PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to S240.14a-11(c) or S240.14a-12
AMERICAN TECHNICAL CERAMICS CORP.
-----------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(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>
AMERICAN TECHNICAL CERAMICS CORP.
17 STEPAR PLACE
HUNTINGTON STATION, NEW YORK 11746
-------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 6, 1996
-------------------------------------------------------
To the Stockholders of
AMERICAN TECHNICAL CERAMICS CORP.
You are hereby notified that the Annual Meeting of Stockholders of
AMERICAN TECHNICAL CERAMICS CORP., a Delaware corporation (the "Company"), will
be held at 2201 Corporate Square Boulevard, Jacksonville, Florida 32216, on
Friday, December 6, 1996, at 10:00 a.m., local time, for the following
purposes:
1. To elect five directors;
2. To ratify the appointment of KPMG Peat Marwick LLP as the independent
public accountants to audit the Company's consolidated financial
statements for the fiscal year ending June 30, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on October 16, 1996
are entitled to notice of and to vote at the meeting. A list of stockholders of
the Company as of the record date may be examined by any stockholder for any
purpose germane to the meeting during ordinary business hours on or after
November 26, 1996 at the place of the meeting. The transfer books of the
Company will not be closed.
Your attention is directed to the accompanying Proxy Statement.
By Order of the Board of Directors
Kathleen M. Kelly
Secretary
October 25, 1996
STOCKHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE URGED TO DATE,
SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY CARD IN THE POSTPAID ENVELOPE TO
ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING. IF YOU ATTEND
THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO, EVEN THOUGH
YOU HAVE SENT IN YOUR PROXY.
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of AMERICAN TECHNICAL CERAMICS CORP. (the
"Company") to be voted at the Annual Meeting of Stockholders (the "Annual
Meeting") and any adjournment or adjournments thereof. The Annual Meeting will
be held at 10:00 a.m., local time, on Friday, December 6, 1996, at the
Company's facility at 2201 Corporate Square Boulevard, Jacksonville, Florida
32216. The principal executive offices of the Company are located at 17 Stepar
Place, Huntington Station, New York 11746. It is expected that this Proxy
Statement and the accompanying proxy card will first be mailed or delivered to
stockholders entitled to notice of and to vote at the Annual Meeting on or
about October 25, 1996.
All proxies received pursuant to this solicitation will be voted, and,
where a choice is specified as to the proposals described in the foregoing
Notice, they will be voted in accordance with that specification. Stockholders
who have executed proxies may revoke them at any time before they are voted by
submitting a later dated proxy or by written notice delivered to the Secretary
of the Company. Personal attendance at the meeting without submitting a later
dated proxy or a written notice of revocation to the Secretary shall not serve
to revoke any proxy.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the Company's Common Stock, par value $.01 per
share ("Common Stock"), at the close of business on October 16, 1996 will be
entitled to notice of and to vote at the Annual Meeting. As of October 16,
1996, there were 3,885,461 shares of Common Stock issued and outstanding. Each
outstanding share of Common Stock is entitled to one vote on all matters, which
vote may be given in person or by proxy duly authorized in writing. There are
no cumulative voting rights.
The affirmative vote of the holders of a majority of the shares of Common
Stock present at the Annual Meeting, in person or by proxy, and entitled to
vote is necessary for the election of directors and the ratification of KPMG
Peat Marwick LLP as the Company's independent public accountants for the fiscal
year ending June 30, 1997. Accordingly, an abstention is the equivalent of a
vote against the election of the nominees of the Board of Directors of the
Company for election as directors and the proposal to ratify the appointment of
KPMG Peat Marwick LLP as the Company's independent public accountants. In the
event a broker that is a record holder of Common Stock of the Company does not
return a signed proxy, the shares of Common Stock represented by such proxy
will not be considered present at the Annual Meeting and, therefore, will not
be counted towards a quorum. Broker non-votes will have no effect on the
outcome of the vote for the election of directors or the ratification of KPMG
Peat Marwick LLP as the Company's independent public accountants.
As of October 16, 1996, 2,357,061 shares of Common Stock (approximately
61% of the issued and outstanding shares of Common Stock) were held of record
and beneficially by Victor Insetta, who is the President, Chief Executive
Officer and a director of the Company. His shareholdings are sufficient to
assure election of the nominees for election as directors as set forth herein,
to ratify the appointment of KPMG Peat Marwick LLP as the Company's independent
public accountants for the fiscal year ending June 30, 1997, and to take action
on any other matters brought before the Annual Meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 16, 1996, certain
information with respect to the ownership of the Company's Common Stock by (i)
all persons who are known by the Company to be the beneficial owners of more
than 5% of the outstanding shares of Common Stock, (ii) each of the directors
of the Company, (iii) each of the executive officers of the Company listed in
the table under the caption "EXECUTIVE COMPENSATION -- Summary Compensation
Table", and (iv) all directors and executive officers of the Company as a
group.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS
- -------------------------------- ----------------------- --------------
VICTOR INSETTA 2,357,061 (2) 60.7%
2201 Corporate Square
Boulevard
Jacksonville, Florida
JOSEPH COLANDREA 204,858 (3) 5.3%
911 South Ocean Boulevard
Boca Raton, Florida
RICHARD MONSORNO 32,680 *
2201 Corporate Square
Boulevard
Jacksonville, Florida
KATHLEEN M. KELLY 20,087 (4) *
One Norden Lane
Huntington Station, New York
CHESTER E. SPENCE 12,500 (5) *
One Norden Lane
Huntington Station, New York
STUART P. LITT 4,000 (6) *
2 Blenheim Terrace
Farmington, Connecticut
O. JULIAN GARRARD III 1,900 *
3871 Little Lane
Jacksonville, Florida
DR. JAMES BIGGERS - -
1321 Old Boalsburg Road
State College, Pennsylvania
RUBIN BLUMKIN - -
7720 Hearth Stone Avenue
Boynton Beach, Florida
All executive officers and 2,428,228 (2) 62.5%
directors as a group (8 persons)
* Less than one percent
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(1) All shares are beneficially owned, and the sole voting and investment
power over such shares is held, by the persons named, except to the extent
described in the following footnotes.
(2) Does not include (i) 204,858 shares owned by Mr. Colandrea which are
subject to a Restated Shareholders' Agreement, dated April 15, 1985, among
the Company and Messrs. Insetta, Colandrea and Joseph Mezey (the "Restated
Shareholders' Agreement"), and (ii) shares subject to Voting and Transfer
Agreements entered into in connection with options granted under the
Company's Incentive Stock Option Plan. Pursuant to the Restated
Shareholders' Agreement, Messrs. Insetta, Colandrea and Mezey have agreed
that, so long as they own shares of Common Stock, they will vote their
shares for the election of either three designees of Mr. Insetta (if Mr.
Insetta elects not to be a director) or of Mr. Insetta and two of his
designees, and for the election of Mr. Colandrea (if Mr. Colandrea elects
to be a director) to the Board of Directors of the Company. Mr. Colandrea
has waived his right to be designated as a director indefinitely until
written notice is served to the contrary at least 90 days prior to the
next scheduled annual meeting. No such notice has been given relevant to
the Company's Annual Meeting to be held December 6, 1996. Mr. Mezey no
longer owns shares of Common Stock. The Restated Shareholders' Agreement
will terminate upon the death of Mr. Insetta or at such time as Mr.
Insetta does not own at least 10% of the outstanding shares of Common
Stock. The Restated Shareholders' Agreement also provides for certain
rights of first refusal and registration rights. For information
concerning the Voting and Transfer Agreements referred to above see
"EXECUTIVE COMPENSATION -- Incentive Stock Option Plan".
(3) Does not include 2,357,061 shares owned by Mr. Insetta which are subject
to the Restated Shareholders' Agreement. See Note (2) above.
(4) Includes 4,600 shares owned jointly with Mrs. Kelly's husband.
(5) Includes 2,500 shares owned jointly with Mr. Spence's wife.
(6) Includes 1,000 shares which will be issued to Mr. Litt within 60 days of
October 16, 1996 pursuant to his employment agreement. See "EXECUTIVE
COMPENSATION -- Employment Agreements".
4
<PAGE>
ELECTION OF DIRECTORS
Five directors are to be elected to serve until the next annual meeting of
stockholders or until their respective successors are elected and qualified.
Dr. James Biggers, a director of the Company since 1985, has chosen not to seek
reelection as a director. On September 17, 1996, the Board adopted a resolution
decreasing the membership of the Board of Directors from six to five, effective
with this Annual Meeting.
Set forth in the table below is certain information, as of October 16,
1996, with respect to the nominees of the Board of Directors of the Company for
election as directors. All of the nominees are presently directors of the
Company. It is the intention of the persons named in the enclosed proxy to vote
for the election as directors of the persons named in the table below. If any
such nominee should become unavailable for any reason, which the Board of
Directors has no reason to anticipate, the persons named in the enclosed proxy
reserve the right to substitute another person of their choice in his place.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
APPOINTED
BUSINESS EXPERIENCE AS A
NAME AGE DURING THE PAST FIVE YEARS DIRECTOR
- ---------------------- -------- ------------------------------------------------- ---------------
<S> <C> <C> <C>
VICTOR INSETTA 56 President and Chief Executive Officer of the 1966
Company.
RUBIN BLUMKIN 75 Retired since May 1988. Prior thereto, Vice 1984
President - Marketing of the Company.
O. JULIAN GARRARD III 51 President of Jay Garrard, P.A., a certified public 1988
accounting firm specializing in taxation.
CHESTER E. SPENCE 57 Vice President - Marketing and Sales of the 1985
Company from August 1993 to
present. Prior thereto,
Consultant, IBM from January 1991
to August 1993.
STUART P. LITT 55 Senior Vice President - Operations of the Company 1993
since September 1996. Prior
thereto, associate of OEM Capital,
an investment banking firm
specializing in the electronics
industry, since December 1992.
Consultant to electronics
companies since September 1990.
</TABLE>
5
<PAGE>
There are no family relationships between or among any directors or
executive officers of the Company. See footnotes (2) and (3) to the table under
the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT"
for information concerning agreements among certain stockholders as to the
election of directors.
During the fiscal year ended June 30, 1996, the Board of Directors held
three meetings. Dr. Biggers was unable to attend two of the three meetings held
during the fiscal year and Mr. Blumkin was unable to attend one of the three
meetings. No other member of the Board of Directors attended fewer than 75% of
the meetings held by the Board of Directors during the fiscal year ended June
30, 1996.
The Board of Directors has created a standing Audit Committee. The Audit
Committee, which held four formal meetings and communicated several times
during the fiscal year ended June 30, 1996, consists of Messrs. Spence, Garrard
and Litt. Among other things, the Audit Committee reviews the scope and
procedures of the audit activities of the independent accountants and their
reports on their examinations. It also reviews reports from the Company's
financial management and independent accountants on compliance with corporate
policies and the adequacy of the Company's internal accounting controls. Each
of Messrs. Spence, Garrard and Litt attended all of the meetings held during
the fiscal year ended June 30, 1996.
The Board of Directors has also created a Compensation Committee which
currently consists of Messrs. Spence and Garrard. The Compensation Committee
held one meeting during the fiscal year ended June 30, 1996. The Compensation
Committee is authorized, subject of the Certificate of Incorporation and
By-Laws of the Company and the Delaware General Corporation Law, to exercise
all power and authority of the Board of Directors with respect to the
compensation of employees of the Company.
Each of the non-employee directors of the Company receives a fee of $1,000
plus expenses for each meeting of the Board of Directors and, if a member of a
Committee, each Committee meeting, that he attends.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who own beneficially more than
ten percent of the Company's Common Stock to file with the Securities Exchange
Commission initial reports of beneficial ownership and reports of changes in
beneficial ownership of the Common Stock. Officers, directors and persons
owning more than ten percent of the Common Stock are required to furnish the
Company with copies of all such reports. To the Company's knowledge, based
solely on a review of copies of such reports furnished to the Company, the
Company believes that, during the fiscal year ended June 30, 1996, the only
deviations from the Section 16(a) filing requirements applicable to its
officers, directors and persons owning beneficially more than ten percent of
the Common Stock were as follows:
Chester E. Spence, a director and officer of the Company, inadvertently
neglected to timely file a Form 4 in connection with the purchase of 1,000
shares of Common Stock in March 1996. The proper Form 4 was filed two weeks
late on April 23, 1996. Similarly, Richard Monsorno, an officer of the Company,
inadvertently neglected to file Form 4s in connection with both a 10,000 share
stock bonus received in November 1995 and the purchase of 2,000 shares Common
Stock in March 1996. The Form 4 for the stock bonus was filed on January 9,
1996 and the Form 4 for the purchase of stock was filed one week late on April
18, 1996.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid over each of the
last three fiscal years to the President and Chief Executive Officer of
the Company and to each of the other executive officers of the Company
whose cash compensation exceeded $100,000:
FISCAL
NAME AND YEAR ALL OTHER
PRINCIPAL ENDING COMPENSATION
POSITION JUNE 30 SALARY ($) BONUS ($)(1) ($)
---------- ------- ---------- --------- -------------
VICTOR INSETTA
President, Chief 1996 $245,700 $170,900 $4,607 (2)
Executive Officer and 1995 254,025 142,208 5,440 (2)
Director 1994 237,825 77,307 4,500 (2)
RICHARD MONSORNO
Senior Vice President - 1996 147,379 127,760 (3) 5,649 (4)
Technology 1995 123,483 13,962 5,697 (4)
1994 115,282 56,547 (5) 3,221 (6)
KATHLEEN M. KELLY
Vice President - 1996 97,016 17,760 4,963 (7)
Administration and 1995 90,769 13,962 5,231 (7)
Secretary 1994 84,551 56,547 (5) 2,530 (6)
CHESTER E. SPENCE
Vice President - 1996 88,335 -0- 4,689 (8)
Marketing and Sales 1995 89,250 71,797 4,516 (8)
and Director 1994 74,307 86,143 (5) -0-
- -------------------
(1) Includes amounts paid in the applicable fiscal year in respect of such
fiscal year and amounts earned for such fiscal year and paid in a
subsequent fiscal year.
(2) Consist of contributions by the Company to the 401(k) Savings Plan on
behalf of Mr. Insetta. See "EXECUTIVE COMPENSATION -- 401(k) Savings
Plan".
(3) Represents a cash bonus and the fair market value of a stock bonus of
10,000 shares of Common Stock granted on November 17, 1995 (based upon the
closing sale price of the Company's Common Stock on the American Stock
Exchange on November 17, 1995 of $11.00 per share). The Company has a
right of first refusal to purchase the shares if at any time Mr. Monsorno
elects to transfer them. As of June 30, 1996, the value of the 10,000
shares of Common Stock issued to Mr. Monsorno pursuant to this stock bonus
was $80,630 (based upon the closing sale price of the Company's Common
Stock on the American Stock Exchange on such date of $8.063 per share).
7
<PAGE>
(4) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Monsorno of $3,606 and $3,543 for fiscal years 1996
and 1995, respectively, and income recorded for fiscal years 1996 and 1995
of $2,043 and $2,154, respectively, as a result of the partial forgiveness
of a loan made by the Company to Mr. Monsorno for the purpose of paying
income taxes on the 10,000 share stock bonus referred to in footnote (5)
below.
(5) Represents cash bonuses and the fair market value of (i) a stock bonus of
5,000 shares of Common Stock granted on July 1, 1993 (based upon the
closing sale price of the Company's Common Stock on the American Stock
Exchange on July 1, 1993 of $2.75 per share), and (ii) a stock bonus of
10,000 shares of Common Stock granted on April 19, 1994 (based upon the
closing sale price of the Company's Common Stock on the American Stock
Exchange on April 1, 1994 of $3.50 per share). The Company has a right of
first refusal to purchase the shares if at any time the executive elects
to transfer them. As of June 30, 1996, the value of the 15,000 shares of
Common Stock issued to the executive pursuant to these stock bonuses was
$120,945 (based upon the closing sale price of the Company's Common Stock
on the American Stock Exchange on such date of $8.063 per share).
(6) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of the executive.
(7) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mrs. Kelly of $2,920 and $3,077 for fiscal years 1996
and 1995, respectively, and income recorded for fiscal years 1996 and 1995
of $2,043 and $2,154, respectively, as a result of the partial forgiveness
of a loan made by the Company to Mrs. Kelly for the purpose of paying
income taxes on the 10,000 share stock bonus referred to in footnote (5)
above.
(8) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Spence of $2,646 and $2,362 for fiscal years 1996
and 1995, respectively, and income recorded for fiscal years 1996 and 1995
of $2,043 and $2,154, respectively, as a result of the partial forgiveness
of a loan made by the Company to Mr. Spence for the purpose of paying
income taxes on the 10,000 share stock bonus referred to in footnote (5)
above.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Victor Insetta,
the Company's President and Chief Executive Officer. The term of the agreement
currently expires on March 1, 1997. The agreement will be renewed automatically
for one year periods on March 1 of every year in the absence of written notice
to the contrary by either party at least 120 days prior to the March 1 renewal
date.
Pursuant to the agreement, Mr. Insetta is currently paid a base
compensation of $246,000 per annum. The agreement provides for further
increases in Mr. Insetta's base salary by the Board of Directors from time to
time in its sole discretion. The agreement also provides that, as additional
annual incentive compensation, Mr. Insetta is also entitled to an amount equal
to 5% of the Company's net income (before such incentive compensation and
before income taxes). The agreement provides, among other things, that if there
is a change of control of the Company or if Mr. Insetta's employment is
terminated prior to the scheduled expiration date other than for cause (as
defined in the agreement), death, disability, or voluntary termination apart
from a change of control, the Company is required to pay to Mr. Insetta, in a
lump sum,
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<PAGE>
an amount equal to the greater of (i) all of the compensation due to Mr.
Insetta under the agreement through the end of the then existing term of the
agreement, or (ii) three times Mr. Insetta's average annual compensation under
the agreement during the five most recent taxable years prior to the taxable
year in which the termination took place as calculated in accordance with the
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). In
addition, if Mr. Insetta voluntarily terminates his employment with the
Company, for a period equal to the lesser of the remaining term of the
agreement or one year, Mr. Insetta has agreed that he will not, directly or
indirectly, solicit those persons or entities who are customers of the Company
on the effective date of his termination of employment for the purpose of
purchasing multi-layer capacitors; provided, however, that the foregoing
restriction shall not apply if Mr. Insetta terminates his employment because of
a change of control of the Company. In addition, Mr. Insetta has agreed for a
period of one year following the termination of his employment (other than
termination by the Company without cause) that he will not divulge to any
person any information which is actually held in confidence by the Company,
subject, however, to certain conditions, including the Company having
performed, and continuing to perform, its obligations under the agreement.
The Company presently maintains a term life insurance policy in the
aggregate amount of $4,000,000 on the life of Mr. Insetta. The Company is named
as the beneficiary of this policy.
The Company has also entered into an employment agreement with Stuart P.
Litt, who in September 1996 became Senior Vice President - Operations of the
Company. Mr. Litt has been a director of the Company since 1993. See "ELECTION
OF DIRECTORS".
Pursuant to the agreement, Mr. Litt shall be employed as Senior Vice
President - Operations of the Company for a period of three years at an annual
base salary of $150,000. In addition, Mr. Litt will be entitled to a quarterly
cash bonus equal to one-half of one percent of the Company's net income (before
such incentive compensation and before income taxes). The agreement may only be
terminated in the event that Mr. Litt is disabled or for cause. In addition,
the agreement provides that if Mr. Litt's employment by the Company is
terminated at any time after the first three years of employment, Mr. Litt will
be entitled to a severance payment of $100,000.
Pursuant to the agreement, the Board of Directors granted to Mr. Litt a
stock bonus of 34,000 shares, 10,000 of which will be issued to him on December
15, 1996 provided he is still actively employed by the Company, and the
remaining 24,000 shares of which will be issued to him in twenty-four monthly
installments of 1,000 shares on the 15th of each month commencing October 15,
1996, again, provided he is still actively employed by the Company on each such
date. As of August 27, 1996, the date as of which the stock bonus was granted
by the Board of Directors, the fair market value of such stock bonus was
$276,250 (based upon the closing sales price of the Company's Common Stock on
the American Stock Exchange on such date of $8.125).
INCENTIVE STOCK OPTION PLAN
In April 1985, the Company adopted an Incentive Stock Option Plan (the
"Plan") intended to qualify as such under Section 422A of the Code in order to
attract and retain qualified key personnel. The Plan has expired and no further
options may be granted thereunder. It is a condition to the exercise of an
option under the Plan that the optionee enter into a Voting and Transfer
Agreement pursuant to which, among other things, the optionee will agree to
vote the shares of Common Stock purchased upon exercise of the option for the
election as directors of the Company of certain persons (currently, Victor
Insetta and Rubin Blumkin). The Voting and Transfer Agreement in certain cases
also gives the Company a right of first refusal and Mr. Insetta a right of
second refusal to purchase the shares purchased upon exercise of options.
9
<PAGE>
During the fiscal year ended June 30, 1996, no options were granted under
the Plan and 300 options were exercised. None of the executive officers named
in the table under the caption "EXECUTIVE COMPENSATION -- Summary Compensation
Table" exercised any options during the fiscal year ended June 30, 1996. No
options have been repriced since the inception of the Plan. At June 30, 1996,
there were 478 unexercised in-the-money options outstanding under the Plan. As
of June 30, 1996, June 30, 1995 and June 30, 1994, there were options to
purchase 478, 778 and 2,768 shares, respectively, outstanding under the Plan.
There are currently three employees with options outstanding under the Plan. No
executive officer named in the table under the caption "EXECUTIVE COMPENSATION
- -- Summary Compensation Table" holds any options to purchase shares of Common
Stock.
401(K) SAVINGS PLAN
The Company has a 401(k) Savings Plan covering all employees. Pursuant to
this plan, eligible employees may elect to defer up to 15% of their eligible
gross earnings, but in no event more than $9,500 for the calendar year 1996. In
addition, contributions may be limited by certain other restrictions under the
Code. The Company contributes an amount based upon the employee's
contributions, up to 3% of such employee's gross earnings. Officers are
eligible to participate in this plan in the same manner as are all other
employees. For the fiscal year ended June 30, 1996, the Company's contributions
to this plan were $291,000, including contributions on behalf of Mr. Insetta,
Mr. Monsorno, Mrs. Kelly and Mr. Spence of $4,607, $3,606, $2,920 and $2,646,
respectively. See "EXECUTIVE COMPENSATION -- Summary Compensation Table".
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED PARTY LEASES
The Company presently leases certain real property from its principal
stockholder, Victor Insetta, and entities controlled by him. In the case of
each such lease, the Company has periodically obtained appraisal letters
indicating that the fixed rentals in effect did not exceed fair market rentals
in the area. The Company does not intend to lease any additional real property
from Mr. Insetta or entities controlled by him other than renewals of existing
leases and improvements and new construction that may be made to existing
leased properties.
FLORIDA FACILITY
The Company's Jacksonville, Florida facility (the "Florida Facility") is
leased by its wholly-owned subsidiary, American Technical Ceramics (Florida),
Inc. ("ATC-Florida"), from V.P.I. Properties Associates ("VPI"), a limited
partnership of which Mr. Insetta is the sole general partner and the limited
partnership interests are owned by members of his family. The lease is for a
term expiring in 2010. Until October 1988, the base rental under the lease was
$13,665 per month (adjusted based upon improvements made or to be made to the
property as described below). In October 1988, this rental was increased to
$21,575 per month (plus such adjustments as are described below) based on the
ratio of the United States Department of Labor- Consumer Price Index for All
Urban Consumers between October 1980 and October 1988. Such rental (together
with additional rent arising from improvements as described below) will be
adjusted upward (but
10
<PAGE>
not downward) again as of October 1996 based upon the ratio of such index
between October 1988 and October 1996.
To the extent that VPI's total expenditures for the real property in the
Florida Facility exceed $1,500,000, the lease provides for an increase in the
monthly rental (when the improvement on which the expenditures are made is
placed in service) based on a formula by which a specified rate is multiplied
by the difference between the cumulative cost of the real property and
$1,500,000. The rate is 10.45% per annum if the expenditure relates to an
improvement placed in service before January 1, 1985. For expenditures on an
improvement placed in service on or after January 1, 1985, the rate is equal
to: (i) 1% per annum above the rate payable by VPI on any permanent mortgage
loan utilized to finance the improvement, or (ii) if no such mortgage loan is
obtained within 12 months after such improvement is placed in service, 1% per
annum above the Standard & Poor's published AA bond rate for the month in which
the improvement is placed in service. As of June 30, 1996, VPI had expended
approximately $2,480,000 for real property and buildings, including
approximately $300,000 in fiscal year ended June 30, 1996 in connection with
the construction of additional space in the Florida facility. The additional
rent on the expenditures over $1,500,000 is $7,025 per month, increasing the
total rental to its current rate of $28,600 per month.
The lease also provided for the rental of certain items of personal
property (machinery and equipment) in the Florida Facility for a term of 84
months. The monthly rental for an item was determined through the use of a
fixed residual value of 20% of the cost of the item and an interest rate equal
to 10.45% per annum on items of personal property acquired prior to January 1,
1985, and the weighted average interest rate being paid by ATC-Florida on
institutional loans in the month prior to the month of acquisition or, if no
such rate exists, the Barnett Bank Trust Company, N.A. ("Barnett") prime rate
in said month on all items acquired on or after January 1, 1985. ATC-Florida
had the right to purchase the items of personal property at their fair market
value or to renew the lease for any such items for two successive three year
terms at fair market rental. ATC-Florida has made no payments in respect of any
item of personal property since December 1992. In August 1996, ATC-Florida
obtained an appraisal of the items of personal property covered by the lease
which reflected the aggregate fair market value of such items to be $33,200. In
October 1996, ATC-Florida purchased such items of personal property from VPI
for such appraised value. Accordingly, there are no items of personal property
covered by the lease.
ATC-Florida is obligated to pay all expenses arising in connection with
the Florida Facility, including all real estate taxes, assessments, utilities
and repairs. The Company, through ATC-Florida, has the right in 1996 and at the
end of the lease term to purchase the real property at its fair market value.
The Company has elected not to exercise such right at this time.
To finance the development of the Florida Facility, VPI transferred the
Florida Facility to the Jacksonville Port Authority which issued tax exempt
bonds (the "Bonds") in the principal amount of $2,000,000 to Barnett. The
Florida Facility was then sold to VPI under an Installment Sale and Security
Agreement with legal title being retained by Barnett, as trustee for the
holders of the Bonds. Payment of the Bonds is secured by a security interest
in, and lien upon, the real property comprising the Florida Facility and the
machinery and equipment which is located therein which were financed from the
Bond proceeds. In no period is ATC-Florida to pay on account of rentals for the
real and personal property less than the principal of, and interest on, the
Bonds.
In the fiscal year ended June 30, 1996, aggregate rental paid by
ATC-Florida under this lease was $343,207. The Company and VPI are in the
process of amending and restating the lease to reflect the purchase by
ATC-Florida of the personal property previously covered thereby and the
additional improvements made to the Florida Facility in the fiscal year ended
June 30, 1996.
11
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NEW YORK PROPERTY
Since July 1976, the Company has leased from Mr. Insetta the land and
building at 15 Stepar Place, Huntington Station, New York (the "New York
Property"). The lease for the New York Property expired in February 1996. The
Company is currently leasing the New York Property on a month-to-month basis on
the same terms as the terms provided in the lease. The base rent is equal to
the annual payments of principal and interest payable under the mortgage
encumbering such property. Current monthly installments are $38,250. The
Company is also responsible for payment of all real estate taxes and all
utilities and repairs relating to the property. During the fiscal year ended
June 30, 1996, the total amount of rent paid by the Company for this facility
was $452,898. In addition, the Company incurred expenses of $72,613 for real
estate taxes, $298,238 for utilities and $24,643 for leasehold improvements.
The base rent reflects an adjustment upward commencing January 1, 1990 and as
of each succeeding calendar year based upon the increase in the Consumer Price
Index for All Urban Consumers (New York City) over the Consumer Price Index for
All Urban Consumers (New York City) for January 1989.
The Company and Mr. Insetta intend to enter into a new lease for the New
York Property which lease will contain terms similar to the terms in the lease
which expired in February 1996.
AUDITORS
KPMG Peat Marwick LLP, the independent auditors who have audited the
Company's books and records for the past seven years, have been appointed by
the Board of Directors of the Company to audit the books and records of the
Company for the fiscal year ending June 30, 1997. The Board of Directors
recommends that the appointment of such auditors be ratified by the
stockholders. The Board of Directors believes that the selection of an
independent accountant to audit the books and records of the Company prepared
by management is an appropriate matter for stockholder consideration. If the
stockholders do not ratify the selection of KPMG Peat Marwick LLP, the Board of
Directors will consider the selection of another firm of independent certified
public accountants to audit the Company's books and records for the fiscal year
ending June 30, 1997. Representatives of KPMG Peat Marwick LLP are expected to
be present at the Annual Meeting and will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
The Board of Directors of the Company recommends a vote FOR the
ratification of KPMG Peat Marwick LLP as the Company's auditors for the fiscal
year ending June 30, 1997.
ANNUAL REPORT TO STOCKHOLDERS
The Company will provide to any stockholder of record at the close of
business on October 16, 1996, without charge, upon written request to the
Secretary of the Company, a copy of the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1996.
12
<PAGE>
STOCKHOLDER PROPOSALS
The Company expects to hold its annual meeting of stockholders for the
fiscal year ending June 30, 1997 in November or December 1997. Stockholders who
intend to present proposals intended to be included in the Company's Proxy
Statement and form of proxy relating to such annual meeting must submit their
proposals in writing to the Secretary of the Company on or before June 30,
1997.
OTHER MATTERS
Management of the Company knows of no business other than that referred to
in the foregoing Notice of Annual Meeting and Proxy Statement that may come
before the Annual Meeting. However, if other matters properly come before the
Annual Meeting it is the intention of the persons named in the enclosed proxy
to vote thereon in accordance with their judgement.
The entire cost of soliciting management proxies will be borne by the
Company. Proxies will be solicited by mail and may be solicited personally by
directors, officers or regular employees of the Company, who will not be
compensated for such services.
By order of the Board of Directors
Kathleen M. Kelly
Secretary
October 25, 1996
13
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APPENDIX
AMERICAN TECHNICAL CERAMICS CORP.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Victor Insetta and Kathleen M. Kelly and
each of them, the attorneys and proxies of the undersigned, with power of
substitution, to represent and vote on behalf of the undersigned all the shares
of common stock of American Technical Ceramics Corp., which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of American Technical
Ceramics Corp., to be held at 2201 Corporate Square Boulevard, Jacksonville,
Florida, 32216, on Friday, December 6, 1996 at 10:00 a.m., local time and any
adjournment or adjournments thereof, hereby revoking all proxies heretofore
given with respect to such stock, upon the following proposals more fully
described in the notice of and proxy statement for the Annual Meeting (receipt
whereof is hereby acknowledged).
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 AND 2.
Continued, and to be signed and dated on reverse side.
Please mark boxes [ ] or [X] in blue or black ink.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1) AND (2).
1. ELECTION OF DIRECTORS
FOR all nominees below WITHHOLD AUTHORITY to
(except as marked to the contrary below) [ ] vote for all nominees
listed below [ ]
Victor Insetta, Rubin Blumkin, O. Julian Garrard III, Chester E. Spence and
Stuart P. Litt. (INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominee's name on space provided below.)
- -------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion upon such other matters as may properly come
before the Annual Meeting. I will [ ] will not [ ] attend the Annual
Meeting.
Please sign exactly as your names appear below. When shares
are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian,
please sign in full title as such. If a corporation, please
sign in full corporate name by President or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated ________________________________, l996
_______________________________________
Signature (s)
_______________________________________
Signature (s)
Please Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
