SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
EDAC Technologies Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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EDAC TECHNOLOGIES CORPORATION
1806 NEW BRITAIN AVENUE
FARMINGTON, CONNECTICUT 06032
(860) 677-2603
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 22, 2002
The Annual Meeting of Shareholders of EDAC Technologies Corporation, a
Wisconsin corporation, which was postponed from its original date of June 27,
2002, will be held at the offices of the Company, 1790 New Britain Avenue,
Farmington, Connecticut 06032, on October 22, 2002 at 10:00 a.m. Eastern
Daylight Time, for the following purposes:
1. To elect six directors;
2. To ratify the appointment of Deloitte & Touche LLP, independent
public accountants, as auditors of EDAC for its fiscal year ending December 28,
2002; and
3. To take action with respect to any other matters that may be
properly brought before the meeting and that might be considered by the
shareholders of a Wisconsin corporation at their annual meeting.
By order of the Board of Directors
Farmington, Connecticut
September 17, 2002
EDAC TECHNOLOGIES CORPORATION
/s/ Ronald G. Popolizio
Ronald G. Popolizio,
Secretary
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON SEPTEMBER 10, 2002
ARE ENTITLED TO VOTE AT THE MEETING. YOUR VOTE IS IMPORTANT TO ENSURE THAT A
MAJORITY OF THE SHARES ARE REPRESENTED. PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING. IF YOU LATER FIND THAT YOU MAY BE PRESENT AT THE
MEETING OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT
ANY TIME BEFORE IT IS VOTED.
A copy of the 2001 Annual Report to Shareholders and a Proxy Statement
accompany this Notice.
EDAC TECHNOLOGIES CORPORATION
1806 NEW BRITAIN AVENUE
FARMINGTON, CONNECTICUT 06032
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 22, 2002
SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of EDAC Technologies Corporation ("EDAC" or the
"Company") of proxies, in the accompanying form, to be used at the Annual
Meeting of Shareholders of the Company to be held at the offices of the Company,
1790 New Britain Avenue, Farmington, Connecticut 06032, on October 22, 2002, at
10:00 a.m. Eastern Daylight Time, and any adjournments thereof. This Proxy
Statement is being mailed on or about September 17, 2002 to shareholders of
record at the close of business on September 10, 2002.
Each shareholder of record at the close of business on September 10,
2002 will be entitled to one vote for each share of common stock, par value
$.0025 per share ("Common Stock"), registered in such shareholder's name in
regard to each proposal put to shareholders at the meeting. On that date, there
were 4,416,038 shares of Common Stock outstanding, the Company's only class of
stock outstanding. Assuming a quorum is present, the directors to be elected to
the Board are elected by plurality, meaning the six directors receiving the most
votes will be elected. All other matters which are properly brought before the
meeting will be approved upon the affirmative vote of a majority of the shares
represented and voted at the meeting. Accordingly, abstentions and broker
non-votes will have no effect. Although not required by law, the Company is
seeking shareholder approval to ratify the appointment of Deloitte & Touche LLP
as the Company's independent auditors for the 2002 fiscal year. If shareholders
do not ratify such appointment, the Company may reevaluate its appointment. The
Company knows of no other matter which will be brought before the meeting other
than the election of directors and ratification of auditors.
All shares of Common Stock represented by properly executed proxies
that are received in time for the annual meeting and which have not been revoked
will be voted in accordance with the instructions indicated in such proxies. If
no such instructions are indicated, such shares of Common Stock will be voted
"FOR" each nominee for election to the Board of Directors and "FOR" the
ratification of the appointment of independent auditors of the Company. In
addition, the persons designated in such proxies will have the discretion to
vote on matters incident to the conduct of the annual meeting. If the Company
proposes to adjourn the annual meeting, the persons named in the enclosed proxy
card will vote all shares of Common Stock for which they have authority, in
favor of such adjournment.
The grant of a proxy on the enclosed proxy card does not preclude a
shareholder from voting in person at the annual meeting. A shareholder may
revoke a proxy at any time prior to its exercise by delivering to the Secretary
of the Company, prior to the annual meeting, a written notice of revocation
bearing a later date or time than the proxy, delivering to the Secretary of the
Company a duly executed proxy bearing a later date or time than the revoked
proxy or
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attending the annual meeting and voting in person. Attendance at the annual
meeting will not in and of itself constitute the revocation of a proxy.
The expense of printing and mailing the Notice and Proxy Statement,
including forwarding expense to beneficial owners of Common Stock held in the
name of another, will be borne by the Company.
ELECTION OF DIRECTORS
NOMINEES
The Company's By-Laws provide for at least five and no more than nine
directors to be elected at each Annual Meeting of Shareholders, to hold office
until the next succeeding Annual Meeting and until their successors are duly
elected. In accordance with the By-Laws, the Company has set the number of
directors at six. Robert J. Gilchrist, a current director, is not standing for
re-election at the annual meeting. The table below sets forth certain
information about each person nominated for election as a director. The Company
anticipates that all nominees listed in this Proxy Statement will be candidates
when the election is held. However, if for any reason any nominee is not a
candidate at that time, proxies will be voted for a substitute nominee
designated by the Company (except where a proxy withholds authority with respect
to the election of directors).
DIRECTOR PRINCIPAL
NAME (AND AGE) SINCE OCCUPATION (1)
- -------------- ----- --------------
John Kucharik (51) 2000 Industry consultant
John Moses (57) - Private investor
Dominick A. Pagano (58) - President and Chief Executive Officer of the Company
and President and Chief Executive Officer of Dapco
Industries, Inc.
Stephen J. Raffay (74)(2)(3) 2000 Retired Vice-Chairman,
Emhart Corporation (a manufacturer of various
machinery and consumer products)
Ross C. Towne (58) - President and Chief Financial Officer, The
Washington Source, Inc. (custom precision sheet
metal fabrication and integration company)
Daniel C. Tracy (61)(2)(3) 1999 Chairman of the Board of the Company and Business
Consultant
(1) The principal occupation of each director during the past five years
was that shown in the table, except that: (1) Mr. Kucharik was Chief
Executive Officer of IPC, Inc. (custom powder coater, e-coater and
electro--plating company) from 2000 to 2002. He
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was President and Chief Executive Officer of MVE, Inc. (manufacturer of
cryogenic holding tanks and equipment) from 1997 to 2000. Prior to
1997, Mr. Kucharik was President of General Signal Pump Group
(manufacturer of water pumps) from 1995 to 1997; (2) Mr. Pagano became
President and Chief Executive Officer of the Company in August of 2002
and also continues as President and Chief Executive Officer of Dapco
Industries, Inc. Mr. Pagano also served as Chairman of the Board of
Directors of American Environmental Technologies, Inc. from 1988 until
1999. He also served as a director of the Company from July 2001 to
April 2002; (3) Mr. Raffay served as a senior executive and as a
Director of Emhart Corporation until his retirement as Vice Chairman in
1987. Since then he has done consulting work and serves as a member of
the boards of directors for a number of companies; (4) Mr. Towne owned
Management Partners, Inc., a management consulting firm from 1990 to
2000, specializing in business planning, organizational restructuring
and operational audits; and (5) Mr. Tracy was employed by Arthur
Andersen from 1963 until his retirement in 1998, serving most recently
as a partner.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
The Board of Directors recommends that shareholders vote FOR all of the
nominees.
DIRECTOR RESIGNATIONS
Joseph P. Lebel resigned from the Board of Directors on February 25,
2002, George Fraher resigned from the Board of Directors on March 14, 2002,
Dominick Pagano resigned from the Board of Directors on April 16, 2002, Ronald
G. Popolizio resigned from the Board of Directors on May 1, 2002 and Richard A.
Dandurand resigned from the Board of Directors and as Chairman and Chief
Executive Officer of the Company on July 29, 2002.
In his letter of resignation, Mr. Lebel stated that he objected to
certain actions of the board majority. Mr. Lebel did not provide any basis for
his objections and the Company does not believe that they have merit.
Mr. Pagano sent a follow-up letter dated April 26, 2002 to the Company
in which Mr. Pagano made certain assertions in connection with his resignation,
including assertions regarding the Company's compensation policies, the proposed
sale of the Company's Precision Components Division in 2001 and the subsequent
operation of that division in 2001, and certain amendments made to the Company's
By-Laws.
DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors has an Audit Committee and a Compensation
Committee.
The Audit Committee held four meetings during 2001. The Audit Committee
meets annually to consider the report and recommendation of the Company's
independent public accountants and is available for additional meetings upon
request of such accountants. The
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Audit Committee's functions also include making recommendations to the Board of
Directors regarding the engagement or retention of such accountants, adoption of
accounting methods and procedures, public disclosures required for compliance
with securities laws and other matters relating to the Company's financial
accounting. For additional information regarding the Audit Committee, see the
"Report of the Audit Committee" below.
The Compensation Committee held four meetings during 2001. The
Compensation Committee sets the compensation for the executive officers of the
Company.
The Company's strategic planning function previously performed by the
Strategic Planning Committee was assumed by the entire Board of Directors which
reviewed the Company's strategic plan.
The Board of Directors held eight meetings during 2001. No director
attended fewer than 75% of the total number of meetings of the Board of
Directors and each Committee on which he served.
FEES OF INDEPENDENT AUDITORS
AUDIT FEES. Arthur Andersen LLP billed the Company $101,500 in fees for
professional services rendered for the audit of the Company's financial
statements for the fiscal year ended December 29, 2001, including reviews of the
interim financial statements in the Company's Quarterly Reports on Form 10-Q
during the fiscal year ended December 29, 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. Arthur
Andersen LLP did not render any professional services to the Company for
information technology advice during the fiscal year ended December 29, 2001.
ALL OTHER FEES. Arthur Andersen LLP billed the Company $56,875 in fees
for all other professional services rendered to the Company during the fiscal
year ended December 29, 2001. These services consisted of tax services and
services relating to employee benefit plans.
The Audit Committee of the Board of Directors of the Company considered
that the provision of the services and the payment of the fees described above
are compatible with maintaining the independence of Arthur Andersen LLP.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three members of the Company's
Board of Directors. Because the Company's Common Stock is traded on the Over the
Counter Bulletin Board, the Company is not subject to the listing requirements
of any securities exchange or Nasdaq regarding the membership of the Company's
Audit Committee. However, each member of the Audit Committee is independent as
defined in Rule 4200(a)(15) for the listing standards of the Nasdaq Stock
Market. The duties and responsibilities of the Audit Committee are set forth in
the Audit Committee Charter, which the Board of Directors adopted on March 14,
2001.
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The Audit Committee has:
- reviewed and discussed the Company's audited financial statements
for the fiscal year ended December 29, 2001, with the Company's
management and with the Company's independent auditors;
- discussed with the Company's independent auditors the matters
required to be discussed by SAS 61 (Codification for Statements on
Auditing Standards); and
- received and discussed with the Company's independent auditors the
written disclosures and the letter from the Company's independent
auditors required by Independence Standards Board Statement No. 1
(Independence discussions with Audit Committees).
Based on such review and discussions with management and the
independent auditors, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 29, 2001, for
filing with the Securities and Exchange Commission.
AUDIT COMMITTEE:
Stephen J. Raffay, Chairman
Robert J. Gilchrist
Daniel C. Tracy
DIRECTORS' FEES
In 2001, the Company paid directors who are not employees of the
Company an $8,000 annual retainer and $1,000 for each non-telephonic Board of
Directors or Committee meeting attended. The Committee Chairmen were paid an
additional $500 for each meeting chaired.
EXECUTIVE OFFICERS
The following table sets forth the name, age and current position of
each executive officer of the Company:
NAME AGE OFFICE
---- --- ------
Dominick A. Pagano 58 President and Chief Executive Officer
Ronald G. Popolizio 43 Executive Vice President, CFO and Secretary
Mr. Pagano became President and Chief Executive Officer of the
Company in August of 2002 and also continues as Chief Executive Officer of Dapco
Industries, Inc. a company that he founded in 1972.
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Mr. Popolizio joined the Company in February 1997 as Vice President,
Chief Financial Officer and Secretary. He became Executive Vice President in
June 1998. From 1994 until joining the Company, Mr. Popolizio was Controller for
The Connecticut Spring and Stamping Corporation. Prior to 1994, he was Chief
Financial Officer with MRMC, Inc., a Rostra holding company.
Officers are elected annually by and serve at the discretion of the
Board of Directors.
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following performance graph compares the five year cumulative
return from investing $100 on December 31, 1996 in the Company's common shares
to the Total Return Index for The Nasdaq Stock Market (U.S. Companies) and the
Total Return Index for Nasdaq Trucking and Transportation Stocks.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF
EDAC COMMON STOCK, TOTAL RETURN INDEX FOR THE NASDAQ STOCK MARKET
AND TOTAL RETURN INDEX FOR NASDAQ TRUCKING AND TRANSPORTATION STOCKS
[LINE GRAPH]
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NASDAQ EDAC
NASDAQ (US) TRANSPORTATION TECHNOLOGIES
YEAR INDEX INDEX INDEX
---- ----- ----- -----
1996 100.000 100.000 100.000
1997 122.477 128.151 437.500
1998 172.680 115.793 264.720
1999 320.832 110.359 82.500
2000 192.977 100.314 44.695
2001 153.121 118.630 104.500
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Compensation Committee of the Board of Directors continues to
monitor existing compensation plans and initiates additional compensation
policies as necessary to enhance the financial performance of the Company.
The Compensation Committee and the entire Board strongly believe that
the shareholders' best interests are served by a motivated workforce that share
in the rewards of achieving defined objectives that improve shareholder value.
The incentive compensation plan (bonus) for Messrs. Dandurand and
Popolizio was established in March 2001 and was based primarily on the
attainment of specific, quantitative objectives relating to sales growth and
corporate net income. To a lesser degree, it was also based on the development
and approval of a long-term strategic business plan. Specifically, separate
stretch goals for sales and net income were established substantially above
budget. To achieve 100% of target incentive both sales and net income had to
reach stretch levels. Bonus amounts paid were calculated on the degree to which
results exceeded budget in each category. Based on the financial performance of
the corporation during 2001, no bonus contribution was earned against sales
growth objectives; however the net income (before extraordinary gain)
substantially exceeded stretch objectives earning full bonus contribution for
this criterion. Other qualitative performance factors routinely considered by
the committee in evaluating executive performance include organizational
development, customer service, quality and adherence to the Company's Mission
Statement.
In addition to the bonus earned in accordance with the incentive plan
described above, Mr. Popolizio was awarded an extraordinary bonus of $50,000 in
2001 for his significant contribution to the completion of the financial
restructuring. As discussed in the 2001 Annual Report, on February 5, 2001 the
Company completed the last step in its refinancing efforts, which occurred
during 2000 and 2001, by obtaining a $2,000,000 real estate loan from a local
bank which resulted in the elimination of approximately $3,884,000 in debt and
approximately $600,000 of accrued interest and fees.
COMPENSATION COMMITTEE:
Robert J. Gilchrist, Chairman
Stephen J. Raffay
Daniel C. Tracy
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION. The following table sets forth certain
information for the years indicated below concerning compensation paid to,
earned by or awarded to the Company's Chief Executive Officer during 2001 and
the only other executive officer of the Company whose total annual salary and
bonus during 2001 exceeded $100,000 (collectively, the "named executive
officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM
------------------- COMPENSATION
------------
AWARDS
SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION SARS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($) (1)
------------------ -------- ------ ----- ------------ ----------- ---------------
Richard A. Dandurand 2001 250,000 82,500 -- 50,000 1,750
Chief Executive 2000 19,321 -- -- 100,000 --
Officer (2)
Ronald G. Popolizio 2001 172,500 91,400 -- 100,000 1,750
Executive Vice 2000 165,000 -- -- 25,000 1,750
President, CFO 1999 157,789 -- -- -- 3,736
and Secretary
(1) Represents payments to defined contribution plans.
(2) Mr. Dandurand became the Chief Executive Officer on December 1, 2000
and resigned effective July 29, 2002.
OPTION GRANTS. The following table provides certain information regarding stock
options granted to the named executive officers in 2001.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLING GRANTED TO EXERCISE FOR OPTION TERM ($) (2)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED (#) FISCAL YEAR (1) ($/SH) DATE 5% 10%
- ----------------------------- --------------- --------------- ---------- --------------------- ---------- -------------
Richard A. Dandurand (3) 50,000 25.2% 2.05 11/30/11 64,462 163,359
Ronald G. Popolizio (4) 100,000 50.4 1.3125 2/04/11 82,542 209,179
(1) The percentage is based on options granted to employees. Options for
198,500 shares were granted to employees during the 2001 fiscal year.
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(2) The dollar amounts under these columns are the result of theoretical
calculations at 5% and 10% rates set by the Commission, and therefore
are not intended to forecast possible future appreciation, if any, in
the Common Stock.
(3) Mr. Dandurand's options were to become exercisable as follows: 20,000
on November 30, 2002, 15,000 on November 30, 2003 and 15,000 on
November 30, 2004. Mr. Dandurand resigned effective July 29, 2002 and
all of his unvested options terminated.
(4) Mr. Popolizio's options become fully exercisable as follows: 33,333 on
February 5, 2002, 33,333 on February 5, 2003 and 33,334 on February 5,
2004.
FISCAL YEAR-END OPTION VALUES. The following table provides certain information
regarding options held by the named executive officers at December 29, 2001.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS AT
AT FISCAL YEAR-END (#) FISCAL YEAR END ($)(1)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------------- --------------- --------------- ------------------------- -------------------------
Richard A. Dandurand -- -- 60,000/140,000 $57,750/86,625
Ronald G. Popolizio -- -- 62,500/100,000 $22,878/58,750
(1) Based on the last reported sale price of the Common Stock on December
28, 2001 less the option exercise price.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Effective July 29, 2002, Richard A. Dandurand resigned as the Company's
Chairman and Chief Executive Officer and the Company entered into a separation
agreement with Mr. Dandurand. Pursuant to this separation agreement, Mr.
Dandurand will receive $104,167 payable over five months in equal installments
beginning on August 1, 2002. The date by which Mr. Dandurand has to exercise
60,000 vested stock options was extended until March 31, 2003. Mr. Dandurand
also will receive continued health, life and long-term disability insurance
coverage until December 2002, use of a leased automobile for 18 months and
outplacement services.
Pursuant to an employment agreement with the Company, as amended in May
2002, Mr. Dandurand was entitled to a minimum annual salary of $250,000 plus an
annual incentive bonus determined by the Compensation Committee of the Board of
Directors, a grant of options to purchase 150,000 shares of Common Stock and
various other fringe benefits. Mr. Dandurand was also entitled to receive a
grant of options to purchase 50,000 shares of Common Stock on
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December 1, 2001 contingent upon renewal of the employment agreement. The
employment agreement also provided that, upon termination of employment by the
Company for any reason other than death, disability or cause or by Mr. Dandurand
following any change in the location he was based to a location outside of
Hartford County, Connecticut, Mr. Dandurand would receive severance equal to 18
months of his then base salary and all previously granted stock options would
become immediately exercisable. If Mr. Dandurand's employment was terminated due
to death or disability, he would be entitled to receive a prorated cash bonus
for the year of termination. The original term of the employment agreement
extended to December 1, 2001, subject to automatic renewal for additional
one--year terms unless notice of termination was given within 45 days of the end
of the then current term.
Pursuant to an employment agreement with the Company, as amended in May
2002, Mr. Popolizio is entitled to a minimum annual salary of $172,500 plus an
annual incentive bonus determined by the Compensation Committee of the Board of
Directors and various other fringe benefits. The agreement also provides that,
upon termination of employment by the Company for any reason other than death,
disability or cause or by Mr. Popolizio following any change in the location he
is based to a location outside of Hartford County, Connecticut, Mr. Popolizio
will receive severance equal to 24 months of his then base compensation plus 2
times the average of the three highest annual bonus payments received by him
during the five fiscal years prior to termination. If Mr. Popolizio's employment
is terminated due to death or disability, he will receive a prorated cash bonus
for the year of termination.
CHANGE OF CONTROL AGREEMENTS
The Company entered into Change of Control Agreements with Richard A.
Dandurand, the Company's former Chief Executive Officer in 2000 and with Ronald
G. Popolizio, the Company's Executive Vice President, Chief Financial Officer
and Secretary in 1999. These agreements essentially act as springing employment
agreements which provide that upon a change of control of the Company (as
defined in the agreement), the executive shall continue to be employed by the
Company for a period of two years for Mr. Dandurand and three years for Mr.
Popolizio in the same capacities and with the same compensation and benefits as
the executive was receiving prior to the change of control (all as specified in
the agreements). If the executive is terminated after the change of control
without cause or he quits for good reason (both as defined in the agreement),
the executive is generally entitled to receive a severance payment from the
Company equal to the amount of compensation to be paid to the executive under
the agreement, in the case of Mr. Dandurand, for two years following termination
if termination occurs during the 180-day period following a change of control
and for 18 months if termination occurs thereafter during the term of the
agreement and, in the case of Mr. Popolizio, for the greater of the balance of
the term of the agreement or one year. A termination by the executive for any
reason during the 180-day period following a change of control is deemed to be
for good reason.
In 2002, certain shareholders proposed changes to the composition of
the Company's board of directors. The letters and other communications from
these shareholders contained certain statements which, if true, appear to have
indicated that a change of control (as defined in the Change of Control
Agreements) may have occurred. In May 2002, Messrs. Dandurand and Popolizio each
agreed to waive their rights under the Change of Control Agreements with
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respect to any prior events that may have been deemed to constitute a change of
control. These officers did not waive their rights under the Change of Control
Agreements with respect to any future events that may constitute a change of
control. In consideration for these waivers, the Company agreed effect certain
amendments to the employment agreements of Messrs. Dandurand and Popolizio,
including to provide that Mr. Popolizio's minimum base salary is $172,500 (which
is the base salary that was in effect for Mr. Popolizio during 2001) and to
provide each officer with severance payments if the officer resigns following
certain changes in the location of his employment by the Company. Mr. Dandurnad
resigned effective July 29, 2002 and his Change of Control Agreement terminated
as of such date. See "Employment and Severance Agreements."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of outside directors. During the
fiscal year ended December 29, 2001, the following board members served on the
Compensation Committee: Robert J. Gilchrist, Stephen J. Raffay and Daniel C.
Tracy.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
selected Deloitte & Touche LLP to be the Company's auditors for the 2002 fiscal
year. Although this appointment is not required to be submitted to a vote of
shareholders, the Company believes it appropriate as a matter of policy to
request that the shareholders ratify the appointment. If shareholder
ratification is not received, the Board of Directors may reconsider the
appointment. It is expected that a representative of Deloitte & Touche LLP will
be present at the annual meeting and will have the opportunity to make a
statement if he desires to do so and will be available to respond to appropriate
questions. Arthur Andersen LLP was the Company's auditors for the 2001 fiscal
year and it is not expected that a representative of Arthur Andersen LLP will be
present at the annual meeting.
INFORMATION REGARDING CHANGE OF AUDITORS
On May 16, 2002, the Company's Board of Directors, upon recommendation
of its Audit Committee, approved the engagement of Deloitte & Touche LLP to
replace Arthur Andersen LLP as the Company's auditors. Arthur Andersen LLP's
reports on the Company's consolidated financial statements for each of the
fiscal years ended December 29, 2001 and December 30, 2000 did not contain an
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope or accounting principles, except that Arthur
Andersen LLP's report on the Company's consolidated financial statements for the
fiscal year ended December 29, 2001 was qualified as to the Company's ability to
continue as a going concern. During the Company's two most recent fiscal years
and through May 21, 2002 (the date that the Company filed a Current Report on
Form 8-K disclosing its decision to no longer engage Arthur Andersen LLP), there
were no disagreements with Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to Arthur Andersen LLP's satisfaction, would
have caused them to make reference to the subject matter in connection with
their report on the Company's consolidated
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financial statements for such years; and there were no reportable events, as
listed in Item 304(a)(1)(v) of SEC Regulation S-K.
During the Company's two most recent fiscal years and through May 21,
2002, the Company did not consult Deloitte & Touche LLP with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, or any other matters or
reportable events listed in Items 304(a)(2)(i) and (ii) of SEC Regulation S-K.
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K
The Company is required to file an annual report, called a Form 10-K,
with the Commission. A copy of Form 10-K for the fiscal year ended December 29,
2001 will be made available, without charge, to any person entitled to vote at
the annual meeting. Written requests should be directed to Ronald G. Popolizio,
Secretary, EDAC Technologies Corporation, 1806 New Britain Avenue, Farmington,
Connecticut 06032.
SECURITY OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock as of August 31, 2002 by (i) each director
and named executive officer (as defined below), (ii) all directors and executive
officers as a group, and (iii) each person or other entity known by the Company
to beneficially own more than 5% of the outstanding Common Stock.
The Company has determined beneficial ownership in accordance with the
rules of the Securities and Exchange Commission. Unless otherwise indicated, the
persons and entities included in the table have sole voting and investment power
with respect to all shares beneficially owned, except to the extent authority is
shared with spouses under applicable law. Shares of Common Stock subject to
options that are either currently exercisable or exercisable within 60 days of
August 31, 2002 are deemed to be outstanding and to be beneficially owned by the
option holder for the purpose of computing the percentage ownership of the
option holder. However, these shares are not treated as outstanding for the
purpose of computing the percentage ownership of any other person.
NUMBER OF SHARES PERCENT
BENEFICIALLY OF
NAME OWNED CLASS
- --------------------------------------------- ----------------------------------- ----------------------------------
EDAC Technologies Corporation Employee
Stock Ownership Plan and Trust (1)
292,064 6.6%
Richard A. Dandurand (2) 79,110 1.8
12
NUMBER OF SHARES PERCENT
BENEFICIALLY OF
NAME OWNED CLASS
- --------------------------------------------- ----------------------------------- ----------------------------------
Robert J. Gilchrist (2) 65,441 1.5
John Kucharik (2) 18,561 *
John Moses 541,190 12.3
Dominick A. Pagano 187,038 4.2
Ronald G. Popolizio (1)(2) 403,301 8.9
Stephen J. Raffay (2) 13,000 *
Ross C. Towne 80,820 1.8
Daniel C. Tracy (2) 46,444 1.0
William B. Bayne Jr. 300,706 6.8
Francis W. Moskey (1) 387,411 8.8
Glenn L. Purple (1)(2) 310,821 7.0
All Directors and Executive Officers as a
group (6 persons) (1)(2) 733,785 16.0
- ---------------------------------------------
* Represents beneficial ownership of less than 1%.
(1) Consists of 292,064 shares owned by the EDAC Technologies Corporation
Employee Stock Ownership Plan (the "ESOP"). Voting power is subject to
the direction of the ESOP participants for all allocated shares, and
the Trustees of the ESOP may only vote such shares if a participant
fails to direct the voting of the shares allocated to his or her
account. As of August 31, 2002, all of the 292,064 shares owned by the
ESOP had been allocated to participants. The Trustees of the ESOP do
not have investment power as to any of the shares owned by the ESOP.
The Trustees of the ESOP are as follows:
Ronald G. Popolizio Glenn L. Purple
Francis W. Moskey
(2) The number of shares shown includes the following shares which may be
acquired by exercise of options which are currently exercisable or
exercisable within 60 days of August 31, 2002: 60,000 as to Mr.
Dandurand; 36,000 as to Mr. Gilchrist; 10,000 each as to Messrs.
Kucharik and Raffay; 20,000 as to Mr. Tracy; 94,333 as to Mr.
Popolizio; 4,667 as to Mr. Purple; and 230,333 as to all executive
officers and directors as a group.
The address of each of the current directors of the Company and the
ESOP is the principal business address of the Company. The address of Mr. Bayne
is 714 South 19th Street, Arlington, VA 22202. The address of Mr. Moses is 3616
North Albemarle Street, Arlington, VA 22207. The address of Mr. Towne is 6643
Madison-McLean Drive, McLean, VA 22101.
13
The above beneficial ownership information is based upon information
furnished by the specified persons and is determined in accordance with
Securities and Exchange Commission Rule 13d-3, as required for purposes of this
Proxy Statement. It is not necessarily to be construed as an admission of
beneficial ownership for other purposes and may include shares as to which
beneficial ownership is disclaimed.
SHAREHOLDER PROPOSALS
Any shareholder who desires to submit a proposal for inclusion in the
Company's 2003 Proxy Statement should submit the proposal in writing to Ronald
G. Popolizio, Secretary, EDAC Technologies Corporation, 1806 New Britain Avenue,
Farmington, Connecticut 06032. Since the Company expects to hold its 2003 Annual
Meeting of Shareholders in May 2003, the Company must receive a proposal no
later than January 24, 2003, in order to consider it for inclusion in the
Company's 2003 Proxy Statement.
The Company's Amended and Restated By-Laws require a shareholder to
give advance notice of any business, including the nomination of candidates for
the Board of Directors, that the shareholder wishes to bring before a meeting of
shareholders of the Company. In general, for business to be brought before a
shareholders meeting by a shareholder, written notice of the shareholder
proposal or nomination must be delivered to or mailed to and received by the
Secretary of the Company at the principal executive offices of the Company not
later than the close of business on the later of (i) the 60th calendar day prior
to the date of such meeting or (ii) the 10th calendar day following the day on
which public announcement is first made of the date of such meeting. The written
notice of a shareholder proposal or nomination must contain all of the
information required by the Company's Amended and Restated By-Laws. Notices of
intention to present proposals or nominations at the 2003 Annual Meeting should
be addressed to Ronald G. Popolizio, Secretary, EDAC Technologies Corporation,
1806 New Britain Avenue, Farmington, Connecticut 06032.
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 10% of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission (the
"Commission") initial reports of beneficial ownership on Form 3 and reports of
changes in beneficial ownership of the Company's equity securities on Form 4 or
5. The rules promulgated by the Commission under section 16(a) of the Exchange
Act require those persons to furnish the Company with copies of all reports
filed with the Commission pursuant to section 16(a). Based solely upon a review
of such forms actually furnished to the Company, and written representations of
certain of the Company's directors and executive officers that no forms were
required to be filed, all directors, executive officers and 10% stockholders
have filed with the Commission on a timely basis all reports required to be
filed under section 16(a) of the Exchange Act with the following exceptions: Mr.
Gilchrist reported late seven purchases requiring one Form 4 report on a Form 5.
Mr. Pagano filed late
14
one Form 4 reporting five purchases. Mr. Moses, the only 10% stockholder, has
not filed any reports under section 16(a) of the Exchange Act.
OTHER MATTERS
The Directors of the Company know of no other matters to be brought
before the meeting. If any other matters properly come before the meeting,
including any adjournment or adjournments thereof, it is intended that proxies
received in response to this solicitation will be voted on such matters in the
discretion of the person or persons named in the accompanying proxy form.
BY ORDER OF THE BOARD
OF DIRECTORS
EDAC Technologies Corporation
/s/ Ronald G. Popolizio
Ronald G. Popolizio, Secretary
Farmington, Connecticut
September 17, 2002
15
EDAC TECHNOLOGIES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - OCTOBER 22, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints each of Ronald G. Popolizio and Daniel J. Brink the
proxies (with full substitution) of the undersigned to attend the annual meeting
of shareholders of EDAC Technologies Corporation (the "Company") to be held on
October 22, 2002 at 10:00 a.m., Eastern Daylight Time, at the offices of the
Company, 1790 New Britain Avenue, Farmington, Connecticut and any adjournment
thereof and to vote the shares of stock of the Company held by the undersigned
on September 10, 2002, as specified on the reverse side and on any other matters
that may properly come before said meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY APPOINTMENT WILL BE
VOTED FOR ITEMS 1 AND 2.
(CONTINUED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
EDAC TECHNOLOGIES CORPORATION
OCTOBER 22, 2002
\/ Please Detach and Mail in the Envelope Provided \/
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK YOUR
A [X] VOTES AS IN
THIS EXAMPLE.
FOR all WITHHOLD
nominees AUTHORITY
listed to the to vote for
right (except as all nominees
specified below) listed to the
right FOR AGAINST ABSTAIN
1. ELECTION NOMINEES: 2. To ratify the appointment
OF of Deloitte & Touche LLP [ ] [ ] [ ]
DIRECTORS: [ ] [ ] as auditors of the Company
1 - John M. Kucharik for the fiscal year ending
Instructions: To withhold authority to vote for any 2 - John Moses December 28, 2002.
individual nominee, write the number(s) of the 3 - Dominick A. Pagano
nominee(s) on the line provided below: 4 - Stephen J. Raffey CHECK APPROPRIATE BOX:
5 - Ross C. Towne
- ---------------------------------------------- 6 - Daniel C. Tracy ADDRESS CHANGE? [ ]
NAME CHANGE? [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Stockholder: Date:
---------------------------------------------- ------------------------------------------------ ------------------
SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as the name appears hereon. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such.
If a corporation, please sign in full corporate name by the president or other authorized officer. If a
partnership, please sign in the partnership's name by an authorized person.
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