SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 4a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-12
Micropac Industries, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: [ ]
2) Form, Schedule or Registration Statement No.: [ ]
3) Filing Party: [ ]
4) Date Filed: [ ]
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PROXY STATEMENT OF
MICROPAC INDUSTRIES, INC.
905 East Walnut Street
Garland, Texas 75040
ANNUAL MEETING OF STOCKHOLDERS
To Be Held At 11:00 A.M., LOCAL TIME ON
March 7, 2008
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Micropac
Industries, Inc., to be held at The Atrium at the Granville Arts Center, 300 N.
Fifth St., Garland, Texas at 11:00 a.m. on March 7, 2008 for the following
purposes:
To elect five directors to serve until the next annual meeting of
stockholders or until their respective successors are elected and
qualified; and
To transact such other business that may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 25, 2008,
as the record date for the meeting. Only stockholders of record at that time are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Further information regarding the matters to be acted upon at the Annual Meeting
is contained in the attached Proxy Statement.
MANAGEMENT HOPES THAT YOU WILL ATTEND THE MEETING IN PERSON. IN ANY EVENT,
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY TO ASSURE THAT YOU ARE
REPRESENTED AT THE MEETING. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR
STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN PROXIES.
By Order of the Board of Directors
/s/ James K. Murphey
------------------------------------
JAMES K. MURPHEY, Secretary
DATED: February 11, 2008
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MICROPAC INDUSTRIES, INC.
905 EAST WALNUT STREET
GARLAND, TEXAS 75040
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
March 7, 2008
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Micropac Industries, Inc. (the "Company")
for use at the Company's Annual Meeting of Stockholders that will be held on
March 7, 2008 at the time and place and for the purposes set forth in the
foregoing notice. This Proxy Statement, the foregoing notice and the enclosed
proxy are first being sent to stockholders on or about February 8, 2008.
The Company's Annual Report to Stockholders for the fiscal year ended
November 30, 2007, is enclosed.
The Board of Directors does not intend to bring any matter before the
meeting except those specifically indicated in the foregoing notice and does not
know of anyone else who intends to do so. If any other matters properly come
before the meeting, however, the persons named in the enclosed proxy, or their
duly constituted substitutes acting at the meeting, will be authorized to vote,
or otherwise act thereon in accordance with their judgment on such matters. If
the enclosed proxy is executed and returned prior to voting at the meeting, the
shares represented thereby will be voted in accordance with the instructions
marked thereon. In the absence of instructions, the shares will be voted FOR the
election as directors of the Company of the five persons named in the section
captioned "Election of Directors".
Any proxy may be revoked at any time prior to its exercise by notifying the
Company's Secretary in writing, by delivering a duly executed proxy bearing a
later date, or by attending the meeting and voting in person.
Only holders of record of common stock at the close of business on January
25, 2008 are entitled to notice of and to vote at the meeting. On that date
there were 2,578,315 shares of common stock outstanding, each of which is
entitled to one vote in person or by proxy on all matters properly brought
before the meeting. Cumulative voting of shares in the election of directors is
prohibited.
The presence, in person or by proxy, of the holders of a majority of the
outstanding common stock is necessary to constitute a quorum at the meeting. In
order to be elected a director, a nominee must receive a plurality of the votes
cast at the meeting for the election of directors. Other matters, if any, to be
voted on at the meeting require the affirmative vote of a majority of the shares
present in person or represented by proxy at the meeting.
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MICROPAC INDUSTRIES, INC.
PRINCIPAL STOCKHOLDERS AND STOCKHOLDINGS OF MANAGEMENT
The following table shows the number and percentage of shares of the
Company's common stock beneficially owned (a) by each person known by the
Company to own 5% or more of the outstanding common stock, (b) by each director
and nominee, and (c) by all present officers and directors as a group.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class(1)
------------------- ------------------ -----------
Patrick Cefalu 0 0%
8706 Arborside
Richardson, Texas 75089
Heinz-Werner Hempel (2) (3) (4) 1,952,577 75.7%
Micropac Industries
Vermoegensverwaltungsgesellschaft
buergerlichen Rechts
Hanseatische Waren-Gesellschaft
MBH & Co., KG
Am Wall 127
28195 Bremen 1 Germany
H. Kent Hearn (3) 3,500 Less than .2%
1409 Briar Hollow
Garland, Texas 75043
Mark King (3) 0 0%
2905 Wyndham Ln.
Richardson, TX 75082
James K. Murphey (3) 0 0%
2290 One Galleria Tower
13355 Noel Road, L.B.75
Dallas, Texas 75240
Nicholas Nadolsky (3) 0 0%
1322 Briar Hollow
Garland, Texas 75043
Connie Wood (3) 6,000 Less than .3%
877 FM 2948
Como, Texas 75431
All officers and directors 1,962,077 76.1%
as a group (7 Persons)
-----------------------
(1) Calculated on the basis of the 2,578,315 outstanding shares. There are no
options, warrants, or convertible securities outstanding.
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(2) The Company and Mr. Heinz-Werner Hempel are parties to an Ancillary
Agreement entered into in March 1987. The Ancillary Agreement primarily
obligates the Company to register Mr. Hempel's stock and allows Mr. Hempel
to participate in any sale of stock by the Company.
(3) A director of the Company. On January 23, 2008, Mr. Nadolsky announced his
plan not to run for re-election as a Director and Chairman of the Board of
Micropac Industries, Inc. (the "Company") due to health reasons. Mr.
Nadolsky will continue to serve in such positions until the Company's next
Annual Shareholder Meeting scheduled for March 7, 2008. All other directors
have been nominated for re-election at the Annual Meeting.
(4) Effective October 10, 2007, the Company's majority shareholder, Mr.
Heinz-Werner Hempel, transferred all of the shares of the Company's common
stock, $.10 par value and consisting of 1,952.577 shares to Micropac
Industries, Inc. Vermoegensverwaltungsgesellschaft buergerlichen Rechts.
This Partnership is composed of Mr. Hempel, his son and his daughter. As
the consideration for this transfer, Mr. Hempel received a 99.98% share in
this partnership and retains the sole voting and management control. His
son and daughter each own 0.01% in this Partnership.
ELECTION OF DIRECTORS
The Board of Directors has determined that the Board should be composed of
five directors and five directors are to be elected at the Meeting to hold
office until the next Annual Meeting of Stockholders or until their respective
successors are elected and qualified. Proxies solicited hereby will be voted FOR
the election of the five nominees named below unless authority is withheld by
the stockholder. Messrs. Hearn, Hempel, King, Murphey, and Mrs. Wood are
currently directors of the Company. All directors participate in the
consideration of Director nominees.
Position(s) With
Name Age the Company Director Since
---- --- ----------- --------------
H. Kent Hearn 71 Director and Member of Audit
Committee February 1983
Heinz-Werner Hempel 79 Director and Member of Audit
Committee February 1997
Mark King 53 CEO, President and
Member of Audit Committee
And Board of Directors November 2005
James K. Murphey 65 Member of Audit Committee and
Board of Directors and Secretary March 1990
Connie Wood 68 Director, and
Member of Audit Committee February 2002
Mr. Hearn is retired. Mr. Hearn was formerly employed as a stockbroker by
Milkie/Ferguson Investments, Inc.
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Mr. Hempel is the Chief Operating Officer of Hanseatische
Waren-Gesellschaft MBH & Co, KG, Bremen Germany.
Mr. King is the current President and Chief Executive of the Company. Prior
to November 2002, Mr. King was the President and Chief Operating Officer of
Lucas Benning Power Electronics. Mr. King jointed the Company in November of
2002, and was elected Chief Executive Officer, President and Board Member in
October 2005.
Mr. Murphey is an attorney and member of the law firm Glast, Phillips &
Murray, P.C. in Dallas, Texas. Glast, Phillips & Murray, P.C. serves as legal
counsel to the Company
Mrs. Wood served as the Company's Chief Executive Officer and President of
the Company until her retirement on December 31, 2005.
The Board of Directors held five (5) board meetings during the year ended
November 2007. Directors (excluding Mark King) received a fee of $1,500.00 for
each meeting attended during the year ended November 2007. Beginning on December
1, 2005, the Board agreed to pay an annual retainer of $10,000 to Messrs
Nadolsky and Hearn and Mrs. Wood. Mr. King did not receive any payments for
attending meetings of the Board of Directors. Mr. Nadolsky, Ms. Wood and Mr.
Hearn attended all of the meetings. Mr. Murphey attended four (4) meetings, and
Mr. Hempel attended two (2) of the meetings.
The Audit Committee held four (4) meetings during the year ended November
30, 2007. Members (excluding Mark King) of the Audit Committee received a fee of
$750.00 for each meeting attended during the year ended November 2007. Mr. King
did not receive any payments for attending meetings of the Audit Committee. Mrs.
Wood, Messr's. Murphey, Nadolsky and Hearn attended all of the meetings. Mr.
Hempel attended one (1) of the meetings.
With the exception of Mr. Hearn, members of the Audit Committee are not
considered as independent members under applicable United States statutes.
The Board does not have a nominating committee due to the Company's small
size. The Board does not provide a process for security holders to send
communications to the Board of Directors due to the infrequent nature of such
communications. The Board has not adopted a policy with regard to Board member
attendance at annual meetings. Five (5) Board members attended the prior year's
annual meeting.
MANAGEMENT REMUNERATION AND TRANSACTIONS
Remuneration
------------
The following table shows as of November 30, 2007, all cash compensation
paid to, or accrued and vested for the account of Mr. Mark King, President and
Chief Executive Officer and Mr. Patrick Cefalu, Vice President and Chief
Financial Officer. Mr. King and Mr. Cefalu received no non-cash compensation
during 2007.
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The company does not have any equity compensation plans.
Annual Compensation
-------------------
Name and Annual Other All Other
Principal Position Year Salary Bonus Annual Compensation Compensation
(a) (b)
====================================================================================================================================
Mark King, 2007 $232,641.33 $20,000 -0- $25,452.21
President and 2006 $220,317.81 $29,500 -0- $15,981.33
Chief Executive Officer (1) 2005 $163,395.50 $14,500 $500 $13,383.62
Patrick Cefalu, 2007 $123,161.42 $20,000 -0- $11,978.68
Vice President and 2006 $114,467.91 $29,500 -0- $ 6,736.33
Chief Financial Officer 2005 $ 90,906.21 $14,500 -0- $10,749.07
(a) Reflects fees for Board meetings and Audit Committee meetings
(b) Reflects amounts contributed by Micropac Industries, Inc., under
Micropac's 401(k) profit sharing plan; unused vacation pay; and
reimbursement for medical expenses under Micropac's Family Medical
Reimbursement Plan.
------------------------------------------------------------------------------------------------------------------------------------
(1) Effective November 2005, Mr. King's existing employment agreement was
revised to provide: (1) that Mr. King would serve as the Company's
President and Chief Executive Officer, and a member of the Board of
Directors and Audit Committee at a base salary of $186,400 for a term of
three (3) years. In December 2005, the Company and Mr. King amended his
employment agreement to increase his annual base salary to $225,000.
Benefit Plans
-------------
The Company maintains a Family Medical Reimbursement Plan for the benefit
of its executive officers and their dependents. The Plan is funded through a
group insurance policy issued by an independent carrier and provides for
reimbursement of 100% of all bona fide medical and dental expenses that are not
covered by other medical insurance plans. During the fiscal year ended November
30, 2007, Mr. King received $1,658.27 and Mr. Cefalu received $11,978.68 which
amounts are included in the "All Other Compensation" column shown in the
preceding remuneration table.
In July 1984, the Company adopted a Salary Reduction Plan pursuant to
Section 401(k) of the Internal Revenue Code. The Plan's benefits are available
to all Company employees who are at least 18 years of age and have completed at
least six months of service to the Company as of the beginning of a Plan year.
Plan participants may elect to defer up to 15% of their total compensation as
their contributions, subject to the maximum allowed by the Internal Revenue code
401(k), and the Company matches their contributions up to a maximum of 6% of
their total compensation. A participant's benefits vest to the extent of 20%
after two years of eligible service and become fully vested at the end of five
years. During the fiscal year ended November 30, 2007, the Company made
contributions to the Plan for Mr. King in the amount of $15,583.60, which
amounts are included in the "All Other Compensation" column shown in the
preceding remuneration table.
-7-
Employment agreements of the Company's officers provide that they may elect to
carry over any unused vacation time to subsequent periods or elect to be paid
for such unused vacation time. In 2007, Mr. King received unused vacation pay in
the amount of $8,210.34 which is included in the "All Other Compensation" column
shown in the preceding remuneration table.
On January 15, 2001, the Board of Directors adopted the Micropac
Industries, Inc. 2001 Employee Stock Option Plan. To date, no options have been
granted under the Plan.
Interest In Certain Transactions
--------------------------------
Since 1980, the Company has leased a 4,800 square-foot building from Mr.
Nadolsky, which is used primarily for manufacturing. The lease originally
provided for a monthly rental of $1,900 (an amount based upon a January 1984,
independent appraisal of the building's value) and was to have expired on
January 1, 1987. Since 1987, the Company has extended the term of this lease
from time to time. The rental paid to Mr. Nadolsky pursuant to this lease was
$41,936 for the fiscal year ended November 30, 2007. The lease was renewed for
three (3) years, July 2007 to June 2010 at the same rental rate provided for in
the previous lease subject to increase based upon increases in the Consumer
Price Index.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG, LLP was selected as the independent accountants in 2002 and has been
responsible for the Company's financial audit for the fiscal years ended
November 30, 2002 through November 30, 2007.
Management anticipates that a representative from KPMG, LLP will be present
at the Annual Meeting and will be given the opportunity to make a statement if
he or she desires to do so. It is also anticipated that such representative will
be available to respond to appropriate questions from stockholders.
AUDIT FEES
KPMG, LLP fees for professional services for the audit of the Company's
financial statements for 2007 and the review of the interim financial statements
included in the Quarterly Reports were $101,000.
TAX FEES
KPMG, LLP fees for tax compliance, tax advice and tax planning in 2007 were
$12,370.
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ALL OTHER FEES
KPMG, LLP did not provide any other services.
The Audit Committee requests that KPMG, LLP provide the committee with the
anticipated charges of all accounting and tax related services to be performed
by KPMG, LLP in advance of performing such services. The Audit Committee
approves all KPMG, LLP tax return preparation in advance of the performance of
such services.
REVIEW OF AUDITED FINANCIAL STATEMENTS
The Board of Directors does not have nominating or compensation committee
or committees performing similar functions. The Board of Directors formed an
audit committee on May 13, 2002.
The members of the Audit Committee are the members of the Board of
Directors and are not independent.
The Board of Directors has discussed with management and the independent
auditors the quality and adequacy of the Company's internal controls. The
Directors have considered and reviewed with the independent auditors their audit
plans, the scope of the audit, and the identification of audit risks.
The Board of Directors has reviewed the Company's audited financial
statements for the fiscal year ended November 30, 2007, and discussed them with
management and the Company's independent auditors. Management has the
responsibility for the preparation and integrity of the Company's financial
statements and the independent auditors have the responsibility for the
examination of those statements. Based on this and discussions with management
and the independent auditors, the Board of Directors has recommended that the
Company's audited financial statements be included in its Annual Report on Form
10-KSB for the fiscal year ended November 30,2007, for filing with the
Securities and Exchange Commission. It is not the duty of the Directors to plan
or conduct audits, to determine that the Company's financial statements are
complete and accurate and are in accordance with accounting principles generally
accepted in the United States. Those responsibilities belong to management and
the Company's independent auditors. In giving its recommendations, the Directors
considered (a) management's representation that such financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States, and (b) the report of the
Company's independent auditors with respect to such financial statements.
The Board of Directors has received and reviewed written disclosures and a
letter from the independent accountants required by the Independence Standards
Board Standard No. 1, entitled "Independence Discussions with Audit Committee,"
as amended to date, and has discussed with the independent accountants their
independence from management.
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COST OF SOLICITATION OF PROXIES
The Company will bear the costs of the solicitation of proxies for the
Meeting, including the cost of preparing, assembling and mailing proxy
materials, the handling and tabulation of proxies received and all charges to
brokerage houses and other institutions, nominees and fiduciaries in forwarding
such materials to beneficial owners. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or telegraph
by directors, officers and regular employees of the Company.
STOCKHOLDERS PROPOSALS
Any stockholder proposing to have any appropriate matter brought before the
next Annual Meeting of Stockholders scheduled for February 2009 must submit such
proposal in accordance with the proxy rules of the Securities and Exchange
Commission. Such proposal should be sent to Mr. Patrick Cefalu, P. 0. Box
469017, Garland, Texas 75046, no later than November 30, 2008.
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PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MICROPAC INDUSTRIES, INC.
March 7, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS: That the undersigned stockholder of Micropac
Industries, Inc., a Delaware Corporation, hereby constitutes and appoints Tracy
Dotson and Patrick Cefalu, and each of them acting individually, the true and
lawful attorneys, agents and proxies of the undersigned, with full power of
substitution and revocation thereof, for and in the name, place and stead of the
undersigned, to vote upon and act with respect to all shares of stock of the
Corporation standing in the name of the undersigned, or with respect to which
the undersigned is entitled to vote and act if personally present, at the Annual
Meeting of Shareholders of said Corporation to be held March 7, 2008, at the
place and time specified in Notice of Annual Meeting of Shareholders and Proxy
Statement dated February 11, 2008 and at any and all adjournments thereof, with
all of the powers the undersigned would possess if personally present at said
meeting.
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote for
all marked to contrary below) nominees listed below
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below)
H. Kent Hearn Heinz-Werner Hempel James K. Murphey
Connie J. Wood Mark W. King
Approve__________ Disapprove__________
2. Upon any other business that may properly come before the meeting.
(Continued on next page to be signed, dated and returned)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS MADE ABOVE. IN THE ABSENCE OF INSTRUCTIONS, SUCH SHARES WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED ABOVE. THIS PROXY ALSO DELEGATES
DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER BUSINESS UPON WHICH
THE UNDERSIGNED IS ENTITLED TO VOTE AND THAT MAY PROPERLY COME BEFORE THIS
MEETING OR ANY ADJOURNMENT THEREOF.
The undersigned hereby revokes all previous proxies for the meeting and hereby
acknowledges receipt of the notice of such meeting and the proxy statement
furnished therewith.
Dated , 2008
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(Stockholder's Signature)
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(Stockholder's Signature)
NOTE: If shares are registered in more than one name, all owners should sign. If
signing in a representative or fiduciary capacity, please give full title and
attach evidence of authority. Corporations please sign with full corporate name
by duly authorized officer and affix corporate seal.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.