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
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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)(4) and 0-11.
1) Title of each class 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
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS
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CONTROL NUMBER.
SEC 1913 (11-01)
EDAC TECHNOLOGIES CORPORATION
1806 NEW BRITAIN AVENUE
FARMINGTON, CONNECTICUT 06032
(860) 677-2603
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, AUGUST 2, 2005
The 2005 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,
August 2, 2005, at 9:30 a.m. local time, to consider and act upon the following
matters:
1. To elect seven 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 December 31,
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
June 8, 2005
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JUNE 1, 2005 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 2004 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 2005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, AUGUST 2, 2005
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 2005 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, August 2,
2005, at 9:30 a.m. local time, and any adjournments thereof.
The Company's Annual Report for the fiscal year ended January 1, 2005 is
being mailed to shareholders, along with these proxy materials, on or about June
8, 2005.
At the close of business on June 1, 2005, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 4,490,870 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 seven 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 2005 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 seven. Proxies may not be voted for
more than seven directors. The persons named in the enclosed proxy will vote to
elect each of William B. Bayne, Jr., Joseph Lebel, 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, with the exception of Joseph Lebel who was a director of the Company
from 2001 to 2002. 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
- --------------------------------- --- -------- -----------------------------------------------------
CURRENT DIRECTORS (ALSO NOMINEES)
William B. Bayne, Jr. (1) 40 2003 President, Chief Executive Officer and founder of BBB
Corporation and 23rd Street Corporation (restaurant
businesses)
John Moses 60 2001 Private Investor
Dominick A. Pagano (2) 61 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) 77 2000 Retired Vice-Chairman,
Emhart Corporation (a manufacturer of various
machinery and consumer products)
Ross C. Towne (4) 61 2001 President and Chief Financial Officer, The Washington
Source, Inc. (a custom precision sheet metal
fabrication and integration company)
Daniel C. Tracy (5) 64 1999 Chairman of the Board of the Company and Business
Consultant
NOMINEE FOR DIRECTOR
Joseph Lebel (6) 75 -- Retired Quality Control Manager for the Company
3
(1) Mr. Bayne founded BBB Corporation and 23rd Street Corporation in 1988 and
1994 respectively.
(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.
(6) Mr. Lebel was the Quality Control Manager for the Company from 1961 until
he retired in 1995. He was a director of the Company from 2001 to 2002.
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
four meetings during 2004. 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.
4
The Compensation Committee, comprised of Messrs. Moses, Bayne and Raffay,
held one meeting during 2004. 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.
The Nominating Committee, comprised of Messrs. Bayne, Raffay, Towne and
Tracy, held one meeting during 2004.
The Board of Directors held five meetings during 2004. 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
In March 2004, the Board of Directors 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. 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 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
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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:
- 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 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.
6
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.
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 January
3, 2004 and January 1, 2005.
FEE CATEGORY FISCAL 2003 FEES FISCAL 2004 FEES
- ------------------ ---------------- ----------------
Audit Fees $79,145 $74,500
Audit-related fees -- --
Tax Fees -- --
All Other Fees -- 14,000
------- -------
Total Fees $79,145 $88,500
======= =======
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 2003 and 2004 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 January 3, 2004 and January 1,
2005.
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.
The Audit Committee has:
- reviewed and discussed the Company's audited financial statements
for the fiscal year ended January 1, 2005, 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 Statement on Accounting Standards No.
61, "Communications with Audit Committees," as currently in effect;
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 1, 2005, for filing with the
Commission.
AUDIT COMMITTEE:
Stephen J. Raffay, Chairman
Ross C. Towne
Daniel C. Tracy
COMPENSATION OF DIRECTORS
In 2004, the Company paid directors of the Company a retainer of $2,500
each fiscal quarter and $1,000 for each non-telephonic Board of Directors or
Committee
8
meeting attended. The Chairman of the Board of Directors was paid an additional
retainer of $1,250 each fiscal quarter 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. As
of April 1, 2005, the Company increased the directors' compensation to a
retainer of $3,125 each fiscal quarter and $1,500 for each non-telephonic Board
of Directors or Committee meeting attended.
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 61 President and Chief Executive Officer
Glenn L. Purple 49 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, 1999 in the Company's
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").
9
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF EDAC COMMON STOCK,
NASDAQ (US) INDEX AND NASDAQ TRANSPORTATION INDEX
[PERFORMANCE GRAPH]
NASDAQ EDAC
NASDAQ (US) TRANSPORTATION TECHNOLOGIES
FISCAL YEAR ENDED INDEX INDEX CORPORATION
- ------------------ ----------- -------------- ------------
January 1, 2000 $100.000 $100.000 $100.000
December 30, 2000 60.309 90.893 55.910
December 29, 2001 47.838 107.470 127.597
December 28, 2002 33.074 109.399 36.170
January 3, 2004 49.449 156.674 70.580
January 1, 2005 53.813 200.807 107.247
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 2004 fiscal year. Based on this
evaluation, the Compensation Committee awarded a bonus to the Company's Chief
Financial Officer for the 2004 fiscal year and an option to purchase 5,000
shares of the Company's common stock.
The Company paid Mr. Pagano, its Chief Executive Officer, compensation of
$180,000 during the fiscal year ended January 1, 2005 under Mr. Pagano's
employment agreement with the Company. His employment agreement was amended,
without changing his base salary, effective February 2005. 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 2004 exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
---------------------------
LONG TERM
COMPENSATION
AWARDS
OTHER ------------
ANNUAL SECURITIES
COMPEN- UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS SATION OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)
- ------------------------- ---- ------- ------ ------- ------------ ------------
Dominick A. Pagano 2004 180,000 -- -- -- 17,000
President and Chief 2003 165,923 -- -- -- 16,000
Executive Officer (1) 2002 21,923 -- -- 140,000 13,000
Glenn L. Purple 2004 108,000 15,186 -- 7,500 --
Vice President and Chief 2003 104,981 -- -- -- --
Financial Officer (2) 2002 95,365 -- -- 5,000 1,750
(1) Mr. Pagano became President and Chief Executive Officer on August 13,
2002. Other compensation represents director retainer and meeting fees.
(2) Mr. Purple became Vice-President-Finance, Chief Financial Officer and
Secretary on November 19, 2002. Other compensation represents payments to
a defined contribution plan.
OPTION GRANTS
The following table provides certain information regarding stock options
granted to the Named Executive Officers in 2004.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM ($) (3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR (1) ($/SH)(2) DATE 5% ($) 10% ($)
- ------------ ----------- --------------- --------- ---------- ------ -------
Glenn Purple 2,500 16.7 1.10 1/6/14 1,729 4,383
Glenn Purple 5,000 33.3 1.67 12/7/14 5,251 13,308
12
(1) Based on a total of 15,000 shares subject to options granted to employees
under the Company's option plans in fiscal year 2004.
(2) Under all of the Company's option plans, the exercise price is equal to
the fair market value of the Company's Common Stock on the date of grant.
(3) The dollar amounts under these columns represent hypothetical gains that
could be achieved for options if exercised at the end of the option term.
These gains are based on assumed rates of stock price appreciation of 5%
and 10% compounded annually from the date options are granted, net of
option exercise price. Actual gains, if any, on stock option exercises
will depend on the future performance of the Company's Common Stock, the
option holder's continued employment throughout the option period, and the
date on which options are exercised.
FISCAL YEAR-END OPTION VALUES
The following table provides certain information regarding options held by
the Named Executive Officers at January 1, 2005.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR END ($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($) Exercisable/Unexercisable EXERCISABLE/UNEXERCISABLE
- ------------------ --------------- ------------ ------------------------- -------------------------
Dominick A. Pagano -- -- 140,000/- $ 140,000/-
Glenn L. Purple -- -- 11,334/9,166 $6,962/3,066
(1) Based on the last reported sale price of the Common Stock on the OTC
Bulletin Board on December 30, 2004 ($1.60), less the option exercise
price.
Pension Plan
The Company maintains a defined benefit plan that was frozen with respect
to all future benefits as of April 1, 1993. The only Named Executive Officer
that will benefit under the plan is Glenn Purple. From the period 1982 to 1993,
Mr. Purple had earned an estimated annual retirement benefit that will be
payable upon attainment of age 65 in the amount of approximately $7,800.
13
EMPLOYMENT AGREEMENTS
As of February 13, 2005, the Company and Mr. Pagano entered into an
amended and restated employment agreement, which replaced his February 13, 2004
employment agreement. Under the new agreement, the initial term of Mr. Pagano's
employment agreement commenced on February 13, 2005 and continues through
December 31, 2005, and automatically extends for successive periods of 90 days
unless either party gives the other 30 days advance written notice to the
contrary. Mr. Pagano's base salary is $15,000 per month. Under the new
agreement, the Company may terminate Mr. Pagano's employment upon cause or
disability (each as defined in the agreement). If the Company terminates Mr.
Pagano's employment for any reason other than cause, disability or death, or if
Mr. Pagano 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 initial term of the agreement ending December 31, 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 1, 2005, 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 2004, 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 2005 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.
14
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 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.
SECURITY OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock as of May 6, 2005 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 May 6, 2005 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.
15
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
- ------------------------ ------------------ --------
William B. Bayne Jr. (1) 443,008 9.86
Joseph Lebel 131,557 2.93
John Moses (2) 551,190 12.25
Dominick A. Pagano (3) 341,738 7.38
Glenn L. Purple (4) 41,138 *
Stephen J. Raffay (5) 18,000 *
Ross C. Towne (6) 91,256 2.03
Daniel C. Tracy (7) 122,468 2.71
All Directors and Executive Officers as a
group (7 persons) (8) 1,608,798 34.28
*Represents beneficial ownership of less than 1%.
(1) Mr. Bayne's address is 1806 South Arlington Ridge Road, 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 12,167 shares subject to stock options held by Mr. Purple.
(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 20,000 shares subject to stock options held by Mr. Tracy.
(8) Includes 202,167 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. 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.
16
SHAREHOLDER PROPOSALS
Any shareholder who desires to submit a proposal for inclusion in the
proxy statement and form of proxy for the Company's 2006 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 February 9, 2006.
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 2006 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
Company's directors and executive officers that no forms were required to be
filed, the Company believes that during fiscal year 2004, 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
17
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
June 8, 2005
18
ANNUAL MEETING OF SHAREHOLDERS OF
EDAC TECHNOLOGIES CORPORATION
AUGUST 2, 2005
[PROOF # 1]
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
-Please detach along perforated line and mail in the envelope provided.-
[ ]
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]
1. ELECTION OF DIRECTORS:
NOMINEES:
[ ] FOR ALL NOMINEES William B. Bayne, Jr.
Joseph Lebel
[ ] WITHHOLD AUTHORITY John Moses
FOR ALL NOMINEES Dominick A. Pagano
Stephen J. Raffay
[ ] FOR ALL NOMINEES EXCEPT Ross C. Towne
(See instructions below) Daniel C. Tracy
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL NOMINEES EXCEPT" and write the nominee(s) name(s) on the line provided
below:
_______________________________________________________
_______________________________________________________
________________________________________________________________________________
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.
[ ]
Signature of Shareholder[________________] Date:[________________]
2. To ratify the appointment of Carlin, Charron & Rosen, LLP as independent
auditors of the Company for the fiscal year ending December 31, 2005.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature of Shareholder[________________] Date:[________________]
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.
[ ] [ ]
[PROOF # 2]
[ ]
EDAC TECHNOLOGIES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - AUGUST 2, 2005
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 August 2, 2005 at 9:30
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 June 1, 2005, 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)
[ ] 14475 [ ]