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 Thursday, April 10, 1997 at the Holiday Inn, Carrier Circle, East
Syracuse, New York 13057 for the purpose of voting on the following matters:
Proposal 1. The election of 3 directors to hold office until
the Annual Meeting of the Shareholders at which their term expires or until
their successors have been duly elected.
Proposal 2. The ratification of Coopers & Lybrand L.L.P. as
the Company's independent auditors for the fiscal year ending September 30,
1997.
Proposal 3. 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 18, 1997 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: March 14, 1997
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 Thursday, April
10, 1997 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
Holiday Inn, 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 March 14, 1997 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 18, 1997 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date
3,552,833 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. Directors are elected by a plurality of the votes
cast at the meeting. Abstentions count for the purpose of determining a
quorum. Broker non-votes do not count for the purpose of determining a
quorum. Abstentions and broker non-votes will count as a vote against
proposal 3. Abstentions will not count as a vote for proposals 1 and 2.
Broker non-votes will count as a vote for proposals 1 and 2.
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 $8,000 (which includes 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 1998 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than November 3, 1997 in order to be included in the proxy soliciting material
relating to that meeting.
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Board Meetings and Committees
The Board of Directors held a total of six meetings during the fiscal
year ending September 30, 1996. 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 two meetings during fiscal year 1996.
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 three
meeting during fiscal year 1996.
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 1996.
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 1996, 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. On July 31, 1996, Board of Director meeting fees and
Executive Committee meeting fees were increased to $300 per meeting and all
other committee meeting fees were increased to $200 per meeting. The Company
also reimburses Directors for reasonable expenses incurred in attending
meetings. The Company also pays Louis S. Misenti $20,000 per year for his
services as Chairman of the Board of Directors. In addition, The Company paid
Louis S. Misenti $3,333 during fiscal 1996 for consulting services. Outside
Directors have the option of receiving their compensation for meetings and
services 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 1996,
14,621 shares were issued to Directors in lieu of Directors' fees:
Number of Shares
Director Issued In Lieu of Directors' Fees
Trudi B. Artini 1,843
Sidney Chong 2,190
Daniel Galbally 897
Frank S. Markovich 1,430
Louis S. Misenti 8,261
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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 18, 1997 (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 * 368,316 10.4%
and Rita Fahrenkrug
8365 Indian Hill Road
Manlius, NY 13104
Louis S. Misenti * 364,511 10.3%
140 Clearview Road
Dewitt, NY 13214
Milo Peterson * 168,570 4.7%
Trudi B. Artini * 108,203 3.0%
David B. Robinson, M.D.* 116,332 3.3%
Frank S. Markovich * 3,998 **
Daniel Galbally * 1,489 **
Sidney Chong * 5,355 **
Robert R. Andrews * 1,214 **
All Directors and Executive
Officers as a group (ten persons) 1,168,896 32.9%
*Directors of the Company.
**Denotes less than one percent of class.
Frederick A. Dix 244,007 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, 1996.
Annual Compensation
Salary Bonus
Name and Principal Position Year $ $
Carl F. Fahrenkrug
President and CEO (1) 1996 104,229 10,000
1995 91,775 -
1994 95,522 -
(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 by it, the Company believes
that during the fiscal year ended September 30, 1996, all such filing
requirements were complied with in a timely fashion.
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PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
Three Directors (Class I) are to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the three 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.
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 in MFC and
Age 74 various other business enterprises in Syracuse, New
Director since 1974 York.
DAVID B. ROBINSON, MD Dr. Robinson is Emeritus Professor of Psychiatry at
Age 72 the Health Science Center, State University of New
Director since 1977 York at Syracuse. He was a faculty member from 1958
until his retirement in 1985 and served as Acting
Chairman of the Dept. of Psychiatry for six of those
years. Since 1989, he has served as a Skaneateles
Town Councilman and in 1980 was a founding Board
Member of the Skaneateles Festival of Chamber Music.
MILO PETERSON Mr. Peterson has served as Executive Vice President
Age 56 and Corporate Secretary of NSI since January 1, 1992.
Director since 1990 Since January 1, 1992, he has also served as
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.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS (PROPOSAL 2)
On the recommendation of the Audit and Finance Committee, the Board of
Directors has appointed Coopers & Lybrand L.L.P., independent certified public
accountants, to audit the Company's financial statements for the fiscal year
ending September 30, 1997 and recommends that shareholders vote for
ratification of such appointment.
Coopers & Lybrand has audited the Company's financial statements since the
fiscal year ended September 30, 1992. A representative is expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so and are expected to be available to respond to
appropriate questions.
The Board of Directors unanimously recommends a vote "FOR" the ratification of
the appointment of Coopers & Lybrand L.L.P. as independent auditors.
SHAREHOLDER PROPOSAL (PROPOSAL 3)
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.
That the following resolution with regard to rescindment and replacement of
By-law Article XII - INDEMNIFICATION AND INSURANCE be presented for approval at
the 1997 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 By-law 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 to provisions of Article XII, as
originally approved by the Board of Dirctors 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"
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"RESOLVED, that the newly adopted Section 7 addition to the Certificate of
Incorporation relating to Indemnification of Directors and Officers (Proposal 8)
approved by the shareholders at the 1996 Annual Meeting, be deemed null and void
and without effect, and it is further"
"RESOLVED, that a new Article XII - Indemnification and Insurance, be approved
effective as of the 1997 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.
(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 By-law 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 By-law 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 By-laws
governing Indemnification and Insurance.
Proponent's identification: My name is David Silver and I am the beneficial
owner of approximately 2% 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 By-law Article XII - 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.
(2) NY BCL allows the Company to indemnify directors and officers. Section 7
of the Certificate of Incorporation compels the Company to do so.
(3) NY BCL places the burden on claimant directors and officers to prove
entitlement to reimbursement. The current current Section 7 of the Certificate
of Incorporation 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 Section 7
of the Certificate of Incorporation may expose the Company to significant
liability.
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In my opinion, the current Section 7 of the Certificate of
Incorporation is an entitlement program for directors and officers. In an age
when entitlements in general are under attack, the 1996 Proposal 8
establishing Section 7 of the Certificate of Incorporation - Indemnification,
guarranteeing directors and officers a carte blanche entitlement to
reimbursement for their legal expenses, regardless of the merit of the claim,
was self serving.
In my opinion, the current Section 7 of the Certificate of Incorporation
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 raid the assets of the Company through their entitlement to
instant reimbursement for their legal expenses pursuant to Section 7 of the
Certificate of Incorporation.
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 expunge the Certificate of Incorporation
of the Company of an indemnification clause that appears self serving, and
seek to restore indemnification to the status of a By-law in the form of the
proposed Article XII, then:
(1) VOTE FOR THIS PROPOSAL USING THE SPACE PROVIDED ON THE COMPANY'S BALLOT.
THE PROPOSAL WILL BECOME OPERATIVE AT THE 1997 ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
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: March 14, 1997
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PROXY
This proxy Is Solicited by The Board of Directors of Microwave Filter Company,
Inc.
Proxy for 1997 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 1997
Annual Meeting of the Shareholders to be held on Thursday, April 10, 1997 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
Trudi B. Artini Milo Peterson David Robinson, MD
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSAL (1) and (2), AND AGAINST PROPOSAL (3).
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 appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the fiscal year ending September 30, 1997.
The Board of Directors recommends a vote FOR this proposal.
FOR __ AGAINST __ ABSTAIN __
(3) 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) and (2), AND AGAINST PROPOSAL
(3).
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 _____
