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MERRIMAC INDUSTRIES, INC.
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(Name of Registrant as Specified in Its Charter)
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MERRIMAC INDUSTRIES, INC.
41 FAIRFIELD PLACE
WEST CALDWELL, NJ 07006-6287
April 28, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Merrimac Industries, Inc. to be held at the offices of the Company, 41
Fairfield Place, West Caldwell, New Jersey, on Tuesday, June 17, 2003, at 10:00
a.m.
Information about the annual meeting is found in the formal Notice of
Annual Meeting of Stockholders and Proxy Statement on the following pages. The
Annual Report to Stockholders for 2002 is part of this mailing, but does not
constitute a part of the proxy solicitation material.
Since it is important that your shares be represented at the annual
meeting, we request that you promptly complete and submit the enclosed proxy
either via the Internet, by telephone or by mail. Any stockholder returning a
proxy may revoke it.
Sincerely,
Mason N. Carter
Chairman of the Board,
President and Chief Executive Officer
MERRIMAC INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 17, 2003
The Annual Meeting of Stockholders of Merrimac Industries, Inc. (the
"Company") will be held at the offices of the Company, 41 Fairfield Place, West
Caldwell, New Jersey, on Tuesday, June 17, 2003, at 10:00 a.m., for the
following purposes:
(1) To elect two members to the Company's Board of Directors for a
term of three years;
(2) To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the 2003 fiscal year; and
(3) To transact such other business as may properly come before the
meeting.
Holders of record of the Company's common stock, $0.01 par value per
share, at the close of business on April 25, 2003, the record date fixed by the
Board of Directors, are entitled to receive notice of, and to vote at, the
meeting and at any adjournments thereof. A proxy and proxy statement for the
meeting are enclosed herewith.
By Order of the Board of Directors,
ROBERT V. CONDON
Secretary
April 28, 2003
WHETHER OR NOT YOU PLAN TO ATTEND THE 2003 ANNUAL MEETING, PLEASE PROMPTLY
SUBMIT THE ACCOMPANYING PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, VIA
THE INTERNET, BY TELEPHONE OR BY MAIL.
MERRIMAC INDUSTRIES, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 17, 2003
The Board of Directors of Merrimac Industries, Inc. (the "Company")
hereby solicits all holders of the Company's common stock, par value $0.01 per
share ("Common Stock"), to vote by proxy at the Annual Meeting of Stockholders,
which will be held at the offices of the Company, 41 Fairfield Place, West
Caldwell, New Jersey, on Tuesday, June 17, 2003, at 10:00 a.m. (including any
adjournment or postponement thereof, the "Meeting") for the purposes stated in
the Notice of Annual Meeting of Stockholders. The shares represented by proxies
will be voted at the Meeting in accordance with the instructions noted thereon.
A proxy may be revoked at any time before it is exercised by filing a
written notice of revocation with the Secretary of the Company, by revocation in
person at the Meeting or by presenting a later-dated proxy.
This Proxy Statement and the accompanying form of proxy are first being
mailed to stockholders on or about May 2, 2003.
The cost of solicitation will be paid by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies from stockholders by telephone, letter, e-mail, facsimile or in
person. The Company expects to pay compensation for the solicitation of proxies,
plus expenses, to Georgeson Shareholder Communications Inc. to supply brokers
and other persons with proxy materials for forwarding to beneficial holders of
Common Stock. The Company expects to pay Georgeson a fee of approximately $3,000
for its services. The Company will also reimburse such brokers and other persons
for expenses related to the forwarding of this mailing.
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL
The Board fixed the close of business on April 25, 2003 as the record
date for the determination of stockholders entitled to receive notice of, and to
vote at, the Meeting. At the close of business on the record date, there were
outstanding and entitled to vote 3,120,591 shares of Common Stock. Every
stockholder of record on the record date is entitled to one vote for each share
of Common Stock then held.
The presence of a quorum is required to conduct business at the
Meeting. A quorum is defined as a majority of all the shares of Common Stock
entitled to vote at the Meeting, present in person or by proxy. Votes withheld
from director nominees and abstentions will be counted in determining whether a
quorum has been reached.
The affirmative vote of (i) a plurality of the shares present at the
Meeting and entitled to vote on the subject matter is required to elect the
director nominees to the Board and (ii) a majority of the shares present at the
Meeting and entitled to vote on the subject matter is required to ratify the
selection of Ernst & Young LLP as the Company's independent auditors and any
other business which may properly come before the Meeting.
Abstentions will have the same effect as negative votes, except that
abstentions will have
no effect on the election of directors because directors are elected by a
plurality of the votes cast. In accordance with the American Stock Exchange
rules, brokers holding shares in street name for their customers may vote, in
their discretion, on behalf of any customers who do not furnish voting
instructions within 10 days of the Meeting on items such as the election of
directors and ratification of the selection of auditors.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board of
Directors shall consist of three classes of directors with overlapping
three-year terms. One class of directors is to be elected each year with terms
extending to the third succeeding annual meeting of stockholders. Each of the
two nominees, Robert C. Cargo and Joel H. Goldberg, to be elected as a Class I
director at the Meeting will hold office until the Company's annual meeting of
stockholders in the year 2006 and until his successor has been duly elected and
qualified. The three directors in Class II, Edward H. Cohen, Arthur A. Oliner
and Harold J. Raveche, and the three directors in Class III, Mason N. Carter,
Albert H. Cohen and David B. Miller, are serving terms expiring at the time of
the Company's annual meetings in 2004 and 2005, respectively, and until their
respective successors have been duly elected and qualified.
The persons named in the enclosed form of proxy will vote such proxy
for the election to the Board of Directors as Class I directors of Robert C.
Cargo and Joel H. Goldberg. Dr. Goldberg has previously been elected as a
director by the stockholders. Approval of the director nominees requires the
affirmative vote of a plurality of the shares present at the Meeting and
entitled to vote on the subject matter. If no contrary indication is made,
proxies in the accompanying form are to be voted for such nominees or, in the
event any such nominee is not a candidate or is unable to serve as a director at
the time of the election (which is not now expected), for any nominee who shall
be designated by the Board to fill such vacancy, unless the Board shall
determine to reduce the number of directors pursuant to the By-laws. There is no
arrangement or understanding between any director or nominee and any other
person pursuant to which such person was selected as a director or nominee
except for David B. Miller, who was elected pursuant to an agreement between the
Company and DuPont Electronic Technologies ("DuPont Electronics") which was
entered into on February 28, 2002.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
INFORMATION ABOUT NOMINEES FOR DIRECTORS AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to each
nominee for director and each continuing director.
4
DIRECTOR OF THE
NAME AGE COMPANY SINCE
---- --- ---------------
Class I:
Robert C. Cargo.............................. 56 2002
Joel H. Goldberg............................. 59 1997
Class II:
Edward H. Cohen.............................. 64 1998
Arthur A. Oliner............................. 81 1961
Harold J. Raveche............................ 60 2001
Class III:
Mason N. Carter............................. 57 1995
Albert H. Cohen............................. 70 1997
David B. Miller............................. 46 2002
Mason N. Carter was elected to the position of Chairman of the Board on
July 24, 1997. He has served as President and Chief Executive Officer of the
Company since December 16, 1996. He is a director of Transnational Industries,
Inc.
Robert C. Cargo is a Certified Public Accountant who has been
self-employed as a Management Consultant since 2000. Mr. Cargo was employed by
Mars, Incorporated in a number of capacities from 1978 to 2000. Mars,
Incorporated is a global, branded consumer products company that operates
business units in over 70 countries. From 1992 to 2000 he was Vice
President/Director of Corporate Finance and Treasury in McLean, Virginia. From
1987 to 1992 he was the Vice President of Finance and Administration at Mars
Confectionery in Slough, England.
Albert H. Cohen has been self-employed as a management consultant and
asset (money) manager since 1987. He was the Chairman of the Board and the Chief
Executive Officer of Metex Corporation from 1986 to 1987, and from 1964 to 1986
he was its President and Chief Executive Officer. Metex Corporation is a
manufacturer of industrial and automotive products.
Edward H. Cohen is counsel to the law firm of Katten Muchin Zavis
Rosenman, with which he has been affiliated since 1963. He is a director of
Phillips-Van Heusen Corporation, Franklin Electronic Publishers, Inc., Gilman &
Ciocia, Inc. and Levcor International, Inc.
Joel H. Goldberg has been Chairman and Chief Executive Officer of
Career Consultants, Inc., a management consulting firm, and SK Associates, an
outplacement firm, located in Union, New Jersey, since 1972. Dr. Goldberg is a
director of Phillips-Van Heusen Corporation,
5
Hampshire Group, Limited, Marcal Paper Company and Modell's, Inc., an advisor to
the New Jersey Sports and Exposition Authority and a member of the Advisory
Council for Sports Management of Seton Hall University. He is also a consultant
to the New York Giants and the New Jersey Nets professional sports teams.
David B. Miller has been Vice President and General Manager of DuPont
Electronics, an electronic development and manufacturing company, since 2001.
Mr. Miller has been employed by DuPont in several capacities since 1981. From
1999 through 2001, Mr. Miller was DuPont's Director of Investor Relations. From
1997 to 1999, Mr. Miller was Managing Director, Asia Pacific and Global Business
Director, Photopolymer and Electronic Materials. Mr. Miller served as Global
Business Director, Printed Circuit Material from 1995 to 1997. Mr. Miller has
responsibility for DuPont's various electronic material initiatives. Mr. Miller
is a director of DuPont Air Products NanoMaterials Joint Venture, a joint
venture with Air Products and Chemicals, Inc. focused on chemical mechanical
planarization materials, and of HD Microsystems, a joint venture with Hitachi
Chemical that develops, manufactures and markets liquid polyimides and other
materials to the semiconductor industry.
Arthur A. Oliner has been Professor Emeritus of Electrophysics at
Polytechnic University (formerly Polytechnic Institute of Brooklyn) since 1990.
Prior to that, he was head of its Electrical Engineering Department from 1966
until 1974, and was the director of its Microwave Research Institute from 1967
to 1982. He was elected a member of the National Academy of Engineering and a
Fellow of the IEEE, the AAAS, and the British IEE. Dr. Oliner is the author of
three books and has received many awards. He has been an engineering consultant
for such companies as IBM, Boeing, Raytheon, Hughes and Rockwell.
Harold J. Raveche has been President of the Stevens Institute of
Technology since 1988. Prior to that, he was the Dean of Rensselaer Polytechnic
Institute from 1985 until 1988. He was a member of the U.S. Trade and Technology
missions to Israel in 1998, Brazil in 1999 and Korea and Taiwan in 2000. Dr.
Raveche is a director of Cirrus Logic, Inc.
There are no family relationships among the directors or nominees for
directors of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year that ended on December 28, 2002, the Board of
Directors held seven meetings, one of which was by telephone conference. Each
director attended 75% of the total number of meetings of the Board and of the
committees on which such director served during fiscal year 2002.
The Board of Directors has an Audit Committee, a Compensation
Committee, a Management Committee, and a Corporate Governance and Nominating
Committee. On December 11, 2002, the Stock Purchase Plan Committee and the Stock
Option Plan Committee were incorporated into the Compensation Committee.
6
The Stock Option Committee consisted of Joseph Fuller (a director who
is not standing for re-election) and Dr. Raveche and administered the Company's
1997 Long-Term Incentive Plan, 1993 Stock Option Plan, 2001 Stock Option Plan
and 2001 Key Employee Incentive Plan. During fiscal year 2002, the Stock Option
Committee held one meeting.
The Stock Purchase Plan Committee consisted of Mr. Fuller and Dr.
Raveche and administered the 2001 Stock Purchase Plan. During fiscal year 2002,
the Stock Purchase Plan Committee held no meetings.
Mr. A. Cohen, Dr. Goldberg and Dr. Oliner currently serve on the
Compensation Committee. The purpose of the Compensation Committee is to oversee
the responsibilities relating to compensation of the Company's executives and
produce an annual report on executive compensation for inclusion in the
Company's proxy statement. Since December 11, 2002, the Compensation Committee
has administered the Company's benefit plans. During fiscal year 2002, the
Compensation Committee held three meetings.
The Audit Committee currently consists of Messrs. Cargo, A. Cohen, E.
Cohen and Dr. Raveche. Mr. Fuller resigned as a member of the Audit Committee on
February 21, 2002. All current members of the Audit Committee are independent as
defined in Section 121(A) of the American Stock Exchange listing standards. The
Audit Committee's function is to provide assistance to the Board of Directors in
fulfilling the Board's oversight functions relating to the quality and integrity
of the Company's financial reports, monitor the Company's financial reporting
process and internal control system, and perform such other activities
consistent with its charter and the Company's By-laws as the Committee or the
Board of Directors deems appropriate. The Audit Committee is directly
responsible for the appointment, compensation and oversight of the work of the
outside auditors (including resolution of disagreements between management of
the Company and the outside auditors regarding financial reporting) for the
purpose of preparing or issuing an audit report or related work. The Audit
Committee must pre-approve all audit and non-audit services to be provided to
the Company by its outside auditors. The Committee carries out all functions
required by the American Stock Exchange, the Securities and Exchange Commission
and the federal securities laws. During fiscal year 2002, the Audit Committee
held nine meetings.
Messrs. Carter and A. Cohen currently serve on the Management
Committee. The Management Committee recommends to the Board the strategic
business direction for the Company and evaluates the impact of current changes
in the business environment in which the Company operates. During fiscal year
2002, the Management Committee held three meetings.
On February 27, 2003, the Company formed a Corporate Governance and
Nominating Committee of its Board of Directors comprised of Mr. E. Cohen, Dr.
Raveche and Dr. Goldberg. The Governance Committee is responsible for (1)
identifying and recommending to the Board of Directors individuals qualified to
become Board and Committee members; (2) maintaining that a majority of the Board
of Directors members are independent and that all the members of the Audit,
Compensation and Governance Committees are independent as required; (3)
developing and recommending to the Board of Directors a set of corporate
governance principles applicable
7
to the Company; and (4) addressing corporate governance issues and recommending
proposals and actions for the Board's consideration.
AUDIT COMMITTEE REPORT
The Company's management has the primary responsibility for the
financial statements and the reporting process, including the Company's system
of internal controls and disclosure controls and procedures. The outside
auditors audit the Company's financial statements and express an opinion on the
financial statements based on the audit. The Audit Committee oversees (i) the
accounting and financial reporting processes of the Company and (ii) the audits
of the financial statements of the Company on behalf of the Board of Directors.
The Audit Committee operates under a written charter adopted by the Board which
is attached hereto as Exhibit A.
We met and held discussions with management and Ernst & Young LLP, the
Company's independent auditors for fiscal 2002. Management represented to us
that the Company's consolidated financial statements for the fiscal year ended
December 28, 2002 were prepared in accordance with generally accepted accounting
principles. We discussed the consolidated financial statements with both
management and the independent auditors. We also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
Nos. 61 and 90 (Communication With Audit Committees).
The Audit Committee discussed with the independent auditors the overall
scope and plans for the audit. We met with the independent auditors, with and
without management, to discuss the results of their examination, their
evaluation of the Company's internal controls, and the overall quality of the
Company's financial reporting.
We discussed with the independent auditors the auditors' independence
from the Company and management, including the independent auditors' written
disclosures required by Independent Standards Board Standard No. 1 (Independence
Discussions With Audit Committees).
During fiscal year 2002, the Company paid Ernst & Young LLP the
following fees:
Audit Fees. Approximately $225,000 for the last annual audit, including
review of periodic filings with the SEC.
Financial Information Systems Design and Implementation Fees. No
amounts were paid for financial information systems design and implementation.
All Other Fees. Approximately $67,000 for all other matters (which were
primarily related to tax compliance and assistance on tax related matters).
We reviewed the above information concerning the fees paid to the
independent auditors for the fiscal year ended December 28, 2002, and have
considered whether the provision of these services is compatible with
maintaining the independence of the independent auditors.
8
Based on the foregoing, we recommended that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 28, 2002, for filing with the SEC.
Audit Committee
Edward H. Cohen, Chairman
Robert C. Cargo
Albert H. Cohen
Harold J. Raveche
9
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each
executive officer of the Company.
NAME AGE CURRENT POSITION
Mason N. Carter 57 Chairman of the Board, President and Chief Executive Officer
Robert V. Condon 56 Vice President, Finance, Chief Financial Officer, Treasurer and Secretary
Richard E. Dec 59 Vice President, Corporate Relations
Rocco A. DeLillo 35 Vice President, Engineering
Reynold K. Green 44 Vice President and General Manager
Jayson E. Hahn 35 Vice President, Information Technology and Chief Information Officer
James J. Logothetis 43 Vice President and Chief Technology Officer
Michael Pelenskij 42 Vice President, Manufacturing
Information regarding Mr. Carter is set forth on page 5.
Mr. Condon has been Vice President, Finance and Chief Financial Officer
since joining the Company in March 1996 and was appointed Secretary and
Treasurer in January 1997. Prior to joining the Company, he was with Berkeley
Educational Services as Vice President, Finance, Treasurer and Chief Financial
Officer from 1995 to February 1996.
Mr. Dec has been Vice President, Corporate Relations since November
2002 after serving as Vice President Business Development from July 2000. He
served as Vice President, Marketing since joining the Company in March 1997.
Prior to joining the Company, he was Vice President of Business Development of
Kinley & Manbeck, Inc., a business process re-engineering and systems
implementation consulting company, from April 1996 to March 1997. From 1995 to
March 1996, he was National Account Manager, Product and Systems Group for
Datatec Industries, Inc.
Mr. DeLillo was appointed Vice President, Engineering in November 2002
after serving as Vice President of Research and Development since September
2002. Prior to September 2002 he was Director of Research and Development since
1999. He joined the Company in March 1998 as a Senior Research and Development
Engineer.
Mr. Green was appointed Vice President and General Manager in November
2002. He was Vice President and General Manager of the RF Microwave Products
Group since January 2000. He was Vice President, Sales from March 1997 to
January 2000 and Vice President of
10
Manufacturing from April 1996 to March 1997. Prior to April 1996, Mr. Green held
positions as Director of Manufacturing, National Sales Manager and Director of
Quality Control and High-Reliability Services at the Company.
Mr. Hahn was appointed Vice President, Information Technology and Chief
Information Officer in October 2000 after serving as Director, Network Services
since June 1998. He served as Manager, Network Services from June 1997 to June
1998 and was Information Technology Support Specialist from December 1996 to
June 1997. Prior to joining the Company, Mr. Hahn was with Berkeley Educational
Services, where he held various Information Technology related positions from
1992 to November 1996.
Mr. Logothetis was appointed Vice President and Chief Technology
Officer in March 2002. Mr. Logothetis was appointed Vice President,
Multi-Mix(R)Engineering in May 1998, after rejoining the Company in January 1997
to serve as Director, Advanced Technology. Prior to rejoining the Company, he
served as a director for Electromagnetic Technologies, Inc. in 1995 and became
Vice President of Microwave Engineering in 1996. From 1984 through 1994, Mr.
Logothetis held various engineering positions with the Company, including Group
Manager, Engineering.
Mr. Pelenskij was appointed Vice President, Manufacturing in January
2000, after serving as Director of Manufacturing of the Company from January
1999 to January 2000. Prior to January 1999, Mr. Pelenskij held the positions of
Manager of Screened Components, RF Design Engineer, and District Sales Manager
at the Company since joining the Company in 1993.
There are no family relationships among the executive officers of the
Company.
EXECUTIVE COMPENSATION
The following table sets forth a summary for the last three fiscal
years of the cash and non-cash compensation awarded to, earned by or paid to the
individuals who were (i) the Chief Executive Officer of the Company during
fiscal year 2002 and (ii) the four other most highly compensated executive
officers serving at the end of the last fiscal year (collectively, the "Named
Executive Officers"). There were no other persons who were executive officers at
any time during fiscal year 2002 and would have been included under clause (ii)
if they had been executive officers at December 28, 2002.
11
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
----------------------------------- --------------------------------------
Awards Payouts
---------------- ---------------------
Securities
Underlying All Other
------------------------------------- Options/SARs Compensation (1)
Name and Principal Position(s) Year Salary ($) Bonus ($) (#) ($)
-------------------------------------- ------- ------------- -------------- ---------------- ---------------------
Mason N. Carter 2002 275,000 -- -- 84,086(2)
Chairman, President and 2001 260,000 125,000 -- 95,343(2)
Chief Executive Officer 2000 250,000 100,000 5,000 6,448
Robert V. Condon 2002 165,000 -- -- 5,500
Vice President, Finance, 2001 158,000 35,000 -- 5,100
Chief Financial Officer, 2000 150,000 20,000 -- 5,674
Treasurer and Secretary
Reynold K. Green 2002 145,000 -- -- 4,795
Vice President and General 2001 135,000 15,000 -- 4,375
Manager 2000 127,500 10,000 -- 4,791
James J. Logothetis 2002 127,000 -- -- 1,979
Vice President and Chief 2001 125,000 5,000 -- 2,024
Technology Officer 2000 120,000 10,000 5,000 2,700
Jayson E. Hahn 2002 120,000 -- -- 3,820
Vice President, Information 2001 95,000 10,000 -- 3,150
Technology and Chief 2000 71,000 -- 2,139 5,000
Information Officer
(1) Except as set forth in note (2) below, comprises matching 401(k)
amounts for each of the three fiscal years and includes a discretionary
profit sharing contribution by the Company pursuant to the Company's
savings and investment plan for fiscal year 2000.
(2) Includes $78,586 in 2002 and $90,243 in 2001 forgiven by the Company as
a special bonus to Mr. Carter in connection with an amendment to his
employment agreement with the Company. See "Certain relationships and
related transactions" below.
There were no individual grants of stock options during fiscal year
2002 to any of the Named Executive Officers.
12
The following table sets forth information concerning the exercise of
stock options during fiscal year 2002 by each of the Named Executive Officers
and the fiscal year-end value of unexercised options. All of the unexercised
options had an option price higher than the market price of the Common Stock of
$4.75 on December 28, 2002.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised
Shares Options/SARs at
Acquired on Value FY-End
Name Exercise(#) Realized($) Exercisable/ Unexercisable*
----------------------- ------------- ------------- ----------------------------
Mason N. Carter -- -- 111,000/2,500
Robert V. Condon -- -- 13,750/0
Reynold K. Green 1,080 1,004 12,850/0
James J. Logothetis -- -- 28,000/8,000
Jayson E. Hahn -- -- 3,800/2,500
* The vesting of unexercisable options may accelerate upon a change-in-control
of the Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mason N. Carter is subject to an employment agreement pursuant to which
he will serve as President and Chief Executive Officer of the Company for a
minimum annual salary of $240,000. The initial term of the employment agreement
ends on December 31, 2007 and automatically renews for successive one year
periods thereafter unless terminated pursuant to the terms of the employment
agreement. If, within 12 months after a change-in-control of the Company, Mr.
Carter resigns for "good reason" (as defined in the employment agreement) or is
dismissed without "cause" (as defined in the employment agreement), the Company
will pay Mr. Carter the greater of (a) his 24-month salary and benefits
(including bonus) or (b) his salary and benefits from the date of his
resignation or termination to the end of the then current term of the employment
agreement. The employment agreement also provides that Mr. Carter will receive
an annual special bonus on August 31 in each of the years 2001, 2002, 2003, 2004
and 2005, in the form of forgiveness of 20% of the principal and the accrued
interest (grossed up for income taxes) on a $280,000 loan the Company made to
Mr. Carter on August 31, 2000, in connection
13
with an amendment to Mr. Carter's employment agreement. See "Certain
relationships and related transactions" below.
In January 1998, the Company entered into severance agreements with
each of the Named Executive Officers (other than Mr. Carter). The severance
agreements provide, among other things, that if an executive is terminated by
the Company without "cause" or the executive resigns for "good reason" (as such
terms are defined in the severance agreements) within one year following a
"change in control" (as defined therein) the Company is obligated to pay to the
executive officer over a 12-month period two times his "annual base salary" (as
defined therein) and to continue to provide health insurance benefits for two
years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1998, the Company sold 22,000 shares of Common Stock to Mason N.
Carter, Chairman, President and Chief Executive of the Company, at a price of
$11.60 per share, which approximated the average closing price of the Company's
Common Stock during the first quarter of fiscal year 1998. The Company lent Mr.
Carter $255,000 in connection with the purchase of these shares and combined
that loan with a prior loan to Mr. Carter in the amount of $105,000. The
resulting total principal amount of $360,000 was payable May 4, 2003, and bore
interest at a variable interest rate based on the prime rate of the Company's
lending bank. This loan was further amended on July 29, 2002. Accrued interest
of $40,000 was added to the principal, bringing the new principal amount of the
loan to $400,000, the due date was extended to May 4, 2006, and interest (at the
same rate as was previously applicable) is now payable monthly. Mr. Carter has
pledged 33,000 shares of Common Stock as security for this loan, which is a
full-recourse loan.
On August 31, 2000, in connection with an amendment of Mr. Carter's
employment agreement, the Company loaned Mr. Carter an additional $280,000.
Interest on the loan varies and is based on the prime rate of the Company's
lending bank, payable in accordance with Mr. Carter's employment agreement. Each
year the Company is required to forgive 20% of the amount due under this loan
and the accrued interest thereon (grossed up for income taxes). During 2002, the
Company forgave $56,000 of principal and $11,586 of accrued interest and paid
$11,000 for a tax gross-up benefit.
The Company is a party to a shareholder's agreement, dated as of
October 30, 1998, with Charles F. Huber II, a former director and Chairman of
the Company. Pursuant to the shareholder's agreement, Mr. Huber is required to
vote his shares of Common Stock as directed by the Board of Directors or the
Chief Executive Officer of the Company. Mr. Huber is a Managing Director of
William D. Witter Associates, an affiliate of William D. Witter, Inc., which is
a beneficial owner of more than 5% of the Common Stock. Mr. Huber disclaims
beneficial ownership of the shares owned by William D. Witter, Inc.
During fiscal year 2002, Mr. A. Cohen was paid $36,000 for providing
financial consulting services to the Company. This consulting fee was terminated
as of April 30, 2003.
14
During 2002, Dr. Oliner was paid $36,000 for providing
technology-related consulting services to the Company.
During fiscal year 2002, the Company retained Career Consultants, Inc.
and SK Associates to perform executive searches and to provide outplacement
services to the Company and paid those companies $24,000. Dr. Goldberg is the
Chairman and Chief Executive Officer of these companies.
During 2002, DuPont Electronics was paid $36,000 for providing
technological and marketing related services on a cost-sharing basis to the
Company.
During fiscal year 2002, the Company's General Counsel, Katten Muchin
Zavis Rosenman, was paid $372,000 for providing legal services to the Company.
Mr. E. Cohen is of counsel to Katten Muchin Zavis Rosenman but does not share in
any fees paid by the Company to Katten Muchin Zavis Rosenman.
On April 7, 2000, the Company sold to Ericsson Holding International,
B.V. ("EHI") 375,000 shares of Common Stock, representing approximately 17.5% of
the Company's outstanding Common Stock after giving effect to the sale, for an
aggregate purchase price of $3,375,000.
On October 26, 2000, the Company sold to a group of investors led by
Adam Smith Investment Partners, L.P. and certain of its affiliates (the "Adam
Smith Investors"), EHI and three members of the board of directors of the
Company (the "Director Investors") units at a price of $12.80 per unit, each
unit consisting of one share of Common Stock and one warrant with an exercise
price of $21.25 which expires on October 26, 2003. The Adam Smith Investors
purchased 240,000 units, EHI purchased 100,000 units and the Director Investors
purchased 20,000 units for an aggregate purchase price of $4,608,000. The Common
Stock portion of the units represented an aggregate of approximately 14% of the
outstanding Common Stock of the Company after giving effect to the sales.
On October 1, 2002, EHI completed the sale of most of its
microelectronics business to Infineon Technologies AG ("Infineon"). As part of
this transaction, EHI transferred to Infineon 475,000 shares of the Common Stock
of Company and the right to acquire 119,380 shares of the Company's Common Stock
pursuant to the warrants issued in October 2000, and EHI assigned to Infineon
its rights in the various agreements between EHI and the Company, which were
modified in certain respects pursuant to an agreement with Infineon.
On February 28, 2002, the Company sold to DuPont Electronics 528,413
shares of Common Stock, approximately 16.6% of the outstanding Common Stock of
the Company after giving effect to the sale, for an aggregate purchase price of
$5,284,130. The Company and DuPont Electronics have also agreed to work together
to better understand the dynamics of the markets for high-frequency electronic
components and modules.
As a result of the sale of Common Stock to DuPont Electronics, pursuant
to the anti-dilution provisions of the warrants issued in October 2000, the
exercise price of the warrants was
15
reduced to $17.80 and the number of shares subject to the warrants was increased
to 429,775. The expiration date of the warrants remained unchanged.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives a monthly
director's fee of $1,500, plus an additional $500 for each meeting of the Board
of Directors and of any Committees of the Board attended. The directors are also
reimbursed reasonable travel expenses incurred in attending Board and Committee
meetings. In addition, pursuant to the 2001 Stock Option Plan, each non-employee
director is annually granted an immediately exercisable option to purchase 2,500
shares of the Common Stock on the date of each annual meeting of stockholders.
Each such grant is at the fair market value on the date of grant and will expire
on the tenth anniversary of the date of the grant.
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN STOCKHOLDERS
The following table sets forth, as of April 25, 2003, information
concerning the Common Stock owned by (i) persons known to the Company who are
beneficial owners of more than five percent of the Common Stock (ii) each
director, director nominee and Named Executive Officer of the Company, and (iii)
all directors, director nominees and executive officers of the Company as a
group, that was either provided by the person to the Company or is publicly
available from filings made with the SEC.
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except as noted) Percent of Class
-------------------- ------------------------ ----------------
Infineon Technologies AG 594,380(1) 18.35%
St.-Martin-Strasse 53
D-81541 Munich
Germany
E.I. DuPont de Nemours and Company 528,413(2) 16.93%
1007 Market Street
Wilmington, DE 19898
16
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except as noted) Percent of Class
-------------------- ------------------------ ----------------
Adam Smith Investment Partners, L.P., its 449,510(3) 13.36%
affiliates and associates
101 East 52nd Street
New York, NY 10022
William D. Witter, Inc. 315,833(4) 10.12%
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Arthur A. Oliner 204,018(5) 6.48%
11 Dawes Road
Lexington, MA 02173
Mason N. Carter 166,230(6) 5.14%
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Joel H. Goldberg 57,732(7) 1.84%
c/o C.C.I. / SK Associates, Inc.
1767 Morris Avenue
Union, NJ 07083
Edward H. Cohen 28,919(8) *
c/o Katten Muchin Zavis Rosenman
575 Madison Avenue
New York, NY 10022
Albert H. Cohen 16,600(9) *
51 Primrose Court
Princeton, NJ 08540
Joseph B. Fuller 15,425(10) *
c/o Monitor Company
Two Canal Park
Cambridge, MA 02141
Harold J. Raveche 5,259(11) *
c/o Stevens Institute of Technology
Castle Point on Hudson
Hoboken, NJ 07030
17
Amount and Nature of
Name and Address Beneficial Ownership+
of Beneficial Owners (direct except as noted) Percent of Class
-------------------- ------------------------ ----------------
David B. Miller 5,000(12) *
c/o DuPont Electronic Technologies
14 T.W. Alexander Drive
Research Triangle Park, NC 27709
Robert C. Cargo
15 Pond View Road 2,500(13) *
Chester, NJ 07930
James J. Logothetis
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006 30,479(14) *
Robert V. Condon 20,666(15) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Reynold K. Green 20,448(16) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
Jayson E. Hahn 3,800(17) *
c/o Merrimac Industries, Inc.
41 Fairfield Place
West Caldwell, NJ 07006
All directors and 617,983(18) 19.80%
executive officers as a group
(16 persons)
--------------------------------------------------------------------------------
+ In accordance with Rule 13d-3 of the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner of securities if such
person has or shares voting power or investment power with respect to
such securities or has the right to acquire beneficial ownership within
60 days.
* The percentage of shares beneficially owned does not exceed 1% of the
class.
(1) Includes 119,380 shares subject to immediately exercisable warrants.
Information as to the shares of Common Stock and warrants to purchase
shares of Common Stock beneficially owned by Infineon Technologies AG
is as of October 1, 2002, as set forth in Schedule 13G, dated October
1, 2002, and filed with the SEC.
(2) Consists of shares owned by DuPont Chemical and Energy Operations, Inc.
("DCEO").
(3) Adam Smith Investment Partners, L.P., its affiliates and associates
include Adam Smith Investment Partners, L.P. ("ASIP"), Adam Smith
Capital Management LLC ("ASCM"), Diamond Capital Management ("DCM"),
Adam Smith Investments, Ltd. ("ASI"), Richard Grossman, Orin Hirschman
and Richard and Ana Grossman JTWROS. The principal executive
18
offices of ASIP, ASCM and DCM, and the business address of each of
Richard Grossman and Orin Hirschman, are located at 101 East 52nd
Street, New York, New York 10022. The principal executive office of ASI
is c/o Insinger Trust (BVI) Limited, Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British Virgin Islands. Includes 244,610
shares subject to immediately exercisable warrants. Information as to
the shares of Common Stock and warrants to purchase shares of Common
Stock beneficially owned by ASIP, ASCM, DCM, ASI, Richard Grossman,
Orin Hirschman and Richard and Ana Grossman is as of December 5, 2000,
as set forth in Schedule 13G/A, dated January 5, 2001, and filed with
the SEC.
(4) Information in respect of the beneficial ownership of William D.
Witter, Inc. (other than percentage ownership) is based upon a Schedule
13G/A filed on January 13, 2003.
(5) Includes 28,100 shares subject to stock options that are exercisable
currently or within 60 days, and 9,528 shares owned by Dr. Oliner's
wife.
(6) Includes 111,000 shares subject to stock options that are exercisable
currently or within 60 days.
(7) Includes 11,600 shares subject to stock options that are exercisable
currently or within 60 days and 13,132 shares subject to immediately
exercisable warrants.
(8) Includes 9,950 shares subject to stock options that are exercisable
currently or within 60 days and 5,969 shares subject to immediately
exercisable warrants.
(9) Includes 11,600 shares subject to stock options that are exercisable
currently or within 60 days.
(10) Includes 6,650 shares subject to stock options that are exercisable
currently or within 60 days and 4,775 shares subject to immediately
exercisable warrants.
(11) Includes 5,000 shares subject to stock options that are exercisable
currently or within 60 days.
(12) David B. Miller disclaims beneficial ownership of the shares owned by
DCEO. Includes 5,000 shares subject to stock options that are
exercisable currently or within 60 days.
(13) Includes 2,500 shares subject to stock options that are exercisable
currently or within 60 days.
(14) Includes 28,000 shares subject to stock options that are exercisable
currently or within 60 days.
(15) Includes 13,750 shares subject to stock options that are exercisable
currently or within 60 days.
(16) Includes 12,850 shares subject to stock options that are exercisable
currently or within 60 days.
(17) Includes 3,800 shares subject to stock options that are exercisable
currently or within 60 days.
(18) Includes 309,161 shares subject to stock options that are exercisable
currently or within 60 days, and 23,876 shares subject to immediately
exercisable warrants.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Common Stock, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock. Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports they file.
19
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, the Company's officers, directors and greater than ten
percent stockholders complied with these Section 16(a) filing requirements with
respect to the Common Stock during the fiscal year ended December 28, 2002.
RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Audit Committee has selected Ernst & Young LLP as independent
auditors to audit and report upon the consolidated financial statements of the
Company for fiscal year 2003. The Board of Directors recommends that the
stockholders ratify the selection of Ernst & Young LLP.
A representative of Ernst & Young LLP is expected to be present at the
Meeting to respond to appropriate questions, and to make a statement if he or
she desires.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 2003.
STOCKHOLDER PROPOSALS
In order to be included in the proxy statement and proxy card relating
to the 2004 annual meeting of stockholders, stockholder proposals must be
received by the Secretary of the Company at the address below no later than
December 31, 2003. The proxy or proxies designated by the Company will have
discretionary authority to vote on any matter properly presented by a
stockholder for consideration at the next annual meeting of stockholders but not
submitted for inclusion in the proxy materials for such meeting, unless notice
of the matter is received by the Secretary of the Company at the address set
forth below not later than March 18, 2004. All proposals must meet the
requirements set forth in the rules and regulations of the SEC in order to be
eligible for inclusion in the proxy statement for the 2004 annual meeting of
stockholders.
ANNUAL REPORT
All stockholders as of the record date are concurrently being sent a
copy of the Company's Annual Report for the fiscal year ended December 28, 2002.
In addition, upon the written request of any stockholder, the Company
will furnish that person, without charge, with a copy of the Form 10-KSB as
filed with the SEC on April 22, 2003. Any such request should be made in writing
to:
Secretary
Merrimac Industries, Inc.
P.O. Box 986
West Caldwell, NJ 07007-0986
20
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors has no
knowledge of any business other than that described above that will be presented
at the Meeting for action by the stockholders. If any other business should
properly come before the Meeting, it is intended that the persons designated as
attorneys and proxies in the enclosed form of proxy will vote all such proxies
as they in their discretion determine.
By Order of the Board of Directors
ROBERT V. CONDON
Secretary
April 28, 2003
21
EXHIBIT A
MERRIMAC INDUSTRIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Audit Committee is a committee of the Board of Directors. It shall provide
assistance to the Board in fulfilling the Board's oversight functions relating
to the quality and integrity of the Company's financial reports, monitor the
Company's financial reporting process and internal control system, and perform
such other activities consistent with this Charter and the Company's By-laws as
the Committee or the Board deems appropriate. It shall have such functions as
are provided by the American Stock Exchange, the Securities and Exchange
Commission and the federal securities laws.
II. COMPOSITION
The Audit Committee shall be composed of three or more directors, none of whom
shall be an employee of the Company and each of whom shall meet the independence
requirements of the American Stock Exchange and the Securities Exchange Act of
1934 (the "Exchange Act"). All members of the Committee shall be financially
literate, and at least one member shall have accounting or related financial
management expertise.
The members of the Audit Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until the next annual
organizational meeting or until their respective successors shall be duly
elected and qualified.
III. MEETINGS
The Audit Committee shall meet at least three times annually, once to review the
audit plan of the outside auditors, once to review the Company's annual audited
financial statements prior to their issuance, and once to review the post-audit
findings of the outside auditors. A quorum for these meetings shall be a
majority of the members.
The Audit Committee shall also meet at least three times annually to confer with
the outside auditors and management to review the Company's interim financial
statements and reports prior to the public announcement of financial results and
the filing of the reports with the Securities and Exchange Commission. A quorum
for these meetings shall be one of the members.
The Audit Committee may also hold any special meetings as may be called by the
Chairman of the Audit Committee, a majority of the members of the Committee or
at the request of the outside auditors or management. Members of senior
management, the outside auditors or others may attend meetings of the Audit
Committee at the invitation of the Audit Committee and shall provide pertinent
information as necessary. The Audit Committee shall meet with the outside
auditors and management in separate executive sessions to discuss any matters
that the Audit Committee or these groups believe should be discussed privately
with the Audit Committee.
22
The Chairman of the Audit Committee shall set the agenda of each meeting and
arrange for the distribution of the agenda, together with supporting material,
to the Audit Committee members prior to each meeting. The Chairman will also
cause minutes of each meeting to be prepared and circulated to the Committee
Members. The Audit Committee may meet via telephone conference calls. The
Committee shall report regularly to the Board as to its activities.
IV. RELATIONSHIP WITH OUTSIDE AUDITORS
The outside auditors are ultimately accountable to the Board and the Audit
Committee, as representatives of the Company's stockholders, but shall report
directly to the Audit Committee. The Audit Committee shall be directly
responsible for the appointment, compensation and oversight of the work of the
outside auditors (including resolution of disagreements between management of
the Company and the outside auditors regarding financial reporting) for the
purpose of preparing or issuing an audit report or related work. All auditing
services and non-audit services provided to the Company by the outside auditors
shall be preapproved by the Audit Committee in accordance with such rules or
limitations the Audit Committee adopts. The Audit Committee may delegate,
subject to any rules or limitations it may deem appropriate, to one or more
designated members of the Audit Committee the authority to grant such
preapprovals; provided, however, that the decisions of any member to whom
authority is so delegated to preapprove an activity shall be presented to the
full Audit Committee at its next scheduled meeting.
V. FUNCTIONS
The Audit Committee's primary functions are to:
Documents/Reports Review
1. Review and assess the adequacy of this Charter at least annually.
2. Discuss all public announcements of financial results and
quarterly and annual financial statements and reports prior to any
filing with the Securities and Exchange Commission or any release
to the public or investors.
3. Recommend to the Board that the audited financial statements be
included in the Company's annual report on Form 10-K for filing
with the Securities and Exchange Commission.
Outside Auditors
4. Approve the appointment and compensation of the outside auditors
prior to any engagement.
23
5. Review all relationships the outside auditors have with the
Company to determine their independence and obtain and review a
report from the outside auditors concerning the auditors' internal
quality control procedures; any material issues raised by the most
recent internal quality-control review, or peer review, of the
firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the firm,
and any steps taken to deal with any such issues. The outside
auditors shall annually provide to the Audit Committee a written
statement delineating all such relationships.
6. Review the annual audit plan of the outside auditors and evaluate
their performance.
7. Review the experience and qualifications of the senior members of
the outside auditors team.
8. Obtain and review a report from the outside auditors at least
annually as to (a) all critical accounting policies to be used,
(b) all alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management of the Company, the ramifications of the use of
such alternative disclosures and treatments and the treatment
preferred by the outside auditors, and (c) other material written
communications between the outside auditors and management of the
Company, including management letters and schedules of unadjusted
differences.
9. Require the rotation of the lead audit partner on a regular basis
in accordance with the requirements of the Exchange Act.
10. Review the Company's hiring of employees or former employees of
the outside auditors who participated in any capacity in the
audits of the Company.
Financial Reporting Processes
11. Consult with the outside auditors concerning the completeness and
accuracy of the Company's financial statements.
12. Consult with the outside auditors concerning the quality of the
Company's accounting principles as applied in its financial
statements and reporting.
13. Review any significant judgments made in management's preparation
of the financial statements and the view of the outside auditors
as to the appropriateness of such judgments.
14. Review any significant difficulties encountered during the course
of the audit or review, including any restrictions on the scope of
the outside auditors' work or access to reviewed information.
24
15. Review any disagreements between management and the outside
auditors in connection with any public announcements of financial
results and quarterly and annual financial statements and reports.
16. Review changes to the Company's accounting principles as
recommended by the outside auditors or management.
17. Review with the outside auditors the adequacy of the Company's
system of internal controls and disclosure controls and
procedures, including computerized information system controls and
security, and any related significant findings and recommendations
of the outside auditors, together with management's responses
thereto.
18. Review periodically with the Company's general counsel, legal and
regulatory matters that could have a significant effect on the
Company's financial statements.
19. Discuss with management and the outside auditors the effect of
regulatory and accounting initiatives as well as off-balance sheet
structures on the Company's financial statements.
Other
20. Review periodically the Company's compliance with its Conflict of
Interest policy.
21. Establish procedures for (a) the receipt, retention, and treatment
of complaints received by the Company regarding accounting,
internal accounting controls, or auditing matters, and (b) the
confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
22. Perform an annual evaluation of the Audit Committee.
23. Investigate any other matter brought to its attention within the
scope of its duties which it deems appropriate for investigation.
The Audit Committee shall have such other functions as are provided by the
American Stock Exchange, the Securities and Exchange Commission and the federal
securities laws.
The Audit Committee shall have the authority to engage outside legal, accounting
or other advisors as it determines necessary to carry out its functions.
25
Limitation of Audit Committee's Role
The Company's management has the primary responsibility for the financial
statements and the reporting process, including the Company's system of internal
controls and disclosure controls and procedures. The outside auditors audit the
Company's financial statements and express an opinion on the financial
statements based on the audit. The Audit Committee oversees (i) the accounting
and financial reporting processes of the Company and (ii) the audits of the
financial statements of the Company on behalf of the Board of Directors.
While the Audit Committee has the functions set forth in this Charter, it is not
the duty of the Audit Committee to plan or conduct audits or to determine that
the Company's financial statements and disclosures are complete and accurate and
are in accordance with generally accepted accounting principles and applicable
rules and regulations. The responsibility to plan and conduct audits is that of
the outside auditors. The Company's management has the responsibility to
determine that the Company's disclosures and financial statements are complete
and accurate and in accordance with generally accepted accounting principles. It
is also not the duty of the Audit Committee to assure the Company's compliance
with laws and regulations or compliance with the Company's code of ethical
conduct. The primary responsibility for these matters rests with the Company's
management.
26
MERRIMAC INDUSTRIES, INC.
41 FAIRFIELD PLACE
WEST CALDWELL, NEW JERSEY 07006-6287
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mason N. Carter and Edward H. Cohen as
proxies, each with the power to appoint his substitute, and hereby authorizes
either or both to represent and to vote all shares of Common Stock of Merrimac
Industries, Inc. held of record by the undersigned on April 25, 2003, at the
Annual Meeting of Stockholders to be held on June 17, 2003, at Merrimac
Industries, Inc., 41 Fairfield Place, West Caldwell, New Jersey, at 10:00 a.m.
(or any adjournment or postponement thereof), for the proposals and items
referred to on the reverse side and described in the Proxy Statement, and to
vote in their discretion on any other business as may properly come before the
Annual Meeting.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted (i) for the election
of the nominees of the Board of Directors and (ii)for the ratification of Ernst
& Young LLP as the independent auditors.
PLEASE MARK ON THE REVERSE SIDE, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
Please mark your votes as indicated in this example [X]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2:
No. 1 Election of Directors
---------------------------
FOR WITHHOLD
all from
nominees nominees
[ ] [ ]
Nominees: 01-Robert C. Cargo and 02-Joel H. Goldberg
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
--------------------------------
No. 2 Ratification of Ernst & Young LLP as the independent auditors
--------------------------------------------------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated:___________________________,2003
------------------------------------------
Signature
------------------------------------------
Signature
This proxy must be signed exactly as name appears hereon. When shares are held
by joint tenants, both should sign. Executors, administrators, trustees, etc.,
should give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer.
SIGN, DATE AND MAIL YOUR PROXY PROMPTLY TODAY.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH HERE
VOTE BY INTERNET OR TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK
OR MAIL.
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED
AND RETURNED YOUR PROXY CARD.
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INTERNET
HTTP://WWW.PROXYVOTING.COM/MRM
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your control number, located
in the box below, to create and submit an electronic ballot.
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OR
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TELEPHONE
1-800-840-1208
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the directions given.
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OR
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MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
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IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
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