<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
SCHEDULE 14D-9/A
(AMENDMENT NO. 1)
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
-------------------------
SAGE LABORATORIES, INC.
(Name of Subject Company)
-------------------------
SAGE LABORATORIES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
786650 10 1
(CUSIP Number of Class of Securities)
-------------------------
SAGE LABORATORIES, INC.
11 HURON DRIVE
EAST NATICK INDUSTRIAL PARK
NATICK, MASSACHUSETTS 01760
(508) 653-0844
ATTENTION: CARL A. MARGUERITE, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of
the Person(s) Filing Statement)
-------------------------
WITH A COPY TO
STANLEY KELLER, ESQ.
PALMER & DODGE LLP
ONE BEACON STREET
BOSTON, MA 02108-3190
================================================================================
<PAGE> 2
This statement relates to a tender offer by FIL Acquisition Corp., a
Massachusetts corporation (the "Purchaser") and a wholly-owned subsidiary of
Filtronic plc, a public limited company incorporated under the laws of England
and Wales ("Filtronic"), disclosed in a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1"), dated May 19, 1998, to purchase all of the outstanding
Shares at a price of $17.50 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 19, 1998 (the "Offer to Purchase") and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has determined that the Offer and
the Merger are fair to, and in the best interests of, the Holders and approved
the Offer and the Merger. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
THE HOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER PURSUANT
TO THE OFFER. This recommendation is based in part upon an opinion of KPMG Inc.
("KPMG"), dated as of May 13, 1998, to the effect that, as of such date, the
cash consideration of $17.50 per Share to be received by the public stockholders
of the Company in the Offer and the Merger is fair, from a financial point of
view, to such stockholders (the "KPMG Opinion"). The KPMG Opinion contains a
description of the assumptions made and the scope of the review undertaken by
KPMG in rendering its opinion. The full text of the KPMG Opinion is attached as
Exhibit 5 to this Schedule 14D-9 and is incorporated herein by reference.
Stockholders are urged to read the KPMG Opinion in its entirety.
BACKGROUND
The Company develops, manufactures, markets and sells electronic
systems and sub-systems of specialized microwave components and subsystems and
is familiar with other companies in its industry. As a result, the Company over
the years has been familiar with Filtronic and its products and markets as well
as its senior management.
On February 5, 1998, the Company was contacted by Filtronic to
determine the Company's interest in being acquired by Filtronic. On February 12,
1998, Filtronic and the Company executed a confidentiality agreement regarding
the furnishing of non-public information concerning the Company to Filtronic.
Filtronic then commenced its due diligence review with meetings with the Company
on February 12 and 13, 1998. From time to time thereafter, Filtronic continued
to conduct discussions with the Company's management and representatives
concerning matters related to the acquisition proposal.
At a regular scheduled meeting of the Filtronic Board of Directors on
February 26, 1998, Filtronic's directors first formally considered the proposal
to acquire the Company although no formal action in this regard was proposed or
taken at the meeting. On March 26 and 27, 1998, members of the Board of
Directors of Filtronic and the Company met in Natick, Massachusetts to further
discuss the proposed acquisition. Filtronic's Board of Directors again
considered the matter at the regular scheduled meeting of the Filtronic Board
held in March and authorized the proper officer of Filtronic to present a
proposal for the acquisition of the Company. Thereafter, on April 2, 1998,
Filtronic delivered to the Company a letter containing a non-binding indication
of interest to acquire the Company in an all cash transaction at a price of
$16.00 per Share.
The Company retained a financial advisor, Katahdin Investment
Partnership LLP ("Katahdin"), to assist the Company in evaluating and
negotiating a transaction with Filtronic. Throughout April and early May, the
Company conferred with Katahdin as to the offer by Filtronic and continued
negotiations with Filtronic. On April 22 and 23, 1998, representatives of the
Company met with representatives of Filtronic at the offices of Filtronic in
Shipley, West Yorkshire, England to further discuss the terms of the proposed
acquisition.
- 2 -
<PAGE> 3
At a regular scheduled meeting of the Filtronic Board of Directors held
on May 1, 1998, the Filtronic Board of Directors authorized the proper executive
officers to proceed with such acquisition, at a price of $17.50 per Share to be
further approved by the Filtronic Board.
On May 1, 1998, Filtronic submitted its non-binding proposal to acquire
the Company for cash at a price of $17.50 per Share, subject to the negotiation
of definitive documentation. On May 4, 1998, the Board of Directors of the
Company held a meeting to consider the proposal and authorized management to
proceed subject to the approval of the Board of the definitive acquisition
agreement. The Board of Directors also engaged KPMG Inc. to render a fairness
opinion. On May 5, 1998, counsel for Filtronic and the Company commenced the
negotiations on the form of a draft merger agreement. Representatives of
Filtronic conducted an on-site due diligence review on May 7 and 8, 1998.
Counsel for Filtronic and the Company continued their negotiations concerning
the Merger Agreement and completed final negotiations on such documents on
May 13, 1998.
On May 13, 1998, the Board of Directors of the Company held a meeting
to consider the Offer, the Merger and the Merger Agreement. KPMG delivered its
oral opinion to the Company's Board (subsequently confirmed in writing) that, as
of such date, the cash consideration of $17.50 per Share to be received by the
public stockholders of the Company in the Offer and the Merger is fair, from a
financial point of view, to the public stockholders. Thereafter, the Company's
Board of Directors unanimously approved the Offer, the Merger and the Merger
Agreement and determined to recommend the Offer and the Merger to the Company's
stockholders. A representative of the Company then contacted Filtronic to inform
it of the Board's determination.
On May 13, 1998, the Filtronic Board of Directors held a telephonic
meeting to consider the Offer, Merger and the Merger Agreement and approved the
merger and determined to recommend the merger to its stockholders.
The Merger Agreement and the Stockholder Agreements were executed by
the respective parties on May 13, 1998. A press release announcing the execution
of the Merger Agreement was released by each of the parties on such day. On
May 19, 1998, the Purchaser commenced the Offer.
REASONS FOR THE BOARD'S CONCLUSIONS
At a meeting held on May 13, 1998, the Board of Directors of the
Company unanimously determined that the Offer and the Merger are fair to, and in
the best interests of, the Holders and resolved to recommend that the Board (a)
determine that the Offer and the Merger are fair to, and in the best interests
of, the Holders; (b) adopt and approve the Offer, the Merger, the Merger
Agreement and the transactions contemplated thereby; and (c) recommend that the
Holders accept the Offer and tender their Shares to the Purchaser pursuant to
the Offer.
In determining that the Offer and the Merger are fair to, and in the
best interests of, the Holders, the Board considered the following factors,
which, taken as a whole, supported its decision:
(a) the Company's relatively small size for a publicly-traded
company, particularly in the industry in which the Company competes,
consequently placing the Company at a competitive disadvantage with
respect to companies having substantially greater financial and other
resources;
(b) the Company's lack of depth in senior management, which
consists of the Chairman and Chief Executive Officer along with two
vice presidents responsible for the management of a total of 66
employees located at two manufacturing locations;
(c) the benefits to the Company resulting from a transaction
with Filtronic, including the anticipated access to additional products
and technology from Filtronic, the availability of greater financial
and other resources to enhance the Company's business and the improved
utilization of the Company's manufacturing facilities;
- 3 -
<PAGE> 4
(d) the transaction is a tax efficient way for the Company's
stockholders to realize the value of the Company's excess cash in
contrast to distributions of such cash;
(e) the low trading volume of the Company's Common Stock on
the Nasdaq National Market which results in reduced liquidity to
stockholders and a trading market that is not necessarily indicative of
the Company's value;
(f) the historical earnings and growth performance of the
Company remains below the average of other companies in the Company's
industry;
(g) the judgment of the Board that $17.50 per Share is a high
price relative to the recent public trading prices of the Company's
Common Stock and constitutes an approximately 40% premium over the
closing price of $12.50 per Share on May 12, 1998;
(h) the strong condition of the stock market in general,
making this an advantageous time for an acquisition transaction;
(i) the terms and conditions of the Merger Agreement,
including the right of the Board to terminate the Merger Agreement in
order to proceed with a Superior Proposal; and
(j) the financial presentations of KPMG made on May 13, 1998
and the oral opinion of KPMG delivered to the Board of Directors of the
Company at the May 13, 1998 meeting (subsequently confirmed in writing
as of such date) to the effect that, as of such date and based upon and
subject to certain matters stated in such opinion, the cash
consideration of $17.50 per Share to be received by the public
stockholders of the Company in the Offer and the Merger is fair, from a
financial point of view, to such stockholders. The KPMG Opinion was
provided for the information and assistance of the Board of Directors
of the Company in connection with the consideration of the Offer and
Merger. The KPMG Opinion does not constitute a recommendation to the
stockholders of the Company as to whether or not such stockholders
should tender Shares in the Offer or vote in favor of the Merger.
STOCKHOLDERS ARE URGED TO READ THE FAIRNESS OPINION IN ITS ENTIRETY.
The Board also considered the following negative factors relating to
the Offer and the Merger:
(a) the Company did not solicit offers from other potential
bidders;
(b) the Company has an uncomplicated business and financial
structure without material contingencies and with an absence of
significant indebtedness, which structure the Board considered to
increase the value to an acquiring company;
(c) the recent improvement of the Company's performance
reflected by increases in net product sales and gross profit for the
quarter ended March 28, 1998; and
(d) the Merger Agreement provides for a termination fee in the
event of a Superior Proposal
The Board evaluated the above factors in light of their knowledge of
the business of the Company and their business judgment and concluded that the
factors supporting a decision to approve the Offer and the Merger outweighed the
negative factors described above. In view of the wide variety of factors
considered in connection with its evaluation of the Offer and the Merger, the
Board did not find it practicable to, and did not, quantify or attempt to assign
relative weights to the specific factors considered in reaching its decision.
The Board believes the process it followed in approving the Offer and
the Merger was procedurally fair and unbiased because (a) the members of the
Board will not personally benefit from the transactions contemplated by the
Merger Agreement (other than in their capacity as holders of Shares); (b) the
Board retained independent advisors to assist it in evaluating Filtronic's
acquisition proposal; (c) the Board obtained the
- 4 -
<PAGE> 5
valuation analysis of KPMG and the KPMG Opinion; and (d) the Board negotiated
with Filtronic on an arm's length basis and with the assistance of its advisors.
On May 13, 1998, the Board held a meeting and determined that the Offer
and the Merger are fair to, and in the best interests of, the Holders, approved
the Offer and the Merger and resolved to recommend that the Holders accept the
Offer and tender their Shares to the Purchaser pursuant to the Offer.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached on Schedule I hereto is being
furnished in connection with the possible designation by the Purchaser, pursuant
to the Merger Agreement, of certain persons to be appointed to the Board other
than at a meeting of the Company's shareholders.
- 5 -
<PAGE> 6
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SAGE LABORATORIES, INC.
By: /s/ Carl A. Marguerite
---------------------------
Carl A. Marguerite
Chairman of the Board
and Chief Executive Officer
Dated: June 8, 1998.
- 6 -
<PAGE> 7
SCHEDULE I
SAGE LABORATORIES, INC.
11 HURON DRIVE
NATICK, MASSACHUSETTS 01760
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS IS REQUIRED IN
CONNECTION WITH THIS INFORMATION. NO PROXIES ARE BEING SOLICITED AND YOU ARE NOT
REQUIRED TO SEND THE COMPANY A PROXY.
This Information Statement is being mailed on or about June 8, 1998 as
a part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Sage Laboratories, Inc. (the "Company") to the holders of
record of shares of the Company's Common Stock, $.10 par value per share (the
"Shares"). Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Schedule 14D-9. You are receiving this Information
Statement in connection with the possible election of persons designated by FIL
Acquisition Corp., a Massachusetts corporation (the "Purchaser") and
wholly-owned subsidiary of Filtronic plc, a public limited company incorporated
under the laws of England and Wales ("Filtronic"), to a majority of the seats on
the Board of Directors of the Company (the "Board"). The Agreement and Plan of
Merger, dated as of May 13, 1998 (the "Merger Agreement"), among Filtronic, the
Purchaser and the Company requires the Company to take such actions as are
necessary to cause the Filtronic Designees (as defined below) to be elected to
the Board under the circumstances described in the Merger Agreement. This
Information Statement is required by Section 14(f) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1 thereunder. See
"Board of Directors and Executive Officers -- Right to Designate Directors; The
Filtronic Designees."
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
May 19, 1998. The Offer is scheduled to expire at 5:00 p.m., New York City time
on Wednesday, June 17, 1998, unless the Offer is extended.
Following the election of the Filtronic Designees and prior to the
consummation of the Merger, the affirmative vote of a majority (or, if there are
only one or two Independent Directors (as defined below), the single or
unanimous vote, as the case may be) of the directors of the Company who were
directors on the date of the Merger Agreement and who are not officers or
directors of Filtronic (the "Independent Directors") (who shall act as an
independent committee of the Board for this purpose) shall be required, and
alone shall be sufficient, to (i) amend or terminate the Merger Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
the Merger Agreement, (iii) subject to the applicable securities laws, extend
the time for performance of Filtronic's and the Purchaser's respective
obligations under the Merger Agreement or (iv) approve any other action by the
Company that the Independent Directors determine could adversely affect the
interests of the stockholders of the Company (other than Filtronic, the
Purchaser and their affiliates) with respect to the transactions contemplated by
the Merger Agreement.
The information contained in this Information Statement concerning
Filtronic, the Purchaser and the Filtronic Designees has been furnished to the
Company by Filtronic and the Purchaser, and the Company assumes no
responsibility for the accuracy or completeness of such information. The
principal executive offices of Filtronic and the Purchaser are located at The
Waterfront, Salts Mill Road, Saltaire, Shipley, West Yorkshire,
England BD18 3TT.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
I - 1
<PAGE> 8
BOARD OF DIRECTORS AND OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share is entitled to one vote. As of June 1, 1998, there were
1,085,265 Shares outstanding.
The Board currently consists of three directors, all of whom are
elected by the stockholders of the Company. Each director holds office until
such director's successor is elected and qualified or until such director's
earlier resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; THE FILTRONIC DESIGNEES
Pursuant to the Merger Agreement, promptly upon the acceptance for
payment of and payment by Filtronic or the Purchaser for Shares constituting a
majority of the then outstanding Shares pursuant to the Offer, and from time to
time thereafter as Shares are accepted for payment and paid for by Filtronic or
the Purchaser, Filtronic shall be entitled to designate such number of the
Company's directors (the "Filtronic Designees"), rounded up to the next whole
number, as will give Filtronic representation on the Board equal to at least
that number of directors which equals the product of the total number of the
Company's directors (after giving effect to the directors elected in accordance
with this procedure) multiplied by the percentage that such number of Shares so
accepted for payment and paid for by Filtronic or the Purchaser bears to the
number of Shares outstanding, and the Company shall, at such time, promptly take
such actions as are necessary to cause the Filtronic Designees to be so elected
or appointed, including increasing the size of the Board or securing the
resignations of incumbent directors or both; provided, however, that
notwithstanding Filtronic's right to designate certain of the Company's
directors as described herein, until the Effective Date, the Company's directors
shall include at least two Independent Directors; provided further, that, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, any remaining Independent Director shall designate a person who is
not an officer or affiliate of Filtronic or the Purchaser to fill such vacancy
and such person shall be deemed to be an Independent Director or, if no
Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who shall not be officers or affiliates of
Filtronic or the Purchaser or officers or affiliates of the Company, and such
persons shall be deemed to be Independent Directors.
Filtronic has informed the Company that each of the Filtronic Designees
listed below has consented to act as a director.
It is expected that the Filtronic Designees may assume office at any
time following the purchase by Filtronic or the Purchaser of a majority of the
Shares pursuant to the Offer, which purchase cannot be earlier than 5:00 p.m.,
New York City time on Wednesday, June 17, 1998, and that, upon assuming office,
the Filtronic Designees will thereafter constitute at least a majority of the
Board.
Biographical information concerning each of the Filtronic Designees and
the current directors and executive officers of the Company is presented on the
following pages.
I - 2
<PAGE> 9
FILTRONIC DESIGNEES
Filtronic has informed the Company that it will choose the Filtronic
Designees it has the right to designate to the Company's Board of Directors
pursuant to the Merger Agreement from the following individuals:
<TABLE>
<CAPTION>
NAME: BUSINESS ADDRESS: FIVE YEAR EMPLOYMENT HISTORY AND
DIRECTORSHIPS:
<S> <C> <C>
Edward McCann 239 Boston Post Road Since 1997, Mr. McCann has been
Weston, MA 02193 employed as the Head of the Technology
Investment Banking Group at Advest,
Incorporated. Since prior to 1993 and
until 1997, Mr.McCann was a Principal
at Hambrecht & Quist LLC in New York
City. Since prior to 1993 and through
1997, Mr. McCann was a director of
Cold Spring Harbor Laboratory
Association and director and board
member of Oyster Bay Community
Foundation. Mr. McCann was also a
lecturer at MIT Enterprise Forum of
New York from 1995-1996 and at Cornell
University MBA/LLD Program from 1997-
1998.
Admiral S. Robert Foley, 11 Kirkwood Road Since prior to 1993 Admiral Foley has
Jr., USN (Ret) Scarborough, Maine 04074 been Vice President, Commercial
Marketing and Planning for Raytheon
Company. Admiral Foley is currently
Trustee of the USS Constitution
Foundation, the Naval Historical
Foundation, the Naval War College
Foundation and the National Naval
Aviation Museum Foundation.
Christopher Schofield The Waterfront Mr. Schofield joined Filtronic plc in
Salts Mill Road, Saltaire 1995 as the Company Secretary and
Shipley, West Yorkshire Solicitor. Prior to that time,
England BD18 3TT Mr. Schofield was a solicitor and
partner with Ralph C. Yablon,
Temple-Milnes & Carr. Mr. Schofield is
also a solicitor and partner with
Schofield Sweeney.
David J. McIntosh 21 Continental Blvd. Mr. McIntosh has been the Vice
Merrimack, NH 03054 President Engineering/Business
Development of Filtronic Comtek Inc.
(a subsidiary of Filtronic plc) since
June 1996. From April 1995 through
June 1996, Mr. McIntosh held the title
of Vice President. From prior to 1993
through March 1995, Mr. McIntosh was
the Director of Engineering of Filcom
Microwave, Inc. Since April 1995
through the present, Mr. McIntosh has
been a member of the board of
Directors of Filtronic Comtek Inc.
Prior to 1993 through March 1995, Mr.
McIntosh was a member of the Filcom
Microwave Inc. Board of Directors.
</TABLE>
I - 3
<PAGE> 10
CURRENT DIRECTORS
The following table sets forth the name, age and length of service as a
director for each current member of the Board of Directors. It also includes
information given by each concerning all positions he holds with the Company,
his principal occupation and business experience for the past five years, the
names of other publicly held companies of which he serves as a director and the
year of the commencement of his term as a director of the Company. Information
with respect to the number of Shares beneficially owned by each director,
directly or indirectly, as of June 1, 1998, appears under "Security Ownership of
Certain Beneficial Owners and Management."
<TABLE>
<CAPTION>
Business Experience During Past Five Director
Name And Age Years And Other Directorships Since
- ------------------ ----------------------------------------------------------- --------
<S> <C> <C>
John E. Miller Director of Intermetrics, Inc, Cambridge, Massachusetts, 1976
Age: 72 producers of computer systems and software, through
August 31, 1995. Mr. Miller was President and Chief
Executive Officer of the same firm until 1986 and Chairman
of the Board until 1993.
Carl A. Marguerite Chairman of the Board, Chief Executive Officer and 1981
Age: 57 Treasurer of the Company. Mr. Marguerite served as the
President of the Company from prior to 1992 until 1996.
Mr. Marguerite was elected President of the Company on
May 4, 1998.
David M. Pozar Professor of Electrical Engineering, University of 1997
Age: 45 Massachusetts at Amherst since 1980.
</TABLE>
- ---------------
BOARD COMMITTEES
The Company has an Audit Committee and a Compensation Committee but
does not have a nominating committee. The entire Board of Directors functions as
a nominating committee, considering nominations submitted to the Chairman of the
Board.
AUDIT COMMITTEE
The current members of the Audit Committee are Messrs. Miller and
Pozar. The Audit Committee reviews with the independent auditors the results of
the auditing engagement.
COMPENSATION COMMITTEE
The current members of the Compensation Committee are Messrs. Miller
and Pozar. The Compensation Committee makes recommendations to the Board of
Directors regarding the compensation of executive officers.
ATTENDANCE AT BOARD MEETINGS
During fiscal 1997, the Board of Directors held four meetings, and each
director attended 100% of the meetings of the Board of Directors and of all
committees of the Board on which he served.
DIRECTOR COMPENSATION
The Company pays each non-employee director a quarterly payment of $750
for services as a director and a fee of $750 for each meeting of the Board of
Directors attended. Directors are paid $500 for attendance at committee
meetings, with no payment if a committee meeting is held on the same day as a
Board of Directors meeting.
I - 4
<PAGE> 11
Under the 1992 Director Stock Option Plan, options to purchase 2,500
shares of the Company's Common Stock are automatically granted to each
non-employee director on the first trading day after the Company's annual
meeting. The options become exercisable with respect to the full 2,500 shares
six months following the grant date. The options have a term of ten years and an
exercise price equal to 100% of the fair market value of the Company's Common
Stock on the grant date.
The Company has purchased directors' and officers' liability insurance
covering all of the Company's directors' and officers'. The aggregate premium
for this insurance policy in 1997 was $16,068.
EXECUTIVE COMPENSATION
Summary Compensation Table. The table below sets forth certain
compensation information for the Chief Executive Officer of the Company and the
four most highly compensated executive officers of the Company whose salary and
bonus for the fiscal year ended June 30, 1997 (the Company's most recent fiscal
year end) exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation Awards
------------------------------------- ------------------------------------------
Securities
Fiscal Other Annual Underlying LTIP Payout All Other
Name And Principal Position Year Salary Bonus Compensation(1) Options ($)(2) Compensation(3)
- --------------------------- ------ -------- -------- --------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Carl A. Marguerite 1997 $178,976 $ 40,000 $87,136 0 $131,250 $24,168
Chairman, Chief Executive 1996 151,951 80,000 87,631 37,500 158,100 24,030
Officer and Treasurer 1995 148,441 125,000 72,372 0 128,000 24,030
Louis J. Lanzillo, Jr. 1997 126,931 40,000 18,995 100,000 0 1,113
President and Chief
Operating Officer
Janusz J. Majewski 1997 104,485 10,000 3,062 25,000 0 19,072
Vice President of Research 1996 91,157 20,000 1,343 10,000 0 17,392
& Development
Anthony J. Cieri 1997 84,521 6,000 1,642 0 0 15,661
Vice President of Customer 1996 92,956 15,000 449 5,000 0 15,791
Service 1995 82,956 17,500 1,022 0 15,533
</TABLE>
- -------------
(1) Amounts listed for Mr. Marguerite in 1997 include: (i) $4,948 in interest,
(ii) $31,996 in principal forgiven on certain loans, (iii) $42,930 for tax
gross-up payments, and (iv) $8,085 in auto expense. In 1996, such amounts
for Mr. Marguerite were $7,234, $31,996, $39,733 and $5,329, respectively.
In 1995, such amounts for Mr. Marguerite were $5,829, $31,996 and $34,004
respectively. Amounts listed for Mr. Lanzillo include $9,550 in auto
expense, tax gross-up payments of $8,468 and medical expense reimbursement
of $977. Amounts listed for Mr. Majewski in 1997 include $2,800 in auto
expense and medical expense reimbursement of $262. The amounts listed for
Mr. Majewski n 1996 and 1995 represent medical expense reimbursement. The
amounts listed for Mr. Cieri in 1997, 1996 and 1995 represent medical
expense reimbursement.
(2) Represents shares of restricted stock granted to Mr. Marguerite as to which
the conditions of forfeiture were eliminated, at the discretion of the
Company's Board of Directors, upon the achievement of certain corporate
performance goals. The restrictions on 10,000 shares of such stock were
eliminated in each of fiscal years 1995, 1996 and 1997, and the Company
recorded deferred compensation based upon the fair market value of the
Company's Common Stock. As of June 30, 1997, the restrictions on the final
10,000 shares had been eliminated.
I - 5
<PAGE> 12
(3) Amounts in this column are derived from the following: for 1997, Messrs.
Marguerite, Majewski and Cieri, respectively $22,500, $18,673 and $14,928
for contributions to the Company's Profit Sharing Plan and $1,688, $403 and
$723 for insurance premiums. Mr. Lanzillo is deemed to have received $1,113
for insurance premiums. For 1996, Messrs. Marguerite, Majewski and Cieri,
respectively, $22,500, $16,989 and $15,068 for contributions to the
Company's Profit Sharing Plan, and $1,530, $403 and $723 for insurance
premiums. For 1995, Messrs. Marguerite and Cieri respectively had $22,500
and $14,843 for contributions to the Company's Profit Sharing Plan and
$1,530 and $723 for insurance premiums.
Subsequent to fiscal year end and effective as of January 31, 1998, Mr.
Lanzillo's employment with the Company terminated. Carl A. Marguerite was
elected President of the Company effective May 4, 1998.
Option Grant Table. The following table sets forth certain information
concerning options granted to the Named Executive Officers under the 1987 Stock
Option Plan in the fiscal year ended June 30, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------
NUMBER OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS OPTIONS GRANTED TO EXERCISE OF BASE EXPIRATION
NAME GRANTED(1) EMPLOYEES IN FISCAL YEAR PRICE ($/SHARE) DATE(3)
---- -------------------- ------------------------ ---------------- ----------
<S> <C> <C> <C> <C>
Carl A. Marguerite............. -- -- -- --
Louis J. Lanzillo, Jr (1)...... 100,000 58.4% $15.00 9/4/06
Janusz J. Majewski (2)......... 25,000 14.6% $12.75 12/9/06
Anthony J. Cieri............... -- -- -- --
</TABLE>
- ----------
(1) One third of such shares are exercisable upon grant; one third exercisable
twelve months from date of grant; balance exercisable twelve months
thereafter.
(2) Twenty percent (20%) of such shares are exercisable on December 9, 1997;
balance exercisable as to twenty-percent (20%) per year until 2001.
(3) Each option expires upon the earlier of (i) sixty days following the
executive's termination of employment, or (ii) ten years following the date
of grant.
Option Exercises and Year-End Values. The following table sets forth
certain information concerning exercisable and unexercisable stock options held
by the Named Executive Officers as of June 30, 1997:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END ($)(2)
--------------------------- ---------------------------
Shares Value
Acquired on Realized
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl A. Marguerite.... 0 0 37,500 0 0 0
Louis J. Lanzillo, Jr.. 0 0 35,833 66,667 0 0
Janusz J. Majewski.... 3,500 $37,667 16,500 25,000 $68,738 $9,388
Anthony J. Cieri....... 0 0 5,000 0 0 0
</TABLE>
- ----------
I - 6
<PAGE> 13
(1) Amounts disclosed in this column do not reflect amounts actually received
by the Named Executive Officer but are calculated based on the spread
between the fair market value of the Company's Common Stock on the date of
exercise and the exercise price of the options. The Named Executive Officer
will receive cash only if and when he sells the Common Stock issued upon
exercise of the options. The amount of cash received by such individual is
dependent on the price of the Company's Common Stock at the time of such
sale.
(2) Value is based on the spread between the option price and the fair market
value of the Common Stock on June 30, 1997 ($13.125) multiplied by the
number of shares underlying the options.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and footnotes set forth certain information regarding
the beneficial ownership of the Company's Common Stock as of June 1, 1998 by (i)
persons known by the Company to be beneficial owners of more than 5% of its
outstanding Common Stock, (ii) the Chief Executive Officer and each of the other
executive officers of the Company named in the Summary Compensation Table under
the caption "Executive Compensation," (iii) each director of the Company, and
(iv) all current executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned(1)
----------------------
Beneficial Owner Shares Percent
---------------- ------- -------
<S> <C> <C>
Carl A. Marguerite(2)................................. 291,680(3) 26.0%
Fenimore Asset Management, Inc(4)..................... 94,350 8.7
118 North Grand Street,
P.O. Box 310
Cobleskill, NY 12043
Anthony J. Cieri(5)................................... 38,570 3.6
Janusz J. Majewski(6)................................. 19,000(3) 1.7
John E. Miller(7)..................................... 20,500(3) 1.9
David M. Pozar........................................ 0 *
All current executive officers and directors as
a group (5 persons)(8)........................... 369,750 32.2%
</TABLE>
- ------------------
* Indicates less than 1%
(1) Unless otherwise indicated in these footnotes, each stockholder has sole
voting and investment power with respect to the shares listed in the table.
(2) Includes 37,500 shares issuable pursuant to stock options exercisable at
June 1, 1998 or within 60 days thereafter.
(3) Represents shares which the stockholder has agreed to sell to Filtronic or
the Purchaser pursuant to a Stockholder Agreement entered into between the
stockholder and Filtronic. See "Certain Transactions -- Stockholder
Agreement."
(4) Based solely on information provided in a Schedule 13G filed with the
Securities and Exchange Commission on February 12, 1998.
I - 7
<PAGE> 14
(5) Includes 5,000 shares issuable pursuant to stock options exercisable at
June 1, 1998 or within 60 days thereafter.
(6) Includes 18,000 shares issuable pursuant to stock options exercisable at
June 1, 1998 or within 60 days thereafter.
(7) Includes 8,500 shares issuable pursuant to stock options exercisable at
June 1, 1998 or within 60 days thereafter.
(8) Includes 69,000 shares issuable pursuant to stock options exercisable at
June 1, 1998 or within 60 days thereafter.
CERTAIN TRANSACTIONS
STOCKHOLDER AGREEMENT
Approximately 25% of the outstanding shares of the Company's Common Stock
are held by certain officers and directors of the Company each of whom has
entered into a Stockholder Agreement with Filtronic (a "Stockholder Agreement")
pursuant to each such person agreed to sell to Filtronic all shares of the
Company's Common Stock then held by such person at a price of $17.50 per share
subject only to the condition that the Purchaser shall have purchased shares of
the Company's Common Stock pursuant to the Offer (as defined in the Merger
Agreement).
I - 8
