<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CERADYNE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF CERADYNE, INC.]
3169 REDHILL AVENUE
COSTA MESA, CALIFORNIA 92626
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 24, 1995
----------------
The Annual Meeting of Stockholders of Ceradyne, Inc., a Delaware corporation
(the "Company") will be held at the Corporate Headquarters located at 3169
Redhill Avenue, Costa Mesa, California, on Monday, July 24, 1995, at 10:00 a.m.
local time, for the following purposes, all as set forth in the attached Proxy
Statement.
1. To elect eight directors to serve until the next annual meeting of
stockholders and until their successors are elected and have qualified.
2. To approve an amendment to the Company's 1994 Stock Incentive Plan to
increase the number of shares of Common Stock authorized for issuance
thereunder from 250,000 shares to 350,000 shares.
3. To approve the Company's 1995 Employee Stock Purchase Plan.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors intends to present for election as directors the
nominees named in the accompanying Proxy Statement, whose names are
incorporated herein by reference.
In accordance with the Bylaws of the Company, the Board of Directors has
fixed the close of business on June 2, 1995 as the record date for the
determination of stockholders entitled to vote at the Annual Meeting and to
receive notice thereof.
Stockholders are cordially invited to attend the meeting in person. However,
even if you do plan to attend the meeting, please complete, sign and date the
enclosed proxy card and return it without delay in the enclosed postage paid
envelope. If you do attend the meeting, you may withdraw your proxy and vote
personally on each matter brought before the meeting.
By Order of the Board of Directors
James F. Gardner
Secretary
Costa Mesa, California
June 19, 1995
<PAGE>
[LOGO OF CERADYNE, INC.]
3169 REDHILL AVENUE
COSTA MESA, CALIFORNIA 92626
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 24, 1995
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy on behalf of the Board of Directors of Ceradyne, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders of the Company to be held on Monday, July 24, 1995, and at any
adjournments thereof. It is anticipated that this Proxy Statement and the
enclosed form of proxy will be first mailed to stockholders on or about June
19, 1995.
The purpose of the meeting and the matters to be acted upon are set forth in
the foregoing attached Notice of Annual Meeting. As of the date of this
statement, the Board of Directors knows of no other business which will be
presented for consideration at the meeting. However, if any other matters
properly come before the meeting, the persons named as proxies will vote on
them in accordance with their best judgment.
Stockholders are requested to date, sign and return the enclosed proxy to
make certain that their shares will be voted at the meeting. Any proxy given
may be revoked by the stockholder at any time before it is voted by delivering
written notice of revocation to the Secretary of the Company, by filing with
him a proxy bearing a later date, or by attendance at the meeting and voting in
person. All proxies properly executed and returned will be voted in accordance
with the instructions specified thereon. If no instructions are specified,
proxies will be voted FOR the election as directors of the eight nominees
below, FOR approval of proposal 2 and FOR approval of proposal 3.
VOTING SHARES AND VOTING RIGHTS
The close of business on June 2, 1995 has been fixed as the record date for
stockholders entitled to notice of and to vote at the meeting. As of that date,
there were 6,274,634 shares of Common Stock of the Company outstanding and
entitled to vote, the holders of which are entitled to one vote per share. The
presence at the meeting, in person or by proxy, of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum for the
transaction of business.
In the election of directors, a stockholder may cumulate his or her votes for
one or more candidates, but only if such candidate's or candidates' names have
been placed in nomination prior to the voting and the stockholder has given
notice at the meeting, prior to the voting, of his or her intention to cumulate
votes. If
1
<PAGE>
any one stockholder has given such notice, all stockholders may cumulate their
votes for the candidates in nomination. If the voting for directors is
conducted by cumulative voting, each share will be entitled to a number of
votes equal to the number of directors to be elected, which votes may be cast
for a single candidate or may be distributed among two or more candidates in
such proportions as the stockholder thinks fit. The eight candidates receiving
the highest number of affirmative votes will be elected. If no such notice is
given, there will be no cumulative voting, which means a simple majority of the
shares voting may elect all of the directors.
Proxies marked "withheld" as to any director or "abstain" as to a particular
proposal, and broker non-votes, will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business. However,
proxies marked "withheld" have no legal effect on the election of directors
under Delaware law. Proxies marked "abstain" as to a particular proposal will
be counted in the tabulation of the votes cast, and will have the same effect
as a vote "against" that proposal. Broker non-votes will not be counted in
determining the total number of votes cast on proposal 2 and proposal 3, and,
therefore, will have no effect on whether those proposals are approved.
The following table sets forth information as of March 14, 1995, regarding
the beneficial ownership of the Common Stock of the Company by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each of the directors of the Company,
(iii) each of the executive officers named in the Summary Compensation Table,
and (iv) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------ ------------ -------
<S> <C> <C>
Joel P. Moskowitz 1,164,294 18.6%
3169 Redhill Avenue
Costa Mesa, CA 92626
Ford Motor Company 1,207,299 19.2%
The American Road
Dearborn, MI 48121
Dimensional Fund Advisors, Inc. 345,000(2) 5.5%
1299 Ocean Avenue
Suite 650
Santa Monica, CA 90401
R.B. Haave Assoc., Inc. 797,723(3) 12.7%
270 Madison Ave.
New York, NY 10016
Leonard M. Allenstein 150,000(4) 2.4%
Richard A. Alliegro 21,000(5) *
Frank Edelstein 13,900(6) *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------ ------------ -------
<S> <C> <C>
Dr. Norman A. Gjostein --
Melvin A. Shader 14,000(7) *
William P. Lanphear IV 10,000 *
Milton L. Lohr 15,000(8) *
David P. Reed 24,550(9) *
James F. Gardner 31,250(10) *
All current executive officers and directors as a
group (15 persons including the persons named
above) 1,529,594(11) 23.9%
</TABLE>
- --------
* Less than 1%
(1) Except as otherwise noted, the beneficial owners have sole voting and
investment powers with respect to the shares indicated, subject to
community property laws where applicable.
(2) Based upon information contained in a statement on Schedule 13G, dated
January 9, 1990, and amended by a filing dated January 30, 1995, filed with
the Securities and Exchange Commission by Dimensional Fund Advisors, Inc.
Schedule G indicated that Dimensional Fund Advisors, Inc., a registered
investment advisor, is deemed to have beneficial ownership of 345,000
shares of Ceradyne, Inc. stock as ofDecember 31, 1994, all of which shares
are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in a series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional Fund Advisors Inc. serves
as investment manager. Dimensional disclaims beneficial ownership of such
shares.
(3) Based upon information contained in the statement on Schedule 13G, dated
January 22, 1991, and amended by a filing dated January 3, 1995, filed with
the Securities and Exchange Commission by R. B. Haave Associates, Inc., all
shares of common stock are owned by advisory clients of R. B. Haave
Associates, Inc.
(4) Includes 10,000 shares subject to options held by Mr. Allenstein which are
currently exercisable.
(5) Includes 20,000 shares subject to options held by Mr. Alliegro which are
currently exercisable.
(6) Includes 12,500 shares subject to options held by Mr. Edelstein which are
currently exercisable.
(7) Includes 13,000 shares subject to options held by Dr. Shader which are
currently exercisable.
(8) Includes 15,000 shares subject to options held by Mr. Lohr which are
currently exercisable.
(9) Includes 22,300 shares subject to options held by Mr. Reed which are
currently exercisable.
(10) Includes 26,500 shares subject to options held by Mr. Gardner which are
currently exercisable.
(11) Includes 176,400 shares subject to options held by such persons which are
currently exercisable or exercisable within 60 days after March 14, 1995.
3
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
The bylaws of the Company presently provide for eight directors. All eight
directors are to be elected at the 1995 Annual Meeting and will hold office
until the 1996 Annual Meeting and until their respective successors are elected
and have qualified. It is intended that the persons named in the enclosed proxy
will, unless such authority is withheld, vote for the election of the eight
nominees proposed by the Board of Directors, all of whom are presently
directors of the Company. In the event that any of them should become
unavailable prior to the Annual Meeting, the proxy will be voted for a
substitute nominee or nominees designated by the Board of Directors, or the
number of directors may be reduced accordingly. If additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them according to the cumulative voting rules to assure the
election of as many of the nominees listed below as possible. In such event,
the specific nominees to be voted for will be determined by the proxy holders.
All of the nominees named below have consented to being named herein and to
serve if elected.
Set forth below are the names and ages of the nominees for election to the
Board of Directors, the present position with the Company of each nominee, the
year each nominee was first elected a director of the Company, the principal
occupation of each nominee, directorships held with other public companies, and
additional biographical data. The beneficial ownership of the Company's Common
Stock by each of the nominees as of March 14, 1995 is set forth in the table
under "Voting Shares and Voting Rights" above.
<TABLE>
<CAPTION>
YEAR FIRST
PRESENT POSITION WITH THE ELECTED
NAME AGE COMPANY DIRECTOR
---- --- ------------------------- ----------
<S> <C> <C> <C>
Joel P. Moskowitz 55 Chairman of the Board, Chief 1967
Executive Officer and President
Leonard M. Allenstein 57 Director 1983
Richard A. Alliegro 65 Director 1992
Frank Edelstein 69 Director 1984
Norman A. Gjostein 63 Director 1995
William P. Lanphear IV 48 Director 1994
Milton L. Lohr 70 Director 1986
Melvin A. Shader 70 Director 1984
</TABLE>
Joel P. Moskowitz co-founded the Company's predecessor in 1967. He served as
President of the Company from 1974 until January 1987, became Chairman of the
Board and Chief Executive Officer in 1983 and resumed the position of President
in September 1987. Mr. Moskowitz obtained a B.S. in Ceramic Engineering from
Alfred University in 1961 and an M.B.A. from the University of Southern
California in 1966. Mr. Moskowitz is a member of the Board of Trustees of
Alfred University.
Leonard M. Allenstein became a director of the Company in 1983. Mr.
Allenstein has been a private investor and businessman for more than the past
five years. He was a founder and general partner of Bristol Restaurants, which
owns and operates restaurants in the Southern California area, from 1978 until
December 1986.
4
<PAGE>
Richard A. Alliegro became a director of the Company in 1992. Mr. Alliegro
retired from Norton Company in 1990 after 33 years, where his last position was
Vice President, Refractories and Wear, for Norton's Advanced Ceramics
operation. More recently he retired as President, Lanxide Manufacturing Co., a
subsidiary of Lanxide Corporation. Mr. Alliegro obtained B.S. and M.S. degrees
in Ceramic Engineering from Alfred University in 1951 and 1952, respectively,
and serves as a member of the Board of Trustees of that university.
Frank Edelstein became a director of the Company in 1984. Mr. Edelstein has
been a Vice President of Gordon + Morris Group (a spinoff of Kelso & Company),
an investment banking firm, since November 1986, and from 1979 to November 1986
he was Chairman of the Board of International Central Bank & Trust company,
which companies were acquired by Continental Insurance Company in July 1983.
Until 1983, Mr. Edelstein was a Vice President of Automatic Data Processing,
Inc., an international computing services company, and President of that
company's Pension Services Division and Benefits Services Division.
Dr. Norman A. Gjostein was appointed a director on February 6, 1995 to fill
the vacancy created by the resignation of David P. Hagen. Dr. Gjostein has held
various management positions on the Research Staff of Ford Motor Company since
1973. Presently he is Director of the Scientific Research Laboratory, which
includes research activities in CAE, advanced materials and manufacturing
systems. Dr. Gjostein obtained a B.S. and an M.S. degree in Metallurgical
Engineering from the Illinois Institute of Technology. Further studies were
carried out at Carnegie-Mellon University where he received M.S. and Ph.D.
degrees in Metallurgical Engineering.
William P. Lanphear IV became a director of the Company in 1994. He is
currently Senior Vice President and member of the board of directors of
Bridgestone Multimedia Group, Inc., which is a publisher of family-oriented
video, audio and software products distributed through mass merchandisers and
specialty channels. From 1989 through 1993, Mr. Lanphear was Chairman and CEO
for Epyx, Inc., a major publisher of home entertainment software. Mr. Lanphear
obtained a B.A. in 1969 from Albian College, an M.S. in Nuclear Engineering in
1970 from the University of Illinois, and an M.B.A. 1972 from Harvard Graduate
School.
Milton L. Lohr served as a director of the Company from 1986 until October
1988, when he resigned to accept a position as Deputy Under Secretary of
Defense for Acquisitions. He held that position until May 1989, and was re-
elected as a director of the Company in July 1989. Presently, Mr. Lohr is
President of Defense Development Corporation, a defense-related research and
development company. Previously Mr. Lohr was Senior Vice President of Titan
Systems, a defense-related research and development company, from 1986 to 1988.
He was founder and President of Defense Research Corporation, a defense
consulting firm, from 1983 to 1986. Mr. Lohr served from 1969 to 1983 as
Executive Vice President of Flight Systems, Inc., a firm engaged in aerospace
and electronic warfare systems. Mr. Lohr has over thirty-five years experience
in government positions and aerospace and defense management. His activities
include serving as a panel member of the President's Science Advisory
Committee, a member of the Office of the Secretary of Defense, Army Science
Board, as well as other ad hoc government related assignments.
Melvin A. Shader became a director of the Company in 1984. Dr. Shader retired
in 1991 from TRW, Inc., where he was Vice President, Business Development, and
Vice President, International, at the Space and Defense Sector of TRW, Inc. He
had been with that company since 1970. From 1969 to 1970, he was Director of
Planning in the Information Network Division of Computer Sciences Corporation.
From 1954 to 1968, Dr. Shader was an executive with IBM.
5
<PAGE>
The Company has agreed to nominate a representative of Ford Motor Company for
election as a director pursuant to an agreement made in March 1986, pursuant to
which agreement Ford has acquired a total of 1,207,299 shares of the Company's
Common Stock. Joel P. Moskowitz and members of his family have agreed to vote a
portion of their shares of the Company's Common Stock, if necessary for the
election of Ford's nominee. Mr. David F. Hagen, General Manager of Ford Motor
Company's Alpha Simultaneous Engineering served on the Board of Directors as
Ford's nominee since 1992. He will not stand for reelection at the Annual
Meeting. Dr. Norman Gjostein is Ford's current nominee, and he was appointed a
director of the Company on February 6, 1995 to fill the vacancy created by the
resignation of Mr. Hagen. See "Certain Transactions" below.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company held four meetings during 1994. Each
director attended at least 75% of the aggregate of all meetings of the Board
and its committees on which he served during 1994.
The Board of Directors has established Audit, Compensation and Stock Option
Committees. The Audit Committee meets with the Company's independent
accountants to review the Company's financial condition and internal accounting
controls. This committee, which is composed of Messrs. Edelstein, Shader and
Lohr met twice during 1994. The Compensation Committee's function is to review
and make recommendations to the Board regarding executive officers'
compensation. This committee, which is composed of Messrs. Edelstein, Alliegro,
Shader and Lohr, acted by written consent once during 1994. The Stock Option
Committee is composed of Messrs. Moskowitz and Gjostein. This committee, which
acted by written consent twice during 1994, administers the Company's 1983
Stock Option Plan, the Company's 1994 Stock Incentive Plan, the 1985 Employee
Stock Purchase Plan and, if approved by the stockholders at the Annual Meeting,
the 1995 Employee Stock Purchase Plan. The Company does not have a standing
nominating committee.
Directors are paid fees for their services on the Board of Directors in such
amounts as are determined from time to time by the Board. Until July 31, 1994,
a fee of $500 per month plus $1000 for each Board meeting attended was paid to
each non-employee director other than the Ford representative and Mr. Lanphear,
who did not receive a fee. These fees were terminated as of July 31, 1994 by
agreement of the Board, but may be reinstated in the future if the Board deems
appropriate.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows certain information concerning
the compensation of the Chief Executive Officer and the highest paid executive
officers of Ceradyne whose aggregate compensation for services in all
capacities rendered to Ceradyne during the year ended December 31, 1994
exceeded $100,000:
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------ ------------
SECURITIES
NAME AND UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
------------------ ---- ----------- --------- ------------
<S> <C> <C> <C> <C>
Joel P. Moskowitz 1994 $150,709 $ -- --
Chairman of the Board, 1993 164,902 -- --
Chief Executive Officer 1992 178,356 -- --
and President
David P. Reed 1994 $101,418 -- 10,000
Vice President 1993 97,353 -- --
1992 96,015 -- --
James F. Gardner 1994 $101,999 -- --
Vice President, Finance 1993 101,999 -- --
Chief Financial Officer 1992 105,346 -- 500
and Secretary
</TABLE>
EMPLOYMENT AGREEMENT
In July 1994, the Company entered into a five year employment agreement with
Mr. Moskowitz, pursuant to which he will serve as Chairman of the Board of
Directors, Chief Executive Officer and President of the Company. The agreement
provides for a base salary at the rate of $175,000 per year; however,Mr.
Moskowitz voluntarily agreed to accept a reduced salary at the rate of $150,000
per year through March 31, 1995 to aid the Company in its cost-cutting efforts.
His annual base salary was reinstated to $175,000 as of April 1, 1995. Under
the agreement, if Mr. Moskowitz' employment is terminated by the Company (other
than as a result of death, incapacity or for "good cause" as defined in the
agreement) or if Mr. Moskowitz elects to resign for "good reason" (as defined
in the agreement), Mr. Moskowitz will be entitled to receive severance pay in
an amount equal to his annual base salary, at the rate in effect on the date of
termination, payable on normal pay dates for the remainder of the term of the
agreement. "Good reason" includes a "change in control" of the Company, a
removal of Mr. Moskowitz from any of his current positions with the Company
without his consent, or a material change in Mr. Moskowitz' duties,
responsibilities or status without his consent. A "change in control" of the
Company shall be deemed to occur if (1) there is a consolidation or merger of
the Company where the Company is not the surviving corporation and the
shareholders prior to such transaction do not continue to own at least 80% of
the common stock of the surviving corporation, (2) there is a sale of all or
substantially all of the assets of the Company, (3) the stockholders approve a
plan for the liquidation or dissolution of the Company, (4) any person becomes
the beneficial owner, directly or indirectly, of 30% or more of the Company's
outstanding Common Stock, or (5) if specified changes in the composition of the
Company's Board of Directors occur.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning stock options granted
during the year ended December 31, 1994 to the executive officers named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME (NO. OF SHARES)(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- ------------------ ------------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joel P. Moskowitz -- -- -- -- -- --
David P. Reed 10,000 9.2% $2.00 8/22/04 $16,844 $36,001
James F. Gardner -- -- -- -- -- --
</TABLE>
- --------
(1) The per share exercise price of all options granted is the fair market
value of the Company's Common Stock on the date of grant. Options have a
term of 10 years and become exercisable in four equal installments, each of
which accrues at the end of each year after the grant date.
(2) The potential realizable value is calculated from the exercise price per
share, assuming the market price of the Company's Common Stock appreciates
in value at the stated percentage rate from the date of grant to the
expiration date. Actual gains, if any, are dependent on the future market
price of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information concerning exercises of options
during the year ended December 31, 1994 by the executive officers named in the
Summary Compensation Table and the value of such officer's unexercised options
at December 31, 1994:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END(/1/)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel P. Moskowitz -- -- -- -- -- --
David P. Reed -- -- 22,300 22,200 $1,050 $7,950
James F. Gardner -- -- 26,500 1,000 (/2/) (/2/)
</TABLE>
- --------
(/1/) Based upon the closing price of the Common Stock on December 31, 1994
($2.375 per share).
(/2/) The 12/31/94 NASDAQ closing market price was below the exercise
price/share. Hence, the option results in a $-0- valuation.
8
<PAGE>
CERTAIN TRANSACTIONS
On March 11, 1986, the Company sold 526,316 shares of its Common Stock to
Ford Motor Company ("Ford") at a price of $19.00 per share, for a total
purchase price of $10,000,000. At the same time, the Company and Ford created a
new corporation, Ceradyne Advanced Products, Inc. ("CAPI"), and entered into
agreements involving a broad-based technology transfer, licensing and joint
development program. Under the agreements, Ford contributed technology and more
than 80 United States and foreign patents relating to technical ceramics to
CAPI in exchange for 80% of CAPI's capital stock, and Ceradyne acquired the
remaining 20% of CAPI in exchange for $200,000. The technology and patents
contributed by Ford were developed in the Ford research laboratories over a 15-
year period. Under the March 11, 1986 agreements, the Company was granted an
option to acquire Ford's 80% interest in CAPI in exchange for an additional
680,983 shares of Ceradyne Common Stock, which the Company exercised effective
February 12, 1988. As a result, Ceradyne now owns 100% of CAPI and Ford owns a
total of 1,207,299 shares of the Company's Common Stock. The Company and Ford
also entered into a joint development agreement which includes a commitment by
Ford to contribute up to $5,000,000, on a matching value basis with Ceradyne,
for the development by Ceradyne of technical ceramic products oriented towards
the automotive market. Through December 31, 1994, Ford agreed to fund a total
of $2,854,000 in cash and equipment pursuant to this agreement.
So long as Ford continues to own 5% or more of the Company's outstanding
Common Stock, Ceradyne has agreed to use its best efforts to cause one person
designated by Ford to be elected a member of the Ceradyne Board of Directors
and, under certain circumstances in the event the Company issues additional
shares of its Common Stock in a public or private transaction, to permit Ford
to purchase, at the same price and terms upon which sold by the Company in such
transaction, additional shares of Ceradyne Common Stock to enable Ford to
maintain its percentage ownership of the Company.
In connection with the sale of stock to Ford, Joel P. Moskowitz, Chairman of
the Board and Chief Executive Officer of the Company, and members of his
immediate family agreed to vote shares of the Company's Common Stock owned by
them in favor of the election of Ford's nominee to the Board of Directors.
However, they may first vote that number of shares that is necessary to assure
the election of Joel P. Moskowitz as a director of the Company, and any shares
that are not necessary to assure the election of Mr. Moskowitz and a Ford
nominee to the Board of Directors may be voted by them without restriction.
9
<PAGE>
AMENDMENT TO THE 1994 STOCK INCENTIVE PLAN TO
INCREASE THE NUMBER OF AUTHORIZED SHARES
(PROPOSAL 2)
On April 24, 1995 the Board of Directors approved, subject to stockholder
approval, an amendment to the 1994 Stock Incentive Plan (the "1994 Plan") to
increase the number of shares of Common Stock authorized for issuance
thereunder from 250,000 to 350,000. Presently, there are available for issuance
under the 1994 Plan 91,500 shares of Common Stock. The additional 100,000
shares will be reserved for future use by being offered to existing or new
directors and employees who meet the qualifications for participation in the
Plan. The Board of Directors believes that the proposed amendment to increase
the number of shares of Common Stock authorized under the Plan is necessary to
continue the effectiveness of the 1994 Plan in achieving the Company's
objective to attract and retain the services of qualified persons upon whose
judgment, initiative and efforts the successful conduct and development of the
Company's business largely depends, by providing them with an opportunity to
participate in the ownership of the Company and thereby have an interest in the
success and increased value of the Company.
The following table sets forth information with respect to options granted
under the 1994 Plan to the persons designated during the year ended December
31, 1994.
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE* NUMBER OF SHARES
----------------- ------------- ----------------
<S> <C> <C>
Joel P. Moskowitz
Chairman of Board,
Chief Executive Officer
and President.................................. -- None
David P. Reed
Vice President................................. $2.00 10,000
James F. Gardner
Vice President, Finance
Chief Financial Officer
and Secretary.................................. -- None
All Current Executive Officers as a Group (5
persons)....................................... $2.00 52,000
Non-Employee Director Group (5 persons)......... $2.00 50,000
Non-Executive Officer Employee Group (29 per-
sons).......................................... $2.00 56,500
</TABLE>
- --------
* This figure represents the exercise price of the options, which is equal to
the fair market value of the shares of Common Stock at the date of grant of
the option. As of June 9, 1995, the market value of the Company's Common
Stock as reported by the NASDAQ Stock Market was $4.75 per share.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of shares of Common Stock
present or represented and entitled to vote at the Annual Meeting is required
to approve the adoption of the amendment to the 1994 Plan, assuming the
presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL.
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<PAGE>
DESCRIPTION OF THE 1994 PLAN
The following description of the 1994 Plan is qualified in its entirety by
reference to the 1994 Plan. A copy of the 1994 Plan will be available at the
Annual Meeting and can also be obtained by a shareholder making a written
request to the Company's Secretary.
The 1994 Plan provides that options may be granted to employees, officers and
directors (including non-employee officers and directors), consultants and
other service providers of the Company and of present or future subsidiary of
the Company. As of June 9, 1995, approximately 220 persons were eligible to
participate in the 1994 Plan. Options can be granted for the purchase of up to
350,000 shares of Common Stock, subject to stockholder approval of the
Amendment. The 1994 Plan provides for appropriate adjustments in the number and
kind of shares subject to the 1994 Plan and to outstanding shares in the event
of stock splits, stock dividends or certain other similar changes in the
capital structure of the Company. Options may be granted either as "incentive
stock options" as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or as nonqualified stock options.
The 1994 Plan is administered by the Stock Option Committee (the "Committee")
of the Board of Directors, which selects the recipients of options. The
Committee also determines the number of shares, the exercise price, the term,
any conditions on exercise, the consequences of any termination of employment,
and other terms of each option. The term of options may not exceed ten years
form the date of grant (five years in the case of an incentive stock option
granted to a person who owns more than 10% of the combined voting power of all
classes of stock of the Company). The option exercise price may not be less
than 100% of fair market value per share of the Common Stock on the date of
grant (110% of fair market value in the case of an incentive stock option
granted to a person who owns more than 10% of the combined voting power of all
classes of stock of the Company). There is no restriction as to the maximum
number of options that may be granted to any optionee, except that the
aggregate fair market value of the Common Stock (determined as of the date of
grant) with respect to which incentive stock options granted under the 1994
Plan and any other plan of the Company become exercisable for the first time by
any optionee during any calendar year may not exceed $100,000.
The option price is payable in full upon exercise, and payment may be made in
cash, or in the discretion of the Committee by delivery of shares of Common
Stock (valued at their fair market value at the time of exercise), the
optionee's promissory note in a form and on terms acceptable to the Committee,
the cancellation of indebtedness of the Company to the optionee, the waiver of
compensation due or accrued to the optionee for services rendered, a "same day
sale" commitment from the optionee and a broker-dealer that is a member of the
National Association of Securities Dealers, Inc. ("NASD Dealer") whereby the
optionee irrevocably elects to exercise the option and to sell a portion of the
shares so purchased to pay for the exercise price and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the exercise price
to the Company, "margin" commitment from the optionee and an NASD Dealer
whereby the optionee irrevocably elects to exercise the option and to pledge
the shares purchased to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the exercise price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
exercise price to the Company, or by any combination of the foregoing methods
of payment.
Options granted under the 1994 Plan may not be transferred by an optionee
other than by will or by the laws of descent and distribution.
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<PAGE>
The Board of Directors has the right at any time to terminate or amend the
1994 Plan, but no such action may terminate options already granted or
otherwise affect the rights of any optionee under an outstanding option without
the optionee's consent. Unless sooner terminated by the Board of Directors, the
1994 Plan will terminate on April 11, 2004.
FEDERAL INCOME TAX CONSEQUENCES
The Federal income tax discussion set forth below is intended for general
information only. State and local income tax consequences are not discussed,
and may vary from locality to locality.
Incentive Stock Options. There is no taxable income to an employee when an
incentive stock option is granted to him or when that option is exercised;
however, generally the amount by which the fair market value of the shares at
the time of exercise exceeds the option price will be included in the
optionee's alternative minimum taxable income upon exercise. If stock received
on exercise of an incentive option is disposed of in the same year the option
was exercised, and the amount realized is less than the stock's fair market
value at the time of exercise, the amount includable in alternative minimum
taxable income does not exceed the amount realized on the sale or exchange of
the stock, less the taxpayer's basis in such stock. Gain realized by an
optionee upon sale of stock issued on exercise of an incentive stock option is
taxable as long-term capital gain, and no tax deduction is available to the
Company, unless the optionee disposes of the shares within two years after the
date of grant of the option or within one year after the date of exercise. In
such event the difference between the option exercise price and the fair market
value of the shares on the date of the optionee's exercise will be taxed at
ordinary income rates, and, subject to Section 162(m) of the Code, which limits
the deductibility of compensation in excess of $1,000,000 per executive
officer, the Company will be entitled to a deduction to the extent the employee
must recognize ordinary income.
Nonqualified Stock Options. The recipient of a nonqualified stock option will
not realize taxable income upon the grant of the option, nor will the Company
then be entitled to any deduction. Generally, upon exercise of nonqualified
stock options the optionee will realize ordinary income and, subject to Section
162(m) of the Code, the Company will be entitled to a deduction in an amount
equal to the difference between the option exercise price and the fair market
value of the stock at the date of exercise. The Company will be required to
withhold taxes on the ordinary income realized by an optionee upon exercise of
nonqualified stock options in order to be entitled to the tax deduction. An
optionee's basis for the stock for purposes of determining his gain or loss on
his subsequent disposition of the shares generally will be the fair market
value of the stock on the date of exercise of the nonqualified stock option.
APPROVAL OF 1995 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 3)
The Board of Directors intends to submit to the shareholders for their
approval at the Annual Meeting the Ceradyne, Inc. 1995 Employee Stock Purchase
Plan (the "Purchase Plan"). The Purchase Plan is substantially similar to the
Company's 1985 Employee Stock Purchase Plan, which will expire upon completion
of the current offering period on July 3, 1995.
The purposes of the Purchase Plan are to provide to employees an incentive to
join and remain in the service of the Company and its subsidiaries, to promote
employee morale and to encourage employee ownership of the Company's Common
Stock by permitting them to purchase shares at a discount through
12
<PAGE>
payroll deductions. The Purchase Plan is intended to qualify as an "employee
stock purchase plan" under Section 423 of the Code.
A total of 100,000 shares of the Company's Common Stock may be sold under the
Purchase Plan. The number and type of shares subject to the Purchase Plan, and
the number and type of shares subject to and the purchase price of outstanding
rights to purchase shares under the Purchase Plan, shall be appropriately
adjusted in the event of any subdivision or combination of outstanding shares,
the payment of a stock dividend, the reclassification or exchange of shares or
like change in the capital structure of the Company.
The following description of the Purchase Plan is qualified in all respects
by reference to the Purchase Plan itself, the full text of which is attached to
this Proxy Statement as Exhibit A.
The Purchase Plan was adopted by the Board of Directors on April 24, 1995,
subject to its approval by the shareholders at the 1995 Annual Meeting.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of shares of Common Stock
present or represented and entitled to vote at the Annual Meeting is required
to approve the Purchase Plan, assuming the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL.
DESCRIPTION OF THE PURCHASE PLAN
Every employee of the Company who customarily works more than 20 hours per
week and more than 5 months per year will be eligible to participate in
offerings made under the Purchase Plan if on the offering date such employee
has been employed by the Company for at least 30 days. Employees of any
subsidiary of the Company may also participate in the Purchase Plan at the
discretion of the Board of Directors. An employee may not participate in an
offering under the Purchase Plan if he owns shares of stock possessing 5% or
more of the total combined voting power or value of all classes of stock of the
Company or of any parent or subsidiary of the Company. As of June 9, 1995,
approximately 220 employees would be eligible to participate in the Purchase
Plan.
The Purchase Plan is administered by a committee consisting of at least two
directors appointed by the Board of Directors (the "Committee"). The Board has
delegated administration of the Purchase Plan to the Stock Option Committee.
Subject to the provisions of the Purchase Plan, the Committee has full
authority to implement, administer and make all determinations necessary under
the Purchase Plan.
Each offering under the Purchase Plan will commence on such date (the
"Offering Date") and shall continue for such period (the "Offering Period") as
the Committee in its discretion shall designate from time to time. Unless the
Committee designates otherwise, offerings will be made once each year and each
Offering Period will be for a period of 12 months.
Eligible employees who elect to participate in an offering will purchase
shares of Common Stock through regular payroll deductions in an amount of not
less than 1% nor more than 15% of base pay, as designated
13
<PAGE>
by the employee. For this purpose, "base pay" includes all salaries and regular
hourly wages, but does not include bonuses, commissions, overtime pay, or other
special payments, fees or allowances. Shares of Common Stock will be purchased
automatically on the last day of the Offering Period (the "Purchase Date") at a
price equal to the lower of 85% of the fair market value of the shares on the
Offering Date or 85% of the fair market value of the shares as of the Purchase
Date. A participant may withdraw from an offering at any time prior to the
Purchase Date and receive a refund of his payroll deductions, without interest.
A participant's rights in the Purchase Plan are nontransferable.
A maximum of 750 shares may be purchased by a participant in any one
offering. Furthermore, no employee may purchase stock in an amount which would
permit his rights under the Purchase Plan (and any similar purchase plans of
the Company and any parent and subsidiaries of the Company) to accrue at a rate
which exceeds $25,000 in fair market value, determined as of the Offering Date,
for each calendar year.
The Board of Directors may at any time amend, suspend or terminate the
Purchase Plan; provided that any amendment that would (1) increase the
aggregate number of shares authorized for sale under the Purchase Plan (except
pursuant to adjustments provided for in the Purchase Plan), or (2) change the
standards of eligibility for participation, shall not be effective unless
approved by the shareholders within 12 months of the adoption of such amendment
by the Board. Unless previously terminated by the Board, the Purchase Plan will
terminate on April 24, 2005.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF PURCHASE PLAN
No taxable income is recognized by a participant either at the time of
election to participate in an offering under the Purchase Plan or at the time
shares are purchased thereunder. If a participant does not dispose of shares
acquired under the Purchase Plan for at least six months after the date of
purchase and two years after the offering date for such shares, then upon such
disposition (a "qualifying disposition") the federal income tax consequences
will be as follows: (1) the lesser of (a) the excess of the fair market value
of the shares on the date of disposition over the purchase price or (b) 15% of
the fair market value of the shares on the offering date will be taxed to the
participant as ordinary income, and (2) the excess, if any, of the fair market
value of the shares on the date of disposition over the sum of the purchase
price and the amount of ordinary income recognized upon disposition will be
taxed as long-term capital gain. If such taxable disposition produces a loss
(i.e., the value of the shares on the date of disposition is less than the
purchase price), the loss will be a long-term capital loss.
If a participant disposes of the shares before the expiration of the six-
month and two-year holding periods described above (a "disqualifying
disposition"), then upon such disposition the federal income tax consequences
will be as follows: (1) the difference between the purchase price and the fair
market value of the shares on the date of purchase will be taxed to the
participant as ordinary income, and (2) the excess, if any, of the fair market
value of the shares on the date of disposition over their fair market value on
the date of purchase will be taxed as capital gain. If the value of the shares
on the date of disposition is less than the sum of the purchase price and the
amount or ordinary income recognized upon disposition, then such difference
will result in a capital loss. Any such loss will not affect the ordinary
income recognized as a result of the disqualifying disposition. The amount of
ordinary income recognized by the participant will be deductible by the Company
for federal income tax purposes.
14
<PAGE>
GENERAL
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Arthur Andersen & Co. as independent
public accountants to audit the financial statements of the Company for the
1995 calendar year. Representatives of Arthur Andersen & Co. will be present at
the Annual Meeting to respond to appropriate questions and will be given an
opportunity to make a statement if they so desire.
STOCKHOLDER PROPOSALS
Stockholders who wish to present proposals for action at the 1996 Annual
Meeting should submit their proposals in writing to the Secretary of the
Company at the address set forth on the first page of this Proxy Statement.
Proposals must be received no later than February 16, 1996 for inclusion in
next year's Proxy Statement and Proxy Card.
EXPENSES OF SOLICITATION
The cost of soliciting the enclosed form of proxy will be borne by the
Company. In addition, the Company will reimburse brokerage firms and other
persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Directors, officers
and regular employees of the Company may, without additional compensation, also
solicit proxies either personally or by telephone, telegram or special letter.
James F. Gardner
Secretary
June 19, 1995
15
<PAGE>
EXHIBIT A
CERADYNE, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
1.ESTABLISHMENT AND PURPOSES OF THE PLAN.
The Ceradyne, Inc. 1995 Employee Stock Purchase Plan (the "Plan") is hereby
established to provide to eligible employees of Ceradyne, Inc. (the "Company")
and its participating subsidiaries, if any, an incentive to join and remain in
the service of the Company and its subsidiaries, to advance the best interests
of the Company, to promote employee morale, and to encourage employee ownership
of the Company's Common Stock. These purposes are sought to be accomplished
under the Plan by enabling employees to subscribe for and purchase directly
from the Company shares of the Company's Common Stock at a discount from the
market price, and to pay the purchase price in installments by payroll
deductions. The Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code") (including any amendments or replacements of such section), and the
Plan shall be so construed.
2.ADMINISTRATION.
The Plan shall be administered by the Board of Directors of the Company (the
"Board") or by a committee composed of at least two directors (the "Committee")
appointed from time to time by the Board. As hereinafter used in this Plan, the
term "Committee" shall refer to the Board if no Committee is then designated.
The Committee shall be vested with full authority to construe, interpret and
implement the Plan, and to make, administer, and interpret such rules and
regulations as it deems necessary to administer the Plan. Any such
determination, decision or action of the Committee with respect to any matter
relating to the Plan shall be final, conclusive and binding on all
participants.
3.STOCK SUBJECT TO THE PLAN.
An aggregate of 100,000 shares of Common Stock, $.01 par value, of the
Company may be sold under the Plan. Such shares may be either authorized but
unissued shares, or shares reacquired by the Company for sale under the Plan.
In the event any shares offered under the Plan are not purchased, then such
shares shall again be available for sale under the Plan. The number and type of
shares subject to the Plan, and the number and type of shares subject to and
the purchase price of outstanding rights to purchase shares under the Plan,
shall be appropriately adjusted by the Committee in the event of any
subdivision or combination of outstanding shares, the payment of a stock
dividend, the reclassification or exchange of shares or like change in the
capital structure of the Company.
4.EMPLOYEES ELIGIBLE TO PARTICIPATE.
Every employee of the Company, and every employee of any subsidiary
corporation of the Company to which the Plan may be extended by action of the
Company's Board of Directors, is eligible to participate in the Plan except the
following:
(a) Employees who have not been continuously employed for a period of at
least thirty (30) days as of the date an offering is made under the Plan;
A-1
<PAGE>
(b) Employees who are customarily employed twenty (20) hours or less per
week;
(c) Employees who are customarily employed for five (5) months or less in
a calendar year; and
(d) Any employee who owns, or immediately after an offering under the
Plan would be deemed to own (under Section 424(d) of the Code, relating to
attribution of stock ownership) shares of stock possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company or of any parent or subsidiary of the Company. For this purpose,
shares which the employee may purchase under outstanding options shall be
treated as stock owned by the employee.
5. OFFERING PERIODS.
Each offering under the Plan shall commence on such date (the "Offering
Date") and shall continue for such period (the "Offering Period") as the
Committee in its discretion shall designate from time to time. Unless the
Committee designates otherwise, offerings shall be made once each year and each
Offering Period shall be for a period of twelve (12) months. In no event may
any Offering Period exceed a duration of twenty-seven (27) months. The last day
of each Offering Period shall be the "Purchase Date."
6. METHOD OF PARTICIPATION; PAYROLL DEDUCTIONS.
There will be an enrollment period of thirty (30) days immediately preceding
the Offering Date of each offering made under the Plan. Each employee who will
be eligible to participate in the Plan as of the Offering Date of any offering
may elect to participate in that offering by delivering to the Company during
the enrollment period a completed subscription agreement in the form provided
for that purpose by the Committee. An employee may participate in each offering
under the Plan for which he or she is eligible, but must elect to participate
by submitting a new subscription agreement for each offering during the
applicable enrollment period, regardless of whether he or she has participated
in any previous offerings. The subscription agreement shall authorize the
Company to withhold a percentage of the participant's base pay through regular
payroll deductions during the applicable Offering Period, and the amount
withheld shall be credited to the Participant's account for payment for the
shares to be purchased. Each participant shall designate in the subscription
agreement the amount to be withheld from his or her base pay, which may be not
less than 1% nor more than 15% of his or her base pay. "Base pay" shall include
all salaries and regular hourly wages, but shall not include bonuses,
commissions, extra pay for extra hours worked outside the participant's regular
work schedule, or other special payments, fees or allowances. Payroll
deductions shall commence on the first payday following the Offering Date and
shall continue until the last payday prior to the Purchase Date unless sooner
terminated as provided in Section 10 below. A participant may lower, but not
increase, the rate of payroll deductions at any time during an Offering Period
by submitting to the Company an amended subscription agreement, in which case
the new rate shall become effective within fifteen (15) days after the
Company's receipt of the amended agreement. Complete withdrawal from the Plan
at any time prior to the Purchase Date is permitted as provided in Section 10
below.
7.PURCHASE PRICE.
(a) The purchase price at which shares will be sold in any Offering Period
under the Plan shall be the lower of:
(i) 85% of the fair market value of the shares on the first day of the
Offering Period (the "Offering Date"), or
(ii) 85% of the fair market value of the shares on the last day of the
Offering Period (the "Purchase Date").
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(b) The "fair market value" of the Company's Common Stock on the Offering
Date or on the Purchase Date, as the case may be, shall be the per share price
of the last sale of such stock in the over-the-counter market as reported on
the NASDAQ Stock Market. If the Common Stock is listed for trading on an
exchange, the fair market value shall be the last reported sale price of the
Common Stock on the principal stock exchange on which the Company's Common
Stock is traded on that date. If no trading occurred on such date, the fair
market value shall be the mean between the representative closing bid and asked
prices for the Common Stock on such exchange or in the over-the-counter market,
as the case may be, on that date, or, if such securities' markets were closed
on that date, on the next preceding date on which such securities' markets were
open for trading.
8.PURCHASE OF STOCK.
(a) At the end of each Offering Period, the maximum number of whole shares
which may be purchased with each participant's accumulated payroll deductions
will automatically be purchased for the participant at the applicable purchase
price determined as provided in Section 7 above, subject to the limitations in
Section 9 below. Any cash balance remaining in an employee's account
attributable to a fractional share shall be refunded promptly to the
participant. No stock shall be purchased on behalf of an employee whose
participation in the Plan has terminated prior to the Purchase Date of the
Offering Period. Because any participant may withdraw his or her accumulated
payroll deductions and terminate his or her participation in the Plan at any
time during an Offering Period prior to the Purchase Date, the participant is,
in effect, given an option which he or she may or may not exercise at the
completion of the Offering Period.
(b) As soon as practicable following the Purchase Date, the Company will
deliver to each participant a stock certificate or certificates issued in his
or her name for the number of shares purchased. The time of issuance and
delivery of shares may be postponed for such period as may be necessary to
comply with the registration requirements under the Securities Act of 1933, as
amended, the listing requirements of any securities exchange on which the
Common Stock may then be listed, or the requirements under other laws or
regulations applicable to the issuance or sale of such shares.
9.LIMITATION ON SHARES TO BE PURCHASED.
No employee shall be entitled to purchase stock under the Plan in an amount
which would permit his or her rights (under this Plan and any similar plans of
the Company and any parent and subsidiary corporations of the Company) to
accrue at a rate which exceeds $25,000 in fair market value, determined as of
the Offering Date, for each calendar year in which the employee participates in
the Plan. In addition, no more than 750 shares may be purchased by a
participant in any single offering. In the event the number of shares to be
purchased by all employees participating in the Plan exceeds the number of
shares remaining available in the Plan, the Company will make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as it shall determine to be equitable. Any payroll deductions
accumulated in a participant's account which are not used to purchase stock due
to the limitations in this section shall be returned to the participant
promptly after the end of the Offering Period.
10.TERMINATION OF PARTICIPATION.
(a) Withdrawal from the Plan. Any time prior to the Purchase Date of an
Offering Period any participating employee may withdraw from the Plan by giving
written notice to that effect to the Company. Such employee's participation in
the Plan shall thereupon terminate, his or her payroll deduction authorization
will be cancelled, and the Company shall promptly refund to such employee,
without interest,
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<PAGE>
the amount of his or her accumulated payroll deductions. An employee who
withdraws from the Plan may participate in the Plan in any subsequent offering
if he or she is otherwise eligible under the Provisions of Section 4 above.
(b) Termination of Employment or Death. An employee's participation in the
Plan shall terminate automatically upon termination of employment, for any
reason, or upon his or her death. Upon termination of participation, the
Company shall promptly refund to such employee or the representative of such
employee's estate, as the case may be, without interest, the amount of such
employee's accumulated payroll deductions.
11.EXCUSED ABSENCES.
During leaves of absence approved by the Company, a participant may, for such
period of time as the Committee in its sole discretion shall deem reasonable
(and as permitted by applicable regulations under the Code), continue
participation in the Plan by cash payment to the Company on his or her normal
paydays equal to the reduction in his or her payroll deductions caused by such
absence. Failure to pay any installment within fifteen (15) days after the
payday on which it is due shall be deemed to constitute a notice of withdrawal
from the Plan and the Company will refund the employee's accumulated payroll
deductions as provided in Section 10(a) above.
12.RIGHTS NOT TRANSFERABLE.
No employee shall sell, assign, transfer, pledge or otherwise dispose of or
encumber either his or her right to participate in the Plan or his or her
interest in any share to be issued upon payment of the purchase price, and
except as otherwise provided by law, such right and interest shall not be
liable for or subject to the debts, contracts, or liabilities of the employee.
If any such action is taken by the employee, or any claim is asserted by any
other party in respect to such right or interest, such action or claim shall be
null and void and of no effect.
13.RIGHTS AS SHAREHOLDER OR EMPLOYEE.
An employee shall have no rights as a shareholder with respect to shares
under election to purchase until a stock certificate has been issued to him or
her as provided in Section 8 above. Nothing in this Plan or in any subscription
agreement shall confer upon any participant any right to continue in the employ
of the Company or its subsidiaries or limit in any way the right of the Company
(or subsidiary) to terminate the participant's employment at any time.
14.USE OF FUNDS; NO INTEREST PAID.
All funds received or held by the Company under the Plan will be included in
the general funds of the Company free of any trust or other restriction and may
be used for any corporate purpose. No interest will be paid to any participant
or credited to his or her account under the Plan.
15.CORPORATE BEARING OF EXPENSES.
No charge of any kind will be made by the Company against the funds held
under the Plan other than the application of the funds to payment for shares
purchased under the Plan. The Company will pay all issue or transfer taxes with
respect to the sale of shares under the Plan and all other fees and expenses
incurred by the Company in connection therewith.
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16.MERGER, ACQUISITION OR LIQUIDATION.
In the event of the merger or consolidation of the Company into another
corporation, the acquisition by another corporation of all or substantially all
of the Company's assets, or the liquidation or dissolution of the Company, the
Purchase Date with respect to any outstanding options shall be the business day
immediately preceding the effective date of such merger, consolidation,
acquisition, liquidation or dissolution unless the Committee shall, in its sole
discretion, provide for the assumption or substitution of such options in a
manner complying with Section 424(a) of the Code.
17.EFFECTIVE DATE, AMENDMENT AND TERMINATION OF PLAN.
(a) The Plan shall become effective upon its adoption by the Board of
Directors. However, unless the Plan is approved by the shareholders of the
Company within twelve (12) months before or after the date of the Board's
initial adoption of the Plan, the Plan and all options granted hereunder shall
be cancelled. No shares may be sold under the Plan prior to and unless such
shareholder approval is obtained.
(b) The Board of Directors may at any time amend, suspend or terminate the
Plan; provided that the rights of participants under options previously granted
under the Plan may not be adversely affected without the participants' consent,
and any amendment that would (i) increase the aggregate number of shares
authorized for sale under the Plan (except as provided in Section 3 above), of
(ii) change the standards of eligibility for participation in the Plan, shall
not be effective unless approved by the shareholders within twelve (12) months
of the adoption of such amendment by the Board.
(c) Unless previously terminated by the Board of Directors, the Plan shall
terminate ten (10) years after it becomes effective, but no such termination
shall affect options previously granted under the Plan.
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[LOGO OF CERADYNE, INC.]
CERADYNE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS JULY 24, 1995
The undersigned hereby appoints Joel P. Moskowitz and James F. Gardner, and
each of them, as Proxies, with full power of substitution, to vote the shares of
Ceradyne, Inc. which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of Ceradyne, Inc. to be held at
the Corporate Headquarters located at 3169 Red Hill Avenue, Costa Mesa,
California, on Monday, July 24, 1995 at 10:00 a.m. local time and at any
adjournment thereof.
SEE REVERSE SIDE
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3.
1. Election of FOR WITHHELD
Directors. [_] [_]
For, except vote withheld from the following nominee(s):
(Instruction: To withhold authority to vote for any
individual nominee write that nominee's name on the space provided below.)
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NOMINEES:
Joel P. Moskowitz
Leonard M. Allenstein
Richard A. Alliegro
Frank Edelstein
Norman A. Gjostein
William P. Lanphear IV
Milton L. Lohr
Melvin A. Shader
2. Approve amendment to the Company's 1994 FOR AGAINST ABSTAIN
Stock Incentive Plan. [_] [_] [_]
3. Approve the adoption of the [_] [_] [_]
Company's 1995 Employee Stock
Purchase Plan.
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS AND
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FOR PROPOSAL 2 AND FOR PROPOSAL 3.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
SIGNATURE DATE
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SIGNATURE DATE
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NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
