<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
MERIDIAN NATIONAL CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------
To Our Stockholders:
The 1996 Annual Meeting of Stockholders of Meridian National Corporation
(the "Company") will be held at the corporate offices of the Company located at
805 Chicago Street, Toledo, Ohio, 43611, on August 2, 1996, at 10:00 a.m. (local
time), to consider and act on the following matters:
1. To elect four directors of the Company.
2. An amendment to the Company's 1990 Non-Qualified and Incentive Stock
Option Plan.
3. To approve the appointment of Ernst & Young LLP as the independent
accountants for the Company for the Company's 1997 fiscal year.
4. To conduct such other business as may properly be brought before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 13, 1996 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the 1996 Annual Meeting.
<PAGE> 3
YOU ARE INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND, WE RESPECTFULLY REQUEST THAT YOU DATE, EXECUTE AND PROMPTLY MAIL THE
ENCLOSED PROXY TO ASSURE REPRESENTATION OF YOUR SHARES. AN ADDRESSED RETURN
ENVELOPE IS ENCLOSED FOR THIS PURPOSE. YOUR PROXY MAY BE REVOKED BY NOTICE IN
WRITING TO THE SECRETARY OF THE COMPANY OR THE SECRETARY OF THE MEETING AT ANY
TIME PRIOR TO ITS USE.
By Order of the Board of Directors,
/s/ James L. Rosino
James L. Rosino
Secretary
Toledo, Ohio
June 28, 1996
<PAGE> 4
[LOGO]
------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
------
This Proxy Statement is furnished to the stockholders of Meridian
National Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held on August 2, 1996, or at any adjournment or adjournments
thereof, in connection with (i) the election of four directors of the Company;
(ii) an amendment to the Company's 1990 Non-Qualified and Incentive Stock Option
Plan (the "Stock Option Plan"); and (iii) to approve the appointment of Ernst &
Young LLP as the independent accountants for the Company for its 1997 fiscal
year.
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company and may be revoked at any time prior to the voting of the proxy by
notice in writing to the Secretary of the Company or the secretary of the
meeting. Properly executed proxies will be voted as specified thereon, and in
the absence of such specification will be voted for the four nominees for
director and for approval of the other proposals set forth in this Proxy
Statement. As to any other matter properly brought before the Annual Meeting and
submitted to a vote of stockholders, proxies will be voted in accordance with
the judgment of the proxy holders named thereon. The approximate date on which
this Proxy Statement and the enclosed Proxy are first being sent to stockholders
is June 28, 1996.
The total outstanding voting stock of the Company, as of June 13, 1996,
consisted of 3,355,145 shares of Common Stock, par value $.01 per share (the
"Common Stock"), and 206,752 shares of Series B Convertible Voting Preferred
Stock, par value $.001 per share (the "Series B Preferred Stock"). Each share of
Common Stock is entitled to one vote and each share of Series B Preferred Stock
is currently entitled to one-tenth of one vote. Stockholders of record of the
Common Stock and Series B Preferred Stock at the close of business on June 13,
1996, are entitled to notice of, and to vote at, the Annual Meeting of
Stockholders. A majority of the outstanding shares will constitute a quorum at
the meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction
<PAGE> 5
of business. Abstentions are counted in tabulations of the votes cast on
proposals presented to stockholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
THE COMPANY, UPON WRITTEN REQUEST, WILL PROVIDE WITHOUT
CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K. THE
REQUEST SHOULD BE DIRECTED TO THE SECRETARY OF THE COMPANY AT
805 CHICAGO STREET, TOLEDO, OHIO 43611.
2
<PAGE> 6
ELECTION OF DIRECTORS
A Board of four directors will be elected, each to serve until the next
Annual Meeting of Stockholders and until his successor is elected and qualified.
The nominees have been designated by the Board of Directors. If any nominee
becomes unavailable for election, an event that is not presently anticipated,
discretionary authority may be exercised by the persons named in the proxy to
vote for any substitute nominee proposed by the Board of Directors.
Brief statements setting forth the age, the principal occupation and
employment during the past five years and other information concerning each
nominee appear below.
<TABLE>
<CAPTION>
Name, Age and Positions with the
Company Other than Director Occupation and Other Information
- -------------------------------- --------------------------------
<S> <C>
William D. Feniger, 49 William D. Feniger has served as Chairman of the Board of
Chairman of the Board of Directors, Directors and Chief Executive Officer of the Company since
President and Chief Executive Officer August 1985. Mr. Feniger has been President since March
1991.
Wayne Gardenswartz, 49 Wayne Gardenswartz has served as a director of the Company
since August 1985. Mr. Gardenswartz is a certified public
accountant and has been a partner in the accounting firm of
Gardenswartz & Suber, P.C., Denver, Colorado, for more than
the past five years.
Jeffrey A. Slade, 55 Jeffrey A. Slade has served as a director of the Company
since February 1995. For more than the past five years, Mr.
Slade has been President of Slade Investment Management, an
investment advisory firm.
Larry Berman, 56 Larry Berman is a majority owner of MNP Corporation of
Utica, Michigan and has served as Chairman of the Board and
President for more than the past five years. MNP Corporation
is a diversified metals fastener manufacturing firm. Mr.
Berman was appointed to the Board of Directors of Meridian
National Corporation in June 1996.
</TABLE>
3
<PAGE> 7
CERTAIN INFORMATION RELATING TO
THE BOARD OF DIRECTORS
INFORMATION REGARDING BOARD OF DIRECTORS
The Board of Directors held seven meetings during fiscal 1996 and took
action by written consent on ten occasions. All of the Board members were
present at each of the meetings. The Company has no audit or nominating
committees. The Company has a Compensation Committee (the "Compensation
Committee") which administers the Company's Stock Option Plan and the Amended
and Restated 1987 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan") and also determines the salaries and bonuses of the officers of the
Company and of the presidents of the Company's subsidiaries. Messrs.
Gardenswartz, Slade and Patrick R. Hylant (prior to his resignation from the
Board of Directors of the Company in February, 1996) are the members of the
Compensation Committee. The Compensation Committee met four times during fiscal
1996. All of the members were present at each of the meetings.
DIRECTORS FEES
Each director who is not an employee of the Company is entitled to
receive a fee of $2,000 ($1,000 for telephonic meetings) plus travel expenses
for each directors' meeting attended. Directors receive a fee of $1,000 for
attending committee meetings which are held separately from directors' meetings.
STOCK OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
SECURITY OWNERSHIP OF MANAGEMENT
The following tables set forth information, as of May 31, 1996,
regarding the beneficial ownership of each director of the Company, each named
executive officer and all current directors and executive officers of the
Company as a group, of the Company's Common Stock. None of such persons
beneficially owns any of the Company's Series B Preferred Stock. Additionally,
there are 4,000 shares of non-voting $100 Series A Preferred Stock ("Series A
Stock"), $.001 par value, of the Company outstanding as of May 31, 1996, of
which William D. Feniger owns 1,334 shares.
4
<PAGE> 8
<TABLE>
<CAPTION>
Officers and Directors
- ----------------------
Number of Shares
Name of Beneficial Owner Beneficially Owned(1) Percentage Ownership
- ------------------------ --------------------- --------------------
<S> <C> <C>
William D. Feniger 775,252(2)(3)(4) 22.7%
Wayne Gardenswartz 25,365(5)(6) *
Jeffrey A. Slade 10,000(5) *
Larry Berman 137,286(7) 4.1%
All directors and executive officers as 965,842(8) 27.9%
a group (6 persons)
- -----------------
<FN>
*Less than 1% of the outstanding Common Stock of the Company.
(1) Except as otherwise indicated, each director and officer has sole voting
and investment power over the shares he beneficially owns.
(2) Includes 17,643 shares issuable upon conversion of a Convertible
Subordinated Note and 5,500 shares issuable upon the exercise of Common
Stock Purchase Warrants held by William D. Feniger.
(3) Includes 7,500 shares held by William D. Feniger as trustee pursuant to a
voting trust agreement over which he has no investment power, 500 shares
held by Mr. Feniger's wife, as to which Mr. Feniger disclaims beneficial
interest and 1,500 shares held by Mr. Feniger as custodian for his minor
children.
(4) Includes options held by William D. Feniger granted under the Stock Option
Plan to purchase 32,000 shares which are exercisable currently.
(5) Includes options to purchase 23,000 shares granted to Wayne Gardenswartz
and 10,000 shares granted to Jeffrey A. Slade under the Directors' Plan,
which are exercisable currently.
(6) Includes 2,365 shares held by Mr. Gardenswartz as trustee under a trust
agreement over which Mr. Gardenswartz has no investment power.
(7) Includes 137,286 shares, which Mr. Berman may be deemed to beneficially
own, held by MNP Corporation, a Michigan corporation. Mr. Berman is a
majority owner of MNP Corporation and is the Chairman of the Board and
President of MNP Corporation.
(8) Includes options granted to officers and directors of the Company under the
Stock Option Plan and Directors' Plan, which are exercisable currently.
</TABLE>
5
<PAGE> 9
OTHER PRINCIPAL STOCKHOLDERS
As of May 31, 1996, the following person (other than the directors and
officers of the Company) is known to be a beneficial owner of more than 5% of
the outstanding shares of Common Stock:
<TABLE>
<CAPTION>
5% Holders
- ----------
Name and Address of Number of Shares Percentage Ownership
Beneficial Owner Beneficially Owned --------------------
- ------------------- ------------------
<S> <C> <C>
George Hofmeister 272,921 8.1%
700 Highland Road
Salem, Ohio 44460
</TABLE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to proxy rules promulgated by the Securities and Exchange
Commission designed to enhance disclosure of corporations' policies toward
executive compensation, Messrs. Gardenswartz and Slade, as members of the
Company's Compensation Committee of the Board of Directors of the Company,
submit the following report outlining the Company's compensation plans and
policies as they pertain to William D. Feniger, President and Chief Executive
Officer of the Company, and the other executive officers of the Company:
COMPENSATION COMMITTEE OF THE BOARD
The Compensation Committee is comprised of two non-employee members of
the Board of Directors. It is the Compensation Committee's responsibility to
review the Company's executive compensation policies and programs and to
recommend compensation actions to the Board of Directors of the Company.
COMPENSATION POLICY AND OBJECTIVES
The Company's compensation philosophy is to provide a competitive
compensation package so that executive employees are rewarded for special
achievements. The current compensation program for executive officers consists
of three major elements: Base Salary, Discretionary Bonuses and Stock Options.
Base Salary: It is the policy of the Company to review executive
officer base salaries each year in relation to salaries being paid to
executive officers employed by companies in industries similar to those
in which the Company operates. In arriving at a decision, the Committee
considers the financial performance of the Company and the effects of
economic inflation on salary levels.
6
<PAGE> 10
Bonus: Presently, the Company pays bonuses to executive officers on a
discretionary basis. In determining the bonuses to be paid, if any,
the Committee considers the financial performance of the Company.
Stock Options: The Company has a non-qualified and incentive stock
option plan designed to encourage officers and key employees of the
Company to acquire or increase their ownership of Common Stock of the
Company on reasonable terms. The opportunity so provided is intended to
foster in participants a strong incentive to put forth maximum effort
for the continued success and growth of the Company and its
Subsidiaries, to aid in retaining individuals who put forth such
efforts, and to assist in attracting the best available individuals to
the Company and its Subsidiaries in the future. The numbers of shares
granted are based on the executive's level of responsibility. Options
are granted at no less than 100% of fair market value of the Common
Stock on the day of grant or, in certain situations, 110% of the fair
market value of the Common Stock covered by the option on the date of
the grant. The term of the option cannot be for more than ten years
from the date of grant or five years in certain circumstances.
The Compensation Committee has not formally considered nor adopted a
policy with regard to qualifying executive compensation plans under Internal
Revenue Code Section 162(m), which generally limits the corporate tax deduction
for compensation paid to certain executive officers named in the Proxy Statement
to $1 million per year. The Compensation Committee has not yet seen any need to
address this issue, since current Company executive compensation, including
expected ultimate value of options, is below, or is expected to be below, the
level at which this new tax limitation would apply.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's base salary is established on the same
policy applicable to executive officers except it is subject to an employment
agreement providing for a minimum annual salary of $120,000 and salary
continuation for certain periods upon death or total disability, among other
provisions. In determining Mr. Feniger's compensation for fiscal 1996, the
Committee considered the financial performance of the Company for fiscal 1995,
the most recent completed fiscal year at the time the compensation for fiscal
1996 was set, and the effects of inflation on salary levels. The Committee set
Mr. Feniger's salary level to $185,000 for fiscal 1996, a 5.7% increase. The
Committee did not award Mr. Feniger a bonus for fiscal 1996.
The Committee grants stock options to officers and key employees
pursuant to the Company's non-qualified and incentive stock option plan to
accomplish the incentive objections described above. In April 1995, the
Committee awarded Mr. Feniger options to acquire 20,000 shares of common stock
at the fair market value of the stock on the date of grant ($2.21875).
Submitted by the Compensation Committee of the Company's Board of
Directors:
Wayne Gardenswartz Jeffrey A. Slade
7
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Patrick R. Hylant, a former director and member of the Compensation
Committee, is an owner and President of Hylant MacLean, Inc., an insurance
broker with whom the Company did business during its fiscal year ended February
29, 1996. Mr. Hylant resigned as a Director of the Company in February 1996.
STOCKHOLDER RETURN COMPARISON
The line graph below compares the cumulative total return from February
28, 1991 to February 29, 1996 of the Company's Common Stock against the
cumulative total return of (i) the NASDAQ Stock Market (US) and (ii) selected
public companies in the metal fabrication or materials industry (peer group)
listed on NASDAQ Small Cap (market value under $25 million), except for one
company which transferred from NASDAQ to the American Stock Exchange in fiscal
1994 and returned to NASDAQ in March 1996. The graph and table assume that $100
was invested on February 28, 1991 in the Company's Common Stock and in each
index and that all dividends were reinvested. The Company chose the metal
fabrication or materials industry since it most closely approximates its main
line of business. However, the Company is also involved in the waste management
industry and some of the companies selected in the peer group may also be
involved in additional industries other than the metal fabrication or materials
industry or waste management industry. As a result, the comparisons shown on the
performance graph may not be meaningful. In addition, the historical stock
performance shown on the graph is not intended to and may not be indicative of
future stock performance. Companies in the current peer group other than the
Company include, Air Cure Environmental, Inc. (ATSS), Chemi Trol Chemical Co.
(CTRL), Cryenco Sciences, Inc. (CSCI), Denoyo Corp. (DNYOF), Dynamic Materials
Corp. (formerly "Explosive Fabricators, Inc.") (BOOM), General Magnaplate Corp.
(GMCC), Margate Industries, Inc. (CGUL), Miller Building Systems, Inc. (MTIK),
Thermal Industries, Inc. (THMP) and Zoltek Companies, Inc. (ZOLT).
8
<PAGE> 12
STOCKHOLDER RETURN PERFORMANCE GRAPH
<TABLE>
<CAPTION>
Feb-91 Feb-92 Feb-93 Feb-94 Feb-95 Feb-96
<S> <C> <C> <C> <C> <C> <C>
Meridian National Corporation 100.0 81.8 18.1 42.1 22.5 13.1
Nasdaq Stock Market (US Companies) 100.0 142.7 152.0 179.8 182.3 255.8
Self-Determined Peer Group 100.0 130.1 112.3 113.6 105.6 155.6
</TABLE>
9
<PAGE> 13
COMPENSATION
The following table sets forth the annual and long-term compensation
paid or accrued by the Company for the three fiscal years ended February 29,
1996 and February 28, 1995 and 1994 for the Company's Chief Executive Officer.
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation
------------------- ------------ ------------
Restricted
Name and Other Annual Stock Options (in
Principal Position Year Salary Bonus Compensation Awards shares)(1)
- ------------------ ---- ------ ----- ------------ ------ -------
<S> <C> <C> <C> <C>
William D. Feniger, 1996 $185,004 -- --- --- 20,000 $6,501
Chairman, President
and Chief Executive 1995 $175,000 $90,000 --- --- 20,000 $ 5,263
Officer
1994 $165,000 $74,000 --- --- 20,000(2) $12,849
<FN>
(1) The number of shares subject to options has been adjusted to reflect a
one-for-ten reverse stock split of the Common Stock effective August
18, 1993.
(2) Includes 2,500 shares of Common Stock subject to options previously
granted for which the exercise price was adjusted during fiscal 1994.
</TABLE>
EMPLOYMENT AGREEMENTS
William D. Feniger has an employment agreement with the Company, the
original term of which expired on April 23, 1995 but was extended to April 23,
1996. The agreement provides for automatic renewals for an additional 12 months
upon each anniversary date of the agreement. The agreement also provides for
termination of employment by either party upon 120 days prior written notice
after April 23, 1995. The agreement provides that Mr. Feniger is to receive such
annual salary as may be determined by the Board of Directors, plus employment
privileges and benefits, but in no event is the annual salary to be lower than
$120,000. Mr. Feniger's annual salary, effective March 1, 1996, is $193,325. The
agreement also provides that in the event of Mr. Feniger's death during the term
of the employment agreement, the current salary is to be continued by payment
for three years to Mr. Feniger's surviving spouse while she is living, otherwise
to his estate. In the event of Mr. Feniger's permanent disability, the agreement
provides for a continuation of salary for a period of 12 months, less, however,
any payments received by Mr. Feniger directly from any insurer under any
insurance policy of health or disability, the premiums for which have been paid
by the Company.
10
<PAGE> 14
OPTION GRANTS IN FISCAL 1996
The following table sets forth information with respect to (i) option
grants to the named executive officers during fiscal 1996 and (ii) the potential
realizable value of such options using a 5% and 10% appreciation rate.
<TABLE>
<CAPTION>
Potential Realizable Value at
Individual Grants Assumed Annual Rates of Stock
- ------------------------------------------------------------------------------- Price Appreciation for Option
Term (2)
-----------------------------
% of Total
Options
Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted(#)(1) Fiscal Year ($/share) Date 5%($) 10%($)
- ---- ------------- ----------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
William D. Feniger 20,000 27.40% $2.21875 4/10/2005 $27,907 $70,720
<FN>
(1) Only includes options as no stock appreciation rights ("SARs") were
granted.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission ("SEC")
and, therefore, are not intended to forecast possible future appreciation,
if any, of the Company's stock price. The Company did not use an
alternative formula for a grant date valuation, as the Company is not aware
of any formula which will determine with reasonable accuracy a present
value based on future unknown or volatile factors.
</TABLE>
OPTION EXERCISES AND FISCAL 1996 YEAR END VALUES
The following table sets forth information with respect to (i) options
to purchase shares of the Company's Common Stock granted under the Company's
Stock Option Plan, which were exercised by the named executive officers during
fiscal 1996, and (ii) unexercised options to purchase shares of the Company's
Common Stock granted under the Company's Stock Option Plan to the named
executive officers and held by them at February 29, 1996.
<TABLE>
<CAPTION>
Value of Unexercised
Unexercised Options In-the-Money Options
Held at 2/29/96 at 2/29/96 (1)
------------------- --------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William D. Feniger --- --- 24,000 36,000 (2) (2)
<FN>
(1) The dollar values are calculated by determining the difference between the
fair market value of the shares of the Company's Common Stock underlying
the options and the exercise price of such options at February 29, 1996.
(2) None of Mr. Feniger's Options are in-the-money.
</TABLE>
11
<PAGE> 15
TAX DEFERRED SAVINGS AND RETIREMENT PLAN
The Company's Tax Deferred Savings and Retirement Plan (the "401(k)
Plan") consists of a defined contribution profit sharing plan with a cash or
deferred arrangement. Each employee of the Company is eligible to participate in
the 401(k) Plan after the person has both attained age 20-1/2 and completed six
months of service. Subject to limitations prescribed by the tax laws, a
participant may elect to make a pretax salary deferral contribution to the
401(k) Plan of up to 15% of the participant's compensation. Unless the Company's
Board of Directors determines otherwise, the Company makes matching
contributions equal to 25% of the first 6% of compensation contributed by each
participant as a salary deferral. For any year, the Company may also make a
discretionary profit sharing contribution of an amount determined by the
Company's Board of Directors. Profit sharing contributions are allocated among
eligible participants on the basis of each participant's compensation during the
year for which the contribution is made.
All salary deferral contributions are 100% vested. The Company's
matching contributions and profit sharing contributions vest on an incremental
basis after three completed years of service and become fully vested after seven
years of completed service. In addition, a participant is fully vested upon
attainment of age 65, death or disability, provided he is in the employ of the
Company at the time such event occurs.
For the plan year ended February 29, 1996, for the 401(k) Plan the
Company made a matching contribution to the account of William D. Feniger in the
amount of $2,449. The Company made no discretionary contributions to the 401(k)
Plan during fiscal year ended February 29, 1996. Mr. Feniger is fully vested.
INTEREST OF MANAGEMENT AND OTHERS IN
CERTAIN TRANSACTIONS
In connection with the 1985 purchase by the Company of stock of four
companies controlled in part by William D. Feniger and Yale M. Feniger (William
D. Feniger's father), the Company issued, as part of the purchase price, a
series of non-negotiable subordinated promissory notes, each due on September
15, 1995, and bearing interest at the rate of 9% per annum (the "Notes").
William D. Feniger received a Note in the amount of $770,720, and Yale M.
Feniger received a Note in the amount of $943,424 (which Note Yale M. Feniger
transferred to his wife). In July 1989, Mr. Feniger converted his Note into a
like amount of convertible subordinated notes (the "Convertible Subordinated
Note"). In June 1994, Mrs. Yale Feniger and the Company entered into an
agreement whereby Mrs. Feniger accepted $305,738, or 50% of the outstanding
balance of her Note, in full satisfaction of the Note.
The Convertible Subordinated Note payable to William D. Feniger, having
a balance of $596,822 at February 29, 1996, bears interest at a rate equal to 9%
per annum. In May 1996, Mr. Feniger agreed to defer the principal payment on the
Note to March 1, 1997. The outstanding principal balance of the Note held by Mr.
Feniger is convertible, at his option, into
12
<PAGE> 16
Common Stock, at any time, at a conversion price of $15.60 per share. In May
1996, subsequent to the agreement by Mr. Feniger to defer principal payments
until March 1, 1997, the Board of Directors authorized the issuance to Mr.
Feniger of 600,000 shares of the Corporation's Common Stock in exchange for a
$300,000 reduction of the $596,822 Convertible Subordinated Note held by Mr.
Feniger. The Company, as of May 31, 1996, reduced the principal amount of the
Convertible Subordinated due to William D. Feniger by an additional $21,590, by
way of an offset for principal and interest due on the notes payable to the
Company by Mr. Feniger as disclosed below. The Company has agreed, at its
expense, to register under the Securities Act of 1933, on one occasion, and at
the expense of the holder of such Convertible Subordinated Note on other
occasions, the Convertible Subordinated Note and/or the underlying securities at
the request of the holder thereof. The Company has also agreed to certain
"piggy-back" registration rights for the Convertible Subordinated Note and the
securities issuable on exercise thereof.
The Company and one of its subsidiaries lease office space in Toledo,
Ohio, pursuant to two separate lease agreements with Greenbelt Associates, a
general partnership in which Messrs. William D. Feniger, Yale M. Feniger and
Real P. Remillard, an executive officer of the Company, are general partners.
William D. Feniger and Yale M. Feniger each own a 29-1/6% interest in the
partnership and Mr. Remillard owns a 12-1/2% interest. Each lease is a five-year
lease, both of which expire on February 14, 1997. During the year ended February
29, 1996, the Company paid $102,617 to Greenbelt Associates.
The Company leases plant and office space in Toledo, Ohio for certain
of its processing and storage operations from Chicago Investors. Chicago
Investors is a general partnership in which Champlain Investors, a general
partnership, has a 50% interest. William D. Feniger and Yale M. Feniger each own
a 33-1/3% interest in Champlain Investors. The Company was leasing part of these
properties pursuant to a long-term lease which expired in March 1996, with the
remaining properties being leased on a month-to-month basis. During the year
ending February 29, 1996, the Company paid $185,660 to Chicago Investors
pursuant to these arrangements. Effective March 1, 1996, the Company entered
into lease arrangements having initial terms of two years with options to renew
for three, one-year periods. The annual rental pursuant to these leases amounts
to $194,160.
During its fiscal year ended February 29, 1996, the Company did
business with Hylant MacLean, Inc., an insurance broker, in which Patrick R.
Hylant, a former Director, is an owner and president. Mr. Hylant resigned as a
Director of the Company in February, 1996.
On June 1, 1995 National Metal Processing, Inc., a wholly-owned
subsidiary of the Company and MNP Corporation entered into a three-year lease
with six consecutive five-year renewals pursuant to which MNP leases space from
the Company. Larry Berman, a director of the Company, is the majority
stockholder and Chairman of the Board and President of MNP Corporation. The
annual rental for the first year of the lease is $115,594. MNP Corporation has
an option to purchase the facility and property adjacent to the facility for an
aggregate purchase price of $1,600,000, which can be reduced to $1,400,000 under
certain circumstances.
13
<PAGE> 17
Management of the Company believes that the terms of each of the
foregoing transactions are at least favorable as those that could have been
obtained from independent third parties.
At the end of fiscal year 1996, William Feniger was indebted to the
Company in the amount of $114,208 which consisted of $103,400 evidenced by notes
receivable and $10,808 of accrued interest on the notes. The first note for
$97,000 was executed in May 1994, bears interest at 6% and requires annual
principal payments of $5,000 plus interest until the note matures on May 24,
1997. The second note for $6,400 was executed in November 1994, bears interest
at 6% and matures on May 24, 1997. At May 31, 1996, the principal payments and
interest payments due on the notes were offset by payments owed by the Company
to Mr. Feniger under the Convertible Subordinated Note as disclosed above.
On November 1, 1991, the Company entered into a Memorandum of
Understanding with Yale M. Feniger pursuant to which Yale M. Feniger terminated
his employment with the Company and its subsidiaries and agreed to serve as a
consultant and advisor to the Company for a period of five years. The Company
has agreed to pay Mr. Feniger a consulting fee of $100,000 per year for the
first two years, $75,000 for the third year and $50,000 for the fourth and fifth
years. Payments in the fourth and fifth years were increased to $100,000 a year
pursuant to an agreement reached in June 1994 between the Company and Yale M.
Feniger. Mr. Feniger is also provided with an automobile allowance, medical
insurance and normal business expenses.
During the fiscal year ended February 29, 1996, the Company chartered
aircraft services through Fenaire Corporation ("Fenaire"). Fenaire is owned by
Yale M. Feniger. The aggregate amount paid to Fenaire during the year ended
February 29, 1996 amounted to $44,828. The prices charged by Fenaire to the
Company were as favorable as those charged by Fenaire to unrelated parties for
comparable services, and management believes that those prices were at least
favorable as those that were charged, generally, by independent third parties
engaged in the air charter business.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms which
they file with the SEC.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended February 29, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except that Patrick
Hylant and William Feniger each had two late filings.
14
<PAGE> 18
AMENDMENT TO STOCK OPTION PLAN
On August 20, 1990, the Board of Directors of the Company adopted, and
on August 9, 1991, the stockholders of the Company approved, the Company's 1990
Non-Qualified and Incentive Stock Option Plan (the "Stock Option Plan"). The
Stock Option Plan was amended by the stockholders of the Company on August 5,
1994 and August 3, 1995.
On June 7, 1996, the Board of Directors adopted, subject to stockholder
approval, an amendment to the Stock Option Plan to increase the number of shares
authorized for issuance under the Stock Option Plan from 350,000 to 600,000.
The Stock Option Plan is intended to encourage ownership of the
Company's Common Stock by officers and other key employees of the Company and
its subsidiaries, to encourage their continued employment with the Company and
to provide them with additional incentives to promote the success of the
Company. As of February 29, 1996, three officers and eleven additional employees
were eligible to participate in the Stock Option Plan.
The Stock Option Plan authorizes the grant to key employees of options
to purchase 350,000 (600,000 subject to stockholder approval) shares of Common
Stock as "incentive stock options," as that term is defined under the provisions
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
as non-qualified stock options. The Compensation Committee of the Board of
Directors may grant options and otherwise administers the Stock Option Plan.
The exercise price of each incentive stock option must be at least 100%
of the fair market value of the Common Stock at the date of grant, and no such
option may be exercisable for more than 10 years after the date of grant. The
exercise price of each incentive stock option granted to any stockholder
possessing more than 10% of the combined voting power of all classes of capital
stock of the Company on the date of grant must not be less than 110% of the fair
market value on that date, and no such option may be exercisable more than five
years after the date of grant. The Stock Option Plan also provides that the
exercise price of any non-qualified stock option must be at least 100% of the
fair market value of the Common Stock at the date of grant. The exercise price
is payable in cash or, in the discretion of the Compensation Committee, in whole
or in part in shares of Common Stock, valued at their fair market value at the
date of exercise, or, if permitted by law, an interest-bearing promissory note.
Options granted under the Stock Option Plan will be subject to
adjustment upon a recapitalization, stock split, stock dividend, merger or other
similar event affecting the Common Stock. Options will not be transferable,
other than by will or the laws of descent and distribution, and an option may be
exercised, during the lifetime of the holder of the option, only by him.
In the case of an unusual corporate event such as liquidation, merger,
reorganization (other than a reorganization as defined by Section 368(a)(1)(F)
of the Code), or other business combination, acquisition or change in the
control of the Company through a tender offer or otherwise, the Board may, in
its sole discretion, determine, on a case by case basis, that each
15
<PAGE> 19
option granted under the Stock Option Plan will terminate 90 days after the
occurrence of such unusual corporate event, but, in the event of any such
termination the option holder will have the right, commencing at least five days
prior to the unusual corporate event and subject to any other limitation on the
exercise of the option in effect on the date of exercise, to immediately
exercise any options in full to the extent they previously have not been
exercised.
The Stock Option Plan will terminate on August 20, 2000, and an option
shall not be granted under the plan after such date. Any options outstanding at
the time of termination of the Stock Option Plan will continue in full force and
effect according to the terms and conditions of the Stock Option Plan.
The Stock Option Plan may be amended by the Board of Directors,
provided that stockholder approval must be obtained in order to (i) increase the
maximum number of shares as to which options may be granted, (ii) expand or
change the class of persons eligible to receive options, (iii) permit the
exercise price of the shares subject to incentive stock options to be less than
the fair market value of such shares at the time of grant, (iv) extend the term
of the plan, or (v) materially increase the benefits to eligible participants.
FEDERAL INCOME TAX CONSEQUENCES - NON-QUALIFIED STOCK OPTIONS
The issuance of a non-qualified stock option under the Stock Option
Plan will not result in any taxable income to the recipient employee or a tax
deduction to the Company at the time of grant. Generally, an employee to whom a
non-qualified stock option has been granted will recognize ordinary income at
the time the employee exercises the option and receives shares of Common Stock,
in an amount equal to the excess of the fair market value of such shares on the
date of exercise over the option price.
Notwithstanding the foregoing, upon the exercise of a non-qualified
stock option by a person subject to Section 16 of the Exchange Act ("Section
16"), the acquisition date of the shares of Common Stock for federal income tax
purposes and the time of recognition of income will be postponed as long as the
sale of the shares of Common Stock could subject the person to suit under the
"short swing profit" provisions of Section 16, unless such person elects to be
taxed on the date of exercise. Furthermore, the amount of income recognized by
the recipient employee will be the excess of the fair market value of such
shares of Common Stock at the end of the postponement period (rather than at the
date of exercise) over the option price.
Generally, under the Section 16 regulations, a person subject to
Section 16 ("a Section 16 person") may exercise an option and sell the
underlying stock immediately without subjecting himself to suit under the "short
swing profit" provisions as long as he has held the option and/or the underlying
stock for an aggregate of six months. Generally, if the Section 16 person
exercises a stock option within the first six months following the date of
grant, then (except in certain cases involving death or incompetence), taxation
will be deferred and the amount of income will generally be measured six months
following the date of grant (unless the person elects to be taxed on the date of
exercise) because the sale of the underlying stock before this date would
subject the Section 16 person to suit under the "short swing profit" provisions.
16
<PAGE> 20
The Company is generally entitled to a tax deduction corresponding to
the amount of income recognized by the employee as a result of the exercise of a
non-qualified stock option for the year in which the employee recognizes such
income for federal income tax purposes.
FEDERAL INCOME TAX CONSEQUENCES - INCENTIVE STOCK OPTIONS
Neither the receipt nor exercise of an incentive stock option is a
taxable event to the employee, and if the recipient employee does not dispose of
the shares of Common Stock acquired under an incentive stock option prior to the
expiration of the requisite holding periods described below, any gain resulting
from the sale of such shares will be long-term capital gain. In such case, the
Company would not be entitled to any tax deduction with respect to the grant or
exercise of the option. The difference between the fair market value of the
shares of the Common Stock on the date of exercise and the option price is a tax
preference item which may cause the employee to incur an alternative minimum tax
in the year of exercise. The minimum statutory holding periods are two years
from the date the option is granted and one year from the date the employee
receives his shares of Common Stock pursuant to the exercise of the incentive
stock option. The statutory holding period for incentive stock options is waived
in the event of the employee's death.
If the shares of Common Stock are disposed of before the end of either
of such statutory holding periods (a "disqualifying disposition"), the lesser of
(i) the excess of the fair market value of such shares on the date of exercise
over the option price, or (ii) the total amount of gain realized on the sale
must be reported by the employee as ordinary income and the Company would be
entitled to a tax deduction in that amount. The remaining gain, if any, would be
taxed to the employee as capital gain.
Notwithstanding the foregoing, if the employee is subject to Section 16
at the time of a disqualifying disposition, the acquisition date of the shares
and the time of recognition of income will be postponed as long as the sale of
shares could subject the employee to suit for "short swing profit", unless he
elects to be taxed immediately. In addition, the amount of income recognized
will be the lesser of (i) the excess of the fair market value of such shares at
the end of the postponement period (rather than at the date of exercise) over
the option price, or (ii) the total amount of gain realized on the sale. See
"Federal Income Tax Consequences - Non-Qualified Stock Options" for a discussion
of options and Section 16.
17
<PAGE> 21
NEW BENEFITS
The following table sets forth the Stock Option Plan benefits that will
be received in fiscal 1997 if the amendment to the Stock Option Plan is
approved.
1990 Non-Qualified and Incentive Stock Option Plan
<TABLE>
<CAPTION>
Name and Position Dollar Value Number of Units
----------------- ------------ ---------------
<S> <C> <C>
William D. Feniger, President and Chief Executive (1) 200,000
Officer
Executive Group (1) 30,000
Non-Executive Director Group -- --
Key Employee Group (1) 70,000
<FN>
(1) All options granted under the Stock Option Plan during fiscal 1997 were
granted at a exercise price of $1.00 which was equal to the greater of
the fair market value on the date of grant ($.8125) or $1.00. The
actual value, if any, that a person may realize will depend on the
excess of the stock price on the date the option is exercised. On June
21, 1996, the Closing price for the Common Stock on NASDAQ was $1.125
per share.
</TABLE>
Approval by a majority of the shares of Common Stock and Series B
Preferred Stock voting as a single class, present and entitled to vote at the
Annual Meeting, is required for approval of the Amendment to the Stock Option
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL TO
APPROVE THE ADOPTION OF THE AMENDMENT TO THE STOCK OPTION PLAN, WHICH IS
DESIGNATED IN THE PROXY AS ISSUE NO. 2.
APPROVAL OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young LLP served as the Company's
independent accountants for the fiscal year ended February 29, 1996, and has
been appointed by the Board to serve as the Company's independent accountants
for the fiscal year ending February 28, 1997. Stockholder approval of the
appointment will be requested at the Annual Meeting. A representative or
representatives of Ernst & Young LLP will be present at the meeting, will have
the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
18
<PAGE> 22
Approval by a majority of the shares of Common Stock and Series B
Preferred Stock voting as a single class, present and entitled to vote at the
Annual Meeting, is required for approval of the appointment of Ernst & Young
LLP.
THE DIRECTORS RECOMMEND A VOTE IN FAVOR OF THE PROPOSAL TO APPROVE THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS, WHICH
IS DESIGNATED IN THE PROXY AS ISSUE NO. 3.
MISCELLANEOUS
Management knows of no other business to be presented for action at the
meeting. If other matters properly come before the meeting, the persons named as
proxies will vote upon them in accordance with their best judgment.
The cost of this solicitation will be borne by the Company. In addition
to the use of the mails, proxy solicitation may be made by telephone, telegraph
and personal interviews by regular employees of the Company at no additional
charge. The Company will also reimburse brokerage houses and others for
forwarding proxy material to beneficial owners of the Common Stock and Series B
Preferred Stock.
Proposals from stockholders intended to be presented at the next Annual
Meeting of Stockholders must be received by the Secretary of the Company at 805
Chicago Street, Toledo, Ohio 43611, no later than February 28, 1997.
By Order of the Board of Directors,
/s/ James L. Rosino
James L. Rosino
Secretary
June 28, 1996
19
<PAGE> 23
PROXY MERIDIAN NATIONAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- AUGUST 2, 1996
The undersigned appoints each of William D. Feniger and James L.
Rosino, each with the power to appoint his substitute, as proxies of
the undersigned, and hereby authorizes them to represent and to
vote, as designated below, all the shares of Common Stock, $.01 par
value, and Series B Convertible Voting Preferred Stock, $.001 par
value, of Meridian National Corporation held of record by the
undersigned on June 13, 1996, at the Annual Meeting of Stockholders
of Meridian National Corporation to be held on August 2, 1996.
1. Election of Directors
<TABLE>
<S> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) / / to vote for all nominees below / /
</TABLE>
William D. Feniger, Wayne Gardenswartz, Jeffrey A. Slade
and Larry Berman
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
provided below.)
--------------------------------------------------------------------
2. Proposal to adopt an amendment to the Company's 1990
Non-Qualified and Incentive Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to approve the appointment of Ernst & Young LLP as
independent accountants for the Company.
FOR / / AGAINST / / ABSTAIN / /
(Continued on the reverse side)
(Continued from other side)
4. In their discretion, the proxies are authorized to vote on such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
Please sign exactly as name appears below.
------------------------------------------
When shares are held by
joint tenants, both should
sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by the
President or other
authorized officer. If a
Partnership, please sign in
partnership name by
authorized person.
DATED:______________ , 1996
---------------------------
Signature
---------------------------
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Proxy Card
