Microwave Filter Company, Inc.
6743 Kinne Street
East Syracuse, New York 13057
Notice of Annual Meeting Of Shareholders
To the Shareholders of Microwave Filter Company, Inc.:
At the direction of the Board of Directors of Microwave Filter Company,
Inc., a New York corporation (the "Company"), notice is hereby given that the
Annual meeting of Shareholders of the Company (the "Meeting") will be held at
10:00 a.m. on Monday, March 11, 1996 at the Syracuse Marriott, Carrier Circle,
East Syracuse, New York 13057 for the purpose of voting on the following
matters:
1. The election of 9 directors to hold office until the Annual
Meeting of the Shareholders at which their term expires or until their
successors have been duly elected.
2. To consider and act upon a proposed Amendment to the Bylaws to
provide for the classification of the Board of Directors into three classes.
3. To consider and act upon a proposed Amendment to the Bylaws to
provide that the size of the Board of Directors shall be nine or less.
4. To consider and act upon a proposed Amendment to the Bylaws
that Directors may be removed only for cause by a majority vote of the Board
then in office or by a two thirds (2/3) vote of the shareholders.
5. To consider and act upon a proposed Amendment to the Bylaws
that any vacancy on the Board shall be filled by the remaining Directors then
in office, whether or not there is a quorum, only until the next annual
meeting and thereafter until a successor shall be elected and shall qualify.
6. To consider and act upon a proposed Amendment to the Bylaws to
provide that a special meeting of the shareholders may be called by the
Chairman of the Board or the President, and shall be called by the Chairman
of the Board or the Corporate Secretary upon written request from a majority
of the Board of Directors or two thirds (2/3) of the outstanding shares
entitled to vote in the election of Directors.
7. To consider and act upon a proposed Amendment to the
Certificate of Incorporation to provide that advance notice of shareholder
nominations for the election of Directors and of shareholder proposals for
action at annual and special shareholder meetings shall be given and certain
information shall be provided with respect to shareholder nominees and
shareholder proposals. This proposed Amendment to the Certificate of
Incorporation currently exists as Article III "Notice of Shareholder Business
and Nominations" of the Bylaws.
8. To consider and act upon a proposed Amendment to the
Certificate of Incorporation to adopt Article XII - "Indemnification and
Insurance" of the Company Bylaws as an Amendment to the Certificate of
Incorporation.
9. To consider and act upon a proposed Amendment to the
Certificate of Incorporation to provide that Directors' liability to the
Company or its shareholders shall be limited to the fullest extent permitted
by law.
10. To consider and act upon a proposed Amendment to the
Certificate of Incorporation to provide that the shareholder vote required to
alter, amend or repeal the foregoing Amendments is increased from a majority
vote of the shareholders to two thirds (2/3) of the outstanding shares
entitled to vote in the election of Directors.
11. The ratification of Coopers & Lybrand L.L.P. as the Company's
independent auditors for the fiscal year ending September 30, 1996.
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12. To consider and act upon a proposed shareholder resolution by
Mr. David Silver, with regard to the rescindment and replacement of Bylaw
Article XII "Indemnification and Insurance".
The Board of Directors has fixed the close of business on February 9, 1996 as
the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting, or any adjournments thereof.
By order of the Board of Directors
Louis S. Misenti
Chairman of the Board
Dated: February 20, 1996
Syracuse, New York
YOUR VOTE IS IMPORTANT. YOU ARE THEREFORE REQUESTED TO SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, EVEN IF YOU EXPECT TO BE PRESENT AT
THE MEETING. YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE MEETING, OR
IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AT THAT TIME AND
VOTE IN PERSON IF YOU WISH.
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MICROWAVE FILTER COMPANY, INC.
Proxy Statement for Annual Meeting of Shareholders
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Microwave Filter Company, Inc. (the "Company") for use at the Company's Annual
Meeting of Shareholders (the "Annual Meeting") to be held on Monday, March 11,
1996 at 10:00 a.m. local time or at any adjournment or postponement thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting of Shareholders. The Annual Meeting will be held at the Syracuse
Marriott, Carrier Circle, East Syracuse, New York 13057.
The Company's principal executive offices are located at 6743 Kinne
Street, East Syracuse, New York 13057. The telephone number at that address
is (315) 437-3953.
These proxy solicitation materials and the Annual Report to Shareholders
were first mailed on or about February 20, 1996 to all shareholders entitled
to vote at the Annual Meeting.
Record Date and Shares Outstanding
Shareholders of record at the close of business on February 9, 1996 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date
3,531,633 shares of the Company's common stock were issued, outstanding and
entitled to vote at the Annual Meeting.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Annual Meeting and voting in person.
Voting and Solicitation
Every shareholder voting for the election for Directors and on the other
matters presented in this proxy is entitled to one vote for each share held of
record on the record date.
The cost of this solicitation will be borne by the Company. The Company
has retained Regan & Associates to assist in the solicitation of proxies at a
fee of $6,000 plus reimbursement of reasonable expenses. In addition, the
Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies also may be solicited by certain
of the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone or by telegram.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders which are intended to be presented by such
shareholders at the Company's 1997 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than November 4, 1996 in order to be included in the proxy soliciting material
relating to that meeting.
Resolutions
Pursuant to a resolution by the Board of Directors, Mr. Robert Portmess,
a former officer of the Corporation, was reimbursed for legal fees in the
amount of $797.90.
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PROPOSAL ONE ELECTION OF DIRECTORS
Nominees
A Board of nine Directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the nine nominees named below, all of whom are presently Directors of the
Company. In the event that any nominee is unable or declines to serve as a
Director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. A term of office for each person elected as a Director will continue
to the Annual Meeting of Shareholders at which their term expires or until his
or her successor has been elected and qualified. It is not expected that any
nominee will be unable or will decline to serve as a Director. In the event
that the Amendment to the Bylaws proposed herein to provide for the
classification of the Board of Directors is approved, one class of three (3)
Directors would hold office initally for a term expiring at the 1997 (Class I)
Annual Meeting; another class, (Class II), would hold office initially for a
term expiring at the 1998 Annual Meeting; and another class, (Class III),
would hold office initially for a term expiring at the 1999 Annual Meeting.
The name of and certain information regarding each nominee is set
forth below.
Director Principal Occupation
TRUDI B. ARTINI Mrs. Artini is an independent investor
Age 73 in MFC and various other business
Director since 1974 enterprises in Syracuse, New York.
Class I
DAVID B. ROBINSON, MD Dr. Robinson was a Professor of
Age 71 Psychiatry and Director of the Adult
Director since 1977 Psychiatric In-Patient Unit of the
Class I Upstate Medical Center of the State
University of New York since July of
1958, until his retirement in 1985. He
continues as a Consulting Psychiatrist
at Upstate Medical Center, Syracuse, New
York. He has served as a Skaneateles
Town Councilman since 1989 and has been
a Board member of the Skaneateles
Festival of Chamber Music since 1980.
SIDNEY CHONG Mr. Chong is manager of financial
Age 54 reports and corporate accounting for the
Director since 1995 Carrols Corp. in Syracuse. Prior to
Class II joining the Carrols Corp., he was a
senior accountant with Price Waterhouse
and Co. in New York City. Mr. Chong has
a bachelor of science degree from
California State University.
DAN GALBALLY Mr. Galbally is controller of Evaporated
Age 48 Metal Films (EMF) in Ithaca, NY. Before
Director since 1995 joining EMF, he worked as controller and
Class III acting Vice President of Finance at
Philips Display Components Co. He has a
bachelor's degree in accounting and an
MBA from Syracuse University.
LOUIS MISENTI Mr. Misenti has been President and
Age 68 Principal shareholder of SCI Corp.,
Director since 1976 Syracuse, New York since 1984. SCI
Class II manufactures polishing compounds for the
automobile and silverware industries.
Mr. Misenti is also managing partner of
Northern Pines Golf Course, Cicero, New
York which was founded in 1970. He was
elected Chairman of the Board of
Directors of MFC on March 27, 1993.
CARL F. FAHRENKRUG, PE Mr. Fahrenkrug was appointed President
Age 53 and Chief Executive Officer of MFC on
Director since 1984 October 7, 1992. He has also served as
Class III President and Chief Executive Officer of
NSI since prior to 1986. He served as
V.P. of Engineering at Microwave
Systems, Inc., Syracuse, N.Y. from 1972-
1976. Mr. Fahrenkrug has a B.S. and
M.S. in Engineering and an MBA from
Syracuse University.
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MILO PETERSON Mr. Peterson has served as Executive
Age 55 Vice President and Corporate Secretary
Director since 1990 of NSI since January 1, 1992. Since
Class I January 1, 1992, he has also served as
MFC Production Consultant to the
President. Prior to January 1, 1992, he
served as Executive Vice President of
NSI. Mr. Peterson graduated from
programs at Yale University and Syracuse
University. He served as V.P. of
Manufacturing of Microwave Systems,
Inc., Syracuse, N.Y. from 1970-1976. He
was elected Corporate Secretary of MFC
on March 27, 1993.
FRANK S. MARKOVICH Mr. Markovich is a self-employed
Age 51 consultant in the manufacturing and
Director since 1992 operations field. Prior to that he was
Class III the Director of the Manufacturing
Extension Partnership at UNIPEG
Binghamton. He held various high level
positions in operations, quality and
product management in a 20 year career
with BF Goodrich Aerospace, Simmonds
Precision Engine Systems of Norwich, New
York. He completed US Navy Electronics
and Communications Schools and received
an MBA from Syracuse University.
ROBERT R. ANDREWS Mr. Andrews is the President and
Age 54 Principal shareholder of Morse
Director since 1992 Manufacturing Co., Inc., East Syracuse,
Class II N.Y. which produces specialized material
handling equipment and has served in
that capacity since prior to 1985. He
received a B.A. degree from Arkansas
University and has served as Vice
President and a Director of the
Manufacturers' Association of Central
New York, President of the Citizens
Foundation, a Trustee of Dewitt
Community Church, Director of the
Salvation Army and Chairman of the
Business and Industry Council of
Onondaga Community College.
Board Meetings and Committees
The Board of Directors held a total of five meetings during the fiscal
year ending September 30, 1995. No Director attended fewer than 75% of all
such meetings of the Board of Directors and of the Committees, if any, on
which such Directors served.
The Company's Finance and Audit Committee currently consists of Sidney
Chong, Chair, Daniel Galbally, Frank S. Markovich and Robert R. Andrews. The
Finance and Audit Committee reviews and approves the scope of the audit
performed by the Company's independent auditors as well as the Company's
accounting principles and internal accounting controls. The Finance and Audit
Committee held three meetings during fiscal year 1995.
The Company's Compensation Committee currently consists of Trudi B.
Artini, Chair, Frank S. Markovich, David B. Robinson, M.D., Daniel Galbally,
and Robert R. Andrews. The Compensation Committee reviews compensation and
benefits for the Company's executives. The Compensation Committee held one
meeting during fiscal year 1995.
The Company's Nominating Committee currently consists of David B.
Robinson, M.D., Chair, Trudi B. Artini, Carl F. Fahrenkrug, P.E., Milo
Peterson and Frank S. Markovich. The Nominating Committee will consider
nominees for the Board of Directors recommended by shareholders if such
recommendations are in writing and are mailed to the Secretary of the Company
at the Company's principal executive office. The Nominating Committee did not
hold any meetings during fiscal year 1995.
The Company also has a standing Executive Committee and Operations
Committee.
Compensation of Directors
The Company pays Directors' fees to each Director who is not an employee
of the Company (currently seven persons). During fiscal year 1995, outside
Directors received fees of $200 per Board meeting and $100 per Committee
meeting, with the exception of the Executive Committee whose members receive
$200 per meeting. The Company also reimburses Directors for reasonable
expenses incurred in attending meetings. Outside Directors have the option of
receiving their compensation for meetings in the form of restricted shares of
the Company's common stock. For this purpose, shares are valued at 85% of the
mean between the bid and asked price of the stock at the beginning of each
quarter. During fiscal 1995, 14,636 shares were issued to Directors in lieu
of Directors' fees.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of February 9, 1996 (i) by each
person who is known by the Company to own beneficially more than 5% of the
Company's common stock, (ii) each Director of the Company and (iii) all
Directors and Executive Officers as a group.
Directors, Officers Shares Beneficially Owned
5% Shareholders Number Percent
Carl F. Fahrenkrug* 374,433 10.6%
and Rita Fahrenkrug
8365 Indian Hill Road
Manlius, NY 13104
Louis S. Misenti * 333,335 9.4%
140 Clearview Road
Dewitt, NY 13214
Milo Peterson * 168,037 4.8%
Trudi B. Artini * 106,230 3.0%
David B. Robinson, M.D.* 114,997 3.3%
Frank S. Markovich * 2,233 **
Daniel Galbally * 780 **
Sidney Chong * 2,705 **
Robert R. Andrews * 1,214 **
Richard L. Jones 30,908
Robert Hamister 124 **
All Directors and Executive
Officers as a group (eleven persons) 1,134,996 32.1%
*Directors of the Company.
**Denotes less than one percent of class.
Frederick A. Dix 243,627 6.9%
and Margorie Dix
209 Watson Road
N. Syracuse, NY 13212
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EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
The following table sets forth the annual and long-term compensation of
the Company's Chief Executive Officer for services to the Company during the
three fiscal years ended September 30, 1995.
Annual Compensation
Salary
Name and Principal Position Year $
Carl F. Fahrenkrug
President and CEO (1) 1995 91,775
1994 95,522
1993 93,802
(1) Mr. Fahrenkrug was elected President and CEO on October 7, 1992
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was or is an officer or employee
of the Company or any of its subsidiaries.
Compliance with Section 16(a) of the Securities Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Executive Officers and Directors and persons who own more than 10%
of a registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Securities and Exchange Commission
and the National Association of Securities Dealers, Inc. Such Officers,
Directors and 10% shareholders are also required by SEC Rules to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of copies of such reports received, the
Company believes that during the fiscal year ended September 30, 1995 all
Section 16(a) filing requirements applicable to its Officers, Directors and
10% shareholders were complied with.
Classification of the Board of Directors and Related Matters
PROPOSALS 2 through 10
To enhance continuity and stability of the Board of Directors and the
policies formulated by the Board, the Board has unanimously approved and is
proposing amendments to the Bylaws and the Certificate of Incorporation to
provide for classification of the Board of Directors and certain related
matters. The proposed amendments to the Bylaws will divide the Board of
Directors into three classes, as nearly equal in number as possible who, after
a transitional arrangement, will serve for three years, with one class being
elected each year. In addition, the proposed amendments to the Bylaws and the
Certificate of Incorporation provide that: (1) The size of the Board of
Directors shall be no more than nine; (2) Directors may be removed only for
cause by the majority vote of the Board then in office or by the vote of two
thirds (2/3) of the outstanding shares entitled to vote in the election of
Directors; (3) any vacancy on the board shall be filled by the remaining
directors then in office, whether or not there is a quorum, only until the
next annual meeting and thereafter until a successor shall be elected and
shall qualify; (4) a special meeting of the shareholders may be called only by
the Chairman of the Board or the President, and shall be called by the
Chairman of the Board or the Corporate Secretary upon written request from a
majority of the Board of Directors or two thirds (2/3) of the outstanding
shares entitled to vote in the election of Directors;(5) Article III "Notice
of Shareholder Business and Nominations" of the Bylaws of the Company be
adopted as an Amendment to the Certificate of Incorporation; (6) Article XII -
"Indemnification and Insurance" of the Company Bylaws shall be adopted as an
Amendment to the Certificate of Incorporation; (7) The liability of Directors
shall be limited to the fullest extent of the law; (8) the shareholder vote
required to alter, amend or repeal the foregoing amendments shall be increased
from a majority vote of the shareholders to two thirds (2/3) of the
outstanding shares entitled to vote in the election of Directors.
In the opinion of the Board of Directors, the proposed amendments are
desirable to help ensure stability and continuity in the management of the
Company's business and affairs. The Board of Directors also believes that the
proposed amendments are desirable to help discourage hostile attempts to take
control of the Company. While existing Federal and New York State laws
provide some protection to
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shareholders in connection with attempts to acquire control of a corporation,
neither the Company's Certificate of Incorporation nor the Bylaws presently
contain provisions that could be characterized as specific "anti-takeover"
provisions.
The Board believes that substantial inequities can result to
shareholders of a company that has become the target of takeover tactics. The
threat of removal of the Company's Board in these situations could severely
curtail its ability to negotiate effectively with a potential purchaser. The
Board would be deprived of the time and information necessary to evaluate a
takeover proposal, to study alternative proposals and to help maximize the
price obtained in any transaction. Among other things, the Classified Board
Amendments further reduce this threat to the removal of the Company's Board of
Directors by classifying the Board so that only one-third of its members are
elected each year. To provide additional protection, they also limit the
circumstances in which a Director may be removed or replaced and special
shareholders meetings may be called, as well as limiting the number of
Directors to nine or less, limiting Director liability to the fullest extent
of the law and extending Director indemnification so any proposal may be
considered free of threats and coercion.
The Board of Directors believes that, to the extent a proxy contest is
part of a plan to acquire control of the Company, adoption of the Classified
Board Amendments will encourage the purchaser to negotiate directly with the
Company. Moreover, the Board believes that shareholders are more likely to be
treated fairly in a transaction negotiated by directors than in one
accomplished without the required approval of such directors. The Board also
believes that it is in a better position, than individual shareholders of the
Company, to negotiate effectively on behalf of all shareholders.
The Board of Directors has carefully considered the potential adverse
effects of the proposed amendments and has concluded that such adverse effects
are substantially outweighed by the benefits the amendments would afford the
Company and its shareholders.
PROPOSED AMENDMENTS
The following description is qualified in its entirety by reference to
the full text of the proposed amendments included in Exhibits A and B attached
hereto. Exhibit A contains the proposed Amendments to the Bylaws and Exhibit
B contains the proposed Amendments to the Certificate of Incorporation.
Classification of Board of Directors
New York law provides that the Certificate of Incorporation or the Bylaws
may provide that the Directors be divided into two, three or four classes, the
terms of office of the Directors initially classified to be as follows: that
of the first class to expire at the next annual meeting of shareholders; the
second class at the second succeeding annual meeting; the third class, if any,
at the third succeeding annual meeting; and the fourth class, if any, at the
fourth succeeding annual meeting. The Company's Bylaws now provide for the
election of all Directors annually. The proposed Amendment to Section 3 of
Article IV of the Bylaws provides for the creation of three separate classes
of Directors. The classes will be equal in number, with each class including
three Directors. Upon their initial election, the members of the first class
of Directors will hold office for a term expiring at the next annual meeting
of the shareholders after their election (1997), the members of the second
class will hold office for a term expiring at the second annual meeting of
shareholders after their election (1998) and the members of the third class
will hold office for a term expiring at the third annual meeting of
shareholders after their election (1999). At each annual meeting after 1996,
shareholders will elect the successors of directors whose terms expire at such
annual meeting. The same procedure would be repeated in each year, with the
result that only approximately one-third of the whole Board of Directors would
be elected each year.
Size of Board of Directors
Article IV, Section 2 of the Bylaws presently provide that the number of
Directors shall be nine. Under New York law the number of Directors may not
be less than three and may be fixed by the Bylaws, or by action of the
shareholders or the Board pursuant to the Bylaws. The proposed Amendment
provides that the number of Directors shall be nine or less.
Removal of Directors; Filling vacancies on the Board of Directors
The Bylaws currently provide that Directors may be removed for cause, by
the action of the Board or the shareholders, or without cause only by the
action of the shareholders. The proposed Amendment provides that a Director
may be removed only for cause by the Board of Directors or by two thirds (2/3)
vote of the shareholders. New York law provides that any or all of the
directors of a corporation may be removed for cause by a vote of the
shareholders and, if the Certificate of Incorporation or the Bylaws so
provides, by action of the Board. Also, Directors may be removed without
cause by vote of the shareholders if the Certificate of Incorporation or a
Bylaw adopted by shareholders so
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provides. The proposed Amendment to Article IV, Section 5 of the Bylaws would
preclude the holder of a majority of the outstanding shares from removing
sitting directors and filling the vacancies with its own nominees before the
completion of the Directors' terms.
Section 4 Article IV of the Bylaws currently provides that any vacancy on
the Board shall be filled for the unexpired term of the Director whose place
is vacant. In order to conform to the requirements of New York law, it is
proposed that section four of Article IV of the Bylaws be amended to provide
that a director chosen by the Board to fill a vacancy shall serve only until
the next annual meeting and thereafter until a successor shall be elected and
shall qualify for the remainder of that unexpired term.
Special Shareholder Meetings
Under the Company's current Bylaws, special meetings of the shareholders
may be called by the Board of Directors, the President, and at the written
request of the Board of Directors or shareholders owning a majority of the
outstanding shares issued and outstanding. The proposed Amendment to Article
II, Section 3 of the Bylaws would limit the calling of special shareholder
meetings to the Chairman of the Board or the President, and the Chairman of
the Board or the Corporate Secretary upon written request from a majority of
the Board of Directors or two thirds (2/3) of the outstanding shares entitled
to vote in the election of Directors. The proposed Amendment would prevent
persons acquiring a majority of the outstanding shares from calling a special
meeting for the purpose of removing Directors or making other proposals that
could disrupt the continuity and stability of the Board and the policies of
the Board.
Notice of Shareholder Business and Nominations
The proposed Amendment to the Certificate of Incorporation would provide
that Article III of the Bylaws "Notice of Shareholder Business and
Nominations" be adopted as an Amendment to the Certificate of Incorporation.
Under the present Article III of the Bylaws which is the proposed Amendment to
the Certificate of Incorporation, in order for a shareholder to nominate an
individual for election to the Company's Board of Directors, he or she must
provide the Company with timely notice thereof, which notice shall include
certain information concerning such nominee. To be timely, a shareholder's
notice generally must be delivered to the Company's Secretary not later than
the 60th day nor earlier than the 90th day prior to the first anniversary of
the preceding year's annual meeting. A shareholder not complying with these
Bylaw requirements will not be entitled to nominate any Director at a
shareholder's meeting.
Indemnification and Insurance
The proposed Amendment to the Certificate of Incorporation would provide
that Article XII of the Bylaws "Indemnification and Insurance" be adopted as
an Amendment to the Certificate of Incorporation. This indemnification
provision is proposed as an Amendment to the Certificate of Incorporation so
that a two-thirds (2/3) vote of the shareholders will be required to change it
and to provide further protection for incumbent and future Directors. Such a
provision is necessary to insure that all Directors will be encouraged to
serve without fear of spurious litigation expenses or threats of litigation.
LIMITATION OF DIRECTORS' LIABILITY
The proposed Amendment to the Certificate of Incorporation would provide
that the personal liability of a Director to the corporation or its
shareholders would be limited to the fullest extent provided by law which
requires an adjudication that any acts or omissions of a Director be in bad
faith, involve intentional misconduct, be a knowing violation of law, or be
for personal gain or financial profit. This Amendment is proposed as a means
to protect Directors from frivolous lawsuits and permit Directors to
deliberate and make decisions without fear of spurious litigation.
Increased Shareholder Vote for Alteration, Amendment or Repeal of Proposed
Amendments
New York law provides that the Certificate of Incorporation of a
corporation may contain provisions specifying a higher proportion of votes of
the holders of shares that shall be necessary at any meeting of shareholders
for the transaction of any business or any specified item of business,
including amendments to the Certificate of Incorporation and the Bylaws, than
the proportion prescribed by New York law in the absence of such provision
(generally a majority of the voting power of the stock represented at a
meeting at which a quorum is in attendance). Under New York law, an amendment
to the Certificate of Incorporation generally requires authorization by a vote
of the Board and approval by a vote of the holders of a majority of all
outstanding shares entitled to vote thereon. Under New York law and the
current Bylaws, an Amendment to the Bylaws generally requires authorization by
a majority vote of the Board or a majority vote of the shareholders.
The proposed Amendment to the Certificate of Incorporation would provide
that the foregoing Amendments to the Bylaws and the Certificate of
Incorporation could be amended or repealed only with approval of the holders
of at least two-thirds (2/3) of the outstanding shares. The requirement of an
increased shareholder vote is designed to prevent a shareholder with a simple
majority of the voting power of the
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Voting Stock from avoiding the requirements of the proposed Amendments by
simply repealing them. It will also have the effect of giving the holders of
one third (1/3) or more of the Company's outstanding shares a veto power over
any changes in the proposed Amendments, even if these changes are favored by a
majority of shareholders or the Board. In this regard, it should be noted
that in the three most recent years the following percentages of the
outstanding shares were represented at the annual meetings of shareholders
1993, 74%, 1994, 84%, 1995, 88%.
Vote Required for Adoption of the Amendments
Under New York law, the affirmative vote of the holders of a majority of
the Common Stock of the Corporation entitled to vote at the annual meeting of
shareholders is required to adopt the proposed Amendments to the Bylaws or the
Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE ABOVE
PROPOSED AMENDMENTS.
PROPOSAL 12. SHAREHOLDER PROPOSAL
THE FOLLOWING PROPOSAL FROM SHAREHOLDER DAVID SILVER IS INCLUDED IN ITS
ENTIRETY AS PRESENTED BY MR. SILVER. THE BOARD OF DIRECTORS HAS MADE NO
DETERMINATION REGARDING ITS LEGALITY OR WHETHER IT IS APPROPRIATE UNDER LAW OR
THE COMPANY'S BYLAWS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
DAVID SILVERS PROPOSAL TO BE INCLUDED IN THE COMPANY'S PROXY STATEMENT.
That the following resolution with regard to rescindment and replacement
of Bylaw Article XII - INDEMNIFICATION AND INSURANCE be presented for approval
at the 1996 Annual Meeting of Shareholders of Microwave Filter Company, Inc.
(the "Company") as follows:
"RESOLVED, that Article XII - Indemnification and Insurance, approved,
effective May 1, 1995, by the Board of Directors of the Company, be deleted in
its entirety and that said Bylaw shall, from the date of its approval
thenceforth, be deemed null and void and without effect; and it is further"
"RESOLVED, that any and all obligations by the Company to claimants for
reimbursement of legal expenses pursuant provisions of Article XII, as
originally approved by the Board of Directors of the Company on May 11, 1994
and rescinded thereafter, and subsequently approved by the Board of Directors,
effective May 1, 1995, are null and void and without effect, and that the
Company shall seek to recover payments made to claimants for reimbursement of
legal expenses pursuant to the provisions of said Article XII; and it is
further"
"RESOLVED, that a new Article XII - Indemnification and Insurance, be
approved effective as of the 1996 Annual Meeting of Shareholders of the
Company as follows:"
"ARTICLE XII - INDEMNIFICATION AND INSURANCE"
"1. INDEMNIFICATION
(a) Indemnification of directors and officers shall be in accordance with
the provisions of NY BCL 722(a) through (d) inclusive and as amended.
(b) Nonexclusivity of indemnification of Directors and Officers Shall be
in accordance with NY BCL 721 as amended."
"2. INSURANCE
(a) Insurance for indemnification of Directors and Officers shall be in
accordance with NY BCL 726(a) through (e) inclusive and as amended."
"3. PAYMENT OF EXPENSES
(a) Payment of indemnification other than by Court award shall be in
accordance with the provisions of NY BCL 723(a) through (c) inclusive and as
amended.
(b) Payment of indemnification of Directors and Officers by a Court shall
be in accordance with the provisions of NY BCL 724(a) through (c) inclusive
and as amended.
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(c) Other provisions affecting indemnification of Directors and Officers,
and payment of indemnification thereto, shall be in accordance with the
provisions of NY BCL 725(a) through (f) inclusive and as amended".
"4. AMENDMENT
This Bylaw shall not be amended or rescinded without the approval of the
holders of not less than a majority of the Corporation's outstanding stock
entitled to vote thereon. This Bylaw will be operative upon acceptance, at
the Annual Meeting in which it is presented for approval."
Proponent's statement in support of the proposal to change the Bylaws
governing Indemnification and Insurance.
Proponent's identification: My name is David Silver and I am the
beneficial owner of approximately 2.4% of the outstanding shares of Microwave
Filter Company, Inc. stock. I am the former Chief Operating Officer and a
seller of Chesterfield Products, Inc., the New Jersey filter company acquired
by the Company in January, 1992. I have over 18 years of diversified
experience in the filter industry.
I propose that stockholders approve the resolutions and rescind and
replace the Bylaw Article IX - Indemnification and Insurance because:
(1) The statutory requirements of New York Business Corporation Law (NY BCL)
provide a more than adequate foundation for guiding the Company with regard
to indemnification and insurance issues. NY BCL provides the framework for
applying the principles of indemnification and insurance requirements.
(2) NY BCL allows the Company to indemnify Directors and Officers. The current
Article XII compels the Company to do so.
(3) NY BCL places the burden on
claimant Directors and Officers to prove entitlement to reimbursement. The
current Article XII places the burden of proof on the Company.
(4) NY BCL offers the Company some protection against a naked assault on the
Company assets by a dubious claim for reimbursement. The current
Article XII may expose the Company to significant liability.
(5) NY BCL does not discriminate against any person, Officer or
Director by name. The current Article XII specifically discriminates against
Glyn and Emily Bostick, the founders and for approximately 25 years Directors
and Officers of the Company. The current Article XII even denies
indemnification to Communications & Energy ("C&E"), which happens to be owned
by the Bosticks', even though C&E never had any association or affiliation
with the Company. The question is not whether the Company can't or shouldn't
seek a remedy if the Bostick's sought indemnification, but rather whether the
Company should corrupt its Bylaws with special personal exclusions.
In my opinion, the current Article XII is an entitlement program for
Directors and Officers. In an age when entitlements in general are under
attack, offering Directors and Officers a carte blanche entitlement to
reimbursement regardless of the merit of the claim is self serving. With
regard to the issue of discrimination against the Bosticks' within the body of
the current Bylaw resolution, imagine what it would mean to you if the
American Bill of Rights excluded certain classes of people from investing in
the stock market based on race, ethnicity or religion!
In my opinion, the current Article XII provides reckless Directors and/or
Officers, who may be under legal attack for actions that may have merit, and
that may not necessarily be in the best interests of the Company, or of its
shareholders, with unrestrained opportunities to attack the assets of the
Company through their entitlement to instant reimbursement.
And, in my opinion, NY BCL provides the framework for applying the
principles of indemnification and insurance regulations. The current Article
XII just overlays applicable law with provisions for privilege and self
service.
This proposal reflects the concern of several outside shareholders, some
of whom, like myself, are beneficial owners of the Company's stock, and
representing approximately five (5%) percent of the Company's outstanding
stock. If you agree that we need to purify the Company's Bylaw Article XII,
then vote for this proposal. This proposal will become operative at the 1996
Annual Meeting.
Other Matters
The Company knows of no other matters to be submitted at the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: February 20, 1996
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EXHIBIT A
PROPOSED AMENDMENTS TO THE BYLAWS TO
ESTABLISH A CLASSIFIED BOARD OF DIRECTORS
AND MAKE CERTAIN RELATED AMENDMENTS
PROPOSAL 6
Section 3 of Article II of the Bylaws is amended to provide as follows:
3. Special Meetings
Special meetings of the shareholders may be called by the Chairman of the
Board of Directors or by the President, and shall be called by the Chairman of
the Board or by the Secretary at the request in writing of a majority of the
Board of Directors or two thirds (2/3) of the holders of the outstanding
shares entitled to vote in the election of Directors. Such meetings shall be
held at such time as may be fixed in the call and stated in the notice of
meetings. Any such written request shall state the purpose or purposes of the
proposed meeting.
PROPOSAL 3
Section 2 of Article IV of the Bylaws is amended to provide as follows:
2. Number of Directors
The number of directors shall be fixed at nine or less.
PROPOSAL 2
Section 3 of Article IV of the Bylaws is amended to provide as follows:
3. Election and Term of Directors
Directors shall be elected at each annual meeting of the shareholders,
or, if no such election shall be held, at a meeting called and held in
accordance with the statutes of the State of New York. Each Director shall be
elected to hold office until the expiration of the term for which he is
elected, and thereafter until a successor shall be elected and shall qualify.
The directors shall be divided, with respect to the terms for which they
severally hold office, into three classes, hereby designated as Class I, Class
II and Class III. Each class shall have three directors and the three classes
shall be as nearly equal in number as possible. The initial terms of office
of the Class I, Class II and Class III directors, elected at the 1996 annual
meeting of shareholders, shall expire at the next succeeding annual meeting of
shareholders, the second succeeding annual meeting of shareholders and the
third succeeding annual meeting of shareholders, respectively. At each annual
meeting of shareholders after 1996 the successors of the class of directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of shareholders to be held in the third year
following the year of their election.
PROPOSAL 4
Section 5 of Article IV of the Bylaws is amended to provide as follows:
5. Removal of Directors
Any of the directors may be removed from office, for cause only, by
action of the Board of Directors or by vote of the shareholders holding two-
thirds (2/3) of the outstanding shares entitled to vote in the election of
Directors.
PROPOSAL 5
Section 4 of Article IV of the Bylaws is amended to provide as follows:
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4. VACANCIES
Vacancies occurring in the board of Directors for any reason may be
filled by vote of a majority of the directors then in office, although less
than a quorum exists or a vote of the holders of two-thirds (2/3) of the
outstanding shares entitled to vote in the election of Directors. A Director
elected to fill a vacancy shall be elected to hold office until the next
annual meeting of the shareholders and thereafter until a successor shall be
elected and shall qualify.
CONFORMING AMENDMENT
The foregoing Amendments also require a conforming Amendment to Article
XIII of the Bylaws which shall read as follows:
(a) Except as otherwise provided by these Bylaws or the Certificate of
Incorporation, the Bylaws of the Corporation may be amended, repealed or
adopted by vote of the holders of record of the shares at the time entitled to
vote in the election of any Directors; provided that Section 3 of Article III,
Sections 2, 3, 4, and 5 of Article IV and Section (a) of Article XIII of the
Bylaws shall not be altered, amended or repealed and no provision inconsistent
therewith shall be adopted without the affirmative vote of the holders of a
least two-thirds (2/3) of the outstanding shares entitled to vote in the
election of Directors. Except as otherwise provided above, Bylaws may also be
amended, repealed, or adopted by the Board of Directors, but any Bylaw adopted
by the Board may be amended or repealed by the shareholders entitled to vote
thereon as herein above provided.
(b) If any Bylaw regulating an impending election of Directors is
adopted, amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
Directors the Bylaws so adopted, amended or repealed, together with a concise
statement of the change made.
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EXHIBIT B
PROPOSED CONFORMING AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
IN CONNECTION WITH
CLASSIFICATION OF THE BOARD OF DIRECTORS
PROPOSAL 7
The following is adopted as a new Section 6 of the Certificate of
Incorporation:
6. Notice of Shareholder Business and Nominations
A. Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the shareholders
may be made at an annual meeting of the shareholders (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any shareholder of the Corporation who was a shareholder
of record at the time of giving of notice provided for in this section of the
Certificate of Incorporation , who is entitled to vote at the meeting and who
complies with the notice procedures set forth in the Certificate of
Incorporation.
B. For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (iii) of paragraph A of
this section, the shareholder must have given timely notice thereof in writing
to the Secretary of the Corporation and such other business must otherwise be
a proper matter for shareholder action. To be timely, a shareholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 60th day nor earlier
than the close of business on the 90th day prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the event that
the date of the annual meeting is more than 30 days before or more than 60
days after such anniversary date, notice by the shareholder to be timely must
be delivered not earlier than the close of business on the 90th day prior to
such annual meeting and not later than the close of business on the later of
(i) the 60th day prior to such annual meeting or (ii) the 10th day following
the day on which public announcement of the date of such meeting is first made
by the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of
a shareholder's notice as described above. Such shareholder's notice shall
set forth (x) as to each person whom the shareholder proposes to nominate for
election or re-election as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14a-11 thereunder (including such
person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); (y) as to any other business that
the shareholder proposes to bring before the meeting, a brief description of
the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (z) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made
(A) the name and address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner and (B) the class and number
of shares of the Corporation which are owned beneficially and of record by
such shareholder and such beneficial owner.
C. Notwithstanding anything in the second sentence of paragraph B of
this section to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is
no public announcement of the Corporation naming all of the nominees for
Director or specifying the size of the increased Board of Directors at least
70 days prior to the first anniversary of the preceding year's annual meeting,
a shareholder's notice required by this section of the Certificate of
Incorporation shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive office of the
Corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the Corporation.
D. Only such business shall be conducted at a special meeting of
shareholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of shareholders at which
directors are to be elected pursuant to the Corporation's notice of meeting
(a) by or at the direction of the Board of Directors or (b) provided that the
Board of Directors has determined that directors shall be elected at such
meeting, by any shareholder of the Corporation who is a shareholder of record
at the time of giving of notice provided for in this Bylaw, who shall be
entitled to vote at the meeting and who complies with the notice procedures
set forth in the Bylaw. In the event the Corporation calls a special meeting
of shareholders for the purpose of electing one or more directors to the Board
of Directors, any such shareholder may nominate a person or persons (as the
case may be), for election to such positions(s) as specified in the
Corporation's notice of meeting, if the shareholder's notice required by
paragraph B of this section shall be delivered to the Secretary at the
principal executive office of the Corporation not earlier than the close of
business on the 90th day prior to such special meeting and not later than the
close of business on the later of (i) the 60th day prior to such special
meeting or (ii) the 10th day following the day on which public announcement is
first made of the date of the special meeting and of
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the nominees proposed by the Board of Directors to be elected at such meeting.
In no event, shall the public announcement of an adjournment of a special
meeting commence a new time period for the giving of shareholders notice.
E. Only such persons who are nominated in accordance with procedures set
forth in this section shall be eligible to serve as directors and only such
business shall be conducted at a meeting of shareholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
section. Except as otherwise provided by law, the Chairman of the meeting
shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made or proposed, as
the case may be, in accordance with the procedures set forth in the
Certificate of Incorporation and, if any proposed nomination or business is
not in compliance with this section to declare that such defective proposal or
nomination shall be disregarded.
F. For purposes of the Certificate of Incorporation "public
announcement" shall mean disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable national news service or in
a document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 15 or 15(d) of the Exchange Act.
G. Notwithstanding the foregoing provisions of this section a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this section. Nothing in this section shall be deemed to affect any
rights (a) of shareholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to the Rule 14a-8 under the Exchange
Act or (b) of the holders of any series of Preferred Stock to elect directors
under specified circumstances.
PROPOSAL 8
The following is adopted as a new section 7 of the Certificate of
Incorporation:
7. INDEMNIFICATION AND INSURANCE
A. The corporation shall indemnify to the fullest extent now or
hereafter provided for or permitted by law each person involved in, or made or
threatened to be made a party to, any action, suit, claim or proceeding,
arbitration, alternative dispute resolution mechanism, investigation,
administrative or legislative hearing or any other actual, threatened, pending
or completed proceeding, whether civil or criminal, or whether formal or
informal, and including an action by or in the right of the corporation or any
other corporation, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, whether profit or non-profit (any such entity, other
than the corporation being hereinafter referred to as an "Enterprise), and
including appeals therein (any such process being hereinafter referred to as a
"Proceeding"), by reason of the fact that such person, such person's testator
or intestate (i) is or was a Director or Officer of the corporation, or (ii)
while serving as a Director or Officer of the corporation, is or was serving,
at the request of the corporation, as a Director, Officer, or in any other
capacity, any other Enterprise, against any and all judgments, fines,
penalties, amounts paid in settlement, and expenses, including attorneys'
fees, actually and reasonably incurred as a result of or in connection with
any Proceeding, or any appeal therein, except as provided in paragraph B
below.
B. No indemnification shall be made to or on behalf of any such person
if a judgment or other final adjudication adverse to such person establishes
that such person's acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to cause of action so
adjudicated, or that such person personally gained in fact a financial profit
or other advantage to which such person was not legally entitled. In
addition, no indemnification shall be made with respect to any Proceeding
initiated by any such person against the corporation, or a Director or Officer
of the corporation, other than to enforce the terms of this section, unless
such Proceeding was authorized by the Board of Directors. Further, no
indemnification shall be made with respect to any settlement or compromise of
any Proceeding unless and until the corporation has consented to such
settlement or compromise.
C. Written notice of any Proceeding for which indemnification may be
sought by any person shall be given to the corporation as soon as practicable.
The corporation shall then be permitted to participate in the defense of any
such Proceeding or, unless conflicts of interest or position exist between
such person and the corporation in the conduct of such defense, to assume such
defense. In the event that the corporation assumes the defense of any such
proceeding, legal counsel selected by the corporation shall be acceptable to
such person. After such an assumption, the corporation shall not be liable to
such person for any legal or other expenses subsequently incurred unless such
expenses have been expressly authorized by the corporation. In the event that
the corporation participates in the defense of any such Proceeding, such
person may select counsel to represent such person in regard to such a
Proceeding; however, such person shall cooperate in good faith with any
request that common counsel be utilized by the parties to any Proceeding who
are similarly situated, unless to do so would be inappropriate due to actual
or potential differing interests between or among such parties.
D. In making any determination regarding any person's entitlement to
indemnification hereunder, it shall be presumed that such person is entitled
to indemnification, and the corporation shall have the burden of proving the
contrary.
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E. The corporation shall indemnify any employee and agent to the extent
such person shall be entitled to indemnification by law by reason of being
successful on the merits or otherwise in defense of any action to which such
person is named a party by reason of being an employee or other agent of the
corporation, and the corporation may further indemnify any such person if it
is determined on a case by case basis by the Board of Directors that
indemnification is proper in the specific case.
F. Notwithstanding anything to the contrary in these Bylaws, no person
shall be indemnified to the extent, if any, it is determined by the Board of
Directors or by written opinion of legal counsel designated by the Board of
Directors for such purpose that indemnification is contrary to applicable law.
G. The corporation may, as the Board of Directors may direct, purchase
and maintain such insurance on behalf of any person who is or at anytime has
been a Director, Officer, employee or other agent of in a similar capacity
with the corporation, or who is or at any time has been, at the direction or
request of the corporation, a Director, trustee, Officer, president, manager,
advisor, or other agent of Enterprise against any liability asserted against
and incurred by such person.
H. Except in the case of a Proceeding against a Director or Officer
specifically approved by the Board of Directors, the corporation shall,
subject to Paragraphs A through G above, pay all expenses incurred by or on
behalf of a Director or Officer in defending any Proceeding in advance of the
final disposition of such Proceeding. Such payments shall be made promptly
upon receipt by the corporation, from time to time of a written demand of such
person for such advancement, together with an undertaking by or on behalf of
such person to repay any expenses so advanced to the extent that the person
receiving the advancement is ultimately found not to be entitled to
indemnification for part or all of such expenses.
I. The rights to indemnification and advancement of expenses granted by
or pursuant to this section 7 of the Certificate of Incorporation: (a) shall
not limit or exclude, but shall be in addition to, any other rights which may
be granted by or pursuant to any statute, corporate charter, by-law,
resolution of shareholders or directors or agreement; (b) shall be deemed to
constitute contractual obligations of the corporation only to any Director or
Officer who is serving in a capacity referred to in Paragraph A at any time
after the Effective Date of this Article XII of the Bylaws which shall be May
1, 1995 and upon compliance with Section 725 of the NY Business Corporation
Law; (c) shall continue to exist after the repeal or modification of Article
XII of the Bylaws or this section 7 of the Certificate of Incorporation with
respect to events occurring after the Effective Date; and (d) shall continue
as to a person who has ceased to be a Director or Officer after the Effective
Date and shall inure to the benefit of the estate, spouse, heirs, executors,
administrators or assigns of such person. It is the intent of this section 7
of the Certificate of Incorporation to require the corporation to indemnify
the persons referred to herein for aforementioned judgments, fines, penalties,
amounts paid in settlement, and expenses, including attorneys' fees, in each
and every circumstance in which such indemnification could lawfully be
permitted by express provision of bylaws, and the indemnification required by
this section shall not be limited by the absence of any express recital of
such circumstance.
PROPOSAL 9
The following is adopted as a new section 8 of the Certificate of
Incorporation:
8. DIRECTORS' LIABILITY
To the fullest extent now or hereafter provided for or permitted by law,
Directors shall not be liable to the corporation or its shareholders for
damages for any breach of duty in their capacity as Directors, provided that
such Director is not acting with bad faith, intentional misconduct, a knowing
violation of law, or personal gain.
PROPOSAL 10
The following is adopted as a new section 9 of the Certificate of
Incorporation:
9. SHAREHOLDER VOTE REQUIRED TO ALTER, AMEND OR REPEAL
Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least two thirds
(2/3) of the outstanding shares entitled to vote in the election of Directors
shall be required to alter, amend or repeal this Certificate of Incorporation
or Section 3 of Article II, and Sections 2, 3, 4 and 5 of Article IV.
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PROXY
This proxy Is Solicited by The Board of Directors of Microwave Filter Company,
Inc.
Proxy for 1996 Annual Meeting of Shareholders
The undersigned hereby appoints Louis Misenti and Carl Fahrenkrug proxies of
the undersigned, with full power of substitution, to vote shares of common
stock of the Company which the undersigned is entitled to vote at the 1996
Annual Meeting of the Shareholders to be held on Monday, March 11, 1996 at
10:00 a.m. and any adjournments thereof as follows:
(1) ELECTION OF DIRECTORS
Instructions: To vote for all nominees, place an X in box number 1.
To withhold authority to vote for any individual
nominee, place an X in box number 2, and draw a line
through his/her name in the list below.
1. __ For All Nominees
2. __ For All Nominees Except Those With A Line Through
Their Name
CLASS I CLASS II CLASS III
Trudi B. Artini Robert Andrews Carl F. Fahrenkrug, PE
Milo Peterson Sidney Chong Daniel Galbally
David Robinson, MD Louis Misenti Frank S. Markovich
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSAL (1), (2), (3), (4), (5), (6), (7), (8), (9), (10),
AND (11), AND AGAINST PROPOSAL (12).
NOTE: Please date and sign exactly as name or names appear on the reverse
side and return in the enclosed postage paid envelope.
(2) Proposal to ratify the Amendment to the Bylaws to provide for the
classification of the Board of Directors into three classes.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(3) Proposal to ratify the Amendment to the Bylaws to provide that the size
of the Board of Directors shall be nine or less.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(4) Proposal to ratify the Amendment to the Bylaws that Directors may be
removed only for cause by a majority vote of the Board then in office or by a
two-thirds (2/3) vote of the shareholders.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(5) Proposal to ratify the Amendment to the Bylaws that any vacancy on the
Board shall be filled by the remaining Directors then in office, whether or
not there is a quorum, only until the next annual meeting and thereafter until
a successor shall be elected and shall qualify.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(6) Proposal to ratify the Amendment to the Bylaws to provide that a special
meeting of the shareholders may be called by the Chairman of the Board or the
President and shall be called by the Chairman of the Board or the Corporate
Secretary upon written request from a majority of the Board of Directors or
two thirds (2/3) of the outstanding shares entitled to vote in the election of
Directors.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
<PAGE>
(7) Proposal to ratify the Amendment to the Certificate of Incorporation to
provide that advance notice of shareholder nominations for the election of
Directors and of shareholder proposals for action at annual and special
shareholder meetings shall be given and certain information shall be provided
with respect to shareholder nominees and shareholder proposals. This proposed
Amendment to the Certificate of Incorporation currently exists as Article III
"Notice of Shareholder Business and Nominations" of the Bylaws.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(8) Proposal to ratify the Amendment to the Certificate of Incorporation
regarding the indemnification and insurance for Directors and Officers which
currently exists as a Bylaw of the Company entitled Article XII -
"Indemnification and Insurance".
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(9) Proposal to ratify the Amendment to the Certificate of Incorporation to
provide that Directors' liability to the Company or its shareholders shall be
limited to the fullest extent permitted by law.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(10) Proposal to ratify the Amendment to the Certificate of Incorporation to
provide that the shareholder vote required to alter, amend or repeal the
foregoing Amendments is increased from a majority vote of the shareholders to
two thirds (2/3) of the outstanding shares entitled to vote in the election of
Directors.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(11) ProposaL to ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the fiscal year ending September 30, 1996.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(12) Proposal to ratify the proposed shareholder resolution by Mr. David
Silver, with regard to the rescindment and replacement of Bylaw Article XII
"Indemnification and Insurance".
The Board of Directors recommends a vote AGAINST this proposal.
FOR __ AGAINST __ ABSTAIN __
In their discretion, the proxies are authorized to vote upon other matters
properly coming before the meeting or any adjournments thereof.
This proxy will be voted as directed by the undersigned. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL (1), (2), (3), (4), (5), (6),
(7), (8), (9), (10), AND (11), AND AGAINST PROPOSAL (12).
NOTE: Please date and sign exactly as your name or names appear below and
return in the enclosed postage paid envelope.
When signing as an Attorney, Executor, Trustee, Guardian or Officer of a
Corporation, please give title as such.
____________________________
Signature
____________________________
Signature if held jointly
IMPORTANT: To assist the Company in planning the Annual Meeting please check
the following: I plan to attend the Annual Meeting _____ I do not plan
to attend the Annual Meeting_____
