UNITED MERCHANTS AND MANUFACTURERS, INC.
1650 Palisade Avenue
Teaneck, New Jersey 07666
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of
United Merchants and Manufacturers, Inc. will be held at The Sheraton
Heights, 650 Terrace Avenue, Hasbrouck Heights, New Jersey, on Thursday,
November 17, 1994, at 2:00 P.M., for the following purposes:
1. To elect a Board of eight Directors to serve for the ensuing year
and until their successors are elected and qualified.
2. To elect two directors to serve as the representatives of the 10%
Cumulative Preferred Stock, Series 1, until the next annual meeting of the
stockholders;
3. To consider and act upon the selection of KPMG Peat Marwick LLP as
auditors for the fiscal year ending June 30, 1995.
4. To transact such other business as may be properly brought before
the meeting or any adjournment thereof.
Holders of record of the Common Stock of the Company at the close of
business on September 23, 1994 will be entitled to vote at the meeting or
any adjournment thereof with respect to all proposals other than
Proposal 2. The holders of record of the 10% Cumulative Preferred Stock,
Series 1 at the close of business on September 23, 1994 will be entitled
to vote at the meeting or any adjournment thereof only with respect to
proposal 2.
Edward D. Taffet
Secretary
Dated: October 7, 1994
<PAGE>
UNITED MERCHANTS AND MANUFACTURERS, INC.
1650 Palisade Avenue
Teaneck, New Jersey 07666
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being
furnished in connection with the solicitation of proxies by the Board of
Directors of United Merchants and Manufacturers, Inc., a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders to be
held on Thursday, November 17, 1994, at 2:00 P.M., at The Sheraton
Heights, 650 Terrace Avenue, Hasbrouck Heights, New Jersey and any
adjournment or postponement thereof.
Whether or not you plan to attend the Annual Meeting, please sign and
return the enclosed proxy in the accompanying postage-paid, addressed
envelope. Each proxy executed and returned by a stockholder may be
revoked at any time thereafter except as to any matter or matters upon
which, prior to such revocation, a vote will have been cast pursuant to
the authority conferred by such proxy. If you attend the meeting you may,
if you wish, vote in person, thereby cancelling any proxy previously
given. Alternatively, you may revoke your proxy by notifying the
Secretary of the Company in writing prior to the Annual Meeting or by
signing a later-dated proxy. The Board of Directors of the Company is not
soliciting proxies with respect to the election of directors by the
holders of Cumulative Preferred Stock.
Only holders of record of the Common Stock of the Company at the close
of business on September 23, 1994 will be entitled to vote with respect to
all proposals other than Proposal 2 as set forth on the attached Notice of
Annual Meeting. The holders of 10% Cumulative Preferred Stock, Series 1
("Cumulative Preferred Stock") at the close of business on September 23,
1994 will be entitled to vote at the meeting or any adjournment thereof
only with respect to proposal 2 as set forth on the attached Notice of
Annual Meeting. As of that date, there were outstanding and entitled to
vote 17,845,055 shares of Common Stock, the only class of voting
securities of the Company. Each share of Common Stock is entitled to one
vote on all matters properly brought before the meeting other than
Proposal 2. The presence in person or by proxy of the holders of a
majority in interest of the Common Stock shall constitute a quorum for
matters to be voted on by the Common Stock.
The mailing address of the Company is 1650 Palisade Avenue, Teaneck,
New Jersey 07666.
<PAGE>
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of directors under Proposal 1,
in voting by proxy, holders of the Commom Stock may vote in favor of all
nominees, withhold their votes as to all nominees or withhold their votes
as to specific nominees. With respect to the ratification of the
appointment of KPMG Peat Marwick LLP as independent auditors, holders of
the Common Stock may vote in favor of the proposal, against the proposal
or may abstain from voting. Holders of the Common Stock should specify
their choices on the enclosed form of proxy. If no specific instructions
are given with respect to the matters to be acted upon, the shares
represented by a signed proxy will be voted FOR the election of all
nominees and FOR the proposal to ratify the appointment of KPMG Peat
Marwick LLP as independent auditors. The affirmative vote of the majority
of common shares present, or represented, and entitled to vote at the
meeting is required for approval of all matters under Proposals 3 and 4.
The Company's By-laws provide that directors of the Company shall be
elected (Proposal 1) by a plurality of votes cast at the Annual Meeting.
Thus, abstentions and broker non-votes will not be included in vote totals
and will have no effect on the outcome of the vote.
Pursuant to the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation"), holders of Cumulative Preferred Stock may
elect two directors to the Company's Board of Directors if at any time the
equivalent of six or more full quarterly dividends (whether or not
consecutive) payable of the Cumulative Preferred Stock is past due. Due
to the Company's failure to pay dividends on the Cumulative Preferred
Stock for at least six consecutive quarters, on the terms and subject to
the conditions set forth in the Certificate of Incorporation, holders of
Cumulative Preferred Stock are entitled to elect two directors at the
Annual Meeting. See "Election of Directors by Holders of Cumulative
Preferred Stock."
This proxy statement and the accompanying proxy card are first being
mailed by the Company on or about October 7, 1994 to the Company's
stockholders. The cost of solicitation of proxies will be borne by the
Company.
The Annual Report to Stockholders of the Company for the fiscal year
ended June 30, 1994, including financial statements as of June 30, 1994
and for the year then ended, is being mailed herewith to each stockholder
of record.
<PAGE>
Principal Holders of Voting Securities
The following are the only persons known to the Company who
beneficially owned, as of September 17, 1993, more than five percent of
the Common Stock of the Company.
Name and address Number of Percent
of beneficial owner Shares of Class (2)
- - ------------------- --------- ------------
Uzi Ruskin 1,165,519 (1) 6.53
1650 Palisade Avenue, Teaneck, N.J. (including
07666 and Monzoral, Inc., 538 Next 1,000,000 shares
Day Hill Drive, Englewood, N.J. 07631 owned by Monzoral,
Inc.)
Kingsbridge Holdings Ltd. 1,263,700 (1) 7.08
36 Glaernisch Strasse,
Zurich 8002, Switzerland
Saturn Corporation 405,500 (1) 2.27
36 Glaernisch Strasse,
Zurich 8002, Switzerland
Buckingham Investment Ltd. 4,077,047 (1) 22.85
48 Beethovenstrasse
Zurich 8002, Switzerland
- - ---------------
(1) According to Amendment No. 12 to Schedule l3D of the group
comprising Uzi Ruskin (Chairman, President, Chief Executive
Officer and a Director of the Company), Monzoral, Inc.
("Monzoral"), Menachem Atzmon, Saturn Corporation ("Saturn"),
Kingsbridge Holdings Ltd. ("Kingsbridge"), and Buckingham
Investment Ltd. ("Buckingham"), dated August 16, l991, on that
date Monzoral beneficially owned and had the sole voting and
dispositive power with respect to 1,000,000 shares, or 5.60%, of
the Company's Common Stock, Mr. Ruskin beneficially owned and had
the sole voting and dispositive power with respect to 1,165,519
shares, or 6.53%, of the Company's Common Stock (including the
1,000,000 shares owned by Monzoral, which is a corporation wholly
owned by Mr. Ruskin), Kingsbridge beneficially owned and had sole
voting and dispositive power with respect to 1,263,700 shares, or
7.08%, of the Company's Common Stock, Saturn beneficially owned
and had the sole voting and dispositive power with respect to
405,500 shares, or 2.27% of the Company's Common Stock (although,
as the sole common stockholder of Kingsbridge, Saturn may be
deemed to beneficially own the shares owned by Kingsbridge as
well), and Buckingham beneficially owned and had the sole voting
and dispositive power with respect to 4,077,047 shares, or 22.85%
of the Company's Common Stock. As the sole director of Saturn,
<PAGE>
Kingsbridge and Buckingham, Mr. Atzmon
may be deemed to have beneficial
ownership and voting and dispositive
power with respect to the shares
owned by Saturn, Kingsbridge and
Buckingham. Such Amendment No. 12
also states that pursuant to Rule
13d-5(b)(1) under the Securities
Exchange Act of 1934, as amended,
each of the members of such group is
deemed to have beneficial ownership,
for purposes of Section 13(d) and
13(g) of the Exchange Act, of all
Company equity securities owned by
the other members of the group.
The Company has no independent knowledge of the completeness or
accuracy of the information contained in the aforesaid document.
(2) Based on 17,845,055 shares outstanding as of September 17, 1993.
There are no options outstanding as of September 23, 1994.
Cumulative Preferred Stock
Pursuant to the Certificate of Incorporation, holders of Cumulative
Preferred Stock may elect two directors to the Company's Board of
Directors if at any time the equivalent of six or more full quarterly
dividends (whether or not consecutive) payable of the Cumulative Preferred
Stock is past due. Due to the Company's failure to pay dividends on the
Cumulative Preferred Stock since its issuance, on the terms and subject to
the conditions set forth in the Certificate of Incorporation, holders of
Cumulative Preferred Stock are entitled to elect two directors at the
annual meeting. See "Election of Directors by Holders of Cumulative
Preferred Stock."
At the Record Date there were issued and outstanding 450,000 shares of
Cumulative Preferred Stock. The presence in person or by proxy of the
holders of a majority of the total number of shares of Cumulative
Preferred Stock then outstanding shall constitute a quorum for matters to
be voted on by the holders of the Cumulative Preferred Stock then
outstanding at the Annual Meeting. In the event that there does not exist
a quorum of the holders of Cumulative Preferred Stock at the Annual
Meeting, action will be taken by the holders of Common Stock with respect
to all proposals other than Proposal 2 set forth on the Notice of Annual
Meeting attached hereto, and the holders of a majority of the shares of
Cumulative Preferred Stock present, in person or by proxy, at the meeting
may adjourn the meeting until such time as a quorum for their election of
directors shall exist or until such time as it is reasonably determined by
the Secretary that a quorum will not be represented at such meeting.
<PAGE>
At the Annual Meeting every holder of Cumulative Preferred Stock
entitled to vote has the right to vote, in person or by proxy, the number
of shares owned, for two directors from among those persons who are
nominated by the holders of Cumulative Preferred Stock at the Annual
Meeting. According to the Certificate of Incorporation, provided there is
a quorum of the holders of Cumulative Preferred Stock, the two nominees
receiving the votes of the holders of a majority of the Cumulative
Preferred Stock present in person or by proxy at the meeting will be
elected and any directors so elected shall serve until their successor
shall have been duly elected and qualified or until the right of the
holders of Cumulative Preferred Stock to vote as a class in the election
of directors shall have been divested as provided in the Certificate of
Incorporation.
As of the Record Date the Company knows of no beneficial owners of
more than five percent of the outstanding shares of Cumulative Preferred
Stock other than Foothill Capital Corp., c/o Security Pacific National
Trust Co., 2 Rector Street, New York, New York 10006 which is the record
holder of 95,185 shares or 21.15% of the Company's Cumulative Preferred
Stock.
I. ELECTION OF DIRECTORS BY HOLDERS OF COMMON STOCK
Eight directors are to be elected at the meeting. It is the intention
of the persons named in the accompanying proxy to vote each proxy executed
and returned by a stockholder for the election of each of the persons
listed below as a director of the Company unless authority to do so is
withheld on such proxy. All directors will serve until the next Annual
Meeting of Stockholders and until his or her successor has been elected
and qualified.
Should any candidate for director become unavailable for any reason,
such proxies will be voted for the alternate candidate, if any, chosen by
the Board of Directors. All the nominees are currently directors of the
Company. The nominees for director have consented to serve if elected and
the Company has no reason to believe that any of the nominees will be
unable to serve.
The following information concerning the nominees has been furnished
by the nominees. Unless otherwise indicated, such persons have held the
positions described below for more than five years.
<PAGE>
Shares of Common
Stock of the
Company
Beneficially
Owned as of
September 23, 1994
(3)(4)
Principal Occupation Director ---------------
Name Age or Employment Since Number Percent
- - ---- --- -------------------- -------- ------ -------
Victor Danko........ 49 Financial Consultant (2) 1990 0 0
S. Arnold Hickox.... 73 Consultant. Formerly 1984 600 *
President of
Manufacturers Hanover
Commercial Corporation
Sidney O. Margolis.. 68 Executive Vice President 1983 105 *
(Administration) and
Assistant Secretary
of the Company
Robert D. Mathews... 66 Consultant (2) 1993 119 *
Judith A. Nadzick... 46 Executive Vice Presi- 1987 500 *
dent, Chief Financial
Officer and Assistant
Secretary of the
Company (2)
Uzi Ruskin (1)...... 49 Chairman, President, 1980 1,165,519 (5) 6.53
Chief Executive and
Chief Operating
Officer of the Company (2)
Robert J. Swartz (1) 68 Financial Consultant (2) 1991 0 0
Hardof Wolf......... 58 Private Investor 1991 0 0
- - ----------
* Less than 0.01%
<PAGE>
(1) Messrs. Ruskin and Swartz are also directors of Victoria
Creations, Inc., a majority-owned, publicly-held subsidiary of
the Company. Mr. Swartz is also a director of Standard Motor
Products, Inc. and Bed Bath & Beyond, Inc.
(2) During the last five years: Mr. Danko has been Director of CR
Capital Australia Limited, Victor Properties Limited and
Restoration Technologies Pty Limited since 1987; Mr. Mathews was
an Executive Vice President of the Company until March 1993 and
served as a Director of the Company until August 1991; Mr. Ruskin
also served as Chairman of Victoria Creations, Inc., a
majority-owned, publicly-held subsidiary of the Company from
April 1987 to November 1989 and since October 1993; Mr. Swartz
was a Senior Partner at KPMG Peat Marwick until March 1991, at
which time he retired.
(3) As used in this table and elsewhere in this proxy statement
"beneficial ownership" means the sole or shared power to vote or
direct the voting of shares of Common Stock and/or the sole or
shared investment power with respect thereto (i.e. the power to
dispose of or direct the disposition of such shares). The shares
owned and the percentage ownership as shown in this table reflect
the 17,845,055 shares outstanding as of September 23, 1994.
There are no options outstanding as of September 23, 1994.
(4) Except as otherwise indicated in these footnotes, such persons
hold sole voting and investment power with respect to the shares
shown in this column.
(5) Included in the number of shares listed as beneficially owned by
Mr. Ruskin are 165,519 shares owned directly and of record by Mr.
Ruskin, and 1,000,000 shares owned by Monzoral, Inc., a
corporation wholly-owned by Mr. Ruskin (Mr. Ruskin has sole power
to vote and invest these shares). As of September 23, 1994, the
shares beneficially owned by Mr. Ruskin constituted 6.53% of the
outstanding shares of the Common Stock of the Company. Such
number of shares does not include, and Mr. Ruskin disclaims any
beneficial ownership of, 5,746,247 shares owned by Saturn,
Kingsbridge and Buckingham which, as a member of a "group" (as
such term is used in Rule l3d-5 under the Exchange Act) which
includes such companies, Mr. Ruskin may, for purposes of Sections
l3(d) and l3(g) of the Exchange Act, be deemed to beneficially
own. See "Principal Holders of Voting Securities" above.
<PAGE>
As of September 23, 1994, the Company's officers and directors as a
group (12 persons) beneficially owned 1,167,243 shares (6.54% of the
shares outstanding based on 17,845,055 shares outstanding as of September
23, 1994) of the Common Stock of the Company.
The Board of Directors has designated from among its members an
Executive Committee, which consists of Messrs. Ruskin (Chairman), Hickox
and Swartz. During the Company's fiscal year ended June 30, 1994, the
Executive Committee held no meetings. The Executive Committee reviews
corporate policy, business and organizational matters for the purpose of
advising and making recommendations to the Board. The Board of Directors
has also designated from among its members an Audit Committee which
consists of Messrs. Hickox (Chairman), Danko and Swartz. During the
fiscal year ended June 30, 1994, the Audit Committee held four (4)
meetings. The Audit Committee has the duty and authority to oversee the
auditing and accounting functions and procedures of the Company, and to
report and make recommendations to the Board of Directors with respect to
such matters. The Board of Directors has also designated from among its
members a Compensation Committee which consists of Messrs. Swartz
(Chairman), Hickox and Ruskin. During the fiscal year ended June 30,
1994, the Compensation Committee held no meetings. The Board of Directors
has not designated a standing Nominating Committee or any other committee
performing similar functions.
During the fiscal year ended June 30, 1994, there were seven (7)
meetings of the Board of Directors. Each director attended at least 75%
of the aggregate of all meetings of the Board and committees of the Board
on which he or she served.
Compliance With Section 16(a) of The Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Officers, directors
and greater than ten percent shareholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that during fiscal 1994 all filing requirements were
complied with by officers, directors and greater than ten percent
beneficial owners.
<PAGE>
Executive Compensation
The following table sets forth all compensation earned by the
Company's chief executive officer and each of the Company's four other
most highly compensated executive officers for services rendered in all
capacities to the Company for the years indicated.
Summary Compensation Table
Year
Name and Ended
Principal Position June 30 Salary Bonus
- - -------------------- ------- ------ -----
Uzi Ruskin (1) 1994 $500,000 $ 0
Chairman, President, Chief 1993 500,000 0
Executive Officer and Chief 1992 500,000 0
Operating Officer
Sidney O. Margolis (2) 1994 250,000 0
Executive Vice President 1993 250,000 0
(Administration) and 1992 250,000 0
Assistant Secretary
Judith A. Nadzick (3) 1994 205,000 0
Executive Vice President, 1993 205,000 0
Chief Financial Officer and 1992 192,500 20,000
Assistant Secretary
Norman R. Forson (4) 1994 185,000 0
Senior Vice President 1993 185,000 0
and Comptroller 1992 185,000 0
Zvi E. Sella (5) 1994 164,360 0
Senior Vice President - 1993 135,000 0
Industrial Operations
- - ----------
(1) Mr. Ruskin and the Company entered into an employment agreement in
July 1982 which, as amended, expires December 31, 1997, pursuant to
which he serves as Chairman, President, Chief Executive and Chief
Operating Officer of the Company at an annual rate, effective January
1986, of $500,000.
(2) Mr. Margolis and the Company entered into an employment agreement in
March 1985 which, as amended, expires December 31, 1995, pursuant to
which he serves as Executive Vice President (Administration) and
Assistant Secretary of the Company at an annual rate, effective June
1989, of $250,000.
<PAGE>
(3) Ms. Nadzick and the Company entered into an employment agreement in
March 1985 which, as amended, expires December 31, 1995, pursuant to
which she serves as Executive Vice President, Chief Financial Officer
and Assistant Secretary of the Company at an annual rate, effective
January 1992, of $205,000.
(4) Mr. Forson and the Company entered into an agreement in January 1993
whereby he serves as Senior Vice President and Comptroller of the
Company at an annual rate of $185,000. In the event the Company
terminates his employment, other than for cause, he will receive, as
severance, one month's salary and benefits for each year of
employment with the Company.
(5) Mr. Sella and the Company entered into an employment agreement in May
1992 which, as amended, expires August 31, 1995, pursuant to which he
serves as Senior Vice President - Industrial Operations of the
Company at an annual rate of $170,000.
(6) The Company does not have a Long-Term Incentive Plan, therefore, no
long-term compensation was earned or awarded during the years shown
in the table.
The employment agreements of Messrs. Ruskin and Margolis and Ms.
Nadzick contain certain provisions which will not become operative unless
any person acquires beneficial ownership of more than fifty (50%) percent
of the outstanding shares of voting capital stock of the Company ("change
in control"). In such event the employee shall have six (6) months from
such change in control to terminate his or her employment with the
Company, in which case the Company shall pay to the employee a lump sum
amount equal to the salary then remaining to be paid pursuant to his or
her employment contract for the unexpired term thereof. (The payments
referred to above are limited by the terms of the agreements in accordance
with the provisions of Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended.)
Stock Options/SAR's
The Company has never granted stock appreciation rights. The Company
has never adjusted or amended the exercise price of a stock option.
During the year ended June 30, 1994, no stock options were granted nor
were any stock options exercised. At June 30, 1994, no stock options were
outstanding.
<PAGE>
Pension Plan Table
The following table sets forth the estimated annual benefits payable
on retirement to employees in the indicated remuneration and years of
service classifications under the Company's pension plan:
Average of Last Ten
Years' Earnings (1)
Prior to Retirement Total of Years of Credited Service
- - ------------------- ---------------------------------------------
10 20 30 35
-------- -------- -------- --------
$100,000 $ 9,884 $ 19,768 $ 29,652 $ 34,593
150,000 15,509 31,018 46,527 54,281
200,000 21,133 42,266 63,399 73,966
250,000 26,759 53,518 80,277 93,656
300,000 32,384 64,768 97,152 113,342
350,000 38,009 76,018 114,027 118,800 (2)
400,000 43,634 87,268 118,800 (2) 118,800 (2)
- - ------------
(1) Subject to the compensation limitation of Section 401(e)(17) of the
Internal Revenue Code.
(2) As of June 30, 1994, the maximum annual pension pursuant to the terms
of the Plan and the Employees Retirement Income Security Act of 1974,
as amended, is $118,800.
The Company has a defined benefit pension plan which is
non-contributory. Each of the individuals named in the above table is a
participant in the Company's pension plan. The amounts expensed for the
plan on account of individual participants are not and cannot readily be
separately or individually calculated by the regular independent
actuaries for the plans, and are accordingly omitted from the foregoing
table. During the Company's 1994 fiscal year, the Company accrued
$309,000 as pension expense with regard to its pension plan. Generally,
benefits are computed based on 0.563% of the first $24,312 (for age 65 in
1994) plus 1.125% of the balance of the average of the last ten years'
earnings prior to retirement multiplied by the number of years of credited
service (maximum of 35 years), with payments for life (100 months
certain). Effective January 1, 1989, the compensation taken into account
under the plan will not exceed a maximum amount established each year,
adjusted for changes in cost of living. The maximum amount for 1994
(effective July 1, 1994) is $150,000. As of June 30, 1994, the
approximate credited service under the plan for Mr. Ruskin was 14 years;
for Mr. Margolis was 33 years; for Ms. Nadzick was 11 years; for Mr.
Forson was 8 years and for Mr. Sella was 3 years.
<PAGE>
Compensation of Directors
Each director of the Company, who is not an employee of the Company,
receives an annual fee of $15,000 for serving on the Board plus $600 for
each Board meeting attended. In addition, Mr. Hickox receives $10,000 a
year as Chairman of the Audit Committee plus $500 for each meeting of that
committee attended. Mr. Swartz, as Chairman of the Compensation
Committee, receives $750 for each meeting of that committee attended.
Other committee members receive $500 for each committee meeting attended.
Directors who are employees of the Company receive no additional
compensation for serving on the Board or committees thereof.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board of Directors of
the Company are Mr. Robert Swartz, Chairman, and Mr. S. Arnold Hickox,
each of whom is a non-employee director. Mr. Uzi Ruskin, Chairman,
President and Chief Executive Officer and Chief Operating Officer of the
Company, is also a member of the Committee. Messrs. Ruskin and Swartz are
directors and serve on the audit and compensation committees of Victoria
Creations, Inc., the Company's majority-owned subsidiary. See also
"Transactions with and Indebtedness of Management." The Committee is free
from interlocking or other relationships that might be considered a
conflict of interest.
Report of Board Compensation Committee on Executive Compensation
The Compensation Committee's policy is to design compensation packages
that will attract and retain key executives for the Company and that will
motivate those employees to improve corporate performance and returns to
stockholders. In designing compensation packages, the Committee takes
into consideration, among other factors, compensation levels and practices
of competitive companies in similar business sectors and of general
industry as applicable. The compensation packages also recognize
individual contributions and achievements as well as business results.
The salary for Mr. Ruskin, Chief Executive Officer of the Company, was
established by contract January 1, 1986 based on compensation levels and
practices of competitive companies in similar businesses.
Salaries for executive officers are determined periodically by
evaluating the performance of the individuals reviewed and their
contribution to the performance of the Company, their responsibilities and
compensation practices at other companies. Financial results as well as
appropriate non-financial measures are considered.
by: Compensation Committee of the Board of Directors
Robert Swartz, Chairman S. Arnold Hickox Uzi Ruskin
<PAGE>
Performance Graph
The following provides a comparison with the stated indices of the
yearly percentage change in the Company's cumulative total stockholder
return on its common stock for a five year period ended June 30, 1994.
Stockholder value to base
year 1989 as of June 30 1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
UM&M 100% 25% 15% 17% 7% 7%
S&P 500 100% 116% 125% 141% 160% 162%
Peer Group 100% 84% 95% 176% 193% 165%
Transactions with and Indebtedness of Management
The Company entered into a Stock Purchase Agreement (the "Purchase
Agreement"), dated as of August 18, 1982, with Monzoral, N.V., predecessor
to Monzoral, Inc. ("Monzoral"), a corporation wholly owned by Mr. Ruskin,
pursuant to which the Company agreed to sell to Monzoral one million
shares (the "Shares") of Common Stock at a price of $5.00 per share for an
aggregate purchase price of $5,000,000, $4,000,000 payable with notes of
Monzoral bearing interest, on the unpaid principal amount, equal to 70% of
the average investment yield for the most recent auction of United States
Treasury Bills with maturities of 52 weeks. (On June 2, 1994, the rate
for such bills was 5.01% a year.) Interest is payable at the time of
principal payments. The purchase price for the Shares was equal to the
closing price of the Common Stock of the Company on the New York Stock
Exchange on August 17, 1982. The Purchase Agreement was approved by the
Company's shareholders on November 12, 1982. On August 19, 1992, the
Board of Directors of the Company approved an amendment to the Purchase
Agreement, extending the maturity dates of the aforementioned notes to
fifteen (15) years after the date of each respective note.
The Purchase Agreement required that Monzoral purchase the Shares in
four annual installments of 250,000 shares commencing on July 1, 1983. At
each purchase, Monzoral paid the Company a cash amount equal to $1.00
times the number of Shares purchased and delivered to the Company its note
in an amount equal to $4.00 times the number of Shares purchased. Each
note is secured by the Shares purchased, with Shares to be released from
pledge to the extent the note is paid. It is not expected that Monzoral's
net worth will materially exceed the value of the Shares purchased. On
May 16, 1983, Monzoral purchased the first installment of 250,000 shares,
on March 28, 1984, Monzoral purchased the second installment of 250,000
shares, on May 7, 1985, Monzoral purchased the third installment of
250,000 shares and on March 10, 1986, Monzoral purchased the fourth
installment of 250,000 shares. Pursuant to the aforementioned amendment
to the Purchase Agreement, Monzoral's notes are due fifteen (15) years
after the date of each respective purchase. As of June 30, 1994,
Monzoral's indebtedness to the Company under the notes was $4,000,000
principal and $1,710,000 accrued interest.
<PAGE>
The Purchase Agreement, as amended, also provides that upon the
termination of Mr. Ruskin's employment after a change in control (as
defined above) of the Company, Monzoral may elect to sell to the Company
any or all of the Shares it purchased. Such sale would be for an amount
in cash per Share equal to the greater of (i) the highest price per share
paid by the person acquiring control, or (ii) the mean between the high
and low selling prices of such stock on the New York Stock Exchange
Composite Tape on the date of termination.
II. ELECTION OF DIRECTORS BY HOLDERS OF CUMULATIVE PREFERRED STOCK
At the meeting, two directors are to be elected to the Company's Board
of Directors by the holders of the Cumulative Preferred Stock, voting as a
class, as a result of the fact that the Company has not declared or paid
dividends on the Cumulative Preferred Stock since its issuance. The
Certificate of Incorporation permits the holders of Cumulative Preferred
Stock to elect two directors to serve for a term expiring (subject to the
earlier payment, or declaration and setting aside for payment, of all past
due dividends on all Cumulative Preferred Stock) at the next annual
meeting of stockholders.
In recognition of the role of these two new directors as
representatives of the holders of the Cumulative Preferred Stock, the
Board of Directors believes it to be in the best interests of those
holders for the Board not to nominate, recommend or suggest possible
choices for the two new director positions, and for the holders of the
Cumulative Preferred Stock to act independently. Accordingly, the Board
of Directors of the Company has not nominated persons to stand for
election at the Annual Meeting as representatives of the holders of the
Cumulative Preferred Stock on the Board of Directors.
THE BOARD OF DIRECTORS HAS NOT NOMINATED ANYONE FOR ELECTION AS A
DIRECTOR TO THE POSITIONS ON THE BOARD OF DIRECTORS THAT MAY BE FILLED BY
THE HOLDERS OF CUMULATIVE PREFERRED STOCK. THE BOARD OF DIRECTORS IS NOT
SOLICITING PROXIES FOR THE ELECTION OF THESE TWO DIRECTORS.
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Nominations for these two directorships will be taken at the meeting,
from holders of Cumulative Preferred Stock who are entitled to vote
thereat. Prior to the Annual Meeting, any holder of Cumulative Preferred
Stock may, upon complying with the applicable federal regulations
governing proxy solicitations, solicit proxies for the election of
individuals who will be nominated at the Annual Meeting for either or both
of the two directors.
To the knowledge of the Company no holder of Cumulative Preferred
Stock has solicited proxies or intends to solicit proxies for the election
of the two directors to be nominated by the holders of the Cumulative
Preferred Stock at the Annual Meeting. Written nominations received by
the Secretary at the Annual Meeting must contain the type of information
about the nominee that is required to be disclosed in solicitations for
proxies for elections of directors pursuant to Regulation 14A of the
Securities and Exchange Commission (the "SEC"), as well as the name of
the nominating stockholder and the class and number of shares of the
Company which are beneficially owned by the stockholder.
At the Annual Meeting every holder of Cumulative Preferred Stock
entitled to vote has the right to vote, in person or by proxy, the number
of shares owned, for two directors from among those directors which may be
nominated at the Annual Meeting. According to the Certificate of
Incorporation, provided there is a quorum of the holders of Cumulative
Preferred Stock, the two nominees receiving the votes of the holders of a
majority of the Cumulative Preferred Stock present in person or by proxy
at the meeting will be elected. As provided in the Certificate of
Incorporation, the presence in person or by proxy of the holders of a
majority of the total number of shares of Cumulative Preferred Stock then
outstanding shall constitute a quorum for any action to be voted on by the
holders of the Cumulative Preferred Stock at the Annual Meeting. In the
event that there does not exist a quorum of the holders of Cumulative
Preferred Stock at the Annual Meeting, action will be taken by the holders
of Common Stock with respect to all proposals other than Proposal 2 set
forth on the Notice of Annual Meeting attached hereto, and the holders of
a majority of the shares of Cumulative Preferred Stock present at the
meeting may adjourn the meeting until such time as a quorum for the
election of directors shall exist or until such time as it is reasonably
determined by the Secretary that a quorum will not be represented at such
meeting.
The right to elect directors will remain vested until all dividends on
the Cumulative Preferred Stock have been paid, or declared and set apart
for payment, at which time: (i) the right shall terminate (subject to
revesting in the case of any subsequent default); (ii) the term of the
directors then in
office elected by the holders of the outstanding Cumulative Preferred
Stock as a class shall terminate; and (iii) the number of directors
constituting the Board of Directors of the Company shall be reduced by
two. Any director to be elected by the holders of Cumulative Preferred
Stock shall be required to agree, prior to such director's election to
office, to resign upon any termination of the right of the holders of
Cumulative Preferred Stock to vote as a class for directors.
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III. SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as
independent auditors for the Company for the current fiscal year. The
stockholders are requested to signify their approval or disapproval of the
selection.
The Board of Directors Recommends a Vote "FOR" Approval of the
Selection of KPMG Peat Marwick LLP as the Company's Auditors for the
Current Fiscal Year.
Representatives of KPMG Peat Marwick LLP are expected to be present at
the Annual Meeting and will have the opportunity to make a statement and
to respond to appropriate questions.
As auditors of the Company, KPMG Peat Marwick LLP provide professional
services in connection with its audit function that include the
examination of the Company's consolidated financial statements, reviews of
filings with the Securities and Exchange Commission, actuarial services,
examinations of financial statements of employee retirement plans and
consultation with respect to accounting and financial reporting matters.
Mr. Swartz, who has been a director of the Company since June 1991, was a
Senior Partner at KPMG Peat Marwick until March 1991, at which time he
retired.
IV. OTHER MATTERS
Management does not intend to bring any business before the Annual
Meeting other than as set forth above nor does it know of any business
that will be presented by others for action by stockholders at the
meeting. However, if any other business shall properly come before the
Annual Meeting, it is the intention of the persons named in the enclosed
proxy to vote said proxy in accordance with their judgment on such matters.
Stockholder Proposals
Any stockholder proposal intended to be presented at the next Annual
Meeting should be sent to the Secretary of the Company at 1650 Palisade
Avenue, Teaneck, New Jersey 07666, and must be received on or before
June 1, 1995 to be eligible for inclusion in the Company's proxy statement
and form of proxy relating to that meeting.
The above notice and proxy statement are being sent by order of the
Board of Directors.
Edward D. Taffet,
Secretary
Dated: October 7, 1994
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