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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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-11(c) or Section 240.14a-12
EDAC Technologies Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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SEC 1913 (11-01)
EDAC TECHNOLOGIES CORPORATION
1806 NEW BRITAIN AVENUE
FARMINGTON, CONNECTICUT 06032
(860) 677-2603
NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 4, 2004
The 2004 Annual Meeting of Shareholders of EDAC Technologies Corporation,
a Wisconsin corporation (the "Company"), will be held at the offices of the
Company at 1790 New Britain Avenue, Farmington, Connecticut 06032, on Tuesday,
May 4, 2004, at 11:00 a.m. local time, to consider and act upon the following
matters:
1. To elect six directors to serve until the next Annual Meeting of
Shareholders;
2. To ratify the appointment of Carlin, Charron & Rosen, LLP as
independent auditors of the Company for the fiscal year ending January 1, 2005;
and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
By Order of the Board of Directors
/s/Glenn L. Purple
Glenn L. Purple, Secretary
Farmington, Connecticut
April 7, 2004
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON APRIL 2, 2004 ARE
ENTITLED TO NOTICE OF, AND TO VOTE AT, THE MEETING OR ANY ADJOURNMENT THEREOF.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES AT THE
MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED
STATES.
A copy of the Company's 2003 Annual Report to Shareholders and a Proxy
Statement also accompany this Notice.
EDAC TECHNOLOGIES CORPORATION
1806 NEW BRITAIN AVENUE
FARMINGTON, CONNECTICUT 06032
PROXY STATEMENT FOR THE 2004 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 4, 2004
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 2004 Annual
Meeting of Shareholders of the Company to be held at the offices of the Company,
1790 New Britain Avenue, Farmington, Connecticut 06032, on Tuesday, May 4, 2004,
at 11:00 a.m. local time, and any adjournments thereof.
The Company's Annual Report for the fiscal year ended January 3, 2004 is
being mailed to shareholders, along with these proxy materials, on or about
April 7, 2004.
At the close of business on April 2, 2004, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 4,444,438 shares of common stock, par value $.0025 per share
("Common Stock"), outstanding and entitled to vote, constituting all of the
outstanding voting stock of the Company. Holders of Common Stock are entitled to
one vote per share.
The holders of a majority of the number of shares of Common Stock issued,
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Shares of Common Stock
represented in person or by proxy (including shares that abstain or otherwise do
not vote with respect to one or more of the matters presented for shareholder
approval) will be counted for purposes of determining whether a quorum is
present at the Annual Meeting.
Assuming a quorum is present, the affirmative vote of the holders of a
plurality of the votes cast by the shareholders entitled to vote at the Annual
Meeting is required for the election of directors, 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 of Common Stock represented and voting on the matter.
Shares that abstain from voting as to a particular matter, and shares held in
"street name" by a broker or nominee that indicates on a proxy that it does not
have discretionary authority to vote as to a particular matter, will not be
voted in favor of such matter, and also will not be counted as shares voting on
such matter. Accordingly, abstentions and broker non-votes will have no effect
on the voting on a matter that requires the affirmative vote of a certain
percentage of the votes cast or the shares voting on that matter.
Although not required by law, the Company is seeking shareholder approval
to ratify the appointment of Carlin, Charron & Rosen LLP as the Company's
independent auditors for the 2004 fiscal year. If shareholders do not ratify
such appointment, the Company may reevaluate its appointment.
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 Carlin, Charron & Rosen, LLP as 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 and time than the proxy, delivering to the Secretary of the
Company a duly executed proxy bearing a later date and time than the revoked
proxy, or 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.
2
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. Each director
holds office until the next succeeding Annual Meeting and until his or her
successor is duly elected. In accordance with the By-Laws, the Board of
Directors has set the number of directors at six. Proxies may not be voted for
more than six directors. The persons named in the enclosed proxy will vote to
elect each of William B. Bayne, Jr., John Moses, Dominick A. Pagano, Stephen J.
Raffay, Ross C. Towne and Daniel C. Tracy as directors, unless authority to vote
for the election of the nominees is withheld by marking the proxy to that
effect. Each of the nominees is currently a director of the Company. Each of the
nominees has indicated his willingness to serve, if elected, but if any of such
persons should be unable or unwilling to stand for election, proxies may be
voted for a substitute nominee designated by the Board of Directors.
DIRECTOR PRINCIPAL
NAME AGE SINCE OCCUPATION
- ---- --- ----- ----------
William B. Bayne, Jr. (1) 39 2003 President, Chief Executive Officer and founder of BBB
Corporation and 23rd Street Corporation (restaurant
businesses)
John Moses 59 2001 Private Investor
Dominick A. Pagano (2) 60 2001 President and Chief Executive Officer of the Company
and President and Chief Executive Officer of Dapco
Industries, Inc. (a manufacturer of ultrasonic
inspection equipment for the steel and railroad
industries)
Stephen J. Raffay (3) 76 2000 Retired Vice-Chairman,
Emhart Corporation (a manufacturer of various
machinery and consumer products)
Ross C. Towne (4) 60 2001 President and Chief Financial Officer, The Washington
Source, Inc. (a custom precision sheet metal
fabrication and integration company)
Daniel C. Tracy (5) 63 1999 Chairman of the Board of the Company and Business
Consultant
(1) Mr. Bayne founded BBB Corporation and 23rd Street Corporation in 1988 and
1994 respectively.
3
(2) Mr. Pagano became President and Chief Executive Officer of the Company in
August 2002 and also serves as President and Chief Executive Officer of
Dapco Industries, Inc., a company that he founded in 1972. Mr. Pagano
served as Chairman of the Board of Directors of American Environmental
Technologies, Inc. from 1988 until 1999. Mr. Pagano has been a director of
the Company since July 2001, provided, however, that he did not serve as a
director from April 2002 to October 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
of 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. He has served as President and Chief
Financial Officer of The Washington Source, Inc. since 2000.
(5) Mr. Tracy was employed by Arthur Andersen LLP from 1963 until his
retirement in 1998, serving since 1975 as a partner. Mr. Tracy is also a
director of Great Western Land and Recreation, Inc.
The Board of Directors recommends that shareholders vote FOR all of the
nominees for director.
BOARD AND COMMITTEE MEETINGS AND RELATED MATTERS
The Company has an Audit Committee, a Compensation Committee and a
Nominating Committee of the Board of Directors.
The Audit Committee, comprised of Messrs. Raffay, Towne and Tracy, held
six meetings during 2003. The Audit Committee meets annually to consider the
report and recommendation of the Company's independent auditors and is available
for additional meetings upon request of such auditors. The Audit Committee's
functions also include the engagement and retention of such auditors, adoption
of accounting methods and procedures, public disclosures required for compliance
with securities laws and other matters relating to the Company's financial
accounting and reporting. For additional information regarding the Audit
Committee, see the "Report of the Audit Committee" below.
The Compensation Committee, comprised of Messrs. Moses, Bayne and Raffay,
held two meetings during 2003. The Compensation Committee sets the compensation
for the executive officers of the Company and establishes compensation policies
for the Company's Chief Executive Officer and other executive officers. The
Compensation Committee is primarily responsible for the administration of the
Company's stock option plans, under which option grants may be made to all
employees, officers, directors and consultants.
4
The Board of Directors held seven meetings during 2003. No director
attended fewer than 75% of the total number of meetings of the Board of
Directors and each Committee on which he served.
The Board of Directors has determined that the following members of the
Board are independent directors, as such term is defined in Nasdaq Rule
4200(a)(15): William B. Bayne, Jr., John Moses, Stephen J. Raffay, Ross C. Towne
and Daniel C. Tracy.
DIRECTOR NOMINATIONS
The Board of Directors has recently established a standing Nominating
Committee comprised of Messrs. Bayne, Raffay, Towne and Tracy. All of the
committee members are independent directors. The duties and responsibilities of
the Nominating Committee are set forth in a written Nominating Committee
Charter, which the Board of Directors adopted on March 9, 2004. A copy of the
Nominating Committee Charter is attached as Appendix B to this Proxy Statement.
Nominations of candidates for election as directors may be made by the
Nominating Committee or by shareholders. The Nominating Committee will consider
directors candidates recommended by the shareholders.
The general criteria that the Nominating Committee uses to select nominees
is: such individual's reputation for integrity, honesty and adherence to high
ethical standards; their demonstrated business acumen, experience and ability to
exercise sound judgments in matters that relate to the current and long-term
objectives of the Company; their willingness and ability to contribute
positively to the decision-making process of the Company; their commitment to
understand the Company and its industry and to regularly attend and participate
in meetings of the Board and its committees; their ability to understand the
sometimes conflicting interests of the various constituencies of the Company,
which include shareholders, employees, customers, governmental units, creditors
and the general public, and to act in the interests of all shareholders; and no
nominee should have, or appear to have, a conflict of interest that would impair
the nominee's ability to represent the interests of all the Company's
shareholders and to fulfill the responsibilities of a director.
A shareholder may nominate one or more persons for election as directors
at a meeting of shareholders only if such shareholder has given timely notice in
proper written form of his or her intent to make such nomination or nominations.
To be timely, such shareholder's notice 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. In no event shall the public announcement of an adjournment of a
meeting commence a new time period for the giving of a shareholder's notice
described above. To be in proper form, a shareholder's notice to the Secretary
shall set forth:
5
- the name and address of the shareholder who intends to make the
nomination, the name and address of the person or persons to be
nominated;
- a representation that the shareholder is a holder of record of stock
of the Company entitled to vote at such meeting, that the
shareholder will continue to be a holder of record of stock of the
Company as of the date of such meeting and, if applicable, that the
shareholder intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice;
- if applicable, a description of all arrangements or understandings
between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder;
- such other information regarding each nominee to be proposed by such
shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated, or intended to be
nominated, by the Board of Directors; and
- the consent of each nominee to serve as director of the Company if
so elected.
The Chairman of the meeting shall refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure.
DIRECTOR ATTENDANCE AT THE ANNUAL MEETING
Although the Company does not have a formal policy with respect to
director attendance at annual meetings, the Company strongly encourages
directors to attend the annual meeting. All of our directors except the one
director not standing for reelection attended last year's annual meeting, and we
expect that all of our directors will attend this year's annual meeting.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board will give appropriate attention to written communications on
issues that are submitted by shareholders and other interested parties. Absent
unusual circumstances, the Chairman of the Board of Directors will, with the
assistance of the Company's outside legal counsel, (1) be primarily responsible
for monitoring communications from shareholders and other interested parties and
(2) provide copies or summaries of such communications to the other directors as
he considers appropriate.
Shareholders and other interested parties who wish to send communications
to the Board should address such communications to Daniel C. Tracy, Chairman of
the Board, EDAC Technologies Corporation, 1806 New Britain Ave., Farmington, CT
06032.
6
FEES OF INDEPENDENT AUDITORS
The following is a summary of the fees billed by the Company's principal
accountant for professional services rendered for the fiscal years ended
December 28, 2002 and January 3, 2004.
FEE CATEGORY FISCAL 2002 FEES FISCAL 2003 FEES
------------ ---------------- ----------------
Audit Fees $111,000 $ 79,145
Audit-related fees -- --
Tax Fees -- --
All Other Fees 28,050 --
-------- --------
Total Fees $139,050 $ 79,145
======== ========
AUDIT FEES. Services consist of the audit of the Company's annual
financial statements and review of financial statements included in the
Company's quarterly reports on Form 10-Q.
AUDIT-RELATED FEES. Services consist of that which are reasonably related
to the performance of the audit or review of the Company's consolidated
financial statements, but are not reported under "Audit Fees." No such fees were
incurred during the past two years.
TAX FEES. Services consist of tax return preparation and tax advice for
federal and state taxes. Services for 2002 and 2003 were provided by accountants
other than the Company's principal accountant.
ALL OTHER FEES. Services consist of audits of the Company's employee
benefit plans. Services for 2003 were provided by accountants other than the
Company's principal accountant.
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 Carlin, Charron & Rosen,
LLP.
The Audit Committee's policy is to pre-approve all audit services, audit
related services, tax services and other services. The Audit Committee may also
pre-approve particular services on a case-by case basis.
The Audit Committee approved all services and fees billed by the Company's
principal accountant for the fiscal years ended December 28, 2002 and January 3,
2004.
7
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three members of the Company's Board
of Directors, Messrs. Raffay, Towne and Tracy. Because the Company's Common
Stock is traded on the OTC Bulletin Board, the Company is not subject to the
listing requirements of any securities exchange or The Nasdaq Stock Market
regarding the composition 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 Board has identified Mr.
Daniel Tracy as the "Audit Committee Financial Expert" as defined by the rules
of the Securities and Exchange Commission (the "Commission"). The duties and
responsibilities of the Audit Committee are set forth in a written Audit
Committee Charter, which the Board of Directors adopted on March 14, 2001, and
amended on March 3, 2003 and March 8, 2004. A copy of the Audit Committee
Charter, as amended, is attached as Appendix A to this Proxy Statement.
The Audit Committee has:
- reviewed and discussed the Company's audited financial statements
for the fiscal year ended January 3, 2004, 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 of 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 Standard No. 1
(Independence Discussions with Audit Committees), and discussed with
the independent auditors the matters disclosed in the letter and
their independence from the Company.
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 January 3, 2004, for filing with the
Commission.
AUDIT COMMITTEE:
Stephen J. Raffay, Chairman
Ross C. Towne
Daniel C. Tracy
COMPENSATION OF DIRECTORS
In 2003, the Company paid directors of the Company a $10,000 annual
retainer and $1,000 for each non-telephonic Board of Directors or Committee
meeting attended. The Chairman of the Board of Directors was paid an additional
$5,000 annual retainer
8
and an additional $500 per non-telephonic meeting attended. Each director who
serves as Chairman of a committee was paid an additional $500 for each
non-telephonic meeting chaired by such director. In addition to the foregoing,
the Company paid John Moses $12,000 during 2003 under a consulting agreement
with Mr. Moses. The agreement provided for Mr. Moses to perform certain
consulting services for the Company as requested by the Company from time to
time, including services related to employee matters, customer and supplier
relationships, public relations, internal control and financial reporting
matters. The agreement was for a three month term commencing on April 1, 2003
and ending on June 30, 2003.
Each new director of the Company is granted a stock option to purchase
10,000 shares of Common Stock on the day of such director's initial election to
the Board of Directors. The exercise price of such options is equal to the fair
market value of the Company's Common Stock on the date of grant. Mr. Bayne, who
became a director on May 20, 2003 declined his grant of stock options.
EXECUTIVE OFFICERS
The following table sets forth the name, age and current positions and
offices of each executive officer of the Company:
NAME AGE OFFICE
---- --- ------
Dominick A. Pagano 60 President and Chief Executive Officer
Glenn L. Purple 48 Vice President - Finance, Chief Financial
Officer and Secretary
Mr. Pagano became President and Chief Executive Officer of the Company in
August 2002 and also serves as President and Chief Executive Officer of Dapco
Industries, Inc. He has served as President and Chief Executive Officer of Dapco
Industries since he founded that company in 1972.
Mr. Purple joined the Company in February 1982 as Controller. He served as
Controller until November 2002, when he was appointed as Vice President -
Finance, Chief Financial Officer and Secretary of the Company. Mr. Purple also
served as Vice President - Finance and Chief Financial Officer of the Company
from 1989 through 1996.
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 total
shareholder return from investing $100 on December 31, 1998 in the Company's
9
Common Stock to (i) the Total Return Index for The Nasdaq Stock Market (U.S.
Companies) (the "Nasdaq (US) Index") and (ii) the Total Return Index for Nasdaq
Trucking and Transportation Stocks (the "Nasdaq Transportation Index").
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF EDAC COMMON STOCK,
NASDAQ (US) INDEX AND NASDAQ TRANSPORTATION INDEX
[FIVE YEAR COMPARISON LINE CHART]
NASDAQ EDAC
NASDAQ (US) TRANSPORTATION TECHNOLOGIES
FISCAL YEAR ENDED INDEX INDEX CORPORATION
- ----------------- ----- ----- -----------
January 2, 1999 100.000 100.000 100.000
January 1, 2000 185.428 95.309 36.666
December 30, 2000 111.832 86.629 18.602
December 29, 2001 88.766 102.435 40.406
December 28, 2002 61.369 104.326 12.766
January 3, 2004 91.753 149.433 22.396
10
COMPENSATION COMMITTEE 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.
To support the Board objective of rewarding all levels of the organization
for the financial successes of the Company and ultimately maximizing shareholder
value, the committee has developed an incentive plan that is directly related to
shareholder value. This incentive plan applies to all employees of the Company,
including the Company's executive officers. The plan was utilized to evaluate
executive performance and bonus awards for the 2003 fiscal year. Based on this
evaluation, the Compensation Committee did not award bonuses to either of the
Company's executive officers for the 2003 fiscal year, although an option to
purchase 2,500 shares of the Company's common stock was granted to Glenn Purple,
the Company's Chief Financial Officer, in January 2004. Presently, there are no
plans for any bonuses or option grants to executive officers until the Company
returns to profitability.
The Company paid Mr. Pagano, its Chief Executive Officer, total
compensation of $165,923 during the fiscal year ended January 3, 2004. This
amount constituted salary paid under Mr. Pagano's employment agreement with the
Company. His employment agreement was amended, without changing his base salary,
effective February 2004. The terms of Mr. Pagano's amended employment agreement
are described under the heading "Employment Agreements" in this Proxy Statement.
The Compensation Committee periodically monitors the compensation amounts of
chief executive officers of comparable companies within the same industry as the
Company and believes that Mr. Pagano's compensation is reasonable based on his
experience and the contributions made, or expected to be made, by him to the
Company.
COMPENSATION COMMITTEE:
John Moses, Chairman
William B. Bayne Jr.
Stephen J. Raffay
11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION
The following table sets forth certain information concerning compensation
for each of the last three fiscal years of the Company's Chief Executive Officer
and the only other executive officer of the Company whose total salary and bonus
during 2003 exceeded $100,000, (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
---------------------------- LONG TERM
COMPENSATION
------------
AWARDS
------
OTHER
ANNUAL SECURITIES
COMPEN- UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS SATION OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)
- ------------------------- ---- ------ ----- ------ ---------- ------------
Dominick A. Pagano
President and Chief 2003 165,923 -- -- -- 16,000
Executive Officer (1) 2002 21,923 -- -- 140,000 13,000
Glenn L. Purple
Vice President and Chief 2003 104,981 -- -- -- --
Financial Officer (2) 2002 95,365 -- -- 5,000 1,750
2001 -- -- -- -- --
(1) Mr. Pagano became President and Chief Executive Officer on August
13, 2002. Other compensation represents director retainer and
meeting fees.
(2) Mr. Purple became Vice-President-Finance, Chief Financial Officer
and Secretary on November 19, 2002. Other compensation of $1,750
represents payments to a defined contribution plan.
OPTION GRANTS
No option grants were made to either of the Named Executive Officers
during the 2003 fiscal year. On January 6, 2004, Mr. Purple was granted an
option to purchase 2,500 shares at the then market share price of $1.10.
12
FISCAL YEAR-END OPTION VALUES
The following table provides certain information regarding options held by
the Named Executive Officers at January 3, 2004.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR END ($)(1)
------------------- ----------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ --------------- ------------ ------------------------- -------------------------
Dominick A. Pagano -- -- 140,000/- $63,000/-
Glenn L. Purple -- -- 8,000/5,000 $1,140/1,800
(1) Based on the last reported sale price of the Common Stock on the OTC
Bulletin Board on January 2, 2004 ($1.05), less the option exercise price.
13
EMPLOYMENT AGREEMENTS
On August 13, 2002, the Company entered into an Employment Agreement with
Mr. Pagano to serve as President and Chief Executive Officer of the Company. The
initial term of the agreement was for six months, which automatically extended
for successive periods of 90 days unless either party gives the other at least
30 days advance written notice to the contrary.
As compensation under the agreement, Mr. Pagano was entitled to receive a
base salary of $5,000 per month. He also received a stock option to purchase
140,000 shares of the Company's Common Stock pursuant to the Company's 2000-B
Employee Stock Option Plan. The option has an exercise price of $0.60 per share,
the fair market value of the Company's Common Stock on the date of grant. The
option was to vest as follows: 56,000 shares on February 13, 2003; 42,000 shares
on August 13, 2003; and 42,000 shares on February 13, 2004. The option, which
has a 10-year term, vests immediately if the Company terminates Mr. Pagano's
employment without cause (as defined in the agreement) or if, after the
employment term, Mr. Pagano ceases to be a director of the Company for any
reason other than his voluntary resignation or removal for cause. The Company
may terminate Mr. Pagano's employment immediately upon cause or his disability
(as defined in the agreement). If the Company terminates Mr. Pagano's employment
for any reason other than cause, disability or death, Mr. Pagano is entitled to
receive a severance payment equal to his base salary for the then remaining
employment term, and shall be entitled to retain his stock option.
As of February 13, 2003, the Company and Mr. Pagano entered into an
amended and restated employment agreement, which replaced his August 13, 2002
employment agreement. Under the new agreement, the initial term of Mr. Pagano's
employment agreement was 12 months from the date of the agreement, subject to
automatic extensions for successive periods of 90 days unless either party gives
the other 30 days advance written notice to the contrary. His base salary was
$15,000 per month. In addition, the stock option granted to Mr. Pagano in
connection with the August 13, 2002 employment agreement became fully vested.
The other terms of the August 13, 2002 employment agreement described above were
also contained in the February 13, 2003 agreement.
As of February 13, 2004, the Company and Mr. Pagano entered into an
amended and restated employment agreement, which replaced his February 13, 2003
employment agreement. Under the new agreement, the initial term of Mr. Pagano's
employment agreement is 12 months from the date of the agreement, which
automatically extends for successive periods of 90 days unless either party
gives the other 30 days advance written notice to the contrary. His base salary
is $15,000 per month. Under the new agreement, the Company may terminate Mr.
Pagano's employment upon cause, disability or upon a change of control (each as
defined in the agreement). The Company may also terminate Mr. Pagano's
employment, at any time after August 15, 2004 but prior to August 30, 2004, if
the Company does not achieve its budgeted net income for the six months ended
June 30, 2004. If the Company terminates Mr. Pagano's employment for any reason
other than cause, disability, death, change in control, or the failure of the
Company to achieve its budgeted net income for the six months ended June 30,
2004, or if Mr. Pagano
14
terminates his employment for "good reason", Mr. Pagano is entitled to receive a
lump sum severance payment equal to his base salary for the then remaining
employment term. Mr. Pagano can terminate his employment for "good reason" if,
during the 12 month period ending February 13, 2005, (i) any of the present
directors of the Company do not continue to be a director of the Company for any
reason, other than death, disability or vote by shareholders, and a new director
is elected or appointed to fill such vacancy, or (ii) the size of the Board is
increased by the Board, except as a result of shareholder action, and a new
director (or directors) is (are) appointed by the Board to fill the vacancy or
vacancies created by such increase. Mr. Pagano can also terminate his employment
for "good reason" if his ability to carry out his duties and responsibilities as
President and Chief Executive Officer of the Company are circumvented or
undermined by the actions of the Board in communicating directly with employees
of the Company (other than any such communications contemplated by applicable
law, regulation or stock market rule, or by any of the Company's policies or
procedures established by the Board in connection with the same).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of independent directors. During the
fiscal year ended January 3, 2004, the following board members served on the
Compensation Committee: William B. Bayne, John Moses and Stephen J. Raffay. No
member of the Compensation Committee was at any time during fiscal year 2003, or
formerly, an officer or employee of the Company or any subsidiary of the
Company, nor has any member of the Compensation Committee had any relationship
with the Company requiring disclosure under Item 404 of Regulation S-K under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors, has appointed Carlin,
Charron & Rosen LLP as the Company's independent auditors for the 2004 fiscal
year. Carlin, Charron & Rosen LLP has served as the Company's independent
auditors since August 2003. 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 Audit Committee of the Board of
Directors may reconsider the appointment of Carlin, Charron & Rosen LLP.
It is expected that a representative of Carlin, Charron & Rosen LLP will
be present at the Annual Meeting and will have the opportunity to make a
statement if he or she desires to do so and will also be available to respond to
appropriate questions.
INFORMATION REGARDING CHANGE OF AUDITORS
On August 5, 2003, the Company's Board of Directors, upon recommendation
of its Audit Committee, approved the engagement of Carlin, Charron & Rosen LLP
to
15
replace Deloitte & Touche LLP as the Company's auditors. Deloitte & Touche LLP's
report on the Company's consolidated financial statements for the fiscal year
ended December 28, 2002 did not contain an adverse opinion or disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principles. During the Company's fiscal year ended December 28, 2002,
and through August 5, 2003 (the date that the Company filed a Current Report on
Form 8-K disclosing its decision to no longer engage Deloitte & Touche LLP),
there were no disagreements with Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to Deloitte & Touche LLP's
satisfaction, would have caused them to make reference to the subject matter in
connection with their report on the Company's consolidated 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 fiscal year ended December 28, 2002 and December 29,
2001, and through August 8, 2003, the Company did not consult Carlin, Charron &
Rosen 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.
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 modified as to the Company's ability to continue as a
going concern. During the Company's fiscal years ended December 29, 2001 and
December 30, 2000, 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 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 fiscal years ended December 29, 2001 and December 30,
2000, 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.
16
SECURITY OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock as of February 17, 2004 by (i) each
director, nominee for director and Named Executive Officer, (ii) each person or
entity known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock and (iii) all directors and executive officers as a
group.
The Company has determined beneficial ownership in accordance with the
rules of the Commission. Unless otherwise indicated, the persons 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 February 17, 2004 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
NAME BENEFICIALLY OWNED OF CLASS
- ---- ------------------ --------
William B. Bayne Jr. (1) 400,008 9.0
John Moses (2) 551,190 12.4
Dominick A. Pagano (3) 340,738 7.4
Glenn L. Purple (4) 38,638 *
Stephen J. Raffay (5) 18,000 *
Ross C. Towne (6) 91,256 2.0
Daniel C. Tracy (7) 122,468 2.7
All Directors and Executive Officers as a
group (7 persons) (8) 1,562,298 33.3
*Represents beneficial ownership of less than 1%.
(1) Mr. Bayne's address is 714 South 19th Street, Arlington, Virginia
22202.
(2) Includes 10,000 shares subject to stock options held by Mr. Moses.
Mr. Moses' address is 3616 North Albemarle Street, Arlington,
Virginia, 22207.
(3) Includes 140,000 shares subject to stock options held by Mr. Pagano.
Mr. Pagano's address is 1806 New Britain Avenue, Farmington,
Connecticut 06032.
(4) Includes 9,667 shares subject to stock options held by Mr. Purple.
17
(5) Includes 10,000 shares subject to stock options held by Mr. Raffay.
(6) Includes 10,000 shares subject to stock options held by Mr. Towne.
(7) Includes 65,000 shares subject to stock options held by Mr. Tracy.
(8) Includes 244,667 shares subject to stock options held by all
directors and executive officers as a group.
The above beneficial ownership information is based upon information
furnished by the specified persons and is determined in accordance with Rule
13d-3 under the Exchange Act, 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
proxy statement and form of proxy for the Company's 2005 Annual Meeting must
submit the proposal in writing to Glenn L. Purple, Secretary, EDAC Technologies
Corporation, 1806 New Britain Avenue, Farmington, Connecticut 06032, no later
than December 8, 2004.
The Company's Amended and Restated By-Laws require a shareholder to give
advance notice of any proposal, 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 a proposal to be brought before a
meeting of shareholders by a shareholder, written notice of the shareholder
proposal 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 must contain all of the information required by
the Company's Amended and Restated By-Laws. Notices of intention to present
proposals at the 2005 Annual Meeting should be addressed to Glenn L. Purple,
Secretary, EDAC Technologies Corporation, 1806 New Britain Avenue, Farmington,
Connecticut 06032.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of 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 Commission initial reports of
beneficial ownership on Form 3 and reports of changes in beneficial ownership of
the Company's equity securities on Forms 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
18
Company's directors and executive officers that no forms were required to be
filed, the Company believes that during fiscal year 2003, all directors,
executive officers and 10% shareholders of the Company have filed with the
Commission on a timely basis all reports required to be filed under Section
16(a) of the Exchange Act.
OTHER MATTERS
The Board of Directors does not know of any other matters which may be
brought before the Annual Meeting. However, if any other matters properly come
before the Annual 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.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews, and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and, as required by law, the Company will
reimburse them for their out-of-pocket expenses in this regard.
THE BOARD OF DIRECTORS HOPES THAT SHAREHOLDERS WILL ATTEND THE ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors
/s/Glenn L. Purple
Glenn L. Purple, Secretary
Farmington, Connecticut
April 7, 2004
19
APPENDIX A
EDAC TECHNOLOGIES CORPORATION
AUDIT COMMITTEE CHARTER
(As amended on March 8, 2004)
MISSION AND PURPOSE
The Audit Committee ("the Committee") is appointed by the
Board of Directors ("the Board") of EDAC Technologies Corporation (the
"Company") to assist the Board in monitoring: (1) the integrity of the
Company's financial statements; (2) the compliance by the Company with
legal and regulatory requirements; and (3) the performance and
independence of the Company's external auditors.
GENERAL GUIDELINES
RESPONSIBILITIES
The Committee shall be responsible for overseeing: the
accounting and financial reporting process, the system of internal
controls, the audits of the Company's financial statements and the audit
process, and the independent public accountants. Management of the company
is responsible for the preparation of financial statements, and ensuring
that the statements are complete, accurate and prepared in accordance with
generally accepted accounting principles. Management is also responsible
for ensuring compliance with laws and regulations. The independent public
accountants are responsible for planning and conducting audits in
accordance with generally accepted auditing standards.
In carrying out its responsibilities, the Committee will
maintain and facilitate free and open communication between directors, the
independent public accountants and the management of the Company.
SIZE AND COMPOSITION
The Committee shall consist of no fewer than three directors,
each of whom shall meet the requirements of applicable Nasdaq rules
(including Rules 4200(a)(15) and 4350(d)) and Section 301 of the
Sarbanes-Oxley Act of 2002 and Securities and Exchange Commission ("SEC")
rules promulgated thereunder (including Exchange Act Rule 10A-3).
Accordingly, all members of the Committee will be independent directors
(as independence is defined under Nasdaq Rule 4350(d)(2)(A) and under
Exchange Act Rule 10A-3(b)(1)); all members of the Committee will be able
to read and understand fundamental financial statements (including balance
sheets, income statements and cash flow statements); no member of the
Committee shall have participated in the preparation of the financial
statements of the Company or any current subsidiary of the Company at any
time during the past three years; at least one member of the Committee
will meet the financial sophistication requirements set forth in Nasdaq
Rule 4350(d)(2)(A); and at least one member of the Committee shall be an
"audit committee financial expert" as that term is defined in Item 410(h)
of SEC Regulation S-K. The Board shall appoint the Committee's Chairperson
and members annually or until successors shall be qualified and elected.
CHARTER
The Committee shall maintain a written charter that is
approved by the Board. The Committee shall review and reassess the
adequacy of the charter at least annually.
OVERSIGHT BY THE BOARD OF DIRECTORS
The Board will approve the Committee's charter and revisions,
and will determine annually that the Committee's members meet the
independence and experience requirements of Nasdaq and the SEC. The
Committee acts on the Board's behalf in the matters outlined in this
charter and is hereby given all the resources and authority necessary to
properly discharge its duties and responsibilities.
The Committee will report its activities to the full Board on
a regular basis so the Board is kept informed of its activities on a
current basis.
MEETINGS
The Committee will meet at least four times per year, or more
frequently as circumstances dictate. The Committee will review quarterly
reports of earnings prior to the release of earnings to the public and the
filing of the SEC Forms 10-K and 10-Q. The Committee shall meet when
necessary but at least once a year with the Chief Financial Officer and
the independent public accountants in private meetings.
Participation of External Auditors and Other Advisors. The
Committee will engage the Company's independent public accountants in
discussions required by their professional standards and other relevant
regulatory requirements prior to the filing of forms 10K and 10Q. The
Committee shall have the authority to retain special independent legal,
accounting or other consultants and advisers to advise the Committee as it
determines necessary to carry out its duties, and the Company shall
provide the Committee with appropriate funding (as the Committee shall
determine) for payment of (i) compensation to any registered public
accounting firm engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the
Company, (ii) compensation to any advisers employed by the Committee and
(iii) ordinary administrative expenses of the Committee that are necessary
or appropriate in carrying out its duties. The Committee may request any
officer or employee of the Company or the Company's outside counsel (in
addition to the independent public accountants) to attend a meeting of the
Committee or to meet with any members of, or consultants to, the
Committee.
EXTERNAL AUDITORS
Appointment and Termination. The Committee shall be directly
responsible for the appointment, compensation, retention and oversight of
the work of the Company's independent public accountants or any other
registered public accounting firm engaged (including resolution of
disagreements between management and the auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company, and
each such registered public accounting firm shall report directly to the
Committee. The Committee shall evaluate the performance of the independent
public accountants and, if so determined by the Committee, replace the
independent public accountants.
Approval of Audit and Non-Audit Services. The Committee will
approve in advance, the retention of the independent public accounting
firm for all audit services, as well as any non-audit service that such
firm is not prohibited from performing for the Company and approve the
fees for any such services.
Independence. The Committee will ensure that the independent
public accountants provide periodic written reports to the Committee
setting forth all relationships between the independent public accountants
and the Company, consistent with the Independence Standards Board Standard
No. 1. The Committee will actively engage in a dialogue with the
independent public accountants with respect to any disclosed relationships
or services which may impact the objectivity and independence of the
independent public accountants. The Committee will take, or recommend that
the full Board take, appropriate action to oversee the independence of the
independent public accountants.
Review. The Committee will review with the independent public
accountants and, if it deems it appropriate, management:
- - Prior to the annual audit, the scope, approach, planning and staffing;
- - Significant accounting policies;
- - Changes to the Company's auditing and accounting principles and practices
as suggested by the independent public accountants or management;
- - Audit conclusions regarding significant accounting estimates and reserves;
- - Proposed fee arrangements for ongoing and special projects;
- - Assessments of the adequacy of internal controls and disclosure controls
and procedures;
- - The resolution of identified material weaknesses and reportable conditions
in internal controls and disclosure controls and procedures (including the
prevention or detection of management override or compromise of the
internal control system);
- - The Company's compliance with laws and regulations having to do with
accounting and financial matters;
2
- - Any problems or difficulties the independent public accountants may have
encountered and any Management Letter comments provided by the independent
public accountants and management's responses thereto;
- - Reports from the independent public accountants regarding (a) critical
accounting policies used by the Company in its financial statements; (b)
all alternative treatments of financial information within generally
accepted accounting principles that the independent public accountants
have discussed with management, ramifications of the use of such
alternative treatments and the treatment preferred by the independent
public accountants; and (c) other material written communications between
the independent public accountants and management; and
- - The matters described under "Financial Statements" below.
The independent public accountants shall provide assurance to
the Committee that their audit was conducted in accordance with generally
accepted auditing standards including provisions contained in Section 10A
of the Securities Exchange Act of 1934.
The Committee should consider whether the independent public
accountants should meet with the full Board to discuss any matters
relative to the financial statements and/or potentially relevant matters,
and to answer questions from other directors.
FINANCIAL STATEMENTS
Year-End Financial Statements. The Committee will review with
management and the independent public accountants the Company's interim
and year-end financial statements, including management's discussion and
analysis and audit findings (including any significant suggestions for
improvements provided to management by the independent public
accountants). Such review will include a discussion of significant
adjustments recorded and other matters required to be discussed by
Statement on Auditing Standards No.61 relating to the conduct of the
audit. Following such review, the Committee will recommend to the Board
whether the audited financial statements should be included in the
Company's annual report on Form 10-K.
Quarterly Financial Statement. The Committee will review with
management and the independent public accountants the Company's quarterly
financial statements prior to the filing of its Form 10-Q. The Committee
will engage in discussions with the independent public accountants with
respect to the impact of significant events, transactions and changes in
accounting estimates considered by the independent public accountants in
performing the quarterly review.
Quality of Financial Reporting. The members of the Committee
will discuss among themselves and with management and the independent
public accountants, the quality (not just the acceptability) of the
Company's accounting principles and underlying estimates in the financial
statements.
Briefings. The Committee will request from financial
management and the independent public accountants, a briefing on any
significant accounting and reporting issues, including any changes in
accounting standards or rules promulgated by the Financial Accounting
Standards Board ("FASB"), the Securities and Exchange Commission ("SEC")
or other regulatory bodies, that have an effect on the financial
statements.
Inquiries. The Committee will inquire:
- - About the existence and substance of any significant accounting accruals,
reserves, or estimates made by management that had a material impact on
the financial statements: and
- - Of management and the independent public accountants if there were any
significant financial accounting or reporting issues and /or disagreements
discussed during the accounting period and, if so, how they were resolved.
LEGAL MATTERS
The Committee will discuss and review with management, company
counsel, and the independent public accountants the substance of any
significant issues raised by counsel concerning litigation, contingencies
or claims, the Company's compliance policies and any material reports or
inquires received from regulators or government agencies. The Committee
should understand how such matters are reflected in the Company's
financial statements.
3
The Committee will discuss and review with management and
advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations.
OTHER
Investigations. The Committee will initiate the investigation
of any matter brought to its attention within the scope of its duties,
with the power and funding to retain outside counsel and other advisers.
Proxy Statement Report. The Committee will prepare a report
for inclusion in the Company's proxy statement for its annual meeting of
stockholders describing the activities in which it has engaged during the
prior year pursuant to its charter. The report will address all issues
required by the rules of the SEC.
Financial Risk Exposures. The Committee will meet periodically
with management to review the Company's major financial risk exposures and
steps management has taken to monitor and control such exposures.
Internal Audit. The Committee will discuss the scope and
staffing of an internal audit function and if an internal audit function
is formed, the Committee will review the plans and findings of the
internal audits and will meet in executive sessions with the head of
Internal Auditing.
Related Party Transactions. The Committee will be responsible
for reviewing related party transactions for potential conflicts of
interest and approving related party transactions.
Complaints. The Committee will establish procedures for the
receipt, retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing matters and
for the confidential, anonymous submission by employees of the Company or
its subsidiaries of concerns regarding questionable accounting or auditing
matters.
Officer Expense Accounts. The Committee will direct that an
annual report of senior officer expense reports and perquisites be
performed and reported to the Committee.
4
APPENDIX B
EDAC TECHNOLOGIES CORPORATION
NOMINATING COMMITTEE CHARTER
PURPOSE
The principal purpose of the Nominating Committee (the "Committee"), in its
capacity as a committee of the Board of Directors, is to (i) identify
individuals qualified to become members of the Board of Directors and (ii)
recommend the persons to be nominated by the Board of Directors for election as
directors at the annual meeting of shareholders.
STRUCTURE AND MEMBERSHIP
The Committee shall be comprised of not less than three members of the Board of
Directors, and the Committee's composition shall meet the requirements of
applicable Nasdaq rules. Accordingly, all members of the Committee shall be
"independent" directors, as defined by such rules. Members of the Committee
shall be appointed by the Board of Directors. Unless the Board of Directors
elects a Chair of the Committee, the Committee shall elect a Chair by majority
vote. The compensation of Committee members shall be as determined by the Board
of Directors. The Board of Directors may remove any member of the Committee from
such Committee, with or without cause.
AUTHORITY AND RESPONSIBILITIES
1. Selection of Director Nominees. The Committee shall be responsible
for (i) identifying individuals qualified to become members of the
Board of Directors and (ii) recommending to the Board of Directors
the persons to be nominated by the Board for election as directors
at the annual meeting of shareholders and the persons to be elected
by the Board of Directors to fill any vacancies on the Board.
2. Criteria for Selecting Directors. Directors shall not be required to
meet any specific or minimum qualifications. The Committee shall,
however, use the criteria set forth below to guide its selection
process. The Committee shall be responsible for reviewing with the
Board of Directors, on an annual basis, the requisite skills and
criteria for new Board members as well as the composition of the
Board as a whole.
- Nominees should have a reputation for integrity, honesty and
adherence to high ethical standards.
- Nominees should have demonstrated business acumen, experience
and ability to exercise sound judgments in matters that relate
to the current and long-term objectives of the Company.
- Nominees should be willing and able to contribute positively
to the decision-making process of the Company.
- Nominees should have a commitment to understand the Company
and its industry and to regularly attend and participate in
meetings of the Board of Directors and its committees.
- Nominees should have the interest and ability to understand
the sometimes conflicting interests of the various
constituencies of the Company, which include shareholders,
employees, customers, governmental units, creditors and the
general public, and to act in the interests of all
shareholders.
- Nominees should not have, or appear to have, a conflict of
interest that would impair the nominee's ability to represent
the interests of all the Company's shareholders and to fulfill
the responsibilities of a director.
3. Shareholder Nominees. The Committee shall consider nominees for the
Board of Directors recommended by shareholders. Nominations by
shareholders must be submitted in accordance with the procedures set
forth in Section 2.05 of the Company's By-laws.
4. Selection Process. The Committee shall review the qualifications and
backgrounds of all directors and nominees (without regard to whether
a nominee has been recommended by shareholders), as well as the
overall composition of the Board of Directors, and recommend a slate
of directors to be nominated for election at the annual meeting of
shareholders, or, in the case of a vacancy on the Board of
Directors, recommend a director to be elected by the Board to fill
such vacancy.
5. Search Firms. The Committee shall have the sole authority to retain
and terminate any search firm to be used to identify director
nominees, including sole authority to approve the search firm's fees
and other retention terms. The Committee is empowered, without
further action by the Board of Directors, to cause the Company to
pay the compensation of any search firm engaged by the Committee.
PROCEDURES AND ADMINISTRATION
1. Meetings. The Committee shall meet as often as it deems necessary in
order to perform its responsibilities. The Committee shall keep such
records of its meetings as it shall deem appropriate.
2. Subcommittees. The Committee may form and delegate authority to one
or more subcommittees (including a subcommittee consisting of a
single member), as it deems appropriate from time to time under the
circumstances.
3. Reports to the Board. The Committee shall report regularly to the
Board.
2
4. Charter. The Committee shall, from time to time as it deems
appropriate, review and reassess the adequacy of this Charter and
recommend any proposed changes to the Board of Directors for
approval.
5. Annual Self-Evaluation. At least annually, the Committee shall
evaluate its own performance.
3
ANNUAL MEETING OF SHAREHOLDERS OF
EDAC TECHNOLOGIES CORPORATION
MAY 4, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- -- Please detach along the perforated line and mail in the envelope provided. --
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
- -----------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. ELECTION OF DIRECTORS: 2. To ratify the appointment of Carlin, Charron & Rosen,
LLP as independent auditors of the Company for the
NOMINEES fiscal year ending January 1, 2005.
[ ] FOR ALL NOMINEES William B. Bayne, Jr.
John Moses PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
[ ] WITHHOLD AUTHORITY Dominick A. Pagano PROMPTLY USING THE ENCLOSED ENVELOPE.
FOR ALL NOMINEES Stephen J. Raffay
Ross C. Towne
[ ] FOR ALL NOMINEES Daniel C. Tracy
EXCEPT
(See instructions below)
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL NOMINEES EXCEPT"
and write the nominee(s) name(s) on the lines
provided below.
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To change the address on your account, please [ ]
check the box at right and indicate your new
address in the address space above. Please note
that changes to the registered name(s) on the
account may not be submitted via this method.
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Signature of Shareholder Date: Signature of Shareholder Date:
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NOTE: Please sign exactly as your name or names appear on this proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
</Table>
EDAC TECHNOLOGIES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - MAY 4, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints each of Glenn L. Purple and Edward J.
Samorajczyk, Jr., and each of them, as proxies (with full power of substitution)
of the undersigned to attend the Annual Meeting of Shareholders of EDAC
Technologies Corporation (the "Company") to be held on May 4, 2004 at 11:00
a.m., local time, at the offices of the Company, 1790 New Britain Avenue,
Farmington, Connecticut and any adjournment thereof, and to vote the shares of
common stock of the Company held by the undersigned on April 2, 2004, as
specified on the reverse side and on any other matters that may properly come
before said meeting, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES AND FOR PROPOSAL 2.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)