SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 the Party other than the Registrant { }
Check the appropriate box:
{ X } Preliminary Proxy Statement
{ X } Confidential, for Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
{ } Definitive Proxy Statement
{ } Definitive Additional Materials
{ } Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MATEC CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
{ X } No fee required.
{ } 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:
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2) Aggregate number of securities to which transaction
applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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{ } 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:
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2) Form, Schedule or Registration Statement No:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14A-6(E)(2))
MATEC CORPORATION
(A DELAWARE CORPORATION)
__________
NOTICE OF SPECIAL IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
__________
TO THE STOCKHOLDERS OF
MATEC CORPORATION
The Special In Lieu Of Annual Meeting of
Stockholders of MATEC Corporation will be held at the
offices of the Company, 75 South Street, Hopkinton,
Massachusetts 01748, on May 28, 1998, at 10:00 A.M. to
consider and vote on the following matters described under
the corresponding numbers in the attached Proxy Statement.
(1) The election of six directors; and
(2) Consideration and vote upon a proposal
to reincorporate the Company in Maryland.
(3) Such other matters as may properly
come before the meeting.
The Board of Directors has fixed April 17, 1998,
at the close of business, as the record date for the
determination of stockholders entitled to vote at the
meeting, and only holders of shares of Common Stock of
record at the close of business on that day will be
entitled to vote. The list of such stockholders will be
available for inspection by stockholders during the ten
days prior to the meeting in accordance with Section 219 of
the Delaware General Corporation Law at the offices of the
Company, 75 South Street, Hopkinton, Massachusetts 01747.
Stockholders may make arrangements for such inspection by
contacting the Secretary of MATEC Corporation, 75 South
Street, Hopkinton, Massachusetts 01748. The stock transfer
books of the Company will not be closed.
WHETHER OR NOT YOU EXPECT TO BE PRESENT, PLEASE
FILL IN, SIGN AND MAIL THE ENCLOSED PROXY, WHICH IS
SOLICITED BY THE BOARD OF DIRECTORS. THE PROXY IS
REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN THE
EVENT YOU ATTEND THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN J. MCARDLE III
Secretary
April , 1998
REQUESTS FOR ADDITIONAL COPIES OF THE PROXY
MATERIAL SHOULD BE ADDRESSED TO SECRETARY, MATEC
CORPORATION, 75 SOUTH STREET, HOPKINTON, MASSACHUSETTS
01748.
<PAGE>
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14A-6(E)(2))
MATEC CORPORATION
75 SOUTH STREET
HOPKINTON, MASSACHUSETTS 01748
____________
PROXY STATEMENT
____________
SPECIAL IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
____________
The enclosed Proxy is solicited by the Board of
Directors of MATEC Corporation (the "Company") in
connection with the Annual Meeting of Stockholders to be
held on May 28, 1998. The Board of Directors has fixed
April __, 1998, at the close of business, as the record
date for the determination of stockholders entitled to vote
at the meeting. Any Proxy received by the Board of
Directors may be revoked, either in writing or in person,
by the record holder of the shares covered thereby, if such
revocation is received by the Company at any time prior to
said Proxy being exercised. It is anticipated that this
Proxy Statement and the enclosed Notice and Proxy first
will be mailed to stockholders of record on or about April
___, 1998.
All Proxies will be voted in accordance with the
instructions contained therein and if no choice is
specified will be voted in favor of the election as
directors of the persons named herein and for approval of
the proposal to reincorporate the Company in Maryland. The
Company knows of no reason why any of the nominees named
herein would be unable to serve. In the event, however,
that any such nominee should prior to the election become
unable to serve as a director, the Proxy will be voted for
such substitute nominee, if any, as the Board of Directors
shall propose.
A stockholder who abstains from a vote by
registering an abstention vote will be deemed present at
the meeting for quorum purposes but will not be deemed to
have voted on the particular matter. Similarly, in the
event a nominee holding shares for beneficial owners votes
on certain matters pursuant to discretionary authority or
instructions from beneficial owners, but with respect to
one or more other matters does not receive instructions
from beneficial owners and does not exercise discretionary
authority (a so-called "non-vote"), the shares held by the
nominee will be deemed present at the meeting for quorum
purposes but will not be deemed to have voted on such other
matters. Thus, on the vote for the proposal to elect
directors, where the outcome depends on the votes cast,
abstentions and non-votes will have no effect.
The proposal to reincorporate in Maryland
requires the approval of a majority of the shares of Common
Stock present and entitled to vote on such proposal.
Abstentions as to such proposals will have the same effect
as votes against such proposals. Broker non-votes,
however, will be treated as unvoted for purposes of
determining approval of such proposals and will not be
counted as votes for or against such proposals.
The Annual Report to Stockholders of the
Corporation, including financial statements for the year
ended December 31, 1997, is enclosed herewith.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All the voting power of the Corporation is vested
in its Common Stock. As of the close of business on April
__, 1998, 2,733,651 shares of Common Stock, par value $.05
per share (exclusive of 1,070,594 shares held by the
Corporation as treasury shares) were outstanding. Each
share of Common Stock (other than the treasury shares) is
entitled to one vote. It is not presently anticipated that
the number of issued and outstanding shares of Common Stock
will significantly change between April ___, 1998 and the
record date.
Set forth in the table below is information
concerning the ownership as of April __, 1998 of the Common
Stock of the Corporation by persons who, to the knowledge
of the Board of Directors, own more than 5% of the
outstanding shares of Common Stock of the Corporation. The
table also shows information concerning beneficial
ownership by all other directors, by each nominee for
director, by each of the executive officers of the
Corporation and by all directors and executive officers as
a group. Unless otherwise indicated, the beneficial owners
have sole voting and investment power with respect to the
shares beneficially owned.
Name and Address Amount Beneficially Percentage
of Beneficial Owner Owned of Class
- - ------------------- ------------------- ----------
Dimensional Fund 149,000(1) 5.5%
Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
John J. McArdle III 187,962(2)(3) 6.9%
MetroWest Bank
15 Park Street
Framingham, MA 01701
Mary R. and 207,400 7.6%
Emile Vaccari
508 40th Street
Union City, NJ 07087
Robert W. Valpey 204,403(2)(4) 7.5%
Route 25
Box 249
Center Harbor, NH 03226
Ted Valpey,Jr. 747,435(5) 27.3%
P.O. Box 4100
Portsmouth, NH 03801
Other Directors and
Executive Officers
- - -------------------
Eli Fleisher 87,000(6) 3.2%
Robert B. Gill 121,300(7) 4.4%
Lawrence Holsborg 114,267 4.2%
Robert W. Muir, Jr. 8,000 less than 1%
Joseph W. Tiberio 25,000 less than 1%
Michael J. Kroll 15,300(8)(9) less than 1%
Directors and Executive 1,306,264(2)(3)(5)-(9) 47.8%
Officers as a Group
(consisting of
8 individuals)
______________________________
(1) Dimensional Fund Advisors Inc., a registered
investment advisor, is deemed to have beneficial
ownership of 149,000 shares of Common Stock of the
Corporation as of December 31, 1997, all of which
shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participating Group Trust,
investment vehicles for qualified employee benefit
plans, all of which Dimensional Fund Advisors Inc.
serves as investment manager. Dimensional Fund
Advisors Inc. disclaims beneficial ownership of all
such shares.
(2) Includes 100,000 shares, as to which each of Mr.
Robert Valpey and Mr. McArdle disclaims beneficial
ownership, held by a trust of which each is one of two
trustees.
(3) Includes 25,750 shares owned by Mr. McArdle's wife as
to which he disclaims beneficial ownership.
(4) Includes 2,900 shares owned by Mr. Robert Valpey's
wife as to which he disclaims beneficial ownership and
1,000 shares jointly owned by Mr. Valpey's wife.
(5) 300,000 of such shares are pledged as collateral to a
bank to secure certain indebtedness of Mr. Ted Valpey,
Jr.
(6) Includes 1,500 shares owned by Mr. Fleisher's wife as
to which he disclaims beneficial ownership.
(7) Includes 64,300 shares jointly owned by Mr. Gill's
wife and deposited as collateral by Mr. & Mrs. Gill in
a joint margin account maintained by them with a
registered broker-dealer.
(8) Includes 8,700 shares jointly owned by Mr. Kroll's
wife.
(9) Includes 1,500 shares issuable upon exercise of
currently exercisable stock options.
(1) ELECTION OF DIRECTORS
NOMINEES
The Board of Directors has amended the By-Laws of
the Corporation, effective the date of the 1998 Special In
Lieu of Annual Meeting to decrease the number of directors
from seven to six. Six directors are to be elected at the
Annual Meeting, each to hold office until the next annual
meeting and until his successor is elected and qualified.
Directors are elected by a plurality of the votes cast.
The following table sets forth certain
information furnished to the Corporation regarding the
persons who are nominees for election as directors of the
Corporation:
Year
First
Principal Occupation Elected
Name of Nominee for Past Five Years Director Age
- - --------------- -------------------- -------- ---
Eli Fleisher(d) Investor since 1977 70
prior to 1993.
Lawrence Holsborg(b)(c)(d) Investor since 1986 64
prior to 1993.
John J. McArdle III(a)(b)(c) Employee of Prime 1992 48
Capital Group
(financial
consultants) since
prior to 1993;
President of RSC
Realty Corporation (a
subsidiary of the
Corporation) since
prior to 1993 and
Secretary of the
Corporation since
prior to 1993;
President and Chief
Executive Officer of
MetroWest Bank since
January 1993.
Robert W. Muir, Jr.(a)(d) [Vice President Corporate 1996 49
Development, Thomas &
Betts Electrical
Supply] CEO and
President of
Diamond Communication
Products Inc.
(manufacturer of
poleline hardware)
from prior to 1993 to
1997.
Joseph W. Tiberio(a)(b) President, Century 1986 76
Manufacturing Co.,
Inc. (metal stamping)
since prior to 1993;
President Ty-Wood
Corporation (metal
fabrication) since
prior to 1993.
Ted Valpey, Jr. (a)(c) Investor; Chairman of 1980 65
the Corporation since
prior to 1992 and
Chief Executive
Officer of the
Corporation from prior
to 1993 to December
21, 1993 and since
April 28, 1997.
______________________
(a) Member of the Executive Committee
(b) Member of the Audit Committee
(c) Member of the Nominating Committee
(d) Member of the Stock Option-Compensation
Committee.
Each of the above nominees was elected a director
at the last Annual Meeting of Stockholders and has served
continuously since the year he was first elected.
Mr. Robert B. Gill, a director who is not
standing for reelection is a member of the Executive
Committee.
The Board of Directors held six meetings during
the last fiscal year. During the last fiscal year Robert
B. Gill attended less than 75% of the meetings of the Board
of Directors and committees of which he is a member.
The Stock Option-Compensation Committee of the
Board of Directors recommends to the Board of Directors the
Compensation for the Chairman and the Chief Executive
Officer ("CEO"), approves the compensation recommendations
of the CEO for corporate and executive officers, and
subsidiary presidents and controllers, administers and
approves option grants pursuant to the Corporation's 1992
Stock Option Plan, and approves the Corporation's
contributions and 401(k) match under the Corporation's
profit sharing 401(k) plan. The Stock Option-Compensation
Committee held three meetings during 1997.
The Nominating Committee of the Board of
Directors performs such functions as the selection and
recommendation to the Board of Directors of potential
candidates for nomination as directors. The Nominating
committee held one meeting during 1997. In recommending
to the Board the nominees for election as directors, the
Committee will consider stockholders' recommendations for
director sent to the Nominating Committee, c/o Secretary,
MATEC Corporation, 75 South Street, Hopkinton,
Massachusetts 01748. Stockholders must submit the names of
potential future nominees in writing with a statement of
their qualifications and an indication of the potential
nominee's willingness to serve as a director if nominated
and elected.
The Executive Committee of the Board of Directors
is authorized to exercise all of the authority of the Board
of Directors except that which by law cannot be delegated
by the Board of Directors. The Executive Committee did not
meet during 1997.
The Audit Committee of the Board of Directors
performs the customary functions of such a committee
including recommendation to the directors of the engagement
of independent auditors, the review of the plan and results
of the yearly audit by the independent auditors, the review
of the Corporation's system of internal controls and
procedures and the investigation, where necessary, into
matters relating to the audit functions. The Audit
Committee held two meetings during 1997.
Except as set forth below none of the directors
or nominees is a director of any company (other than the
Corporation) which is subject to the reporting requirements
of the Securities Exchange Act of 1934 or which is a
registered investment company under the Investment Company
Act of 1940.
Name of
Director Director of
-------- -----------
John J. McArdle III MetroWest Bank
Ted Valpey, Jr. MetroWest Bank
DIRECTORS COMPENSATION
Each outside director is paid an annual
director's fee of $1,000 plus $500 for each meeting of the
Board of Directors attended. Each outside director who is
a member of a Committee is paid $500 for each Committee
meeting attended and not held on the same day as a meeting
of the Board of Directors. For Committee meetings held on
the same day as meetings of the Board of Directors, each
outside director is paid for attendance at the rate of $250
per Committee meeting.
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth
compensation information for each of the Corporation's last
three fiscal years for the CEO and the other executive
officers whose total annual salary for such fiscal year
exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation(1)(2) Compensation
------------------------- ------------
Awards
------
Securities
Name and Underlying
Principal Options/ All Other
Position Year Salary Bonus SAR's(#) Compensation(3)
- - --------- ---- ------ ----- ---------- ---------------
Ted Valpey, Jr. 1997 $80,000 25,000 -- 2,531
(CEO and
President since
April 28, 1997,
and Chairman)
Robert B. Gill 1997 199,647 -- -- 3,989
(CEO and 1996 200,000 -- -- 4,500
President until 1995 200,000 25,000 -- 4,500
April 28, 1997)
Michael J. Kroll 1997 111,500 15,000 -- 3,741
(Vice President 1996 111,500 -- -- 3,532
and Treasurer) 1995 111,500 -- -- 3,532
_____________________________
(1) For 1996 and 1995 the Corporation maintained a
Management Incentive Plan (the "Incentive Plan") which
provides cash payments to key managers of the
Corporation based on the achievement of defined profit
objectives by various operating units and other
transaction and performance-oriented goals. The
Corporation paid no amounts to any of the named
officers pursuant to the Incentive Plan in 1996 or
1995.
(2) The above table does not include any amounts for
personal benefits because, in any individual case,
such amounts do not exceed the lesser of $50,000 or
10% of such individual's cash compensation.
(3) Represents amounts allocated under the Corporation's
Profit Sharing and Savings Plan.
(4) Mr. Valpey was elected CEO on April 28, 199. The
amounts set forth in the table with respect to 1997
includes all amounts paid to Mr. Valpey as
compensation in 1997. The Corporation reimburses Mr.
Valpey at the rate of $4,000 per month for office,
secretarial and other business expenses.
(5) Mr. Gill ceased to be CEO on April 28, 1997. The
amounts set forth in the table with respect to 1997
include all amounts paid to Mr. Gill as compensation
in 1997. See "CERTAIN TRANSACTIONS".
OPTION TABLE
The following table sets forth the fiscal year-
end option values with respect to the named officers. No
stock options were exercised by or granted to the named
officers during 1997.
<PAGE>
December 31, 1997
-----------------
Option Values(1)
-------------
Number of Securities Values of Unexercised
Underlying Unexercised In-the-Money Options at
Options at 12/31/97 12/31/97(1)
---------------------- -----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Ted Valpey, Jr. -- -- -- --
Robert B. Gill -- -- -- --
Michael J. Kroll 1,500 1,000 $ -0- -0-
____________________
(1) The fair market value of the Corporation's Common
Stock at December 31, 1997 was $4.125 per share. The
exercise price of all exercisable and unexercisable
options to purchase shares held by Mr. Kroll were
equal to or in excess of such fair market value.
CERTAIN TRANSACTIONS
Robert B. Gill, a director of the Corporation who
is not standing for reelection ceased to be President and
Chief Executive Officer of the Corporation on April 28,
1997. For the period April 28, 1997 until August 5, 1997
he was President of the Corporation's wholly owned
subsidiary Bergen Cable Technologies, Inc. Pursuant to a
Separation Agreement between the Corporation and Mr. Gill,
Mr. Gill's employment by the Corporation terminated on
August 5, 1997. In connection with such termination, the
Corporation paid Mr. Gill $100,000 in six equal monthly
installments. All such termination payments paid in 1997
are included in the Summary Compensation Table. In
addition, the Corporation paid Mr. Gill $60,000 for
cancellation of options to purchase 120,000 shares of
Common Stock of the Corporation.
On April 14, 1998, the Company sold substantially
all the assets of its wholly owned subsidiary, Bergen Cable
Technologies, Inc. to a newly created corporation of which
Robert W. Muir, Jr., a director of the Company, owns ___%
of the outstanding capital stock. The purchase price
received by the Company consisted of $7,500,000, a
promissory note in the principal amount of $1,250,000, a
10% stock interest in the acquiring corporation and
assumption of certain liabilities including trade payables.
Because of Mr. Muir's interest in the transaction the
Company retained the firm of O'Conor Wright Wyman, Inc. to
evaluate the fairness of the transaction to the
stockholders of the Company from a financial point of view.
O'Conor Wright Wyman, Inc. gave their opinion that the
consideration received was fair to the stockholders of the
Company from a financial point of view. The transaction
was unanimously approved by all directors of the Company
except Mr. Muir who did not vote on approval of the
transaction.
EXECUTIVE COMPENSATION REPORT OF THE
STOCK OPTION-COMPENSATION COMMITTEE
The Stock-Option Compensation Committee (the
"Committee") of the Board of Directors consists of three
non-employee directors, Eli Fleisher, Lawrence Holsborg and
Robert W. Muir, Jr.
The Committee recommends to the Board of
Directors the compensation for the Chairman, President and
the CEO, approves the compensation recommendations of the
Chairman, President and CEO for corporate and executive
officers, and subsidiary presidents and controllers,
administers and approves option grants pursuant to the
Corporation's 1992 Stock Option Plan, and approves the
Corporation's contributions and 401(k) match under the
Corporation's profit sharing 401(k) plan.
COMPENSATION POLICY FOR EXECUTIVE OFFICERS
The Committee's policy is that the Corporation's
executive officers should be paid a salary commensurate
with their responsibilities, should receive short-term
incentive compensation in the form of a bonus, and should
receive long-term incentive compensation in the form of
stock options.
The policy with respect to salaries of the
executive officer, other than the CEO, is that it should be
in an amount recommended by the CEO, and the current salary
is in the amount so recommended. The considerations
entering into the determination by the CEO of the salary
for the named executive which he recommended to the
Committee in 1997 was his subjective evaluation of the
ability and past performance of the executive and his
judgment of his potential for enhancing the profitability
of the Corporation. The CEO advised the Committee that, in
his subjective judgment based on his experience and
knowledge of the marketplace, such salary was reasonable
and proper in light of the duties and responsibilities of
the executive.
On the recommendation of the Committee, the Board
has adopted the Corporation's Management Incentive Plan
(the "Plan"). However, for 1997, the Committee recommended
that Corporate Management, including the executive officers
named in the Summary Compensation Table, not be eligible to
participate in the Plan. The Committee did however
recommend payment of bonuses aggregating $15,000 to Mr.
Kroll.
The Committee's policy generally is to grant
options to executives and other key employees under the
Corporation's 1992 Stock Option Plan (the "Option Plan")
and in amounts not exceeding the amounts recommended by the
Chairman and the CEO. The recommendations of the Chairman
and the CEO for option grants reflect their subjective
judgment of the performance of employees and the potential
benefit to the Corporation from the grant of this form of
incentive compensation. In recommending option grants the
Chairman, President and CEO, among other things, consider
the amount and terms of options granted in the past. No
options were granted under the Option Plan to executive
officers in the 1997 fiscal year.
Section 162(m) of the Internal Revenue Code,
enacted in 1993, generally disallows a tax deduction to
public companies for compensation over $1,000,000 paid to
the CEO and other named executive officer. Because of the
range of compensation paid to its executive officers, the
Committee has not established any policy regarding annual
compensation to such executive officers in excess of
$1,000,000.
COMPENSATION OF THE CEO IN 1997
On April 28, 1997 Mr. Gill ceased to be CEO and
Mr. Valpey was elected CEO. At the time of his election by
the Board of Directors, the Board determined to continue to
pay Mr. Valpey $80,000 per annum, the amount he had been
receiving as Chairman. In ________, 1998, the Board of
Directors approved a bonus of $25,000 for the increased
responsibilities he assumed as President during 1997.
Eli Fleisher
Lawrence Holsborg
Robert W. Muir, Jr.
Stock Option-Compensation
Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Holsborg was President of Matec Fiberoptics
Inc., a subsidiary of the Corporation, prior to 1989.
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total
shareholder return on the Corporation's Common Stock with
the cumulative total return of the American Stock Exchange
Index and a weighted index made up 40% of companies in the
electronic components manufacturing business, 40% of
companies in the fabricated metal products business and 20%
of companies in the laboratory analytical instruments
business, for the five years beginning December 31, 1992
and ending December 31, 1997 (assuming the investment of
$100 on December 31, 1992, and the reinvestment of all
dividends). The Corporation selected the weighted index
because the companies included therein are engaged in
operations similar to those of the Corporation's three
segments with the percentages being approximately the same
as the revenues of the segments are of total revenues
during the period since December 31, 1992.
TOTAL SHAREHOLDER RETURNS
[Graph]
Base
Period
Dec.92 Dec.93 Dec.94 Dec.95 Dec.96 Dec.97
MATEC CORPORATION 100 110.71 128.57 114.29 96.43 117.86
AMERICAN STOCK EXCHANGE IND 100 119.52 108.63 137.32 146.10 171.48
WEIGHTED PEER INDEX 100 107.85 109.21 141.49 156.66 194.81
<PAGE>
(2) REINCORPORATION OF THE COMPANY IN MARYLAND
AND RELATED CHANGES TO THE RIGHTS OF STOCKHOLDERS
GENERAL
The Board of Directors has unanimously approved a
proposal (the "Reincorporation") to change the Company's
state of incorporation from Delaware to Maryland. The
Reincorporation would be accomplished by merging the
Company (the "Merger") into a newly formed Maryland
subsidiary named [MATEC of Maryland, Inc.] (the "Maryland
Company"), pursuant to an Agreement of Merger and
Recapitalization (the "Merger Agreement") substantially in
the form attached as Exhibit A to this Proxy Statement.
The Maryland Company was incorporated in Maryland on
__________________ 1998, specifically for purposes of the
Reincorporation and has conducted no business and has no
material assets or liabilities. In connection with the
Merger, the Maryland Company will change its name to MATEC
Corporation.
The Maryland Company's principal executive offices
will continue to be located at 75 South Street, Hopkinton,
Massachusetts 01748. The Reincorporation will not result
in any change in the Company's business, management,
policies, assets or liabilities and will not result in any
relocation of management or other employees. It will not
result in any changes in ownership of the Common Stock of
the Company ("Common Stock") except that holders of less
than 100 shares will be cashed out, as described below.
PURPOSES OF THE REINCORPORATION
There are two purposes of the proposed
Reincorporation. First, in connection with it,
approximately 1,700 Stockholders who each own less than 100
shares of the Common Stock, will cease to be Stockholders
and will receive cash in lieu of fractional shares in the
Maryland Company. At ____________, 1998, such stockholders
owned an aggregate of 36,165 shares, representing 1.3% of
the 2,733,651 shares outstanding. This will result in
savings in administering stockholder accounts estimated at
$______ per year. Second, the Company will be able to
avoid Delaware's annual franchise tax which for the year
ended December 31, 199_, totaled $_______. The Company
anticipates having to pay the same amount in franchise
taxes for future years if it continues as a Delaware
corporation. As a Maryland corporation, the Company would
not be subject to such annual taxes other than the property
tax filing fee of $100, provided that Maryland does not
alter its current laws.
In addition to cashing out its holders of less than
100 shares and avoiding the annual Delaware franchise tax,
a number of changes will be effected as a result of the
Reincorporation. Such changes are described below under
the headings "Certain Consequences of the Merger" and
"Comparison of Rights of Stockholders of the Company and
Stockholders of the Maryland Company."
The Board of Directors estimates the aggregate costs
to the Company of the Reincorporation to be approximately
$_______.
In the event this proposal is not adopted, the Company
will continue to operate as a Delaware corporation, the
Company will remain subject to Delaware's annual franchise
tax and the holders of less than 100 shares will continue
as Stockholders of the Company.
CONVERSION OF COMMON STOCK AND
CASH PAYMENT TO HOLDERS OF LESS
THAN 100 SHARES
In the Merger, each outstanding share of Common Stock
of the Company will automatically be converted into 1/100th
of a share of the Common Stock of the Maryland Company.
Holders of less than 100 shares will receive cash for their
shares based on the market value of the Company's Common
Stock at the time of the Reincorporation.
THE SHARE OWNERSHIP OF HOLDERS OF 100 SHARES OR MORE
WILL NOT BE AFFECTED BY THE MERGER. The reason is that one
hour after the effectiveness of the Merger, shares of the
Common Stock of the Maryland Corporation stock (the
"Maryland Common Stock") will be split 100 for 1, so that
each holder of 100 shares or more of the Company's Common
Stock will hold the same number of shares of the Maryland
Common Stock. As to such holders, other than changes due
to the differences between Delaware and Maryland law and
certain differences between the charters of the Company and
the Maryland Company, there will be no changes in the
rights, preferences and privileges of holders of the Common
Stock as a result of the Reincorporation (see "Comparison
of Rights of Stockholders of the Company and Stockholders
of the Maryland Company"). The Maryland Common Stock will
be listed on the American Stock Exchange, Inc. (the "AMEX")
under the same symbol as the Company's Common Stock,
___________.
DESCRIPTION OF THE REINCORPORATION
EFFECTIVE TIME. The Merger will take effect at 6:00
P.M. Eastern Time on ____________, 1998 (the "Effective
Time") or such later time as the Board of Directors may
determine
At the Effective Time, the separate corporate
existence of the Company will cease, and the Maryland
Company will possess all of the rights, property and assets
of the Company and will assume all of its debts,
liabilities and obligations.
EFFECT ON CAPITAL STOCK.
1. Each stockholder who owns of record less than 100
shares of Common Stock immediately prior to the Effective
Time will have only the right to receive cash in lieu of
receiving a fraction of a share, as hereinafter described.
The interest of each such stockholder in the Company will
terminate, and each such stockholder will have no right to
vote as a stockholder or share in the Company's assets,
earnings or profits following the Reincorporation.
2. Each stockholder who owns of record 100 or more
shares of Common Stock immediately prior to the Effective
Time will become stockholders of the Maryland Company
owning 1/100th of the number of shares so owned in the
Company. As of 7:00 p.m. Eastern Time on ___________,
1998, each such share and fractional share will be split
100 for 1 (the "Split").
ANY HOLDER OF RECORD OF LESS THAN 100 SHARES OF COMMON
STOCK WHO DESIRES TO RETAIN AN EQUITY INTEREST IN THE
COMPANY AFTER THE MERGER MAY DO SO BY PURCHASING, PRIOR TO
THE MERGER, A SUFFICIENT NUMBER OF SHARES OF COMMON STOCK
SUCH THAT THE TOTAL NUMBER OF SHARES HELD OF RECORD IN HIS
NAME IS EQUAL TO AT LEAST 100. ANY BENEFICIAL OWNER OF
LESS THAN 100 SHARES WHO IS NOT A HOLDER OF RECORD AND WHO
DESIRES TO HAVE HIS SHARES EXCHANGED FOR CASH SHOULD
INSTRUCT HIS BROKER TO TRANSFER HIS SHARES INTO HIS NAME IN
A TIMELY MANNER SUCH THAT SUCH BENEFICIAL OWNER WILL BE A
HOLDER OF RECORD AT THE EFFECTIVE TIME.
CASH PAYMENT IN LIEU OF FRACTIONAL SHARES. The
average daily closing price per share of the Common Stock
on the AMEX for the ten trading days immediately preceding
the date on which the Merger takes effect is hereinafter
called the "Purchase Price." Each stockholder who holds
less than 100 shares of record at the Effective Time will
receive, in lieu of fractional shares, cash in the amount
of the Purchase Price multiplied by the number of shares of
Common Stock held by such stockholder at the Effective Time
(the "Cash Out".) All amounts payable to stockholders will
be subject to applicable state laws relating to abandoned
property. No service charges or brokerage commissions will
be payable by stockholders in connection with the Cash Out.
The Company will pay no interest on cash sums due any such
stockholder pursuant to the Cash Out.
As soon as practical after the Merger, the Company
will mail a letter of transmittal to each such holder of
less than 100 shares of Common Stock for use in
transmitting stock certificates to the Company's Exchange
Agent. The letter of transmittal will contain instructions
for the surrender of such certificate or certificates to
the Exchange Agent in exchange for such stockholder's cash
payment. No cash payment will be made to any such
stockholder until he has surrendered his outstanding
certificate(s), together with the letter of transmittal, to
the Exchange Agent. The Exchange Agent is State Street
Bank and Trust Company, P.O. Box 644, Mail Stop 45-02-64,
Boston, MA 02102-0644, Telephone No. 800-426-5523.
After the Merger and until surrendered, each
outstanding certificate held by a stockholder of record who
held less than 100 shares at the close of business at the
Effective Time will represent only the right to receive the
amount of cash to which the holder is entitled.
CONTINUING STOCKHOLDERS. After the Merger and the
Split, stockholders who immediately prior to the Effective
Time owned 100 shares or more of the Common Stock of the
Company will be stockholders of the Maryland Company owning
the same number of shares until they acquire or dispose of
shares. The stock will be identified by a new CUSIP
number, which will appear on all certificates issued after
the Merger. After the Merger and the Split, each
certificate which immediately prior to the Merger
represented at least 100 shares of Common Stock, until
surrendered and exchanged for a new certificate will be
deemed for all purposes to evidence ownership of the same
number of shares of the Maryland Company. Any stockholder
desiring to receive a new certificate bearing the new CUSIP
number can do so at any time by contacting the Exchange
Agent at the address set forth above for instructions for
surrendering his old certificates.
EFFECT OF CASH OUT. As of ______________, 1998,
approximately 1,200 record holders of Common Stock, or
approximately 59% of the total number of record holders,
owned less than 100 shares of Common Stock. Such
stockholders owned in the aggregate 36,165 shares, being
approximately 1.3% of the outstanding shares of Common
Stock. Based on the average daily closing price per share
of the Common Stock on the AMEX for the ten trading days
immediately preceding _______, 1998, the Company estimates
that cash payments to such holders will total $__________
(______ shares multiplied by an assumed Purchase Price of
$_______ per share).
The cost of administering each stockholder's account
and the amount of time spent by management of the Company
in responding to stockholder requests is the same
regardless of the number of shares held in the account.
Accordingly, the cost to the Company of maintaining many
small accounts is disproportionately high when compared
with the total number of shares involved. Management of
the Company believes that it would be beneficial to the
Company and its stockholders as a whole to eliminate the
administrative burden and costs associated with the
accounts containing less than 100 shares of Common Stock.
It is expected that the direct costs of administering
stockholder accounts will be reduced by approximately
$________ per year if the Reincorporation is effected.
Since the Company is unable to locate a significant
number of its stockholders with small holdings, it believes
it would be unable to acquire the shares of such stock-
holders by making a tender offer to acquire the shares.
Accordingly, if it is to acquire these shares, the Company
believes it must do so by means of the Reincorporation.
Funds otherwise payable to a stockholder who cannot be
located will be held by the Company until proper claim
therefor is made, subject to applicable escheat laws.
Further, the Reincorporation will enable holders of
record of less than 100 shares to dispose of their
investment at market value and avoid brokerage fees on the
transaction. Stockholders owning a small number of shares
would, if they chose to sell their shares otherwise, likely
incur brokerage fees disproportionately high relative to
the market value of the shares. In some cases,
stockholders might encounter difficulty in finding a broker
willing to handle such small transactions.
CERTAIN CONSEQUENCES OF THE REINCORPORATION
In the discussion below, where the context so requires
the term "Company" shall mean the Maryland Company
following the Reincorporation and the term "Board of
Directors" shall mean the Board of Directors of the
Maryland Company following the Reincorporation.
MANAGEMENT AFTER THE REINCORPORATION. Immediately
after the Reincorporation, the Board of Directors of the
Maryland Company (the "Maryland Board of Directors") will
be composed of the persons who are Directors of the Company
at the time of the Merger. Each will serve as director of
the Maryland Company until the next Annual Meeting of
Stockholders and until his successor is elected and
qualified.
STOCKHOLDER RIGHTS. Certain differences in
Stockholder rights exist under Delaware General Corporation
Law ("Delaware law") and Maryland General Corporation law
("Maryland law"). These are discussed below under the
caption "Comparison of Rights of Stockholders of the
Company and Stockholders of the Maryland Company".
NUMBER OF SHARES OF STOCK AUTHORIZED AND OUTSTANDING.
The Company's charter authorizes the Company to issue ten
million shares of Common Stock and one million shares of
preferred stock, and the charter of the Maryland Company
also authorizes the issuance of ten million shares of
Common Stock and one million shares of preferred stock.
The number of outstanding shares of Maryland Common Stock
following the Reincorporation and Split will equal the
number of shares of Common Stock of the Company outstanding
immediately prior to the Effective Time less the
approximately 36,000 shares held by holders of less than
100 shares. No shares of preferred stock are outstanding.
SECURITIES LAWS. The Common Stock is registered under
Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and, as a result, the Company
is subject to the periodic reporting and other requirements
of the Exchange Act. The Common Stock of the Maryland
Company will be registered under the Exchange Act. The
Company has no current intention of terminating such
registration to become a "private" company, and after the
Reincorporation the Maryland Company will be a publicly
held company. It will file with the SEC and provide to its
stockholders the same type of information that the Company
has previously filed and provided. Continuing shareholders
whose stock in the Company is freely tradable will have
freely tradable shares of the Maryland Company.
Shareholders holding restricted securities will be subject
to the same restrictions on transfer as those to which
their present shares of stock in the Company are subject.
FRANCHISE TAX. The Company is subject to Delaware's
annual franchise tax and for the year ended December 31,
199_, the amount of such tax was $______________. The
Company anticipates having to pay approximately the same
amount of franchise tax each year in the future if it
continues as a Delaware corporation. As a Maryland
corporation, the Maryland Company would not be subject to
any such annual taxes other than the Maryland personal
property tax filing fee of $100, provided that Maryland
does not alter its current laws.
OPTION PLAN. The Company's 1992 Stock Option Plan
(the "Plan") will be continued by the Maryland Company
following the Reincorporation. Approval of the proposed
Reincorporation will constitute approval of the adoption
and assumption of the Plan by the Maryland Company.
OUTSTANDING OPTIONS. All outstanding options and
other rights to acquire shares of Common Stock of the
Company will be converted into options or rights to acquire
shares of the Maryland Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
CONSEQUENCES TO THE COMPANY. The Reincorporation is
intended to be tax free under the Internal Revenue Code and
no gain or loss will be recognized by the Company or the
Maryland Company as a result of it.
CONSEQUENCES TO STOCKHOLDERS WHO RECEIVE NO CASH AND
CONTINUE TO HOLD COMMON STOCK IMMEDIATELY AFTER THE
EFFECTIVENESS OF THE REINCORPORATION. A stockholder who
continues to hold Common Stock immediately after the
effectiveness of the Reincorporation and who receives no
cash pursuant to the Reincorporation (i) will not recognize
any gain or loss in the Reincorporation and (ii) will have
the same adjusted tax basis and holding period in the
Common Stock as he had in the Common Stock immediately
prior to the Reincorporation.
CONSEQUENCES TO STOCKHOLDERS WHO RECEIVE CASH OF
PURSUANT TO THE REINCORPORATION. A stockholder who
receives cash in lieu of fractional shares in the
Reincorporation generally will recognize capital gain or
loss in an amount equal to the difference between the cash
received in the Reincorporation and his aggregate adjusted
tax basis in the shares of Common Stock disposed of.
If a stockholder who receives cash continues to own
shares beneficially, but not of record, or is treated under
the Internal Revenue Code as constructively owning shares
owned by certain related persons or entities, then under
some circumstances the full amount of the cash received may
be treated as capital gain or ordinary income.
MAXIMUM TAX RATES APPLICABLE TO CAPITAL GAIN. Under
the Taxpayer Relief Act of 1997, net capital gain (i.e.,
generally, capital gain in excess of capital loss)
recognized by an individual upon the sale of a capital
asset that has been held for more than 18 months will
generally be subject to tax at a rate not to exceed 20%.
Net capital gain recognized by an individual from the sale
of a capital asset that has been held for more than 12
months but not for more than 18 months will continue to be
subject to tax at a rate not to exceed 28%, and capital
gain recognized from the sale of a capital asset that has
been held for 12 months or less will continue to be subject
to tax at ordinary income tax rates. In addition, capital
gain recognized by a corporate taxpayer will continue to be
subject to tax at the ordinary income tax rates applicable
to corporation.
The foregoing is only a summary of certain Federal
income tax consequences, and each stockholder is urged to
consult his tax advisor as to the particular Federal,
state, local and foreign tax consequences to him.
ACCOUNTING TREATMENT OF THE MERGER
Upon the effectiveness of the Merger, the financial
accounts of the Maryland Company will become those of the
Company as they were immediately before effectiveness,
except that they as a result of the Cash Out the Common
Stock account will be charged with the portion of the Cash
Out payment equal to the total par value of the eliminated
common Stock and the capital surplus account will be
charged with the balance.
APPRAISAL RIGHTS
Delaware law provides that shareholders of a
corporation do not have appraisal rights when a corporation
whose shares are listed on a national securities exchange
merges with a foreign corporation. Consequently, because
the Common Stock is listed on the AMEX, appraisal rights
are not available to shareholders of the Company with
respect to the Reincorporation.
APPROVAL REQUIRED FOR REINCORPORATION
The affirmative vote of a majority of the outstanding
Common Stock entitled to vote on the proposal is required
for approval of the Reincorporation. The Reincorporation
may be abandoned or the Merger Agreement may be amended
(with certain exceptions), either before or after
Stockholder approval has been obtained, if in the opinion
of the Board of Directors circumstances arise that make
such action advisable.
No federal or state regulatory requirements must be
complied with or approval must be obtained in connection
with the proposed transaction.
COMPARISON OF RIGHTS OF STOCKHOLDERS OF THE COMPANY AND
STOCKHOLDERS OF THE MARYLAND COMPANY
GENERAL. The Company is organized as a corporation
under the laws of the State of Delaware and the Maryland
Company is organized as a corporation under the laws of the
State of Maryland. As a Delaware corporation, the Company
is subject to Delaware law and, as a Maryland corporation,
the Maryland Company is subject to Maryland law. The
Company also is governed by its Certificate of
Incorporation (the "Delaware Certificate") and Bylaws (the
"Delaware Bylaws"), which have been adopted pursuant to
Delaware law. As a Maryland corporation, the Maryland
Company is governed by Maryland law and by its Articles of
Incorporation (the "Maryland Articles") and Bylaws (the
"Maryland Bylaws"). A number of differences between
Delaware law and Maryland law and among these various
documents are summarized below.
The discussion of the comparative rights of the
shareholders of the Company and the stockholders of the
Maryland Company as set forth below does not purport to be
complete and is subject to and qualified in its entirety by
reference to Delaware law and Maryland law and also to the
Maryland Articles, Maryland Bylaws, Delaware Certificate
and Delaware Bylaws. The Maryland Articles and Maryland
Bylaws will be substantially in the forms attached as
Exhibits B and C, respectively, to this Proxy Statement,
and the Delaware Certificate and Delaware Bylaws may be
obtained from the Company, without charge, by contacting
Michael J. Kroll, Vice President, MATEC Corporation , 75
South Street, Hopkinton, Massachusetts 01748.
LIMITATION OF LIABILITY. Pursuant to Delaware law and
the Delaware Certificate, the liability of directors of the
Company to the Company or to any shareholder of the Company
for money damages for breach of fiduciary duty has been
eliminated, except for (i) breach of the directors' duty of
loyalty to the Company or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) unlawful
dividends or redemptions or purchases of stock, or (iv) any
transaction from which the directors derived an improper
personal benefit. In general, the liability of officers
may not be eliminated or limited under Delaware law.
Pursuant to Maryland law and the Maryland Articles,
the liability of directors and officers of the Maryland
Company to the Maryland Company or to any shareholder of
the Maryland Company for money damages has been eliminated
except for (i) actual receipt of an improper personal
benefit in money, property or service and (ii) active and
deliberate dishonesty established by a final judgment as
being material to the cause of action.
As a result of the Reincorporation, both directors and
officers of the Company may not be liable under Maryland
law for certain actions for which they would have otherwise
been liable under Delaware law; therefore, the likelihood
of payments by the Company pursuant to its indemnification
obligations (which are described below) may be reduced.
There is no pending or, to the Company's knowledge,
threatened litigation to which any of its directors or
officers is a party in which the rights of the Company or
its shareholders would be affected if the Company already
were subject to the provisions of Maryland law rather than
Delaware law.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. The
Delaware Certificate requires the Company, to the fullest
extent permitted by Delaware law, to indemnify every person
who is or was a party or is or was threatened to be made a
party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the
fact that he is or was a director, officer or employee of
the Company or, while a director, officer or employee of
the Company, is or was serving at the request of the
Company as a director, officer, employee, agent or trustee
of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against all
expense, liability and loss (including attorneys' fees,
judgments, fines and amounts paid in settlement) reasonably
incurred by him in connection with such action, suit or
proceeding.
The Maryland Articles authorize the Maryland Company
to indemnify its present and former directors and officers,
and any former director and officer who served a
predecessor of the Maryland Company in such capacity, and
to pay or reimburse expenses in advance of the final
disposition of a proceeding to the fullest extent permitted
from time to time by the laws of Maryland. Maryland law
permits a corporation to indemnify its present and former
directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their
service in those or other capacities unless it is
established that (a) the act of omission of the director or
officer was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result
of active and deliberate dishonesty, (b) the director or
officer actually received an improper personal benefit in
money, property or services, or (c) in the case of any
criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful. In
addition, Maryland law requires the Company, as conditions
to advancing expenses, to obtain (i) a written affirmation
by the director or officer of his or her good faith belief
that he or she has met the standard of conduct necessary
for indemnification by the Company as authorized by the
bylaws, and (ii) a written statement by or on his or her
behalf to repay the amount paid or reimbursed by the
Company if it shall ultimately be determined that the
standard of conduct was not met. Under Maryland law,
rights to indemnification and expenses are non-exclusive,
in that they need not be limited to those expressly
provided by statute. As a result, under Maryland law and
the Maryland Articles, the Maryland Company is permitted to
indemnify its directors, officers, employees and other
agents, within the limits established by law and public
policy, pursuant to an express contract, bylaw provision,
stockholder vote or otherwise, any or all of which could
provide indemnification rights broader than those currently
available under the Delaware Certificate or Delaware law.
Unlike the Delaware Certificate, which specifically
sets forth most of the conditions and requirements of
indemnification for the Delaware Company without referring
to Delaware law, the Maryland Articles define most of the
conditions and requirements of indemnification for the
Maryland Company by referring to applicable Maryland law;
therefore, the Maryland Company's indemnification
obligations may be modified by future changes in law
without stockholder action. To protect the Maryland
Company's officers and directors, the Maryland Articles
provide that amendment or repeal of the indemnification
provision of the Maryland Articles would be effective on a
prospective basis only and neither repeal nor modification
of such provision would adversely affect rights to
indemnification in effect at the time of any act or
omission that is the subject of a proceeding against an
indemnified person. The indemnification provisions of the
Maryland Articles are intended to apply to proceedings
arising from acts or omissions occurring before or after
their respective adoption or execution. There is presently
no pending or already completed litigation nor, to the best
knowledge of the Company, is there any threatened
litigation to which the expanded nature of the coverage
under the indemnity provision of the Maryland Articles
would apply.
Under Delaware law, the termination of any proceeding
by conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
such person is prohibited from being indemnified. Under
Maryland law, such a termination creates a rebuttable
presumption that such person is not entitled to
indemnification. In addition, Delaware law requires court
approval before there may be any indemnification where the
person seeking indemnification has been found liable to the
corporation. However, indemnification is prohibited under
Maryland law if the person seeking indemnification has been
found liable to the corporation in a proceeding brought by
or in the right of the corporation. In addition, Maryland
law provides that a person adjudged liable on the basis
that personal benefit was improperly received may not be
indemnified by the corporation. Thus, under these
circumstances, Maryland law provides indemnification rights
that are narrower than under Delaware law.
Delaware law, Maryland law and the Bylaws of both the
Company and the Maryland Company may permit indemnification
for liabilities arising under the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934
Act"). The Board of Directors has been advised that, in
the opinion of the SEC, indemnification for liabilities
arising under the 1933 Act or the 1934 Act is contrary to
public policy and is therefore unenforceable, absent a
decision to the contrary by a court of appropriate
jurisdiction.
ACTIONS BY WRITTEN CONSENT OF SHAREHOLDERS. Under
both Delaware law and Maryland law, shareholders may act by
written consent in lieu of a shareholder meeting. Delaware
law provides that, unless otherwise provided in the
certificate of incorporation, any action that may be taken
at a shareholder meeting may be taken without a meeting,
without prior notice and without a vote, upon the written
consent of the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to
authorize or take such action at a shareholder meeting at
which all shares entitled to vote were present and voted.
Maryland law provides that any action that may be taken at
a stockholder meeting may be taken without a meeting only
if, among other things, a unanimous written consent setting
forth the matter is signed by each stockholder entitled to
vote on the matter.
Because Maryland law requires the consent of all
stockholders entitled to vote for actions to be taken by
written consent, it will be extremely unlikely that
stockholders of the Maryland Company will be able to take
action by written consent.
INSPECTION OF BOOKS AND RECORDS. Under Delaware law,
any shareholder of the Company may examine the list of
shareholders and any shareholder making a written demand
may inspect any other corporate books and records for any
purpose reasonably related to the shareholder's interest as
a shareholder. Maryland law provides an absolute right of
stockholder inspection for any purpose to individuals who
have been stockholders for more than six (6) months and,
individually or as a group, own at least five percent (5%)
or more of a Maryland corporation's outstanding voting
shares. In addition, any stockholder of a Maryland
corporation has the right to request the corporation to
provide a sworn statement showing all stock and securities
issued and all consideration received by the corporation
within the preceding twelve (12) months. Thus,
stockholders of less than five percent (5%) of the
Company's Common Stock will generally not be able to make
written demand to inspect the books and records of the
Company if the Reincorporation is approved.
AMENDMENT TO BYLAWS. Under Delaware law, the
shareholders may never be divested of the power to adopt,
amend or repeal the bylaws. Such power may also be
conferred upon the board of directors. Under Maryland law,
the exclusive power to adopt, amend or repeal the bylaws
may be conferred upon the stockholders, vested exclusively
with the board of directors, or shared by both groups.
Under both the Delaware Bylaws and the Maryland
Bylaws, the bylaws may be altered, amended or repealed, or
new bylaws may be adopted by the respective shareholders or
by the respective boards of directors.
FILLING VACANCIES ON THE BOARD OF DIRECTORS. Pursuant
to Maryland law, unless the charter or bylaws provide
otherwise or a classified board system is employed, a
majority of the remaining directors, whether or not
sufficient to constitute a quorum, may appoint a director
to fill a vacancy which results from any cause except an
increase in the number of directors, and any vacancy
resulting from an increase in the number of directors shall
be filled only by a majority vote of the entire board. If
the vacancy is caused by removal of a director by the
stockholders, the successor director may be elected by the
stockholders at the same meeting at which such removal
occurs.
Pursuant to Delaware law, vacancies and newly created
directorships may be filled by a majority of the directors
then in office or a sole remaining director (even though
less than a quorum) unless otherwise provided in the
certificate of incorporation or bylaws. However, Delaware
law also provides that if the directors then in office
constitute less than a majority of the corporation's board
of directors, then, upon application by shareholders
representing at least ten (10%) of outstanding shares
entitled to vote for such directors, the Court of Chancery
may order a shareholder election of directors to be held.
DIVIDENDS AND OTHER DISTRIBUTIONS. Under Delaware
law, dividends may be paid out of the surplus of the
corporation or, if there is no surplus, out of net profits
for the year in which the dividend is declared and/or the
preceding fiscal year. Maryland law allows the payment of
dividends and redemption of stock unless (i) the
corporation would not be able to pay indebtedness that
became due in the ordinary course of business or (ii) the
corporation's total assets would be less than the sum of
the corporation's liabilities plus, unless the charter
would provide otherwise, the amount that would be needed
upon dissolution to satisfy the preferential rights of
those shareholders whose preferential rights upon
dissolution are superior to those receiving the
distribution.
SALES AND OTHER TRANSFERS OF ASSETS Pursuant to
Delaware law, a corporation may sell, lease or exchange all
or substantially all of its property and assets, as the
board of directors deems expedient and for the best
interests of the corporation, if authorized by a resolution
adopted by the holders of a majority of the outstanding
shares entitled to vote thereon.
Unlike Delaware law, which requires shareholder
approval for any transfer of assets of substantially all of
its assets, Maryland law permits a corporation to transfer
any or all of its assets to a subsidiary without
stockholder approval if one hundred percent (100%) of the
equity interests of the subsidiary are owned, directly or
indirectly, by the corporation.
LAWS REGULATING BUSINESS COMBINATIONS. Delaware law
requires that a merger, consolidation, share exchange, or,
in certain circumstances, an asset transfer, or issuance of
reclassification of equity securities (a "business
combination") between a corporation and any person who owns
fifteen percent (15%) or more of the outstanding voting
stock of the corporation may not occur for three (3) years
following the date such person became such an interested
shareholder unless (i) approved by the board of directors
and holders of at least two-thirds (2/3) of the outstanding
voting stock (other than shares controlled by the
interested shareholder), (ii) the board of directors
approved the acquisition of voting stock pursuant to which
such person became an interested shareholder, or (iii) an
exemption is available.
Under Maryland law, business combinations between a
Maryland corporation and any person who, at any time within
the two-year period prior to the date in question, was the
beneficial owner of ten percent (10%) or more of the voting
power of the then-outstanding voting stock of the
corporation (an "Interested Maryland Stockholder") are
prohibited for five (5) years after the most recent date on
which the Interested Maryland Stockholder became an
Interested Maryland Stockholder. Thereafter, unless an
exemption is available, Maryland law provides that any such
business combination must be recommended by the board of
directors of such corporation and approved by the
affirmative vote of at least (a) eighty percent (80%) of
the votes entitled to be cast by holders of outstanding
voting shares of the corporation and (b) sixty-six percent
(66%) of the votes entitled to be cast by outstanding
voting shares of the corporation other than shares held by
the Interested Maryland Stockholder with whom the business
combination is to be effected.
The Maryland business combination statue could have
the effect of discouraging offers to acquire the Maryland
Company and of increasing the difficulty of consummating
any such offers.
DISSENTERS' RIGHTS. Under Maryland law, stockholders
have the right to demand and to receive payment of the fair
value of their stock in the event of: (a) a merger or
consolidation, (b) a share exchange, (c) certain sales of
all or substantially all of the assets, (d) a charter
amendment altering contract rights of outstanding stock, as
expressly set forth in the charter, and substantially
adversely affecting the stockholders rights, unless the
right to do so is reserved in the charter, or (e) certain
business combinations with interested stockholders which
are subject to or exempted from Maryland's business
combination statute and in connection with the approval of
voting rights of certain stockholders under Maryland's
control share acquisition statute. However, the right to
demand and receive payment of fair value does not apply to
stock listed on a national securities exchange.
See "Appraisal Rights" above concerning rights of
appraisal in connection with the Reincorporation.
NUMBER OF AUTHORIZED SHARES OF CAPITAL STOCK. The
Delaware Certificate authorizes the issuance of 10,000,000
shares of Common Stock and 1,000,000 shares of preferred
stock. The Maryland Articles also authorize the issuance
of 10,000,000 shares of Common Stock and 1,000,000 shares
of preferred stock.
CLASSIFICATION & RECLASSIFICATION OF UNISSUED STOCK.
Maryland law expressly permits a Maryland corporation's
charter to authorize so-called "blank check" stock which
permits the Board both to classify and/or reclassify the
preferences, conversion rights, voting powers,
restrictions, limitations as to dividends, rights regarding
redemption and liquidation, and other rights of any shares
of unissued stock. If the Board of Directors exercises
this power, Articles Supplementary must be filed with SDAT
prior to the issuance of such securities. This power can
be used not only to classify or initially set the
preferences and other terms of preferred stock as under
Delaware law, but also to change the terms of unissued
common stock or to reclassify unissued common stock as
preferred stock, or vice versa.
Delaware law provides for a similar right for a
Delaware corporation, but only with respect to classifying
(but not reclassifying) the terms of any class or series of
authorized but unissued stock.
Because Maryland law affords greater flexibility in
either classifying or reclassifying the terms of any
unissued stock than does Delaware law, "blank check" stock
of a Maryland corporation can be used as a anti-takeover
defense since it enables the corporation to issue
additional shares with supervoting or other enhanced
rights.
VALIDITY OF THE MARYLAND COMPANY STOCK.
The validity of the Maryland Company Stock will be
passed upon for the Maryland Company by Whiteford, Taylor &
Preston L.L.P., Seven Saint Paul Street, Baltimore,
Maryland 21202-1626.
POSSIBLE DISADVANTAGES.
Despite the belief of the Company's Board of Directors
that the Reincorporation Proposal is in the best interests
of the Company and its shareholders, shareholders should be
aware that Maryland law has generally not received the same
extent of scrutiny and interpretation by the courts as has
Delaware law. Although the corporate law of other states
such as Maryland's has been updated in a number of
significant respects recently to make it an attractive
alternative site for incorporation, Delaware law is still
widely regarded as the most extensive and well-defined body
of corporate law in the United States. Because of
Delaware's prominence as a state of incorporation for many
major corporations, both the legislature and courts in
Delaware have demonstrated an ability and willingness to
act quickly and effectively to meet changing business
needs. Furthermore Delaware corporations are often guided
by the extensive body of court decisions interpreting
Delaware's corporate law.
Maryland law is a modern corporation statute, which
was significantly updated in 1975, and has been further
amended in a number of significant respects to date. The
Company's Board of Directors believes that Maryland law, as
supplemented by its legislative history, will provide MATEC
Corporation with a comprehensive and flexible legal
structure under which to operate. Furthermore, Maryland
courts have referred to the analysis of the Delaware courts
in addressing issues raised by similar provisions of
Maryland law and Delaware law.
RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board believes that the Reincorporation proposal is
in the best interests of the Company and it Stockholders and
therefore recommends Stockholders vote FOR approval of the
proposal.
A vote FOR the Reincorporation will constitute approval
of (i) the change in the Company's state of incorporation
through a merger of the Company into the Maryland Company,
(ii) the Maryland Articles, [(iii) the Maryland ByLaws,] and
(iv) all other aspects of the Reincorporation.
OTHER MATTERS
The Board of Directors knows of no matters to be
presented at the meeting other than those set forth in the
foregoing Notice of Annual Meeting. If other matters
properly come before the meeting, the persons named on the
accompanying form of proxy intend to vote the shares
subject to such proxies in accordance with their best
judgment.
AUDIT AND RELATED MATTERS
The Board of Directors has selected Deloitte &
Touche, independent certified public accountants, as
auditors of the Corporation for 1998.
The consolidated financial statements of the
Corporation and its subsidiaries included in the Annual
Report to Stockholders for the fiscal year ended December
31, 1997 were examined by Deloitte & Touche.
Representatives of Deloitte & Touche are expected to attend
the meeting with the opportunity to make a statement if
they desire. It is expected that such representatives will
be available to respond to appropriate questions from
stockholders.
ADDITIONAL INFORMATION
The cost of solicitation of Proxies will be
borne by the Corporation. If necessary to insure
satisfactory representation at this meeting, Proxies may be
solicited to a limited extent by telephone or personal
interview by officers and employees of the Corporation.
Such solicitation will be without cost to the Corporation,
except for actual out-of-pocket communication charges.
Brokerage houses, banks, custodians, nominees and
fiduciaries are being requested to forward the proxy
material to beneficial owners and their reasonable expenses
therefore will be reimbursed by the Corporation.
STOCKHOLDER'S PROPOSALS
From time to time, stockholders present
proposals which may be proper subjects for inclusion in the
Proxy Statement and for consideration at the annual
meeting. To be considered, proposals must be submitted on
a timely basis. Proposals for the 1999 annual meeting must
be received by the Corporation no later than _____________,
1998.
JOHN J. MCARDLE III
SECRETARY
______________, 1998
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER OF
THE CORPORATION, THE CORPORATION WILL PROVIDE TO SUCH
STOCKHOLDER A COPY OF THE CORPORATION'S ANNUAL REPORT ON
FORM 10-K FOR 1997, INCLUDING THE FINANCIAL STATEMENTS AND
THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE DIRECTED
TO SECRETARY, MATEC CORPORATION, 75 SOUTH STREET,
HOPKINTON, MASSACHUSETTS 01748. THERE WILL BE NO CHARGE
FOR SUCH REPORT UNLESS ONE OR MORE EXHIBITS THERETO ARE
REQUESTED, IN WHICH CASE THE CORPORATION'S REASONABLE
EXPENSES OF FURNISHING SUCH EXHIBITS MAY BE CHARGED.
ALL STOCKHOLDERS ARE URGED TO FILL IN, SIGN AND
MAIL THE ENCLOSED PROXY PROMPTLY WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING. IF YOU ARE MAILING YOUR PROXY,
KINDLY DO SO SUFFICIENTLY IN ADVANCE OF THE MEETING DATE SO
THAT IT WILL BE RECEIVED IN TIME TO BE COUNTED AT THE
MEETING.
<PAGE>
EXHIBIT A
AGREEMENT OF MERGER
AND
RECAPITALIZATION
THIS AGREEMENT (the "Agreement"), dated as of
____________________, 1998, is by and between MATEC
Corporation, a Delaware corporation (the "Company"), and
[MATEC of Maryland Inc.], a Maryland corporation (the
"Maryland Company").
RECITALS
WHEREAS, the Board of Directors of the Company
and the Board of Directors of the Maryland Company each
have determined that it is in the best interest of their
respective shareholders to effect the merger provided for
herein and thereafter to effect the recapitalization of the
Maryland Company provided for herein, all upon the terms
and subject to the conditions set forth therein,
NOW, THEREFORE, in consideration of the premises,
and of the representations, warranties, covenants and
agreements contained herein, the parties hereto adopt the
plan or reorganization encompassed by this agreement and
agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time (as
defined in Section 1.2), the Company shall be merged with
and into the Maryland Company and the separate corporate
existence of the Company shall thereupon cease (the
"Merger"). To the extent the Merger constitutes a
transaction for federal income tax purposes, the parties
intend that the Merger qualify as a reorganization
described in Section 368(a)(1)(F) of the Internal Revenue
Code of 1986, as amended. The Maryland Company (sometimes
hereinafter referred to as the "Surviving Entity") shall be
the surviving entity in the Merger and shall continue to be
governed by the laws of the State of Maryland, and its
separate existence with all its rights, privileges,
immunities, powers and franchises shall continue unaffected
by the Merger. The Merger shall have the effects specified
in the Delaware General Corporation Law (the "DGCL"" and
the Maryland General Corporation Law (the "MGCL").
1.2 Effective Time. Promptly after the
conditions set forth in Section 6.1 shall be fulfilled, and
provided that this Agreement has not been terminated or
abandoned pursuant to Article VII, the Company and the
Maryland Company shall cause a Certificate of Merger (the
"Certificate of Merger") to be executed and filed with the
Secretary of State of Delaware as provided in Section 251
of the DGCL and Articles of Merger (the "Articles of
Merger") to be executed and filed with the State Department
of Assessments and Taxation of Maryland (the "SDAT") as
provided in Section 3-107 of the MGCL. The Merger shall
become effective at 6:00 P.M. Eastern Time on __________,
1998 (the "Effective Time"), but only if prior to that date
such Certificate of Merger and Articles of Merger have been
so filed.
ARTICLE II
ARTICLES OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles
of Incorporation of the Maryland Company in effect at the
effective Time, as amended by this Agreement, shall be the
Articles of Incorporation of the Surviving Entity, until
duly amended in accordance with the MGCL.
2.2 The Bylaws. The Bylaws of the Maryland
Company in effect at the Effective Time shall be the Bylaws
of the Surviving Entity, until duly amended in accordance
with the terms thereof and the MGCL.
ARTICLE III
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
3.1 Directors and Officers. The directors and
officers of the Company at the Effective Time shall, from
and after the Effective Time, be the directors and
officers, respectively, of the Surviving Entity until their
successors have been duly elected or appointed and
qualified or until their earlier death, resignation or
removal in accordance with the Surviving Entity's Articles
of Incorporation and Bylaws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK
4.1 Effect on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the
part of any holder of capital stock of the Company:
(a) Except as provided in (b) below, each
share of the common stock, par value $0.05 per share, of
the Company ("Company Stock") issued prior to the Effective
Time (including treasury shares) and not theretofore
retired shall be converted into 1/100th of one validly
issued, fully paid and nonassessable share of common stock,
par value $0.05 per share, of the Maryland Company
("Maryland Company Stock").
(b) Stockholders holding less than 100
shares of Company Stock of record immediately prior to the
Effective Time ("Fractional Holders") shall not receive or
be entitled to any fractional shares of Maryland Company
Stock and, except as set forth in the immediately following
sentence, shall not have any rights as a stockholder of the
Surviving Entity. In lieu of all other rights, Fractional
Holders shall be entitled to receive, upon surrender of the
certificate or certificates evidencing their shares of
Company Stock, the cash value of such shares based on the
average daily closing price per share of the Company Stock
on the American Stock Exchange for the 10 trading days
immediately preceding the Effective Time, without interest.
(c) Each issued certificate which
immediately prior to the Effective Time represented at
least 100 shares of Company Stock shall, from and after the
Effective Time and the effectiveness of the amendment of
the Articles of Incorporation of the Maryland Company
referred to in Section 6.1(c) (the "Split"), be deemed for
all purposes to evidence ownership of and represent the
number of shares of Maryland Company Stock which the shares
of Company Stock represented by such certificates have
become as a result of the Merger and the Split, and shall
be so registered on the books and records of the Maryland
Company and its transfer agent.
(d) Each option or other right to purchase
or otherwise acquire shares of Company Stock outstanding
immediately prior to the Effective Time shall, by virtue of
the Merger and the Split and without any action on the part
of the holder of such option or right, be converted into
and become an option or right to purchase or otherwise
acquire the same number of shares of Maryland Company Stock
at the same price per share and upon the same terms and
subject to the same conditions as applicable to such
options or other rights immediately prior to the Effective
Time.
(e) Each share of the Maryland Company Stock
outstanding immediately prior to the Effective Time shall
be canceled and retired, without payment of any
consideration therefor, and resume the status of an
authorized and unissued share of Maryland Company Stock.
ARTICLE V
COVENANTS
5.1 Stock Exchange Listing. The Maryland
Company shall use its best efforts to cause the Maryland
Company Stock to be issued in the Merger and Split to be
approved for listing on the American Stock Exchange, Inc.
(AMEX) prior to the Effective Time subject to official
notice of issuance.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of the
Maryland Company and the Company to consummate the Merger
are subject to the fulfillment of each of the following
conditions:
(a) Shareholder Approval. This Agreement
shall have been duly approved by the holders of a majority
of the outstanding shares of Company Stock.
(b) AMEX Listing. The Maryland Company
Stock issuable pursuant to this Agreement shall have been
approved for listing on AMEX upon official notice of
issuance.
(c) The Articles of Incorporation of the
Maryland Company shall have been amended by adding a
Paragraph (c) thereto providing as follows:
"(c) Effective one hour after the
merger of MATEC Corporation (a Delaware
corporation) with and into this corporation
shall become effective, each issued share of
the common stock par value $0.05 per share
(including treasury shares), of this
corporation and each fraction thereof is
reclassified and converted into multiple
shares on the basis of 100 shares for each
one share."
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This
Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, before or after
the approval by holders of the Company Stock, by the mutual
consent of the Board of Directors of the Company and the
Board of Directors of the Maryland Company
7.2 Effect of Termination and Abandonment. In
the event of termination of this Agreement and abandonment
of the Merger pursuant to this Article VII, no party hereto
(or any of its directors or officers) shall have any
liability or further obligation to any other party to this
Agreement.
ARTICLE VIII
AMENDMENT OF ARTICLES OF INCORPORATION
Name Change. At the Effective Time, Article II
of the Articles of Incorporation of the Maryland Company
shall be amended to provide as follows:
"The name of the corporation shall be MATEC
Corporation."
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Modification or Amendment. Subject to the
applicable provisions of the DGCL and the MGCL, at any time
prior to the Effective Time, the parties hereto may modify
or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective
parties.
9.2 Waiver of Conditions. The conditions to
each of the parties' obligations to consummate the Merger
are for the sole benefit of such party and may be waived by
such party in whole or in part to the extent permitted by
applicable law.
9.3 Counterparts. For the convenience of the
parties hereto, this Agreement may be executed in any
number of counterparts, each such counterpart being deemed
to be an original instrument, and all such counterparts
shall together constitute the same agreement.
9.4 Headings. The Article, Section and paragraph
headings herein are for convenience of reference only, do
not constitute a part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions
hereof.
IN WITNESS WHEREOF, this Agreement has been
duly executed and delivered by the duly authorized officers
of the parties hereto on the date first hereinabove
written.
MATEC CORPORATION
ATTEST: By:
_____________________________
(Name)
(Title)
MATEC OF MARYLAND, INC.
ATTEST: By:
_____________________________
(Name)
(Title)
<PAGE>
EXHIBIT B
ARTICLES OF INCORPORATION
OF
MATEC OF MARYLAND, INC.
THE UNDERSIGNED, ____________________, whose
mailing address is ________________________________, being
at least eighteen years of age, acting as incorporator,
does hereby form a corporation under the General Laws of
the State of Maryland.
FIRST: The name of the corporation (the
"Corporation") is MATEC of Maryland, Inc..
SECOND: The purpose of the Corporation is to
engage in any lawful act or activity for which corporations
may be organized under the Maryland General Corporation Law
as now or hereafter in force.
THIRD: The address of the Corporation's
principal office is 75 South Street, Hopkinton,
Massachusetts 01748. The address of the Corporation's
principal office and registered office in the State of
Maryland is c/o Harbor City Research, Inc., 201 East
Baltimore Street, Suite 630, Baltimore, Maryland 21202.
The name of its registered agent at that office is National
Corporation Research, Ltd.
FOURTH: (a) The total number of shares of
capital stock which the Corporation has authority to issue
is Eleven Million 11,000,000) shares, consisting of ten
million (10,000,000) shares of common stock, par value $.05
per share, and One Million (1,000,000) shares of series
preferred stock, par value ($.10) per share. The aggregate
par value of all authorized shares having a par value is
Six Hundred Thousand dollars ($600,000).
(b) The following is a description of each class
of stock of the Corporation, including any preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption:
1. Common Stock. Subject to the rights of
holders of any series of preferred stock established
pursuant to paragraph 2 of this Article SIXTH, each
share of common stock shall entitle the holder to one
(1) vote per share on all matters upon which
stockholders are entitled to vote, to receive
dividends and other distributions as authorized by the
Board of Directors in accordance with the Maryland
General Corporation Law ("MGCL") and to all rights of
a stockholder pursuant to the MGCL. The common stock
shall have no preferences or preemptive, conversion or
exchange rights. The Board of Directors may classify
or reclassify any unissued shares of common stock from
time to time by setting or changing the designations,
preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends and
other distributions, qualifications or terms or
conditions of redemption.
2. Series Preferred Stock. The Board of
Directors shall have the power from time to time to
classify or reclassify, in one (1) or more series, any
unissued shares of series preferred stock by setting
or changing the number of shares constituting such
series and the designation, preferences, conversion
and other rights, voting powers, restrictions,
limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption
of such shares and, in such event, the Corporation
shall file for record with the State Department of
Assessments and Taxation of Maryland ("SDAT") Articles
Supplementary in substance and form as prescribed from
time to time by the MGCL.
FIFTH: No holder of shares of capital stock of
the Corporation shall, as such holder, have any preemptive
or other right to purchase or subscribe for any shares of
Common Stock or any class of capital stock of the
Corporation that the Corporation may issue or sell.
SIXTH: The number of directors that will
constitute the entire Board of Directors shall be fixed by,
or in the manner provided in, the Bylaws but shall in no
event be less than three nor more than fifteen. The names
of the directors who will serve until the first annual
meeting or until their successors are chosen and qualify
are ____________________________________________________.
SEVENTH: The Board of Directors of the
Corporation is hereby empowered to authorize the issuance
from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities
convertible into shares of its stock of any class or
classes, whether now or hereafter authorized.
EIGHTH: The liability of the directors and
officers of the Corporation to the Corporation and its
shareholders for money damages is hereby limited to the
fullest extent permitted by the laws of the State of
Maryland now or hereafter in force. No amendment of these
Articles of Incorporation or repeal of any of its
provisions shall limit or eliminate the benefits provided
to directors and officers under this provision with respect
to any act or omission that occurred prior to such
amendment or repeal.
NINTH: The Corporation shall indemnify
directors, officers, agents and employees as follows: (a)
the Corporation shall indemnify its directors and officers,
whether serving the Corporation, any predecessor of the
Corporation, or at the Corporation's request any other
entity, to the fullest extent required or permitted by the
laws of the State of Maryland now or hereafter in force,
and (b) the Corporation shall indemnify other employees and
agents, whether serving the Corporation, any predecessor of
the Corporation, or at the Corporation's request any other
entity, to such extent as shall be authorized by the Board
of Directors or the Corporation's Bylaws and be permitted
by law. The foregoing rights of indemnification shall not
be exclusive of any other rights to which those seeking
indemnification may be entitled and shall continue as to a
person who has ceased to be a director, officer, agent or
employee and shall inure to the benefit of the heirs,
executors and administrators of such a person. The Board
of Directors may take such action as is necessary to carry
out these indemnification provisions and is expressly
empowered to adopt, approve and amend from time to time
such Bylaws, resolutions or contracts implementing such
provisions or such further indemnification arrangements as
may be permitted by law. No amendment of these Articles of
Incorporation of the Corporation shall limit or eliminate
the right to indemnification provided hereunder with
respect to acts or omissions occurring prior to such
amendment or repeal.
TENTH: Notwithstanding any provision of the
General Laws of the State of Maryland requiring action to
be taken or authorized by the affirmative vote of the
holders of a designated proportion greater than a majority
of the shares of capital stock of the Corporation
outstanding and entitled to vote thereupon, such action
shall, except as otherwise provided in these Articles of
Incorporation, be valid and effective if taken or
authorized by the affirmative vote of the holders of a
majority of the total number of shares of capital stock of
the Corporation outstanding and entitled to vote thereupon
voting together as a single class.
ELEVENTH: Pursuant to the express grant of
authority contained in MGCL Sections 3-702(b) and 2-104(b),
the control share acquisition provisions of Title 3, Subtitle
7 of the MGCL shall not apply with respect to the voting or
any other rights of any shares of the Corporation's capital
stock of every nature, kind and description whatsoever
acquired or otherwise held by any entity, individual or any
other person at anytime whatsoever and the acquisition of
said shares by any such person or entity, as aforesaid, is
hereby generally approved in all respects; provided that,
this election shall be effective only for so long as the
provisions of this Article ELEVENTH remain in full force and
effect and the Corporation expressly reserves the right to
amend, repeal or otherwise alter the same at anytime, in
whole or in part, in accordance with the MGCL and the
Corporation's Articles of Incorporation and By-Laws, as the
same may be amended, supplemented and in effect from time to
time.
TWELFTH: The Corporation reserves the right to
amend, alter or repeal any provision contained in these
Articles of Incorporation in any manner permitted by
Maryland law, including any amendment changing the terms or
contract rights, as expressly set forth in its Charter, of
any of its outstanding stock by classification,
reclassification or otherwise, upon the vote of the holders
of a majority of the shares of capital stock of the
Corporation outstanding and entitled to vote thereon voting
together as a single class.
THIRTEENTH: The duration of the Corporation
shall be perpetual.
IN WITNESS WHEREOF, the undersigned incorporator
of the Corporation who executed the foregoing Articles of
Incorporation hereby acknowledge the same to be their act
and further acknowledge that, to the best of their
knowledge the matters and facts set forth therein are true
in all material respects under the penalties of perjury.
Dated the day of April, 1998.
________________________
<PAGE>
Exhibit C
MATEC Corporation
By-Laws
ARTICLE I
OFFICES
Section 1. Offices. The Corporation shall
maintain a registered office in Maryland. The Corporation
may maintain such other offices and keep its books,
documents and records at such other places both within and
without the State of Maryland as the Board of Directors may
from time to time determine or the business of the
Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 2. Annual Meetings. Annual meetings of
stockholders shall be held on the last Wednesday in April,
in each year, if not a legal holiday, and if a legal
holiday, then on the next secular day following, or on such
other day as shall be fixed by the Board of Directors and
stated in the notice of the meeting, when stockholders
shall elect by a plurality vote a Board of Directors, and
transact such other business as may properly be brought
before the meeting. The annual meeting shall be held at a
time determined by the Board of Directors and stated in the
notice of the meeting.
Section 3. Notice of Annual Meeting. Written or
printed notice of the annual meeting stating the place,
date and hour of the meeting shall be delivered not less
than ten nor more than sixty days before the date of the
meeting, by mail, by or at the direction of the chief
executive officer, the Secretary, or the officer or persons
calling the meeting, to each stockholder of record entitled
to vote at such meeting.
Section 4. Special Meetings. Special meetings
of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the chief executive officer
or the Board of Directors. The business transacted at any
special meeting of stockholders shall be limited to the
purposes stated in the notice of the meeting.
Section 5. Notice of Special Meetings. Written
or printed notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes
for which the meeting is called, shall be delivered not
less than ten nor more than sixty days before the date of
the meeting, by mail, by or at the direction of the chief
executive officer, the Secretary, or the officer or persons
calling the meeting, to each stockholder of record entitled
to vote at such meeting. The notice shall also indicate
that it is being issued by, or at the direction of, the
person calling the meeting.
Section 6. Quorum. The holders of a majority of
the shares issued and outstanding and entitled to vote,
represented in person or by proxy, shall constitute a
quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by
statute or by the Articles of Incorporation. If, however,
such quorum shall not be present or represented at any
meeting of the stockholders, the stockholders present in
person or represented by proxy shall have power to adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which
a quorum shall be present or represented any business may
be transacted which might have been transacted at the
meeting as originally noticed.
Section 7. Voting. At any meeting of
stockholders each outstanding share having voting power
shall be entitled to one vote on each matter submitted to a
vote. A stockholder may vote either in person or by proxy
executed in writing by the stockholder or by his duly
authorized attorney-in-fact. All elections shall be
determined by plurality vote, and except as otherwise
provided by statute or in the Articles of Incorporation,
all other matters shall be determined by vote of a majority
of the shares present or represented at such meeting and
voting on such matters.
Section 8. Inspectors of Election. The Board of
Directors in advance of any meeting of stockholders may
appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed,
the person presiding at a meeting of stockholders may, and,
on the request of any stockholder entitled to vote thereat,
shall appoint one or more inspectors. In case any person
appointed as inspector fails to appear or act, the vacancy
may be filled by the Board of Directors in advance of the
meeting or at the meeting by the person presiding thereat.
Each inspector, before entering upon the discharge of his
duties shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict
impartiality and according to the best of his ability.
Section 9. List of Stockholders. A list of
stockholders as of the record date, certified by the
officer of the Corporation responsible for its preparation
or by the transfer agent, shall be produced at any meeting
of stockholders upon the request thereat or prior thereto
of any stockholder. If the right to vote at any meeting is
challenged, the inspectors of election, or person presiding
thereat shall require such list of stockholders to be
produced as evidence of the right of the persons challenged
to vote at such meeting, and all persons who appear from
such list to be stockholders entitled to vote thereat may
vote at such meeting.
ARTICLE III
DIRECTORS
Section 1. Number, Qualification and Term. The
property and business of the Corporation shall be managed
by its Board of Directors consisting of not less than Five
(5) nor more than Thirteen (13) persons. The number of
directors constituting the entire Board shall be Six (6);
provided, however, that from time to time, such number may
be decreased to not less than Five (5) or increased to not
more than Thirteen (13) persons by amendment of this
section of the By-laws by a majority of the entire Board of
Directors. Directors need not be stockholders. They shall
be elected at the Annual Meeting of Stockholders and each
director shall be elected to serve until his successor
shall be elected and shall qualify.
Section 2. Removal. Any or all of the directors
may be removed for cause at any time by the vote of the
stockholders.
Section 3. Vacancies. Newly created
directorships resulting from an increase in the Board of
Directors and all vacancies occurring in the Board of
Directors, except vacancies caused by removal without
cause, may be filled by a majority vote of the directors
then in office, though less than a quorum exists. A
director elected to fill a vacancy shall be elected for the
unexpired portion of the term of his predecessor in office.
A director elected to fill a newly created directorship
shall serve until the next succeeding annual meeting of
stockholders and until his successor shall have been
elected and qualified.
Section 4. Additional Powers. In addition to
the powers and authorities by these By-Laws expressly
conferred upon it, the Board of Directors may exercise all
such powers of the Corporation and do all such lawful acts
and things as are not by statute or by the Articles of
Incorporation or by these By-Laws directed or required to
be exercised or done by the stockholders.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Place. Meetings of the Board of
Directors, regular or special, may be held either within or
without the State of Maryland.
Section 2. First Meeting. The first meeting of
each newly elected Board of Directors shall be held
immediately after the annual meeting of stockholders at the
same place as such meeting is held and no notice of such
meeting to the newly elected directors shall be necessary
in order legally to constitute the meeting provided a
quorum shall be present, or it may convene at such place
and time as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of
Directors, or as shall be specified in a duly executed
waiver of notice thereof.
Section 3. Regular Meetings. Regular meetings
of the Board of Directors may be held upon such notice, or
without notice, and at such time and at such place as shall
from time to time be determined by the Board.
Section 4. Special Meetings. Special meetings
of the Board of Directors may be called by the chief
executive officer on written notice to each director,
deposited in the United States mail no later than the third
calendar day preceding the meeting date or delivered by
hand or to the telegraph company no later than the first
calendar day preceding the meeting date; special meetings
shall be called by the chief executive officer or Secretary
in like manner and on like notice on the written request of
two directors.
Section 5. Quorum. A majority of the entire
Board of Directors shall constitute a quorum for the
transaction of business unless a greater or lesser number
is required by law or by the Articles of Incorporation.
The vote of a majority of the directors present at any
meeting at which a quorum is present shall be the act of
the Board of Directors, unless the vote of a greater number
is required by law or by the Articles of Incorporation. If
a quorum shall not be present at any meeting of directors,
the directors present may adjourn the meeting from time to
time. Notice of any such adjournment shall be given to any
director who was not present at the time of such
adjournment and unless announced at the meeting to the
other directors.
Section 6. Consent in Lieu of Meeting. Any
action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a
meeting if all members of the Board or the committee
consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written
consents thereto by the members of the Board or committee
shall be filed with the minutes of the proceedings of the
Board or committee.
Section 7. Telephone Participation at Meetings.
Any one or more of the Board of Directors or any committee
thereof may participate in a meeting of the Board of
Directors or of such committee by means of conference
telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at
the same time. Participation in a meeting by such means
shall constitute presence in person at a meeting.
ARTICLE V
COMMITTEES
Section 1. Committees. The Board of Directors,
by resolution adopted by a majority of the entire board,
may designate, from among its members, an executive
committee and other committees consisting of three or more
directors, which, to the extent provided in the resolution,
shall have all the authority of the Board, except as
otherwise required by law. Vacancies in the membership of
such committees shall be filled by the Board of Directors
at a regular or special meeting. Such committees shall
keep regular minutes of its proceedings and report the same
to the Board when required.
Subject to the provisions of these By-Laws, the
executive committee and each other committee shall fix its
own rules of procedure and shall meet at provided by such
rules or by resolution of the Board of Directors and it
shall also meet at the call of the Chairman of the Board or
President of the Corporation or any two members of such
committee. A majority of the executive committee and of
each other committee shall constitute a quorum for the
transaction of business and the vote of a majority of the
members of such committee present at any meeting at which
there is a quorum shall be the act of such committee.
ARTICLE VI
NOTICES
Section 1. Form; Delivery. Whenever, under the
provisions of the statutes or of the Articles of
Incorporation or of these By-Laws, notice is required to be
given to any director or stockholder, such notice may be
given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of
the Corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the
same shall be deposited in the United States mail. Notice
to directors may also be given by hand delivery, effective
upon such delivery, or by telegram which notice shall be
deemed to have been given when delivered to the telegraph
company. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of
notice of such meeting.
Section 2. Waiver of Notice. Whenever any
notice is required to be given under the provisions of any
statute or under the provisions of the Articles of
Incorporation or these By-Laws, a waiver thereof in writing
signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice. In
addition, any stockholder attending a meeting of
stockholders in person or by proxy without protesting prior
to the conclusion of the meeting, the lack of notice
thereof to him, and any director attending a meeting of the
Board of Directors without protesting prior to the meeting
or at its commencement such lack of notice shall be
conclusively deemed to have waived notice of such meeting.
ARTICLE VII
OFFICERS AND AGENTS
Section 1. Officers. The officers of the
Corporation shall be chosen by the Board of Directors and
shall be a Chairman of the Board, a President, a Vice-
President, a Secretary and a Treasurer. The Board of
Directors may also choose additional Vice-Presidents, and
one or more Assistant Secretaries and Assistant Treasurers.
Section 2. Election. The Board of Directors at
its first meeting after each annual meeting of stockholders
shall choose a Chairman of the Board, a President, one or
more Vice-Presidents, a Secretary and a Treasurer. Any two
or more offices may be held by the same person.
Section 3. Additional Officers and Agents. The
Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to
time by the Board of Directors.
Section 4. Compensation. The salaries of all
officers of the Corporation shall be fixed by the Board of
Directors and the compensation of employees and agents
shall be so fixed or shall be fixed by officers thereunto
duly authorized.
Section 5. Term of Office; Removal. The
officers of the Corporation shall hold office until their
successors are chosen and qualify. Any officer or agent
elected or appointed by the Board of Directors may be
removed at any time with or without cause by the Board.
Any vacancy occurring in any office of the Corporation may
be filled by the Board of Directors.
Section 6. Powers and Duties of the Chairman of
the Board. The Chairman of the Board of Directors shall
preside at all meetings of the Board and all meetings of
the stockholders at which he shall be present and shall
have such other powers and duties as may from time to time
be assigned to him by the Board of Directors.
Section 7. Powers and Duties of the President.
The President shall be the Chief Executive Officer of the
Corporation, and shall have the general management and
superintendence of the affairs of the Corporation, subject,
however, to the control of the Board of Directors; and in
all cases where, and to the extent that, the duties of the
other officers of the Corporation are not specifically
prescribed by By-Laws or rules or regulations of the Board
of Directors, the President may prescribe such duties. He
shall have general and active supervision over the
property, business and affairs of the Corporation and may
sign, execute, and deliver in the name of the Corporation
deeds, mortgages, bonds, contracts, powers of attorney, and
other instruments, except in cases where the signing and
execution thereof shall be expressly delegated by the Board
of Directors or these By-Laws to some other officer or
agent of the Corporation or shall be required by law or
otherwise to be signed or executed, and may exercise any
and all powers and perform any and all duties relating to
such supervision, or which are imposed upon him by the By-
Laws, or by the Board of Directors.
Subject to such limitations as the Board of
Directors may from time to time prescribe, the Chief
Executive Officer shall have power to appoint and to
dismiss all such agents and employees of the Corporation
who are not officers thereof (including any appointed by
the Board) as he may deem proper, and to prescribe their
duties, and subject to like limitations, delegate to other
officers of the Corporation any other of the powers and
duties conferred upon him by the By-Laws or by the Board of
Directors.
Section 8. Powers and Duties of the Vice
President. The Vice-President shall perform the duties as
may be prescribed by the Board of Directors and subject to
the chief executive officer.
Section 9. Powers and Duties of the Secretary.
The Secretary shall attend all sessions of the Board and
all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for
that purpose, and shall perform like duties for any
committee of the Board when required. He shall cause to be
given notice of all meetings of stockholders and directors
and shall perform such other duties as pertain to his
office. He shall keep in safe custody the seal of the
Corporation and when authorized by the Board of Directors,
affix it when required to any instrument.
Section 10. Powers and Duties of the Treasurer.
The Treasurer shall have the custody of all the corporate
funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging
to the Corporation and shall deposit all moneys and other
valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by
the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper
vouchers for such disbursements, and shall render to the
chief executive officer and directors at the regular
meetings of the Board, or whenever they may require it, an
account of all his transactions as treasurer and of the
financial condition of the Corporation.
Section 11. Powers and Duties of Other Officers.
All other officers shall have such duties and exercise such
powers as generally pertain to their respective offices and
all officers shall have such other duties and exercise such
other powers as from time to time may be prescribed by the
chief executive officer or the Board of Directors.
ARTICLE VIII
SHARES
Section 1. Form; Signature. The shares of the
Corporation shall be represented by certificates signed by
the President or a Vice-President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant
Treasurer of the Corporation and may be sealed with the
seal of the Corporation or a facsimile thereof. The
signatures of the officers of the Corporation upon a
certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a
registrar other than the Corporation itself or an employee
of the Corporation. In case any officer who has signed or
whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer
at the date of issue.
Section 2. Lost Certificates. The Board of
Directors may authorize the officers or agents of the
Corporation to issue a new certificate in place of any
certificate theretofore issued by the Corporation alleged
to have been lost or destroyed and as a condition precedent
to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such
indemnities as it deems adequate to protect the Corporation
from any claim that may be made against it with respect to
any such certificate alleged to have been lost or
destroyed.
Section 3. Transfer of Shares. Upon surrender
to the Corporation or the transfer agent of the Corporation
of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer, a new certificate shall be issued to
the person entitled thereto, and the old certificate
cancelled and the transaction recorded upon the books of
the Corporation.
Section 4. Fixing Record Date. For the purpose
of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment
thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of
determining stockholders entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose
of any other action, the Board of Directors may fix, in
advance, a date at the record date for any such
determination of stockholders. Such date shall not be more
than sixty nor less than ten days before the date of any
meeting nor more than sixty days prior to any other action.
When a determination of stockholders of record entitled to
notice of or to vote at any meeting of stockholders has
been made as provided in this section, such determination
shall apply to any adjournment thereof, unless the Board
fixes a new record date for the adjourned meeting.
Section 5. Registered Stockholders. The
Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of
shares to receive dividends, and to vote as such owner, and
to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any
other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions
of law and of the Certificate of Incorporation relating
thereto, dividends may be declared by the Board of
Directors at any regular or special meeting, pursuant to
law. Dividends may be paid in cash, the Corporation's
bonds or its property, including the shares or bonds of
other corporations, subject to any provisions of law and of
the Certificate of Incorporation.
Section 2. Reserves. Before payment of any
dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for such other purposes
as the directors shall think conducive to the interest of
the Corporation, and the directors may modify or abolish
any such reserve in the manner in which it was created.
Section 3. Checks. All checks or demands for
money and notes of the Corporation shall be signed by such
officer or officers or such other person or persons as the
Board of Directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the
Corporation shall begin on January 1st and end on December
31st of each year, unless otherwise provided by the Board
of Directors.
Section 5. Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of
its organization and the words "CORPORATE SEAL, DELAWARE".
This seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any manner reproduced.
ARTICLE X
AMENDMENTS
Section 1. Amendments. These By-Laws may be
amended or added to or any part thereof repealed by the
affirmative vote of a majority of the votes cast by the
holders of shares entitled to vote thereon at any meeting
of stockholders, the notice of which meeting includes
notice of the proposed amendment, addition or repeal; or
the affirmative vote of a majority of the directors present
at the time of the vote, if a quorum is present at such
time, at any meeting of the Board of Directors, the notice
of which meeting includes notice of the proposed amendment,
addition or repeal, unless all members of the Board of
Directors are present at such meeting or unless such notice
be waived, in a writing, setting forth the proposed
amendment, addition or repeal and signed by the director
entitled to such notice.
