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 Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
MERRIMAC INDUSTRIES, INC.
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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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(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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MERRIMAC INDUSTRIES, INC.
41 FAIRFIELD PLACE
WEST CALDWELL, NJ 07006-6287
Mason N. Carter
Chairman of the Board May 1, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Merrimac Industries, Inc. to be held at the offices of the Company, 41
Fairfield Place, West Caldwell, New Jersey, on Wednesday, June 12, 2002 at
10:00 a.m.
Information about the annual meeting and the various matters upon which
stockholders will act is found in the formal Notice of Annual Meeting of
Stockholders and Proxy Statement on the following pages. The Annual Report to
Stockholders for 2001, including financial statements, accompanies the Proxy
Statement, but does not constitute a part of the proxy solicitation material.
Since it is important that your shares be represented at the annual
meeting, we request that you promptly complete and submit the enclosed proxy
either via the Internet, by telephone or by mail. Any stockholder returning a
proxy may revoke it.
Sincerely,
/s/ Mason N. Carter
Mason N. Carter
Chairman of the Board,
President and
Chief Executive Officer
MERRIMAC INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 2002
The Annual Meeting of Stockholders of Merrimac Industries, Inc. (the
"Company") will be held at the offices of the Company, 41 Fairfield Place, West
Caldwell, New Jersey, on Wednesday, June 12, 2002, at 10:00 a.m., for the
following purposes:
(1) To elect three members to the Company's Board of Directors for a
term of three years;
(2) To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the 2002 fiscal year; and
(3) To transact such other business as may properly come before the
meeting.
Holders of record of the Company's common stock, $0.01 par value per
share, at the close of business on April 26, 2002, the record date fixed by the
Board of Directors, are entitled to receive notice of, and to vote at, the
meeting and at any adjournments thereof. A proxy and proxy statement for the
meeting are enclosed herewith.
By Order of the Board of Directors,
/s/ Robert V. Condon
ROBERT V. CONDON
Secretary
May 1, 2002
WHETHER OR NOT YOU PLAN TO ATTEND THE 2002 ANNUAL MEETING, PLEASE PROMPTLY
SUBMIT THE ACCOMPANYING PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, VIA
THE INTERNET, BY TELEPHONE OR BY MAIL.
MERRIMAC INDUSTRIES, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 2002
The Board of Directors (the "Board") of Merrimac Industries, Inc. (the
"Company") hereby solicits all holders of the Company's common stock, par value
$0.01 per share ("Common Stock"), to vote by proxy at the Annual Meeting of
Stockholders, which will be held at the offices of the Company, 41 Fairfield
Place, West Caldwell, New Jersey, on Wednesday, June 12, 2002 at 10:00 a.m.
(including any adjournment or postponement thereof, the "Meeting") for the
purposes stated in the Notice of Annual Meeting of Stockholders. The shares
represented by proxies will be voted at the Meeting in accordance with the
instructions noted thereon.
A proxy may be revoked at any time before it is exercised by filing a
written notice of revocation with the Secretary of the Company, by revocation in
person at the Meeting or by presenting a later-dated proxy.
This Proxy Statement and the accompanying form of proxy are first being
mailed to stockholders on or about May 1, 2002.
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 stockholders 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 the forwarding of this mailing.
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL
The Board fixed the close of business on April 26, 2002 (the "Record
Date"), as the record date for the determination of stockholders 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 3,186,008 shares of
Common Stock. Every stockholder of record on the Record Date is entitled to one
vote for each share of Common Stock then held.
The presence of a quorum is required to conduct business at the
Meeting. A quorum is defined as a majority of all the shares of Common Stock
entitled to vote at the Meeting, present in person or by proxy. Votes withheld
from director nominees and abstentions will be counted in determining whether a
quorum has been reached.
The affirmative vote of (i) a plurality of the shares present at the
Meeting and entitled to vote on the subject matter is required to elect the
director nominees to the Board, and (ii) a majority of the shares present at the
Meeting and entitled to vote on the subject matter is required to ratify the
selection of Ernst & Young LLP as the Company's independent auditors and for any
other business which may properly come before the Meeting.
Abstentions will have the same effect as negative votes, except that
abstentions will have no effect on the election of directors because directors
are elected by a plurality of the votes cast. In accordance with the American
Stock Exchange rules, brokers 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 on items such as the election
of directors and appointment of auditors.
ELECTION OF DIRECTORS
The Company's 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 stockholders. Each of the
three nominees, Mason N. Carter, Albert H. Cohen and David B. Miller, to be
elected as Class III directors at the Meeting would hold office until the
Company's annual meeting of stockholders in the year 2005 and until his
successor is duly elected and qualified. The two directors in Class I, Joel H.
Goldberg and Joseph B. Fuller, and the three directors in Class II, Edward H.
Cohen, Arthur A. Oliner and Harold J. Raveche, are serving terms expiring at the
Company's annual meetings in 2003 and 2004, respectively.
The persons named in the enclosed form of proxy will vote such proxy
for the election to the Board as Class III directors of Mason N. Carter, Albert
H. Cohen and David B. Miller. Messrs. Carter and A. Cohen have been previously
elected as directors by the stockholders. Approval of the director nominees
requires the affirmative vote of a plurality of the shares present at the
Meeting and entitled to vote on the subject matter. 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. There is no arrangement or understanding between any
director or nominee and any other person pursuant to which such person was
selected as a director or nominee, except that on February 28, 2002, the Company
entered into a subscription agreement for Common Stock with DuPont Chemical and
Energy Operations, Inc. ("DCEO"), a subsidiary of E.I. DuPont de Nemours and
Company ("DuPont"), whereby DCEO has the right to designate a nominee to the
Company's Board and has designated David B. Miller as such nominee.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
2
INFORMATION ABOUT NOMINEES FOR DIRECTORS AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to each
nominee for director and each continuing director.
DIRECTOR OF THE
NAME AGE COMPANY SINCE
---- --- ---------------
Class III:
Mason N. Carter................... 56 1995
Albert H. Cohen................... 69 1997
David B. Miller................... 45 2002
Class I:
Joel H. Goldberg.................. 58 1997
Joseph B. Fuller.................. 45 2000
Class II:
Edward H. Cohen................... 63 1998
Arthur A. Oliner.................. 80 1961
Harold J. Raveche................. 59 2001
Mason N. Carter was elected to the 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 and Systems Group of Datatec Industries, Inc., Fairfield, New Jersey, a
leading provider of data network implementation services. He is a director of
Transnational Industries, Inc.
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 its President and Chief Executive Officer. Metex Corporation is a
manufacturer of industrial and automotive products.
David B. Miller has been Vice President and General Manager of DuPont
Electronic Technologies, an electronic development and manufacturing company,
since 2001. Mr. Miller has been employed by DuPont in several capacities since
1981. From 1999 through 2001, Mr. Miller was DuPont's Director of Investor
Relations. From 1997 to 1999, Mr. Miller was Managing Director, Asia Pacific and
Global Business Director, Photopolymer and Electronic Materials. Mr. Miller
served as Global Business Director, Printed Circuit Material from 1995 to 1997.
Mr. Miller has responsibility for DuPont's various electronic material
initiatives. Mr. Miller is a director of DuPont Air Products NanoMaterials Joint
Venture, a joint venture with Air Products and Chemicals, Inc. focused on
chemical mechanical planarization materials, and of HD Microsystems, a joint
venture with Hitachi Chemical that develops, manufactures and markets liquid
polyimides and other materials to the semiconductor industry.
3
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. Mr. Goldberg 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 a
director of Phillips-Van Heusen Corporation.
Edward H. Cohen is counsel to the law firm of Katten Muchin Zavis
Rosenman, with which he has been affiliated since 1963. He is a director of
Phillips-Van Heusen Corporation, Franklin Electronic Publishers, Inc., Voice
Powered Technology International, Inc. and Levcor International, Inc.
Arthur A. Oliner has been Professor Emeritus of Electrophysics at
Polytechnic University (formerly Polytechnic Institute of Brooklyn) since 1990.
Prior to that, he 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.
Harold J. Raveche has been President of the Stevens Institute of
Technology since 1988. Prior to that, he was the Dean of Rensselaer Polytechnic
Institute from 1985 until 1988. He was a member of the U.S. Trade and Technology
missions to Israel in 1998, Brazil in 1999 and Korea and Taiwan in 2000. Dr.
Raveche is a director of Cirrus Logic, Inc.
There are no family relationships among the directors or nominees for
directors of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year that ended on December 29, 2001, the Board of
Directors held seven meetings, of which one was by telephone conference. Each
director attended 75% or more of the aggregate of the total number of meetings
of the Board and of the committees on which he served during fiscal year 2001.
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 currently consists of Messrs. Fuller and
Raveche and administers the Company's 1997 Long-Term Incentive Plan, 1993 Stock
Option Plan, 2001
4
Stock Option Plan and 2001 Key Employee Incentive Plan. During fiscal year 2001,
the Stock Option Committee held one meeting.
The Stock Purchase Plan Committee currently consists of Messrs. Fuller
and Raveche and administers the 2001 Stock Purchase Plan. During fiscal year
2001, the Stock Purchase Plan Committee held one meeting.
The Audit Committee currently consists of Messrs. A. Cohen, E. Cohen
and Raveche. Mr. Fuller resigned as a member of the Audit Committee on February
21, 2002, and was replaced by Dr. Raveche. The Audit Committee's function is to
review the Company's annual audit and the Company's accounting practices with
the Company's independent auditors and to ascertain their independence from
management. The Audit Committee is responsible for recommending the inclusion of
the audited financial statements in the Company's annual report on Form 10-KSB
filed with the Securities and Exchange Commission ("SEC"). During fiscal year
2001, the Audit Committee held five meetings.
Messrs. A. Cohen, Goldberg and Oliner 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 year 2001, the Compensation Committee held
three meetings.
Messrs. Carter and A. Cohen currently serve on the Management
Committee. The Management Committee determines the strategic business direction
for the Company and evaluates the impact of current changes in the business
environment in which the Company operates. During fiscal year 2001, the
Management Committee held three meetings.
Messrs. Carter and Oliner currently serve on the Nominating Committee.
Stockholders wishing to recommend persons for consideration by the Nominating
Committee as nominees for election to the Board must comply with the Company's
By-laws (see "Stockholder Proposals" below). Any such recommendation should be
accompanied by a description of the person's experience and 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
year 2001, the Nominating Committee held one meeting.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial reporting process
on behalf of the Board of Directors. The Audit Committee operates under a
written charter adopted by the Board. Management is responsible for the
Company's internal financial controls and financial reporting process. The
independent auditors are responsible for performing an independent audit of the
Company's consolidated financial statements in accordance with generally
accepted auditing standards and for issuing a report thereon.
We met and held discussions with management and Arthur Andersen LLP,
the Company's independent auditors for fiscal 2001. Management represented to us
that the
5
Company's consolidated financial statements for the fiscal year ended December
29, 2001 were prepared in accordance with generally accepted accounting
principles. We discussed the consolidated financial statements with both
management and the independent auditors. We also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication With Audit Committees).
The Audit Committee discussed with the independent auditors the overall
scope and plans for the audit. We met with the independent auditors, with and
without management, to discuss the results of their examination, the evaluation
of the Company's internal controls, and the overall quality of the Company's
financial reporting.
We discussed with the independent auditors the auditor's independence
from the Company and management, including the independent auditors written
disclosures required by Independent Standards Board Standard No. 1 (Independence
Discussions With Audit Committees).
During fiscal year 2001, the Company paid Arthur Andersen LLP the
following fees:
Audit Fees. Approximately $174,100 for the last annual audit, including
review of periodic filings with the SEC.
Financial Information Systems Design and Implementation Fees. No
amounts were paid for financial information systems design and implementation.
All Other Fees. Approximately $73,500 for all other matters (which were
primarily related to tax compliance and assistance on tax related matters).
We reviewed the above information concerning the fees paid to the
independent auditors for the fiscal year ended December 29, 2001, and have
considered whether the provision of these services is compatible with
maintaining the independence of the independent auditors.
Based on the foregoing, we have recommended to the Board of Directors,
and the Board approved, that the audited consolidated financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 29, 2001, for filing with the SEC.
Subsequent to the filing of the Form 10-KSB on March 29, 2002, the
Audit Committee recommended that the Company appoint Ernst & Young LLP as its
new auditors commencing with the 2002 fiscal year.
Audit Committee
Edward H. Cohen, Chairman
Albert H. Cohen
Harold J. Raveche
Joseph B. Fuller (1)
- --------------------------
(1) Mr. Fuller resigned as a member of the Audit Committee on February 21,
2002, and was replaced by Dr. Raveche.
6
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each
executive officer of the Company.
NAME AGE CURRENT POSITION
---- --- ----------------
Mason N. Carter 56 Chairman of the Board, President and Chief Executive Officer
Robert V. Condon 55 Vice President, Finance, Chief Financial Officer, Treasurer
and Secretary
Richard E. Dec 58 Vice President, Business Development
Brian R. Dornan 53 Vice President and Chief Engineer, RF Microwave Products
Group
Reynold K. Green 43 Vice President and General Manager, RF Microwave Products
Group
Jayson E. Hahn 34 Vice President, Information Technology and Chief
Information Officer
James J. Logothetis 42 Vice President and Chief Technology Officer, Multi-Mix(R)
Microtechnology Group
Joseph McAndrew 47 Vice President and General Manager, Multi-Mix(R)
Microtechnology Group
Michael Pelenskij 41 Vice President , Operations RF Microwave Products Group
Dr. Kovilvila N. Ramachandran 61 President and Technical Director, Filtran Microcircuits
Inc. ("FMI"), the Company's wholly-owned subsidiary
Lawrence S. Ross 33 Vice President, Quality
Information regarding Mr. Carter is included on page 3.
Mr. Condon has been Vice President, Finance and Chief Financial Officer
since joining the Company in March 1996 and was appointed Secretary and
Treasurer 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 was appointed Vice President, Business Development in July 2000
after serving as Vice President, Marketing since joining the Company in March
1997. Prior to joining the Company, he was Vice President of Business
Development of Kinley & Manbeck, Inc., a business process re-engineering and
systems implementation consulting company, from April 1996 to March 1997. From
1995 to March 1996, he was National Account Manager, Product and Systems Group
for Datatec Industries, Inc.
7
Mr. Dornan was appointed Vice President and Chief Engineer of the RF
Microwave Products Group in December 2000 after serving as Vice President,
Research and Development since February 1998. From October 1996 to February 1998
he served as Group Vice President of Technology and Engineering of the Company.
He had been Group Vice President of Manufacturing from 1986 to October 1996.
Mr. Green was appointed Vice President and General Manager of the RF
Microwave Products Group in January 2000. He was Vice President, Sales from
March 1997 to January 2000 and Vice President of Manufacturing from April 1996
to March 1997. He was a member of the Board of Directors from April 1996 to May
1997 and did not seek re-election to the Board. Prior to April 1996, Mr. Green
held positions as Director of Manufacturing, National Sales Manager and Director
of Quality Control and High-Reliability Services at the Company.
Mr. Hahn was appointed Vice President, Information Technology and Chief
Information Officer in October 2000 after serving as Director, Network Services
since June 1998. He served as Manager, Network Services from June 1997 to June
1998 and was Information Technology Support Specialist from December 1996 to
June 1997. Prior to joining the Company, Mr. Hahn was with Berkeley Educational
Services, where he held various Information Technology related positions from
1992 to November 1996.
Mr. Logothetis was appointed Vice President and Chief Technology
Officer, Multi-Mix(R)Microtechnology Group in March 2002. Mr. Logothetis was
appointed Vice President, Multi-Mix(R)Engineering in May 1998, after rejoining
the Company in January 1997 to serve as Director, Advanced Technology. Prior to
rejoining the Company, he served as a director for Electromagnetic Technologies,
Inc. in 1995 and became Vice President of Microwave Engineering in 1996. From
1984 through 1994, Mr. Logothetis had various engineering positions with the
Company, including Group Manager, Engineering.
Mr. McAndrew was appointed Vice President and General Manager,
Multi-Mix(R) Microtechnology Group in March 2002. Mr. McAndrew was appointed
Vice President, Multi-Mix(R) 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 the Company including Manager,
Manufacturing and Process Engineering.
Mr. Pelenskij was appointed Vice President, Operations RF Microwave
Products Group in January 2000, after serving as Director of Manufacturing of
the Company from January 1999 to January 2000. Prior to January 1999, Mr.
Pelenskij held the positions of Manager of Screened Components, RF Design
Engineer, and District Sales Manager at the Company since joining the Company in
1993.
Dr. Ramachandran has been President of 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 the Company's
acquisition of FMI. Prior to 1983, Dr. Ramachandran held a position at the
National Research Council of Canada.
Mr. Ross was appointed Vice President, Quality in January 2000 after
serving as Director, Quality since joining the Company in March 1999. Prior to
joining the Company, Mr. Ross was employed as Manager, Quality & Efficiency at
Philips Consumer Electronics' Digital TV Group, a corporate design competency,
from December 1998 to March 1999. From May 1997 to December 1998, Mr. Ross held
the position of Corporate Quality Assurance Manager at
8
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.
There are no family relationships among the executive officers of the
Company.
EXECUTIVE COMPENSATION
The following table sets forth a summary for the last three 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 year 2001 and (ii) the four other most highly compensated executive
officers serving at the end of the last fiscal year (collectively, the "Named
Executive Officers"). No persons who were executive officers at any time during
fiscal year 2001, but not on December 29, 2001, would have been included under
clause (ii) if they had remained an executive officer at December 29, 2001.
9
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- --------------------------------------
AWARDS PAYOUTS
---------------- --------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(S) Year Salary ($) Bonus ($) OPTIONS/SARS(#) COMPENSATION (1)($)
- -------------------------------------- ------- ------------- -------------- ---------------- ---------------------
Mason N. Carter 2001 260,000 125,000 - 95,343(2)
Chairman, President and 2000 250,000 100,000 5,000 6,448
Chief Executive Officer 1999 240,000 - 15,000
4,800
Robert V. Condon 2001 158,000 35,000 - 5,100
Vice President, Finance, 2000 150,000 20,000 - 5,674
Chief Financial Officer, 1999 145,000 - 3,500 4,648
Treasurer and Secretary
Reynold K. Green 2001 135,000 15,000 - 4,375
Vice President and General 2000 127,500 10,000 - 4,791
Manager, RF Microwave 1999 126,000 - 3,500 3,680
Products Group
Vice President, Sales
James J. Logothetis 2001 125,000 5,000 - 2,024
Vice President and Chief 2000 120,000 10,000 5,000 2,700
Technology Officer, 1999 116,000 5,000 3,500 1,745
Multi-Mix(R)Microtechnology Group
Joseph McAndrew 2001 115,000 5,000 - 3,750
Vice President and General 2000 115,000 10,000 - 4,236
Manager, Multi-Mix(R) 1999 105,000 2,000 4,000 3,068
Microtechnology Group
(1) Except as set forth in note (2) below, comprises matching 401(k)
amounts for each of fiscal year 1999, 2000 and 2001 and includes a
discretionary profit sharing contribution by the Company for fiscal
year 2000, pursuant to the Company's savings and investment plan.
(2) Includes $90,243 forgiven by the Company as a special bonus to Mr.
Carter in connection with an amendment to his employment agreement with
the Company. See "Certain relationships and related transactions"
below.
10
There were no individual grants of stock options during fiscal year
2001 to any of the Named Executive Officers.
The following table sets forth information concerning the exercise of
stock options during fiscal year 2001 by each of the Named Executive Officers
and the fiscal year-end value of unexercised options.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END($)**
ACQUIRED ON VALUE FY-END EXERCISABLE/
NAME EXERCISE(#) REALIZED($) EXERCISABLE/ UNEXERCISABLE * UNEXERCISABLE
- ---------------------------- ---------------- ----------------- ------------------------------ -------------------------
Mason N. Carter 1,650 4,628 111,000/2,500 115,430/7,363
Robert V. Condon - - 13,750 14,520/0
Reynold K. Green - - 12,850 42,587/0
James J. Logothetis - - 28,000/8,000 16,120/7,363
Joseph McAndrew - - 13,350/19,250 19,795/0
* 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 market price of the Common Stock of $11.32 on December 29,
2001.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Mason N. Carter is subject to an employment agreement, as amended as of
August 31, 2000, pursuant to which he will serve as President and Chief
Executive Officer of the Company for a minimum annual salary of $240,000. The
initial term of the employment agreement ends on December 31, 2007 and
automatically renews for successive one year periods thereafter unless
terminated pursuant to the terms of the employment agreement. If, within 12
months after a change-in-control of the Company, Mr. Carter resigns for "good
reason" (as defined in the employment agreement) or is dismissed without "cause"
(as defined in the employment agreement), the Company will pay Mr. Carter the
greater of (a) his 24-month salary and benefits (including bonus) or (b) his
salary and benefits from the date of his resignation or termination to the end
of the then current term of the employment agreement. The employment agreement
also provides that Mr. Carter will receive an annual special bonus on August 31
in each of the years 2001, 2002, 2003, 2004 and 2005, in the form of forgiveness
of 20% of the principal and the
11
accrued interest on a $280,000 loan the Company made to Mr. Carter on August 31,
2000, in connection with the amendment to Mr. Carter's employment agreement. See
"Certain relationships and related transactions" below.
In January 1998, the Company entered into severance agreements with
each of the Named Executive Officers (other than Mr. Carter). 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 in the severance agreements) 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1998, the Company sold 22,000 shares of Common Stock to Mason N.
Carter, Chairman, President and Chief Executive of the Company, at a price of
$11.60 per share, which approximated the average closing price of the Company's
Common Stock during the first quarter of fiscal year 1998. The Company extended
to Mr. Carter a loan of $255,000 in connection with the purchase of these
shares. In addition, the Company amended a prior loan to Mr. Carter of $105,000.
The 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. However, payment of interest
that accrued from November 1998 until November 1999 was deferred and payment of
interest that will accrue from November 2001 until November 2002 will be
deferred until 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 and Mr. Carter has agreed to restrictions on the resale of these shares of
Common Stock.
On August 31, 2000, in connection with an amendment of Mr. Carter's
employment agreement, the Company loaned Mr. Carter an additional $280,000.
Interest on the loan will be calculated at a variable interest rate based on the
prime rate of the Company's lending bank payable in accordance with Mr. Carter's
employment agreement. Each year the Company will forgive 20% of the amount due
under this loan and accrued interest thereon. During 2001, the amount of $56,000
and $23,000 of accrued interest was forgiven.
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. Pursuant to the shareholder's agreement, Mr. Huber is required to
vote his shares of Common Stock as directed by the Board of Directors or the
Chief Executive Officer of the Company. Mr. Huber is a Managing Director of
William D. Witter Associates, an affiliate of William D. Witter, Inc., which is
a beneficial owner of more than 5% of the Common Stock. Mr. Huber disclaims
beneficial ownership of the shares owned by William D. Witter, Inc.
During fiscal year 2001, Mr. A. Cohen was paid $40,300 for providing
financial consulting services to the Company.
During fiscal year 2001, the Company retained Career Consultants, Inc.
and SK Associates to perform executive searches and to provide outplacement
services to the Company. Dr. Goldberg is the Chairman and Chief Executive
Officer of these companies. The Company paid an aggregate of $117,000 to these
companies during the year 2001.
12
During fiscal year 2001, the Company's General Counsel, Katten Muchin
Zavis Rosenman, was paid $288,000 for providing legal services to the Company.
Mr. E. Cohen is of counsel to Katten Muchin Zavis Rosenman.
Mr. Oliner is compensated at a rate of $3,000 a month for providing
technology-related consulting services to the Company.
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 shares of 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. The stock purchase and exclusivity
agreement also provides that the Company will design, develop and produce
exclusively for Ericsson Multi-Mix(R) products that incorporate active RF power
transistors for use in wireless base station applications, television
transmitters and certain other applications that are intended for Bluetooth
transceivers. The Company also agreed that it will generally be the priority
supplier for such products.
On October 26, 2000, the Company entered into subscription agreements
for common stock and three-year warrants to purchase shares of Common Stock
("Warrants") with a group of investors led by Adam Smith Investment Partners,
L.P. and certain of its affiliates (the "Adam Smith Investors"), EHI and three
members of the board of directors of the Company (the "Director Investors"). The
Company sold to the investors units ("Units") at a price of $12.80 per unit,
each unit consisting of one share of Common Stock and one Warrant with an
exercise price of $21.25 which expires on October 26, 2003. The Adam Smith
Investors purchased 240,000 Units, EHI purchased 100,000 Units and the Director
Investors purchased 20,000 Units for an aggregate purchase price of $4,608,000.
The Common Stock portion of the Units represented an aggregate of approximately
14% of the outstanding Common Stock of the Company after giving effect to the
sales.
On February 28, 2002, the Company entered into a subscription agreement
for Common Stock with DCEO. Pursuant to the subscription agreement, the Company
sold to DCEO 528,413 shares of the Common Stock, approximately 16.6% of the
outstanding Common Stock of the Company after giving effect to the sale, for an
aggregate purchase price of $5,284,130. The Company and DuPont Electronic
Technologies have also agreed to work together to better understand the dynamics
of the markets for high-frequency electronic components and modules.
As a result of the sale of Common Stock to DCEO, certain contractual
anti-dilution provisions affected both the Warrant exercise price and the number
of shares subject to the Warrants issued in October 2000 as part of the Units.
The exercise price of the Warrants was reduced to $17.80 and the number of
shares subject to the Warrants was increased to 429,775. The expiration date of
the Warrants remained unchanged.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives a monthly
director's fee of $1,500, plus an additional $500 for each meeting of the Board
and of any Committees of the Board attended. The directors are also reimbursed
reasonable travel expenses incurred in attending Board and Committee meetings.
In addition, pursuant to the 2001 Stock Option Plan, each non-employee director
is annually granted an immediately exercisable option to purchase
13
2,500 shares of the Common Stock on the date of each annual meeting of
stockholders. Each such grant is at the fair market value on the date of grant
and will expire on the tenth anniversary of the date of the grant.
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN STOCKHOLDERS
The following table sets forth, as of April 26, 2002, information
concerning the Common Stock owned by (i) persons known to the Company who are
beneficial owners of more than five percent of the Common Stock (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 to the Company or is publicly
available from filings made with the SEC.
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except as noted) Percent of Class
-------------------- ------------------------ ----------------
Ericsson Holding International, B.V. 594,380(1) 17.98%
c/o Lawrence Lyles
740 East Campbell Road
Richardson, Texas 75081
E.I. DuPont de Nemours and Company 528,413(2) 16.59%
1007 Market Street
Wilmington, DE 19898
Adam Smith Investment Partners, L.P., 449,510(3) 13.10%
its affiliates and associates
101 East 52nd Street
New York, NY 10022
William D. Witter, Inc. 343,688(4) 10.79%
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Darryl Rabideau Family Trust 213,430(5) 6.70%
8101 E. Kalil Drive
Scottsdale, AZ 85260
Arthur A. Oliner 203,168(6) 6.32%
11 Dawes Road
Lexington, MA 02173
Mason N. Carter 165,980(7) 5.03%
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
14
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except as noted) Percent of Class
-------------------- ------------------------- ----------------
Joel H. Goldberg 55,232(8) 1.72%
c/o C.C.I. / SK Associates, Inc.
1767 Morris Avenue
Union, NJ 07083
Edward H. Cohen 26,419(9) *
c/o Katten Muchin Zavis Rosenman
575 Madison Avenue
New York, NY 10022
Albert H. Cohen 14,100(10) *
51 Primrose Court
Princeton, NJ 08540
Joseph B. Fuller 12,925(11) *
c/o Monitor Company
Two Canal Park
Cambridge, MA 02141
Harold J. Raveche 2,759(12) *
c/o Stevens Institute of Technology
Castle Point on Hudson
Hoboken, NJ 07030
David B. Miller 0(13) *
c/o DuPont Electronic Technologies
14 T.W. Alexander Drive
Research Triangle Park, NC 27709
James J. Logothetis
c/o Merrimac Industries, Inc. 30,479(14) *
41 Fairfield Place
West Caldwell, NJ 07006
Robert V. Condon 20,666(15) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Reynold K. Green 20,448(16) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Joseph McAndrew 18,648(17) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
15
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except as noted) Percent of Class
-------------------- ------- ---------------- ----------------
All directors and 639,371(18) 18.26%
executive officers as a group
(18 persons)
- --------------------------------------------------------
+ In accordance with Rule 13d-3 of the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner of securities if such person
has or shares voting power or investment power with respect to such
securities or has the right to acquire beneficial ownership within 60
days.
* The percentage of shares beneficially owned does not exceed 1% of the
class.
(1) Includes 119,380 shares subject to immediately exercisable warrants.
Information as to the shares of Common Stock and warrants to purchase
shares of Common Stock beneficially owned by Ericsson Holding
International, B.V. is as of October 26, 2000, as set forth in Schedule
13D, dated November 22, 2000, and filed with the SEC.
(2) Consists of shares owned by DCEO.
(3) Adam Smith Investment Partners, L.P., its affiliates and associates
include Adam Smith Investment Partners, L.P. ("ASIP"), Adam Smith Capital
Management LLC ("ASCM"), Diamond Capital Management ("DCM"), Adam Smith
Investments, Ltd. ("ASI"), Richard Grossman, Orin Hirschman and Richard
and Ana Grossman JTWROS. The principal executive offices of ASIP, ASCM and
DCM, and the business address of each of Richard Grossman and Orin
Hirschman, are located at 101 East 52nd Street, New York, New York 10022.
The principal executive office of ASI is c/o Insinger Trust (BVI) Limited,
Tropic Isle Building, P.O. Box 438, Road Town, Tortola, British Virgin
Islands. Includes 244,610 shares subject to immediately exercisable
warrants. Information as to the shares of Common Stock and warrants to
purchase shares of Common Stock beneficially owned by ASIP, ASCM, DCM,
ASI, Richard Grossman, Orin Hirschman and Richard and Ana Grossman is as
of December 5, 2000, as set forth in Schedule 13G/A, dated January 5,
2001, and filed with the SEC.
(4) Information in respect of the beneficial ownership of William D. Witter,
Inc. (other than percentage ownership) is based upon a Schedule 13G/A
filed on February 11, 2002.
(5) Information in respect of the beneficial ownership of the Darryl Rabideau
Family Trust (other than percentage ownership) is based upon a Schedule
13G/A filed on April 2, 2002.
(6) Includes 27,250 shares subject to stock options that are exercisable
currently or within 60 days, and 9,528 shares owned by Dr. Oliner's wife.
(7) Includes 111,000 shares subject to stock options that are exercisable
currently or within 60 days.
(8) Includes 9,100 shares subject to stock options that are exercisable
currently or within 60 days and 13,132 shares subject to immediately
exercisable warrants.
(9) Includes 7,450 shares subject to stock options that are exercisable
currently or within 60 days and 5,969 shares subject to immediately
exercisable warrants.
(10) Includes 9,100 shares subject to stock options that are exercisable
currently or within 60 days.
(11) Includes 4,150 shares subject to stock options that are exercisable
currently or within 60 days and 4,775 shares subject to immediately
exercisable warrants.
(12) Includes 2,500 shares subject to stock options that are exercisable
currently or within 60 days.
(13) David B. Miller disclaims beneficial ownership of the shares owned by
DCEO.
16
(14) Includes 28,000 shares subject to stock options that are exercisable
currently or within 60 days.
(15) Includes 13,750 shares subject to stock options that are exercisable
currently or within 60 days.
(16) Includes 12,850 shares subject to stock options and 1,080 shares subject
to options under the 2001 Stock Purchase Plan that are exercisable
currently or within 60 days.
(17) Includes 13,350 shares subject to stock options and 920 shares subject to
options under the 2001 Stock Purchase Plan that are exercisable currently
or within 60 days.
(18) Includes 291,435 shares subject to stock options and 2,920 shares subject
to options under the 2001 Stock Purchase Plan that are exercisable
currently or within 60 days, and 23,876 shares subject to immediately
exercisable warrants.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, requires the
Company's directors and executive officers, and persons who own more than ten
percent of the 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 stockholders 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 stockholders complied with these Section 16(a) filing requirements with
respect to the Common Stock during the fiscal year ended December 29, 2001.
RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Board of Directors has, upon the recommendation of the Audit
Committee, selected Ernst & Young LLP as independent auditors to audit and
report upon the consolidated financial statements of the Company for fiscal year
2002 ending January 4, 2003. The Board of Directors recommends that the
stockholders ratify the selection of Ernst & Young LLP.
The Board of Directors decided not to reappoint Arthur Andersen LLP as
the Company's independent public accountants in light of the current
circumstances surrounding Arthur Andersen LLP. The decision to change public
accountants was recommended by the Audit Committee and approved by the Board of
Directors. On April 26, 2002, the Company engaged Ernst & Young LLP to serve as
its independent public accountants for fiscal year 2002.
Arthur Andersen LLP's reports on the Company's consolidated financial
statements for the 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. During the
years ended December 29, 2001 and December 30, 2000 and through April 26, 2002,
the subsequent interim period preceding the decision to change independent
auditors, 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 agreements, if not resolved to Arthur Andersen LLP's
satisfaction, would have caused them to make reference to the subject matter of
such disagreements in connection with their report on the Company's consolidated
financial statements for such years. During the years
17
ended December 29, 2001 and December 30, 2000 and through April 26, 2002, there
were no "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K.
The Company provided Arthur Andersen LLP with a copy of the foregoing
paragraphs. Attached as Appendix A hereto is a letter dated April 30, 2002 from
Arthur Andersen LLP to the SEC stating its agreement with the disclosures
therein.
Ernst & Young LLP has not served as our independent auditors since the
1993 fiscal year. In the years ended December 29, 2001 and December 30, 2000 and
through April 26, 2002, the Company did not consult Ernst & Young 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 as set forth in Item 304(a)(2)(ii) of Regulation
S-K.
A representative of Arthur Andersen LLP is expected to be present at
the Meeting to respond to appropriate questions, and to make a statement if he
or she desires. It is expected that a representative of Ernst & Young LLP will
also be present at the Meeting to respond to appropriate questions, and to make
a statement if he or she desires.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 2002.
STOCKHOLDER PROPOSALS
In order to be included in the proxy statement and proxy card relating
to the 2003 annual meeting of stockholders, stockholder proposals must be
received by the Secretary of the Company at the address below no later than
December 31, 2002. The proxy or proxies designated by the Company will have
discretionary authority to vote on any matter properly presented by a
stockholder for consideration at the next annual meeting of stockholders but not
submitted for inclusion in the proxy materials for such meeting, unless notice
of the matter is received by the Secretary of the Company at the address set
forth below not later than February 28, 2003. 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 2003 annual meeting of
stockholders.
18
ANNUAL REPORT
All stockholders as of the Record Date are concurrently being sent a
copy of the Company's Annual Report for the fiscal year ended December 29, 2001.
In addition, upon the written request of any stockholder, the Company
will furnish that person, without charge, with a copy of the Form 10-KSB as
filed with the SEC on March 29, 2002. Any such request should be made in writing
to:
Secretary
Merrimac Industries, Inc.
P.O. Box 986
West Caldwell, NJ 07007-0986
OTHER BUSINESS
As of 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 stockholders. 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.
By Order of the Board of Directors
/s/ Robert V. Condon
ROBERT V. CONDON
Secretary
May 1, 2002
19
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Appendix A
April 30, 2002
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madam:
We have read the first three paragraphs of the section entitled "Ratification of
Selection of Independent Auditors" included in the Proxy Statement for Annual
Meeting of Stockholders of Merrimac Industries, Inc. to be filed with the
Securities and Exchange Commission and are in agreement with the statements
contained therein.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP