the Board of Directors may from time to time
designate (the "Committee"). Among other things, the Committee will have
authority to select key employees to whom awards may be granted, to determine
the number of available shares of the Company's Common Stock to be covered by
each award and to determine the terms and conditions of any such awards.
Eligibility
Any person, including an officer or director, in the regular full-time
employment of the Company who, in the opinion of the Board of Directors or the
Committee, is or is expected to be primarily responsible for the management,
growth or protection of some part or all of the business of the Company is
eligible to be granted awards of restricted stock under the Incentive Plan.
19
Plan Features
The number of shares of Common Stock available for awards under the
Incentive Plan would depend on whether the Company achieves two target market
capitalizations during the next five years. If the Company has an average market
capitalization equal to or greater than $50,000,000 (subject to adjustment as
described below) over the course of any one six-month period during the next
five years ("Performance Target 1"), the total number of shares of Common Stock
available under the Incentive Plan with respect to achieving Performance Target
1 would be calculated by dividing five percent of such average market
capitalization divided by the fair market value of the Common Stock on the day
Performance Target 1 is reached. In addition, if the Company has an average
market capitalization equal to or greater than $80,000,000 (subject to
adjustment as described below) over the course of any one six-month period
during the next five years ("Performance Target 2"), the total number of shares
of Common Stock available under the Incentive Plan with respect to achieving
Performance Target 2 would be calculated by dividing five percent of such
average market capitalization divided by the fair market value of the Common
Stock on the day Performance Target 2 is reached. The number of shares available
under the Incentive Plan with respect to achieving Performance Target 1 and
Performance Target 2 are respectively referred to herein as "Target 1 Shares"
and "Target 2 Shares."
The maximum aggregate amount of shares of Common Stock that could be
available for grant under the Incentive Plan would equal the sum of Target 1
Shares and Target 2 Shares if the Company achieves both Performance Target 1 and
Performance Target 2. But in no event could either Performance Target 1 or
Performance Target 2 be reached more than once during the five-year term of the
Incentive Plan. The shares subject to grant under the Incentive Plan would be
made available from authorized but unissued shares or from treasury shares of
the Company.
Notwithstanding the foregoing, in the event of a Change in Control (as
defined in the Incentive Plan), Performance Target 1 would be achieved if the
number of shares of Common Stock (calculated on a fully diluted basis) on the
date of the Change in Control multiplied by the Change in Control Price (as
defined in the Incentive Plan) (any such number, the "Change in Control Market
Capitalization") is equal to or greater than $50,000,000 (subject to adjustment
as described below), and Performance Target 2 would be achieved if the Change in
Control Market Capitalization is equal to or greater than $80,000,000 (subject
to adjustment as described below). Also, in the event of Change in Control, the
number of Target 1 Shares and Target 2 Shares would be calculated by dividing
five percent of the Change in Control Market Capitalization by the Change in
Control Price.
20
Shares of Common Stock subject to an award ("Restricted Stock") would
be subject to restrictions on transfer as set forth in the Incentive Plan and
such other restrictions or incidents of ownership as the Committee may
determine, in each case as evidenced by an award agreement. The provisions of
award agreements need not be the same with respect to each recipient.
Subject to the applicable award agreement, the provisions relating to a
participant's termination of employment as described below and the provisions
regarding a Change in Control, shares of Restricted Stock would vest over a
three-year period commencing on the date of such award at such times and in such
amounts as determined by the Committee. During the time period in which
Restricted Stock would not be vested and for two years after any such Restricted
Stock would become vested in accordance with the terms of the applicable award
agreement (the "Restriction Period"), such Restricted Stock could not be sold,
assigned, transferred, pledged or otherwise encumbered. Otherwise, a participant
would have, with respect to the shares of Restricted Stock that have vested in
accordance with the applicable award agreement, all of the rights of a
shareholder of the Company, including the right to vote the shares and the right
to receive any cash dividends.
Generally, in the event of a participant's termination of employment
with the Company for any reason (other than as described below), all unvested
Restricted Stock would be forfeited by the participant. In the event of a
participant's retirement, disability or death, however, the Committee would have
the discretion to waive any remaining restrictions with respect to any of such
participant's shares of Restricted Stock, except in the case of the
participant's death where all unvested Restricted Stock would be forfeited. In
the event of a participant's involuntary termination of employment by the
Company (other than for cause or as a result of retirement, disability or
death), all unvested Restricted Stock held by such participant would become
fully vested, but would remain subject to the prohibition on transfer and
encumbrance during the Restriction Period.
Change in Capitalization or Change in Control
The Incentive Plan provides that, in the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, spinoff or other distribution of
property, or any reorganization or partial or complete liquidation of Merrimac,
the Committee may make such substitution or adjustment in the aggregate number
and kind of shares available for issuance under the Incentive Plan and the
maximum limitation upon awards to be granted to a participant, in the number and
kind of shares subject to outstanding awards granted under the Incentive Plan,
in the target market capitalization threshold for each of Performance Target 1
and Performance Target 2 to the extent necessary to account for any such change
in corporate capitalization or such other equitable substitution or
21
adjustments as may be determined to be appropriate by the Committee. The
Incentive Plan also provides that in the event of a Change in Control (as
defined in the Incentive Plan) of Merrimac (i) any awards outstanding or
otherwise payable at any time within three years as of the date of a Change in
Control, whether or not any such award is then vested, would become fully vested
and (ii) the restrictions and deferral limitations applicable (or that would be
applicable) to any restricted stock, whether or not any such related restricted
stock award is then vested, would immediately lapse, and such restricted stock
would become free of all restrictions and become fully vested and transferable.
Term and Amendment
The Incentive Plan will terminate upon the earlier of (i) five years
after its effective date or (ii) upon a Change in Control (as defined in the
Incentive Plan) if Performance Target 1 and Performance Target 2 shall not have
been achieved; provided, that the Incentive Plan awards outstanding as of such
date shall not be affected or impaired by the termination of the Incentive Plan.
The Board of Directors may amend, alter, or discontinue the Incentive
Plan, but no amendment, alteration or discontinuation may impair the rights of a
recipient of an award previously granted without the recipient's consent. In
addition, the Incentive Plan may not be amended without the approval of the
Company's shareholders to the extent such approval is required by law or
agreement.
Tax Consequences
The value of an award granted under the Incentive Plan and the value of
the issuance and transfer of Restricted Stock in payment of an award are not
taxable to a recipient, and the Company will not be entitled to a deduction,
until the restrictions lapse. When the restrictions lapse, the Company would be
entitled to a deduction equal to the value of the shares on that date.
Compensation paid to the Company's chief executive officer or the four other
most highly compensated officers, however, is not deductible to the extent such
compensation paid to any one such individual in a fiscal year exceeds
$1,000,000. Under the Incentive Plan no key employee may receive in any one
fiscal year a number of shares of Common Stock pursuant to an award where the
total value of such Common Stock received, when aggregated with all other
compensation received or to be received by the key employee from the Company in
such fiscal year, exceeds $1 million. Since the Incentive Plan limitation on the
number of restricted shares transferred arises at the time the Restricted Stock
is issued and the $1,000,000 limitation on the deductibility of compensation
arises at the time the restrictions lapse and value of the Restricted Stock is
taken into income by the key employee, it is uncertain whether the $1,000,000
limitation would result in the denial of a deduction for the Company for all or
a portion of the amount of an award.
22
Accounting Treatment
The Company would accrue the fair market value of vested awards as a
charge to earnings.
Vote required for approval of Incentive Plan
Under New Jersey law, the affirmative vote of the holders of a majority
of the votes of the Company's Common Stock cast at the Meeting is required to
approve the Incentive Plan. The Board of Directors recommends that the
shareholders approve the Incentive Plan, and intends to introduce at the Meeting
the following resolution:
"RESOLVED, that as conditionally adopted by the Board of
Directors, the 2000 Key Employee Incentive Plan submitted to this
Annual Meeting and as set forth in Appendix A to the proxy
statement be and it is hereby approved effective as of February
29, 2000."
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 3. APPROVAL OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has, subject to ratification by the
shareholders, reappointed Arthur Andersen LLP as independent auditors for the
fiscal year beginning January 2, 2000. Arthur Andersen LLP has been the
Company's independent auditors since 1997. The Board of Directors recommends
that the shareholders ratify the appointment of Arthur Andersen LLP, and intends
to introduce at the Meeting the following resolution:
"RESOLVED, that the appointment by the Board of Directors of
Arthur Andersen LLP as independent auditors for this Company for
the fiscal year 2000 be and it is hereby approved, ratified and
confirmed."
Representatives of Arthur Andersen LLP have been invited and are
expected to attend the Meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to answer questions that may be
asked by shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR PROPOSAL 3.
23
OTHER BUSINESS
At the date of this Proxy Statement, the Board of Directors has no
knowledge of any business other than that described above that will be presented
at the Meeting for action by the shareholders. If any other business should
properly come before the Meeting, it is intended that the persons designated as
attorneys and proxies in the enclosed form of proxy will vote all such proxies
as they in their discretion determine.
FORM 10-KSB ANNUAL REPORT
Any shareholder who desires a copy of the Company's 1999 Annual Report
on Form 10-KSB filed with the SEC may obtain a copy (excluding exhibits) without
charge by addressing a request to:
Secretary
Merrimac Industries, Inc.
P.O. Box 986
West Caldwell, NJ 07007-0986
Exhibits also may be requested, but a reasonable charge for the reproduction
cost thereof will be made.
Shareholders may also access the Company's internet web site on the
World Wide Web at: www.merrimacind.com for the Company's financial information.
By Order of the Board of Directors,
/s/ Robert V. Condon
----------------------
ROBERT V. CONDON
Secretary
April 28, 2000
24
APPENDIX A
MERRIMAC INDUSTRIES, INC.
2000 KEY EMPLOYEE INCENTIVE PLAN
SECTION 1. Purpose; Definitions
The purpose of this Plan (as defined herein) of Merrimac Industries,
Inc. (the "Company") is to give the Company a competitive advantage in
attracting, retaining and motivating officers and employees and to provide the
Company and its Subsidiaries with a stock plan providing incentives more
directly linked to the profitability of the Company and increases in shareholder
value.
For purposes of the Plan, the following terms are defined as set forth
below:
"Affiliate" means a corporation or other entity controlling,
controlled by or under common control with the Company.
"Award" means an award granted under Section 4.
"Award Agreement" means a writing signed by the Company and
the participant specifying the terms and conditions of the Award and containing
such other terms and conditions not inconsistent with the provisions of the Plan
as the Committee considers necessary or advisable to achieve the purposes of the
Plan or to comply with applicable tax and regulatory laws and accounting
principles.
"Award Term" means the five-year period commencing February
29, 2000 and ending February 28, 2005.
"Board" means the Board of Directors of the Company.
"Cause" means, except as otherwise determined by the Committee
pursuant to an Award Agreement, such events as shall be determined by the
Committee, including, without limitation: (i) the plea of guilty or nolo
contendere to, or conviction for, the commission of a felony offense by a
participant; (ii) a material breach by a participant of a fiduciary duty owed to
the Company or any of its Subsidiaries; (iii) a material breach by a participant
of any nondisclosure, non-solicitation or non-competition obligation owed to the
Company or any of its Subsidiaries; and (iv) the willful and continued failure
or gross neglect on the part of a participant to perform his or her employment
duties. The Committee shall have the sole discretion to determine whether
"Cause" exists, and its determination shall be final.
"Change in Control", "Change in Control Market Capitalization"
and "Change in Control Price" have the meanings set forth in Sections 6(b) and
(c), respectively.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
"Commission" means the Securities and Exchange Commission or
any successor agency.
"Committee" means the Committee referred to in Section 2.
"Common Stock" means common stock, par value $.50 per share,
of the Company.
"Company" means Merrimac Industries, Inc., a New Jersey
corporation, and any successor corporation.
"Disability" means, except as otherwise determined by the
Committee in an Award Agreement, the inability of the participant, as a result
of physical or mental illness or injury, to perform his or her duties for the
longer of (a) 90 consecutive work days, (b) a period of 120 non-consecutive work
days in any twelve-month period, or (c) any period prescribed by applicable law.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
"Fair Market Value" means, as of any given date, the closing
price of the Common Stock as reported on the American Stock Exchange (or, if the
Common Stock is listed on a different national securities exchange or in the
over-the-counter market, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
security exchange or as reported by NASDAQ, as the case may be, on which the
Common Stock is listed or admitted to trading) on the last preceding date or, if
there are no reported sales on that date, on the last day prior to that date on
which there are such reported sales.
"Key Employee" means any person, including an officer or
director, in the regular full-time employment of the Company who, in the opinion
of the Board or the Committee, is or is expected to be primarily responsible for
the management, growth or protection of some part or all of the business of the
Company.
"Market Capitalization" means, as of any given date, the
number of then outstanding shares of Common Stock multiplied by the Fair Market
Value.
"Performance Target 1" means the achievement by the Company of
an average Market Capitalization equal to or greater than $50,000,000 (subject
to the adjustment provisions in Section 3) over the course of any one six-month
period during the Award Term (such average Market Capitalization, the "Target 1
Market Capitalization") determined by calculating the Market Capitalization of
the Company for each day of any such one six-month period. Notwithstanding the
foregoing, in the event of a Change in Control, Performance Target 1 shall be
achieved if the Change in Control Market Capitalization is equal to or greater
than $50,000,000 (subject to the adjustment provisions in Section 3). In no
event shall it be determined that Performance Target 1 has occurred more than
once during the Award Term.
A-2
"Performance Target 2" means the achievement by the Company of
an average Market Capitalization equal to or greater than $80,000,000 (subject
to the adjustment provisions in Section 3) over the course of any one six-month
period during the Award Term (such average Market Capitalization, the "Target 2
Market Capitalization") determined by calculating the Market Capitalization of
the Company for each day of any such one six-month period. Notwithstanding the
foregoing, in the event of a Change in Control, Performance Target 2 shall be
achieved if the Change in Control Market Capitalization is equal to or greater
than $80,000,000 (subject to the adjustment provisions in Section 3). In no
event shall it be determined that Performance Target 2 has occurred more than
once during the Award Term.
"Plan" means the Merrimac Industries, Inc. 2000 Key Employee
Incentive Plan, as set forth herein and as hereinafter amended from time to
time.
"Retirement" means retirement from active employment with the
Company or a Subsidiary at or after age 65 or, with advance consent of the
Committee, before age 65 but at or after age 55.
"Subsidiary" means a corporation or other entity in which the
Company, directly or indirectly, controls 50% or more of the total combined
voting power of all classes of such corporation's or other entity's stock,
equity securities, partnership interests or membership interests.
"Termination of Employment" means the termination of the
participant's employment with the Company and any Subsidiary. A participant
employed by a Subsidiary shall also be deemed to incur a Termination of
Employment if the Subsidiary ceases to be such a Subsidiary and the participant
does not immediately thereafter become an employee of the Company or another
Subsidiary. Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and its Subsidiaries shall not
be considered Terminations of Employment.
"Treasury Regulations" means the Federal income tax
regulations promulgated by the United States Treasury Department under the Code,
as amended from time to time.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
SECTION 2. Administration
The Plan shall be administered by the Compensation Committee or such
other committee of two or more members who qualify as "non-employee directors"
within the meaning of applicable Rule 16b-3 under the Exchange Act and as
"outside directors" within the meaning of Section 162(m) of the Code, as the
Board may from time to time designate (the "Committee"), which shall be
appointed by and serve at the pleasure of the Board.
A-3
The Committee shall have plenary authority to grant Awards pursuant to
the terms of the Plan to Key Employees of the Company and its Subsidiaries.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) To select the Key Employees to whom Awards may from time
to time be granted;
(b) Determine whether and to what extent Awards are to be
granted hereunder;
(c) Determine the number of shares of Common Stock to be
covered by each Award granted hereunder;
(d) Determine the terms and conditions of any Award granted
hereunder, any vesting condition, restriction or limitation (which may be
related to the performance of the participant, the Company or any Subsidiary or
Affiliate) and any vesting acceleration or waiver of forfeiture regarding any
Award and the shares of Common Stock relating thereto, based on such factors as
the Committee shall determine;
(e) Modify, amend or adjust the terms and conditions of any
Award, at any time or from time to time;
(f) Determine to what extent and under what circumstances
Common Stock and other amounts payable with respect to an Award shall be
deferred; and
(g) Determine under what circumstances an Award may be settled
in cash or Common Stock under Section 5.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Award Agreement relating
thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may authorize any one or more of their number or
any officer of the Company to execute and deliver documents on behalf of the
Committee.
Any determination made by the Committee with respect to any Award shall
be made in the sole discretion of the Committee at the time of the grant of the
Award or, unless in contravention of any express term of the Plan, at any time
thereafter. All decisions made by the Committee shall be final and binding on
all persons, including the Company and Plan participants.
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SECTION 3. Common Stock Subject To Plan
Upon the achievement of Performance Target 1, the total number of
shares of Common Stock available for grant under the Plan with respect to
Performance Target 1 shall equal the quotient of (a) .05 multiplied by the
Target 1 Market Capitalization or, in the event of a Change in Control, the
Change in Control Market Capitalization, divided by (b) the Fair Market Value on
the date Performance Target 1 is achieved or, in the event of a Change in
Control, the Change in Control Price (such number of shares, "Target 1 Shares").
Upon the achievement of Performance Target 2, the total number of shares of
Common Stock available for grant under the Plan with respect to Performance
Target 2 shall equal the quotient of (a) .05 multiplied by the Target 2 Market
Capitalization or, in the event of a Change in Control, the Change in Control
Market Capitalization, divided by (b) the Fair Market Value on the date
Performance Target 2 is achieved or, in the event of a Change in Control, the
Change in Control Price (such number of shares, "Target 2 Shares"). The maximum
aggregate amount of shares of Common Stock available for grant under the Plan
shall equal the sum of Target 1 Shares and Target 2 Shares. In no event shall it
be determined that either Performance Target 1 or Performance Target 2 has
occurred more than once during the Award Term.
Notwithstanding anything to the contrary contained herein, no
participant may receive in any one fiscal year a number of shares of Common
Stock pursuant to an Award in which the total value of such Common Stock
received (regardless of whether such participant actually realizes taxable
income in such taxable year as a result of the receipt of such shares), when
aggregated with all other compensation (as defined in Treasury Regulation
Section 1.162-27(c)(3)) received or to be received by the participant from the
Company in any one such fiscal year, would exceed $1,000,000. Shares subject to
an Award under the Plan may be authorized and unissued shares or may be treasury
shares.
If any shares subject to Awards are forfeited for which the participant
did not receive any benefits of ownership (as such phrase is construed by the
Commission or its staff), such shares shall again be available for distribution
in connection with Awards under the Plan.
In the event of any change in corporate capitalization (including, but
not limited to, a change in the number of shares of Common Stock outstanding),
such as a stock split or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other distribution of stock
or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code) or any partial or complete liquidation of the Company, the Committee may
make such substitution or adjustments in the aggregate number and kind of shares
available for issuance under the Plan and the maximum limitation upon Awards to
be granted to any participant, in the number and kind of shares subject to
outstanding Awards granted under the Plan, in the target Market Capitalization
threshold for each of Performance Target 1 and Performance Target 2 to the
extent necessary to account for any such change in corporate capitalization
and/or such other equitable substitution or
A-5
adjustments as it may determine to be appropriate in its sole discretion;
provided, however, that the number of shares subject to any Award shall always
be a whole number.
SECTION 4. Award of Restricted Stock
(a) Administration. Shares of Common Stock subject to an Award
granted under the Plan ("Restricted Stock") shall be subject to restrictions on
transfer as set forth below and such other restrictions or incidents of
ownership as the Committee may determine in accordance with Section 2 and this
Section 4. Upon the occurrence of Performance Target 1 or upon the occurrence of
an action or event in which a Change in Control is reasonably likely to occur,
the Committee shall determine the Key Employees to whom and the time or times at
which grants of Restricted Stock will be awarded and the number of Target 1
Shares to be awarded to any participant (subject to the aggregate limit on
grants to individual participants set forth in Section 3). Upon the occurrence
of Performance Target 2 or upon the occurrence of an action or event in which a
Change in Control is reasonably likely to occur, the Committee shall determine
the Key Employees to whom and the time or times at which grants of Restricted
Stock will be awarded and the number of Target 2 Shares to be awarded to any
participant (subject to the aggregate limit on grants to individual participants
set forth in Section 3).
Subject to the terms of the Plan, the Committee may, prior to grant,
condition the vesting of Restricted Stock upon the continued service of the
participant. The provisions of Restricted Stock Awards need not be the same with
respect to each recipient.
(b) Awards and Certificates. Shares of Restricted Stock shall
be evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock certificates. Any
certificate issued in respect of shares of Restricted Stock shall be registered
in the name of such participant and shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Merrimac Industries,
Inc. 2000 Key Employee Incentive Plan and an Award Agreement.
Copies of such Plan and Agreement are on file at the offices
of Merrimac Industries, Inc."
The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Stock, the participant shall
have delivered a stock power, endorsed in blank, relating to the Common Stock
covered by such Award.
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(c) Terms and Conditions. Shares of Restricted Stock shall be
subject to the following terms and conditions:
(i) Subject to Sections 4(c)(iii), 4(c)(iv), 4(c)(v),
6(a) and the applicable Award Agreement, shares of Restricted
Stock shall vest over a three-year period commencing on the
date of such Award at such times and in such amounts as
determined by the Committee. During the time period in which
Restricted Stock is not vested and for two years after any
such Restricted Stock becomes vested in accordance with the
terms of the applicable Award Agreement (the "Restriction
Period"), such Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered.
(ii) Except as provided in this paragraph (ii), Section
4(c)(i) and the applicable Award Agreement, the participant
shall have, with respect to the shares of Restricted Stock
that have vested in accordance with the applicable Award
Agreement, all of the rights of a shareholder of the Company
holding the class or series of Common Stock that is the
subject of the Restricted Stock, including, if applicable, the
right to vote the shares and the right to receive any cash
dividends. If so determined by the Committee in the applicable
Award Agreement and subject to Section 9(e) of the Plan, (1)
cash dividends on the class or series of Common Stock that is
the subject of the Restricted Stock Award shall be
automatically deferred and reinvested in additional Restricted
Stock, held subject to the vesting of the underlying
Restricted Stock, (2) dividends payable in Common Stock shall
be paid in the form of Restricted Stock of the same class as
the Common Stock with which such dividend was paid, held
subject to the vesting of the underlying Restricted Stock and
(3) dividends payable in shares of a Subsidiary upon a
spin-off transaction shall be held as restricted shares
subject to the vesting provisions of the underlying Restricted
Stock.
(iii) Except to the extent otherwise provided in the
applicable Award Agreement and Sections 4(c)(iv), 4(c)(v) and
6(a), upon a participant's Termination of Employment for any
reason, all unvested Restricted Stock shall be forfeited by
the participant.
(iv) In the event of a participant's Retirement,
Disability or death, the Committee shall have the discretion
to waive, in whole or in part, any or all remaining
restrictions with respect to any or all of such participant's
shares of Restricted Stock; provided, however, that in the
case of the participant's death, all unvested Restricted Stock
shall be forfeited by the participant.
(v) Subject to the second sentence of Section 4(c)(i),
in the event of a participant's involuntary Termination of
Employment by the Company
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(other than for Cause or as a result of Retirement, Disability
or death), all unvested Restricted Stock held by such
participant shall become fully vested.
(vi) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock, unlegended
certificates for such shares shall be delivered to the
participant upon surrender of the legended certificates.
(vii) Each Award shall be confirmed by, and be subject to,
the terms of an Award Agreement.
SECTION 5. Tax Withholding
If, and to the extent Federal income tax withholding (and state and
local income tax withholding, if applicable) may be required by the Company in
respect of taxes on income realized by a participant upon receipt of Restricted
Stock or upon disposition of Restricted Stock, such income tax withholding may
be paid by such participant in (1) cash or (2) by electing either (i) to have
the Company withhold a portion of the shares of Common Stock comprising
Restricted Stock or (ii) to deliver other shares owned by the participant, in
either case having a Fair Market Value (on the date that the amount of tax
elected to be withheld is to be determined) of the amount to be withheld. The
Company has no obligation to issue any shares of Common Stock pursuant to an
Award until any required withholding taxes have been satisfied.
SECTION 6. Change In Control Provisions
(a) Impact of Event. Notwithstanding any other provision of
the Plan to the contrary, upon a Change in Control:
(i) Any Awards outstanding or otherwise payable at any
time within three years as of the date of such Change in
Control, whether or not any such Award is then vested, shall
become fully vested; and
(ii) The restrictions and deferral limitations applicable
(or that would be applicable) to any Restricted Stock, whether
or not any such related Restricted Stock Award is then vested,
shall immediately lapse, and such Restricted Stock shall
become free of all restrictions and become fully vested and
transferable.
(b) Definition of Change in Control. For purposes of the Plan,
unless otherwise provided in an Award Agreement, a "Change in Control" shall
mean the happening of any of the following events:
(i) The acquisition by any individual entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated
A-8
under the Exchange Act) of either (A) 50% or more of the then
outstanding shares of Common Stock of the Company
("Outstanding Company Common Stock") or (B) equity securities
of the Company representing more than 50% of the voting power
of the then outstanding equity securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change in Control: (A) any
acquisition by the Company, (B) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company, or (C) any acquisition by any Company pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (iii); or
(ii) Individuals who, as of February 29, 2000, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
February 29, 2000, whose election, or nomination for election
by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the purchase of assets or stock of another entity
(a "Business Combination"), in each case, unless immediately
following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to
such Business Combination will beneficially own, directly or
indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the then outstanding
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation,
a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be,
A-9
(B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) will beneficially own, directly or
indirectly, more than a majority of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination will have been
members of the Incumbent Board at the time of the initial
agreement, or action of the Board, providing for such Business
Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) Change in Control Market Capitalization; Change in Control
Price. For purposes of this Plan, the "Change in Control Market Capitalization"
means the number of shares of Common Stock (calculated on a fully diluted basis)
on the date of a Change in Control multiplied by the Change in Control Price.
For purposes of the Plan, the "Change in Control Price" means the higher of (i)
the highest reported sales price, regular way, of a share of Common Stock in any
transaction reported on the American Stock Exchange or other national exchange
on which such shares are listed or on NASDAQ during the 60-day period prior to
and including the date of a Change in Control or (ii) if the Change in Control
is the result of a tender or exchange offer or a Business Combination, the
highest price per share of Common Stock paid in such tender or exchange offer or
Business Combination. To the extent that the consideration paid in any such
transaction described above consists all or in part of securities or other
noncash consideration, the value of such securities or other noncash
consideration shall be determined in the sole discretion of the Board.
SECTION 7. Term, Amendment and Termination
The Plan will terminate upon the earlier of (a) five years after the
effective date of the Plan or (b) upon a Change in Control if Performance Target
1 and Performance Target 2 shall not have been achieved; provided, that the Plan
Awards outstanding as of such date shall not be affected or impaired by the
termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of a
recipient of an Award theretofore granted without the recipient's consent. In
addition, no such amendment shall be made without the approval of the Company's
shareholders to the extent such approval is required by law or agreement.
A-10
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any holder of such Award without the holder's consent.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules
as well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without shareholder approval.
SECTION 8. Unfunded Status Of Plan
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock; provided, however, that unless the Committee
otherwise determines, the existence of such trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan. This Plan is intended to
be an unfunded bonus plan that is exempt from the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
SECTION 9. General Provisions
(a) The Committee may require each person purchasing or
receiving shares pursuant to an Award to represent to and agree with the Company
in writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of the Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:
(i) Listing or approval for listing upon notice of issuance,
of such shares on the American Stock Exchange or such other securities
exchange as may at the time be the principal market for the Common
Stock;
(ii) Any registration or other qualification of such shares of
the Company under any state or federal law or regulation or the
maintaining in effect of any such registration or other qualification
which the Committee shall, in its absolute discretion upon the advice
of counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit from
any state or federal governmental agency which the Committee shall, in
its absolute discretion after receiving the advice of counsel,
determine to be necessary or advisable.
A-11
(b) Nothing contained in the Plan shall prevent the Company or
any Subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) Adoption of the Plan shall not confer upon any employee
any right to continued employment, nor shall it interfere in any way with the
right of the Company or any Subsidiary or Affiliate to terminate the employment
of any employee at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock in
accordance with Section 5, including Common Stock that is part of the Award that
gives rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements, and the Company
and its Affiliates shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment otherwise due to the participant. The
Committee may establish such procedures as it deems appropriate, including
making irrevocable elections, for the settlement of withholding obligations with
Common Stock.
(e) Reinvestment of dividends in additional Restricted Stock
at the time of any dividend payment with respect to Restricted Stock shall only
be permissible if sufficient shares of Common Stock are available under Section
3 for such reinvestment.
(f) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid or by whom any
rights of the participant, after the participant's death, may be exercised.
(g) In the case of a grant of an Award to any employee of a
Subsidiary, the Company may, if the Committee so directs, issue or transfer the
shares of Common Stock, if any, covered by the Award to the Subsidiary, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares of Common Stock to
the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan.
(h) The Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
New Jersey, without reference to principles of conflict of laws.
SECTION 10. Effective Date Of Plan
The Plan shall be effective as of February 29, 2000, the date it was
approved by the Board, subject to later approval by the Company's shareholders.
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MERRIMAC INDUSTRIES, INC.
41 Fairfield Place
West Caldwell, New Jersey 07006-6287
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mason N. Carter and Arthur A. Oliner as
Proxies, each with the power to appoint his substitute, and hereby authorizes
either or both to represent and to vote all shares of Common Stock of Merrimac
Industries, Inc. held of record by the undersigned on April 20, 2000, at the
Annual Meeting (or any adjournment or postponement thereof) of Shareholders to
be held on June 7, 2000, at Merrimac Industries, Inc., 41 Fairfield Place, West
Caldwell, New Jersey, at 10:00 a.m. Eastern Daylight Time for the proposals and
items referred to on the reverse side and described in the Proxy Statement, and
to vote in their discretion on any other business as may properly come before
the Annual Meeting (or any adjournment or postponement thereof).
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted for the election of
the nominees of the Board of Directors listed in proposal 1, for the approval of
the 2000 Key Employee Incentive Plan in proposal 2 and for the ratification of
the Independent Auditors in proposal 3.
Please mark on the reverse side, sign, date and return this
proxy card promptly using the enclosed envelope.
- --------------------------------------------------------------------------------
^FOLD AND DETACH HERE^
Please |X|
mark your
votes as
indicated
in this
example
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3:
No. 1 Election of Directors Nominees: J.H. Goldberg and J.B. Fuller
FOR WITHHOLD (INSTRUCTION: To withhold authority to vote fo any
all from individual nominee, write that nominee's name in the
nominees nominees space provided below.)
|_| |_| _____________________________________________________
No. 2 Approval of 2000 Key Employee No. 3 Ratification of Arthur Andersen LLP
Incentive Plan Merrimac's Independent Auditors
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
|_| |_| |_| |_| |_| |_|
Dated:______________________, 2000
__________________________________
Signature
__________________________________
Signature
This proxy must be signed exactly
as name appears hereon. When
shares are held by joint tenants,
both should sign. Executors,
administrators, trustees, etc.,
should give full title as such. If
the signer is a corporation,
please sign full corporate name by
duly authorized officer.
SIGN, DATE AND MAIL YOUR PROXY
PROMPTLY TODAY.
- --------------------------------------------------------------------------------
^FOLD AND DETACH HERE^