SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Under Rule
14a-12
BLONDER TONGUE LABORATORIES, INC.
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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:
________________________________________________________________________________
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:
________________________________________________________________________________
BLONDER TONGUE LABORATORIES, INC.
ONE JAKE BROWN ROAD
OLD BRIDGE, NEW JERSEY 08857
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 3, 2002
----------------
To Our Stockholders:
The 2002 Annual Meeting of Stockholders of Blonder Tongue
Laboratories, Inc. (the "Company") will be held at the Hyatt Regency New
Brunswick, 2 Albany Street, New Brunswick, New Jersey 08901, on May 3, 2002,
beginning at 10:00 a.m., local time, for the following purposes:
1. To elect three Directors constituting Class I of the Board of
Directors to serve until the 2005 Annual Meeting of
Stockholders or until their successors have been elected and
qualified;
2. To consider and vote upon an amendment of the Company's 1995
Long Term Incentive Plan to increase the aggregate number of
shares which may be issued pursuant to options or restricted
stock awards granted thereunder from 900,000 to 1,150,000;
3. To ratify the appointment of BDO Seidman, LLP, certified
public accountants, as the Company's independent auditors for
the year ending December 31, 2002; and
4. To transact such other business as may properly come before
the meeting or any adjournments thereof. In their discretion,
the Proxies are authorized to vote upon such other business as
may properly come before the Annual Meeting or any
adjournments thereof.
A Proxy, if properly executed and received in time for the
voting, will be voted in the manner directed therein. If no direction is made,
such Proxy will be voted FOR all proposals therein.
The Board of Directors has fixed the close of business on
March 20, 2002, as the record date for determining stockholders entitled to
notice of the meeting and to vote at such meeting or any adjournments thereof,
and only stockholders of record at the close of business on March 20, 2002, are
entitled to notice of and to vote at such meeting or any adjournments thereof.
Your attention is directed to the attached Proxy Statement for
further information regarding each proposal to be made.
You are cordially invited to attend the meeting. Whether or
not you plan to attend, you are urged to complete, date and sign the enclosed
proxy and return it promptly. If you receive more than one form of proxy, it is
an indication that your shares are registered in more than one account, and each
such proxy must be completed and returned if you wish to vote all of your shares
eligible to be voted at the meeting.
By Order of the Board of Directors
Robert J. Palle, Jr., Executive Vice
President, Chief Operating Officer and
Secretary
April 3, 2002
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PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND DESIRE TO
VOTE IN PERSON AT THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU UPON WRITTEN
NOTICE TO THE SECRETARY OF THE COMPANY REVOKING YOUR PROXY.
BLONDER TONGUE LABORATORIES, INC.
ONE JAKE BROWN ROAD
OLD BRIDGE, NEW JERSEY 08857
PROXY STATEMENT FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 3, 2002
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Blonder Tongue
Laboratories, Inc., a Delaware corporation (the "Company"), to be voted at the
2002 Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held at the Hyatt Regency New Brunswick, 2 Albany Street, New Brunswick, New
Jersey 08901 on May 3, 2002, at 10:00 a.m., local time, and at any adjournment
or adjournments thereof.
All proxies delivered pursuant to this solicitation are
revocable at any time before they are exercised by written notice to the
Secretary of the Company, or by delivering a later dated proxy. Attendance at
the Annual Meeting will not, without delivery of the written notice described in
the immediately preceding sentence, constitute revocation of a proxy. The
mailing address of the principal executive offices of the Company is One Jake
Brown Road, Old Bridge, New Jersey 08857. The Company's telephone number is
(732) 679-4000. This Proxy Statement and the enclosed form of proxy will be
mailed to each stockholder on or about April 3, 2002, together with the Annual
Report on Form 10-K for the year ended December 31, 2001.
All properly executed proxies delivered pursuant to this
solicitation and not revoked will be voted at the Annual Meeting in accordance
with the directions given. Regarding the election of Directors to serve until
the 2005 Annual Meeting of Stockholders, in voting by proxy, stockholders may
vote in favor of all nominees or withhold their votes as to all nominees or
withhold their votes as to specific nominees. With respect to the other
proposals to be voted upon, stockholders may vote in favor of a proposal,
against a proposal or may abstain from voting. Stockholders should specify their
choices on the enclosed form of proxy. If no specific instructions are given
with respect to the matters to be acted upon, the shares represented by a signed
proxy will be voted FOR the election of all nominees, FOR the proposal to amend
the 1995 Long Term Incentive Plan by increasing the number of shares of Common
Stock available for awards thereunder, and FOR the proposal to ratify the
appointment of BDO Seidman, LLP as independent auditors for the fiscal year
ending December 31, 2002. Directors will be elected by a plurality of the votes
cast by the holders of the shares of Common Stock voting in person or by proxy
at the Annual Meeting. Thus, abstentions will have no effect on the vote for
election of Directors. Approval of any other matters to come before the Annual
Meeting will require the affirmative vote of the holders of a majority of the
shares of Common Stock of the Company present in person or by proxy at the
Annual Meeting. Broker non-votes, which occur when a broker or other nominee
holding shares for a beneficial owner does not vote on a proposal because the
beneficial owner has not checked one of the boxes on the proxy card, are not
considered to be shares "entitled to vote" (other than for quorum purposes),
will not be included in vote totals and will have no effect on the outcome of
any matters to be voted upon at the Annual Meeting.
Management is not aware at the date hereof of any matter to be
presented at the Annual Meeting other than the election of Directors and the
other proposals described in the attached Notice of Annual Meeting of
Stockholders. If any other matter is properly presented, the persons named in
the proxy will vote thereon according to their best judgement.
The expense of soliciting proxies for the Annual Meeting,
including the cost of preparing, assembling and mailing the notice, proxy and
Proxy Statement, will be paid by the Company. The solicitation will be made by
use of the mails, through brokers and banking institutions, and by officers and
regular employees of the Company. Proxies may be solicited by personal
interview, mail, telephone or facsimile transmission.
Only owners of record of the common stock, $.001 par value per
share, of the Company ("Common Stock") at the close of business on March 20,
2002 (the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting or any adjournments or postponements thereof. Each owner of record on
the Record
Date is entitled to one vote for each share of Common Stock of the Company so
held. There is no cumulative voting. On the Record Date, there were 7,612,664
shares of Common Stock issued, outstanding and entitled to vote.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended,
provides that the Board shall consist of between five and eleven members, as
determined from time to time by the Board, divided into three classes as nearly
equal in number as possible. The size of the Board has currently been set at
eight. The term of the current Class I Directors expires at the 2002 Annual
Meeting, the term of the current Class II Directors expires at the 2003 Annual
Meeting and the term of the current Class III Directors expires at the 2004
Annual Meeting. The successors to each class of Directors whose terms expire at
an Annual Meeting will be elected to hold office for a term expiring at the
Annual Meeting of Stockholders held in the third year following the year of
their election.
The Directors whose terms will expire at the 2002 Annual
Meeting of Stockholders are John E. Dwight, Robert E. Heaton, and James A.
Luksch, all of whom have been nominated by the Board to stand for reelection as
Directors at the 2002 Annual Meeting of Stockholders, to hold office until the
2005 Annual Meeting of Stockholders and until their successors are elected and
qualified. Messrs. Dwight, Heaton and Luksch have consented to serve for the new
terms, if elected.
RECOMMENDATION OF THE BOARD OF DIRECTORS CONCERNING THE ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR
JOHN E. DWIGHT, ROBERT E. HEATON, AND JAMES A. LUKSCH AS CLASS I DIRECTORS TO
HOLD OFFICE UNTIL THE 2005 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR
SUCCESSORS ARE ELECTED AND QUALIFIED. PROXIES RECEIVED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXY A CONTRARY CHOICE.
DIRECTORS AND EXECUTIVE OFFICERS
NOMINEE AND CONTINUING DIRECTORS
The following table sets forth the names and certain
information about each of the nominees for election as a Director of the Company
and the continuing Directors of the Company:
Director
Name Age Since
---- --- --------
Nominees for a three-year term expiring in 2005 (Class I Directors):
John E. Dwight..............................................................................66 1995
Robert E. Heaton(1) (2) ....................................................................72 1998
James A. Luksch.............................................................................71 1988
Directors not standing for election this year whose terms expire in 2003 (Class
II Directors):
Robert J. Palle, Jr.........................................................................56 1993
Gary P. Scharmett...........................................................................46 1997
James H. Williams...........................................................................70 1988
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(1) Since May, 1998, a member of the Compensation Committee of the Board of
Directors.
(2) Since June, 2000, a member of the Audit Committee of the Board of
Directors
-2-
Directors not standing for election this year whose terms expire in 2004 (Class
III Directors):
Robert B. Mayer(1)(2).......................................................................70 1995
James F. Williams(1)(3).....................................................................44 1993
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(1) Since December, 1995, a member of the Audit Committee of the Board of
Directors.
(2) Since December, 1995, a member of the Compensation Committee of the
Board of Directors.
(3) Since September, 1997, a member of the Compensation Committee of the
Board of Directors.
Set forth below is a brief summary of the recent business experience
and background of each nominee, continuing Director and executive officer:
JOHN E. DWIGHT became a Director of the Company on December 14, 1995,
immediately after the completion of the Company's initial public offering of
Common Stock. He was a Senior Vice President of the Company from September, 1997
through December, 2000. Mr. Dwight currently serves as Assistant to the
President of the Company. From 1992 until September, 1997, Mr. Dwight served as
President of Film Microelectronics, Inc., a designer and manufacturer of
microelectronic products.
ROBERT E. HEATON became a Director of the Company in March, 1998. He
also presently serves on the Board of Directors of Calstrip Steel Corp. From
April, 1993 through April, 1995, Mr. Heaton served as Vice Chairman of the
Stainless Steel Group of Lukens, Inc. From April, 1981, through April, 1993, Mr.
Heaton was President and Chief Executive Officer of Washington Steel Corporation
until it was acquired by Lukens, Inc. Mr. Heaton is a past Chairman of the
Specialty Steel Industry of North America.
JAMES A. LUKSCH has been the President and Chief Executive Officer and
a Director of the Company since November, 1988. He became Chairman of the Board
in November, 1994.
ROBERT B. MAYER became a Director of the Company on December 14, 1995,
immediately after the completion of the Company's initial public offering of
Common Stock. From 1966 to 1991, he served in various executive positions,
including Director and Regional President of Norstar Bank, N.A. (formerly known
as Liberty National Bank & Trust Co.), a member of Fleet Financial Group. Mr.
Mayer has from time to time served as a part-time instructor at State University
of New York at Buffalo and is currently a Director and Chairman of People, Inc.
and a member of the Loan Committee, Erie County Regional Industrial Development
Corporation.
ROBERT J. PALLE, Jr. has been the Executive Vice President, Chief
Operating Officer and Secretary of the Company since April, 1989. He became a
Director of the Company in September, 1993 and served as Interim Treasurer from
March through April 2001.
GARY P. SCHARMETT became a Director of the Company in December, 1997.
Since January, 1989, Mr. Scharmett has been a partner in the law firm of
Stradley, Ronon, Stevens & Young, LLP, the Company's outside counsel, and also
presently serves on the Board of Directors of that firm.
JAMES F. WILLIAMS became a Director of the Company in September, 1993.
He has also served as the President and a Director of Ontario Consolidated
Leasing, a heavy equipment leasing company, since March, 1997. Since April,
1996, Mr. Williams has also been the Chairman of the Board and Chief Executive
Officer of Integrated Waste Services, Inc. ("IWSI"). U.S. Dismantlement
Corporation ("USDC"), for which Mr. Williams serves as a Director, is an
indirect, wholly-owned subsidiary of IWSI. In early 1997, USDC's Board
determined to cease operations and liquidate its business. Toward the end of
that process, an uncontested, involuntary bankruptcy petition was filed against
USDC on May 28, 1997. An order closing this proceeding was issued by the court
on December 31, 1997. Mr. Williams is the nephew of Mr. James H. Williams.
JAMES H. WILLIAMS has been a Director of the Company since November,
1988, and served as Chairman of the Board from the Company's inception until
November, 1994. He presently serves as a consultant to the Company under a
written agreement.
-3-
OTHER EXECUTIVE OFFICERS
DANIEL J. ALTIERE, 63, has been a Senior Vice President of the Company
since April, 1989. Since 1989, he has been responsible for human resources,
quality control, manufacturing, warranty service and industrial engineering.
ERIC S. SKOLNIK, 37, has served as Chief Financial Officer of the
Company since May, 2001. He served as Interim Chief Financial Officer of the
Company from January, 2001 through April, 2001. He was hired by the Company in
May, 2000, as Corporate Controller. From 1994 until May, 2000, Mr. Skolnik
worked as a certified public accountant with BDO Seidman, LLP, the Company's
independent auditors.
NORMAN A. WESTCOTT, 61, became Senior Vice President - Operational
Services of the Company in October, 1999 and was a Vice President of the Company
from July, 1994 until October, 1999. He is responsible for material purchasing
and production.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES
During the year ended December 31, 2001, there were seven meetings of
the Company's Board of Directors and each Director attended (either in person or
via teleconference) at least 75% of the meetings held. The Board of Directors
has two standing committees: the Compensation Committee and the Audit Committee.
COMPENSATION COMMITTEE. The Compensation Committee is currently
comprised of Robert B. Mayer, Robert E. Heaton and James F. Williams, all of
whom are non-employee Directors. The Compensation Committee is responsible to
determine compensation for the Company's executive officers and to administer
the Company's stock option plans, except for the 1996 Director Option Plan. This
committee held six meetings during 2001, all of which were attended (either in
person or via teleconference) by each committee member.
AUDIT COMMITTEE. The Audit Committee is currently comprised of James F.
Williams, Robert B. Mayer and Robert E. Heaton, all of whom are non-employee
Directors. The Audit Committee is responsible to make recommendations concerning
the engagement of independent public accountants, review the plans and results
of the audit engagement with the independent public accountants, approve
professional services provided by the independent public accountants, review the
independence of the independent public accountants, consider the range of audit
and non-audit fees and review the adequacy of the Company's internal accounting
controls. This committee held four meetings during 2001, all of which were
attended (either in person or via teleconference) by each committee member.
The members of the Audit Committee are independent, as defined in the
American Stock Exchange listing standards. The Board of Directors has adopted a
written charter for the Audit Committee which the Audit Committee reviews and
reassesses for adequacy on an annual basis.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has:
o reviewed and discussed the audited financial statements for
the fiscal year ended December 31, 2001 with the Company's
management;
o discussed with the Company's independent auditors the
matters required to be discussed by Statement on Accounting
Standards No. 61, as the same was in effect on the date of the
Company's financial statements;
o received the written disclosures and the letter from the
Company's independent auditors required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit
Committees), as the same was in effect on the date of the Company's
financial statements; and
-4-
o discussed with the Company's independent auditors their
independence from the Company and its management.
Based on the review and discussions referred to in the items above, the
Audit Committee recommended to the Board of Directors that the audited financial
statements for the fiscal year ended December 31, 2001 be included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001.
THE AUDIT COMMITTEE
James F. Williams, Chairman
Robert B. Mayer
Robert E. Heaton
DIRECTORS' COMPENSATION
During calendar year 2001, each non-employee Director of the Company
(other than James H. Williams) received an annual retainer of $15,000, payable
quarterly, a fee of $1,000 for each Board meeting attended in person ($500 if
attendance was telephonic) and a fee of $600 for each committee meeting attended
in person ($300 if attendance was telephonic or if attending on the same date as
a Board meeting). Each Director was also reimbursed for certain travel, lodging
and related expenses incurred in connection with attendance at Board and
committee meetings. During calendar year 2001, Messrs. Luksch, Palle and Dwight
did not receive any separate compensation for serving on the Board of Directors
or any committees thereof.
Effective January 1, 2000, the Company enacted a new policy requiring
each of the Company's Directors to maintain an investment in the Company's
Common Stock during his or her entire tenure as a Director equal to at least
$25,000, calculated by taking the greater of (i) the amount paid for such stock
by the Director and (ii) the highest fair market value of such stock.
Non-employee directors of the Company are encouraged to purchase Company common
stock equal to or exceeding one year's annual retainer during any three-year
period until they meet this requirement.
In May, 1998, the stockholders of the Company approved the adoption of
the Company's Amended and Restated 1996 Director Option Plan (the "1996 Plan").
Under the 1996 Plan, Directors who are not currently employed by the Company or
any subsidiary of the Company and who have not been so employed within the past
six months are eligible to receive options from time to time to purchase a
number of shares of Common Stock as determined by the Board; provided, however,
that no Director may be granted options to purchase more than 5,000 shares of
Common Stock in any one calendar year. The exercise price for such shares is the
fair market value thereof on the date of grant, and the options vest as
determined in each case by the Board of Directors. Options granted under the
1996 Plan must be exercised within ten years from the date of grant. A maximum
of 100,000 shares may be awarded under the 1996 Plan which expires January 2,
2006. The plan is administered by the Board of Directors.
On February 16, 2001, each of the Company's non-employee Directors
other than James H. Williams was granted an option under the 1996 Plan to
purchase 5,000 shares of Common Stock at an exercise price of $2.88 per share.
The options vested on the first anniversary of the date of grant.
The Company is party to a consulting and non-competition agreement with
James H. Williams for the purpose of obtaining advice and counseling from Mr.
Williams concerning strategic planning and financial and business matters. Under
this agreement, as amended, Mr. Williams is obligated to make himself available
to the Company for up to 25 hours per month, in addition to time spent attending
to his duties as a member of the Board of Directors of the Company. Mr. Williams
is currently paid $157,500 per year for his services under this agreement,
subject to adjustment on a basis consistent with adjustments to compensation to
the Company's senior management. The agreement provides a cap of $200,000 on
payments to be made thereunder during any calendar year. The initial term of
this agreement expires on December 31, 2004 and automatically renews thereafter
for successive one year terms (subject to termination at the end of any renewal
term on at least 90 days' notice). Payments to Mr. Williams under this
consulting agreement are in lieu of any other payments in connection with his
services as a Director or committee member, other than the reimbursement of
certain travel, lodging and related expenses incurred in connection with
attendance at Board and committee meetings.
-5-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission and the American Stock Exchange, initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, Directors and greater than ten
percent stockholders (collectively, "Reporting Persons") are additionally
required to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations of the
Reporting Persons that no other reports were required with respect to fiscal
2001, all Section 16(a) filing requirements applicable to the Reporting Persons
were complied on a timely basis in fiscal 2001, except (i) the Form 3 required
for Mr. Skolnik upon becoming a Reporting Person on January 24, 2001 was not
filed until March 1, 2001, (ii) an amended Form 5 for Mr. Luksch with respect to
transactions in fiscal 2000, reporting a gift of 100,000 shares, was filed on
February 8, 2002, (iii) a sale of 2,500 shares by Mr. Luksch on September 7,
2001 was reported on a Form 5 filed on February 8, 2002 and (iv) the Form 5 for
each of Messrs. Heaton, Mayer, Scharmett and James F. Williams reporting a stock
option award to each for 5,000 shares, granted on July 13, 2000, was filed on
March 27, 2002.
-6-
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 28, 2002 by (i) each
person who is known by the Company to beneficially own more than five percent of
the Company's Common Stock, (ii) each of the Company's Directors, including
nominee Directors, (iii) each of the executive officers named in the Summary
Compensation Table and (iv) all executive officers and Directors as a group.
Except as otherwise indicated, the persons named in the table have sole voting
and investment power with respect to all shares beneficially owned, subject to
community property laws where applicable.
PERCENT OF CLASS
NAME AND ADDRESS OF AMOUNT AND NATURE OF BENEFICIALLY
BENEFICIAL OWNER(1)(2) BENEFICIAL OWNERSHIP (1) OWNED
---------------------- ------------------------ ----------------
James A. Luksch................................................... 1,622,497 (3) 21.31%
Robert J. Palle, Jr............................................... 1,192,664 (4) 15.67%
Norman A. Westcott................................................ 60,374 (5) *
Daniel J. Altiere................................................. 56,750 (6) *
Eric S. Skolnik................................................... 4,455 (7) *
John E. Dwight.................................................... 74,160 (8) *
James H. Williams................................................. 1,528,854 (9) 20.08%
James F. Williams................................................. 86,673 (9) 1.13%
Gary P. Scharmett................................................. 33,300 (10) *
Robert B. Mayer................................................... 21,500 (11) *
Robert E. Heaton.................................................. 20,000 (12) *
All Directors and executive officers as a group (11 persons)...... 4,649,054 58.84%
----------------
* Less than 1%
(1) Beneficial ownership as of February 28, 2002 for each individual includes
shares subject to options held by such persons (but not held by any other
person) which are exercisable within 60 days after such date. Beneficial
ownership is determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to securities.
This table contains information furnished to the Company by the respective
stockholders or contained in filings made with the Commission.
(2) The address for each beneficial owner is c/o Blonder Tongue Laboratories,
Inc. One Jake Brown Road, Old Bridge, NJ 08857.
(3) Includes 10,927 shares of Common Stock owned of record by two trusts of
which Mr. Luksch is the trustee, nine shares of Common Stock owned of record
by an estate of which Mr. Luksch is the executor and 200,000 shares of
Common Stock held of record by Mr. Luksch's spouse, as to which Mr. Luksch
expressly disclaims beneficial ownership.
(4) Includes 200,000 shares owned of record by a limited liability company of
which Mr. Palle and his wife are the sole members.
(5) Includes 47,367 shares of Common Stock underlying options granted by the
Company.
(6) Includes 55,173 shares of Common Stock underlying options granted by the
Company.
(7) Includes 3,667 shares of Common Stock underlying options granted by the
Company.
(8) Includes 46,850 shares of Common Stock underlying options granted by the
Company.
(9) James H. Williams has granted to James F. Williams the option to purchase
52,173 shares of Company Common Stock which he owns. These shares are
included in the beneficial ownership of both Directors. Beneficial ownership
for James F. Williams also includes 19,500 shares of Common Stock underlying
options granted by the Company.
(10)Includes 27,000 shares of Common Stock underlying options granted by the
Company.
(11)Includes 19,500 shares of Common Stock underlying options granted by the
Company, 500 shares of Common Stock held of record by Mr. Mayer's adult son,
as to which Mr. Mayer expressly disclaims beneficial ownership and 200
shares of Common Stock held of record by Mr. Mayer's spouse.
(12)Includes 17,000 shares of Common Stock underlying options granted by the
Company.
-7-
EXECUTIVE COMPENSATION
SUMMARY
The following table sets forth certain summary information concerning
compensation paid or accrued for services rendered to the Company in all
capacities for the year ended December 31, 2001 and two prior fiscal years with
respect to the Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company who served as executive officers
during 2001 and whose salary plus bonus during 2001 exceeded $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------------------- ------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(1) OPTIONS(#) COMPENSATION($)(2)
------------------ ---- ---------- ----------- ----------- ------------------
James A. Luksch........................ 2001 341,000 (3) 0 --- 8,856
President and Chief Executive 2000 325,000 0 --- 7,611
Officer 1999 325,000 0 --- 7,126
Robert J. Palle, Jr.................... 2001 266,000 (4) 0 --- 12,358
Executive Vice President, Chief 2000 253,000 0 3,483
Operating Officer and Secretary 1999 253,000 0 --- 3,327
---
Daniel J. Altiere ..................... 2001 162,081 0 12,000 5,159
Senior Vice President 2000 154,056 0 10,000 4,868
1999 143,688 0 --- 4,821
Norman A. Westcott..................... 2001 129,331 0 12,000 5,015
Senior Vice President - Operational 2000 124,427 0 10,000 4,996
Services 1999 120,000 0 6,000 4,491
Eric S. Skolnik........................ 2001 104,146 0 8,000 3,345
Vice President, Chief Financial 2000 54,135 (5) 0 3,000 32
Officer and Treasurer 1999 --- --- --- ---
------------------
(1) Bonus amounts for each year include bonuses earned by each individual under
the Company's Executive Officer Bonus Plan based on the Company's financial
performance during such year. These amounts are paid to such individuals in
the year after that in which they accrue.
(2) Represents reimbursement of life insurance premiums, matching contributions
paid by the Company under its 401(k) plan and costs of preparations of
individual tax returns. Amounts paid in 2001 for life insurance were $1,236,
$258, $54, $396 and $396; matching contributions under the Company's 401(k)
plan were $5,250, $5,250, $3,300, $4,763 and $3,519; and amounts paid for
preparation of tax returns were $2,370, $12,850, $0, $0, and $1,100 for
Messrs. Luksch, Palle, Skolnik, Altiere, and Westcott, respectively. Amounts
paid in 2000 for life insurance were $1,136, $258, $54, $396, $396; matching
contributions under the Company's 401(k) plan were $5,250, $2,100, $0,
$4,472 and $3,500; and amounts paid for preparation of tax returns were
$1,125, $1,125, $0, $0, and $1,000 for Messrs. Luksch, Palle, Skolnik,
Altiere and Westcott, respectively. Amounts paid in 1999 for life insurance
were $1,001, $202, $0, $543 and $350; matching contributions under the
Company's 401(k) plan were $5,000, $2,000, $0, $428 and $3,041; and amounts
paid for preparation of tax returns were $1,125, $1,125, $0, $0 and $1,100
for Messrs. Luksch, Palle, Skolnik, Altiere and Westcott, respectively.
(3) Mr. Luksch's accrued annual salary for the period ending December 31, 2001
was $341,000, however, due to timing issues the actual cash paid for the
period ending December 31, 2001 was $325,000. The unpaid balance was paid to
Mr. Luksch during 2002.
(4) Mr. Palle's accrued annual salary for the period ending December 31, 2001
was $266,000, however, due to timing issues the actual cash paid for the
period ending December 31, 2001 was $253,000. The unpaid balance was paid to
Mr. Palle during 2002.
(5) Represents compensation paid to Mr. Skolnik from the commencement of his
employment at the Company in May 2000 through December 31, 2000.
-8-
STOCK OPTIONS
The following table provides information with respect to the named
executive officers concerning options granted to them during fiscal year 2001.
OPTION GRANTS IN 2001
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SHARES TOTAL OPTIONS EXERCISE ANNUAL RATES FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------
NAME GRANTED (#) 2001 ($/SH.) DATE 5% 10%
---- ----------- ------------ ------- ---------- -- ---
James A. Luksch............... --- --- --- --- --- ---
Robert J. Palle, Jr. ......... --- --- --- --- --- ---
Daniel J. Altiere............. 12,000 7.69 2.88 2/14/2011 21,735 55,080
Norman A. Westcott............ 12,000 7.69 2.88 2/14/2011 21,735 55,080
Eric S. Skolnik............... 8,000 5.13 2.88 2/14/2011 14,490 36,720
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers concerning the exercise of options during fiscal year 2001
and unexercised options held as of December 31, 2001.
AGGREGATED OPTION EXERCISES IN 2001
AND OPTION VALUES AS OF DECEMBER 31, 2001
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS AT MONEY OPTIONS AT
ON EXERCISE(#) REALIZED($) DECEMBER 31, 2001(#) DECEMBER 31, 2001($)(1)
--------------- ---------- ------------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
James A. Luksch......... --- --- --- --- --- ---
Robert J. Palle, Jr..... --- --- --- --- --- ---
Daniel J. Altiere....... --- --- 51,173 18,666 13,282 9,720
Norman A. Westcott...... --- --- 43,367 20,666 --- 9,720
Eric S. Skolnik......... --- --- 1,000 10,000 --- 6,480
----------
(1) These columns represent the difference on December 31, 2001 between the
closing market price of the Company's common stock and the option exercise
price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists
of James F. Williams, Robert B. Mayer and Robert E. Heaton. No member of the
Compensation Committee was an officer or employee of the Company during fiscal
year 2001. None of the executive officers of the Company has served on the board
of directors, the compensation committee or any other board committee performing
equivalent functions of any other entity, any of whose officers served either on
the Board of Directors or the Compensation Committee of the Company.
EMPLOYMENT CONTRACTS
In August 1995, Mr. Altiere and the Company entered into an employment
agreement which provides that Mr. Altiere is entitled to receive his base salary
for one year following termination of his employment by the Company without
cause. Upon his disability, Mr. Altiere is also entitled to receive his base
annual salary for one year.
-9-
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION POLICIES
GENERAL
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The objective of the Company
in setting executive compensation has been to attract, retain and motivate
qualified executives to manage the Company's business and affairs so as to
foster sales and earnings growth, achieve significant current profits and
maximize stockholder value. Executive compensation in the aggregate is made up
principally of annual base salary, bonus, and awards of stock options under the
Company's 1995 Long Term Incentive Plan.
Generally, annual salary adjustments and bonuses for executive officers
other than Messrs. Luksch and Palle have been established by Mr. Luksch with the
concurrence of the Compensation Committee. The annual salary adjustments and
bonuses for Messrs. Luksch and Palle are determined by the Compensation
Committee, subject to Board approval. An annual performance evaluation of each
executive officer is conducted, upon which a salary adjustment is determined.
The performance evaluation focuses on the executive's performance during the
past year of the responsibilities of his position, the executive's improvement
in areas where any deficiencies may have been noted in the past, and the
executive's achievement of any specific goals and objectives which may have been
established for such executive, including achievement of budget objectives. The
Company's overall profit for the fiscal year and the executive's individual
contribution to that profit are also considered. As is typical for most
corporations, the assessment of individual performance contributions is in most
cases subjective and not conditioned upon the achievement of any specific,
pre-determined performance targets.
In February, 1997, the Compensation Committee implemented the Executive
Officer Bonus Plan ("Executive Bonus Plan"). The Compensation Committee believes
that a combination of base salary, cash bonus awards under the Executive Bonus
Plan and the award of stock options and/or restricted stock awards will support
the short-term and long-term strategic objectives of the Company and will reward
individual performance and the value created for stockholders. Cash bonus awards
under the Executive Bonus Plan are paid to officers during a particular fiscal
year based upon and relating to the financial performance of the Company during
the prior fiscal year. During the first quarter of each fiscal year of the
Company, the Compensation Committee designates which of the Company's executive
officers are to participate in the Executive Bonus Plan for that year. Also
during the first quarter, the Compensation Committee establishes one or more
objective performance goals for each participant, together with a maximum dollar
bonus opportunity for the participant and a formula to determine bonus payments
based on the achievement of the goal(s). In no event may the bonus for any
participant exceed 100% of such participant's base salary.
The performance goals are expressed in terms of (a) one or more
corporate or divisional earnings-based measures (which may be based on net
income, operating income, cash flows, or any combination thereof) and/or (b) one
or more corporate or divisional sales-based measures. Each such goal may be
expressed on an absolute and/or relative basis, may employ comparisons with past
performance of the Company (including one or more divisions) and/or the current
or past performance of other companies, and in the case of earnings-based
measures, may employ comparisons to capital, stockholders' equity and shares
outstanding. Performance goals need not be uniform among participants.
After the Company's financial results for a fiscal year have been
determined, the Compensation Committee certifies the level of performance goal
attainment and the potential bonus payment for each participant. The
Compensation Committee has full authority to reduce the amount that would
otherwise be payable to any participant for a fiscal year.
For 2001, bonuses under the Executive Bonus Plan were only to be
awarded if the Company's diluted earnings per share in 2001 were at least equal
to 120% of its average annual diluted earnings per share for calendar years
1998, 1999 and 2000. This threshold requirement for the payment of bonuses was
not met for fiscal 2001, therefore no bonuses were awarded under the Executive
Bonus Plan. Each of the named executive officers in the Summary Compensation
Table herein was eligible to participate in the Executive Bonus Plan during
2001. If awarded, bonuses earned during the 2001 fiscal year under the Executive
Bonus Plan (included as bonuses earned
-10-
during 2001 in the Summary Compensation Table herein but payable in 2002) were
to be based on a percentage of each recipient's annual salary for 2001 equal to
the percentage increase in the Company's diluted earnings per share for fiscal
2001 over the average annual diluted earnings per share for calendar years 1999,
2000 and 2001, multiplied by a multiplier between 1.0 and 1.5 determined on an
individual basis by the Compensation Committee, subject to a maximum amount
equal to 100% of such recipient's 2001 base annual salary.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Luksch has been President and Chief Executive Officer of the
Company since it commenced operations in 1988. His compensation includes the
same elements and performance measures as the compensation of the Company's
other executive officers.
Mr. Luksch's annual salary, which had been $325,000 since January 1999,
was increased to $341,000 effective January 1, 2001 and is expected to remain at
this level during 2002. Mr. Luksch received no bonus and no stock options during
fiscal year 2001. The Committee believes that Mr. Luksch's overall compensation
is fair and reasonable. This assessment is a subjective determination and is not
quantitatively related to the Company's performance.
THE COMPENSATION COMMITTEE
Robert B. Mayer, Chairman
Robert E. Heaton
James F. Williams
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total return during the period
from December 31, 1996 to December 31, 2001, for the Company's Common Stock, the
AMEX Market Value Index and the Dow Jones Electrical Components & Equipment
Industry Group Index. This graph assumes the investment of $100 in the Company's
Common Stock, the stock in the companies presented in the AMEX Market Value
Index and the stock in the companies comprising the Dow Jones Electrical
Components & Equipment Industry Group Index on January 1, 1997 and the
reinvestment of all dividends.
[THE TABLE BELOW REPRESENTS A LINE GRAPH IN THE PRINTED REPORT]
----------------------------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
----------------------------------------------------------------------------------------------------
BDR 100.00 162.06 86.34 65.16 40.73 48.09
----------------------------------------------------------------------------------------------------
AMEX 100.00 117.37 118.12 150.34 153.91 145.32
----------------------------------------------------------------------------------------------------
DJEI 100.00 111.11 126.46 180.15 110.40 77.64
----------------------------------------------------------------------------------------------------
-11-
CERTAIN TRANSACTIONS
The President's daughter and son-in-law, Emily Nikoo and Nezam Nikoo,
are a marketing manager and senior engineer for the Company, respectively. In
addition, Ms. Nikoo heads the Company's task force for the promotion of its
interdiction product line. The annual compensation for Ms. Nikoo in 2001 was
$113,625. The annual compensation for Mr. Nikoo was $110,465. In 2001, Ms. Nikoo
was granted options under the 1995 Plan to purchase 10,000 shares of Common
Stock at a price of $2.88 per share, vesting over three years at one-third per
year, commencing on February 16, 2002. In 2001, Mr. Nikoo was granted options
under the 1995 Plan to purchase 10,000 shares of Common Stock at a price of
$2.88 per share, vesting over three years at one-third per year, commencing on
February 16, 2002.
PROPOSAL NO. 2 - AMENDMENT OF 1995 LONG TERM INCENTIVE PLAN
At the Annual Meeting, stockholders will be presented with a proposal
to increase the number of shares subject to the Company's 1995 Long Term
Incentive Plan, as heretofore amended (the "1995 Plan"), by 250,000 shares.
Previously, stockholders have approved a total of 900,000 shares of Common Stock
for issuance under the 1995 Plan. Options to purchase a total of 766,500 shares
of Common Stock (not including conditionally granted stock option) at exercise
prices ranging from $2.79 to $8.63 per share have been granted and remain
outstanding under the 1995 Plan as of February 28, 2002. No restricted shares
have been awarded under the 1995 Plan. The full text of the proposed amendment
to the 1995 Plan is set forth in Exhibit A to this Proxy Statement. The
foregoing description of such proposed amendment is qualified in its entirety by
reference to the text of Exhibit A hereto.
The Board of Directors has historically sought to employ the 1995 Plan
as a long-term incentive for its management and employees to enhance stockholder
value. Because options granted under the 1995 Plan are generally granted at fair
market value of the Common Stock on the date of grant, any value which
ultimately accrues to optionees from such options is based entirely on the
Company's performance following the date of grant, as perceived by stockholders
who establish the price for the Company's shares. The proposed amendment
increasing the number of shares subject to the 1995 Plan will permit further
grants under such plan, thereby allowing the Company to continue creating
incentives for its management and employees to enhance stockholder value.
Accordingly, the Board of Directors believes it is in the best interests of the
Company and its stockholders to amend the 1995 Plan as described above.
Following the approval of the amendment to the 1995 Plan described
above, but subject to stockholder approval, the Board of Directors conditionally
granted options to purchase an aggregate of 301,500 shares of Common Stock at an
exercise price of $3.43 per share to certain individuals. The table below
summarizes these conditionally granted stock options and provides other
information as to the persons to whom such stock options were granted. The
remaining shares of Common Stock which approval of this Proposal No. 2 would
make subject to the 1995 Plan will be used to make additional grants of stock
options from time to time to persons eligible to receive such options.
-12-
NEW PLAN BENEFITS
1995 LONG TERM INCENTIVE PLAN, AS AMENDED
Market Value of Shares
Number of Shares Underlying Underlying Options
Options Granted Subject to Option Exercise Granted Subject to
Name and Position Stockholder Approval (#)(1)(2) Price Per Share ($) Stockholder Approval ($)(3)
----------------- ------------------------------ ------------------- ---------------------------
Daniel J. Altiere 25,000 $3.43 $87,000
Senior Vice President
Norman A. Westcott 25,000 $3.43 $87,000
Senior Vice President -
Operational Services
Eric S. Skolnik 25,000 $3.43 $87,000
Vice President, Chief
Financial Officer and
Treasurer
John E. Dwight 10,000 $3.43 $34,800
Nominee for Director,
Assistant to the President
Kant Mistry 20,000 $3.43 $69,600
Chief Technology Officer
Emily Nikoo 17,500 $3.43 $60,900
Marketing Manager
Nezam Nikoo 17,500 $3.43 $60,900
Senior Engineer
Executive Officer Group 75,000 $3.43 $261,000
Non-Executive Officer 226,500 $3.43 $788,220
Employee Group
----------------
(1) These stock options were granted by the Board of Directors subject to
stockholder approval of Proposal No. 2 to increase the number of shares
eligible for issuance under the 1995 Plan. The stock options expire 10 years
from the date of grant.
(2) These stock options vest and become exercisable, subject to stockholder
approval, in three substantially equal annual installments on the first,
second and third anniversaries of the date of grant.
(3) The market value is based on the March 26, 2002 closing price of $3.48 per
share of Common Stock on the American Stock Exchange.
SUMMARY DESCRIPTION OF THE 1995 PLAN
The 1995 Plan was adopted by the Board of Directors and stockholders on
October 3, 1995. It provides for grants of "incentive stock options" or
nonqualified stock options, and awards of restricted stock, to executives and
key employees, including officers and employee Directors. The 1995 Plan is
administered by the Compensation Committee of the Board of Directors, which
determines the optionees and the terms of the options granted under the 1995
Plan, including the exercise price, number of shares subject to the option and
the exercisability thereof, as well as the recipients and number of shares
awarded for restricted stock awards; provided, however, that no employee may
receive stock options or restricted stock awards which would result, separately
or in combination, in the acquisition of more than 100,000 shares of Common
Stock of the Company under the 1995 Plan. The exercise price of incentive stock
options granted under the 1995 Plan must be equal to at least the fair market
value of the Common Stock on the date of grant. With respect to any optionee who
owns stock representing more than 10% of the voting power of all classes of the
Company's outstanding capital stock, the exercise price of any incentive stock
option must be equal to at least 110% of the fair market value of the Common
Stock on the date of grant, and the term of the option may not exceed five
years. The term of all other incentive stock options granted under the 1995 Plan
may not exceed ten years. The aggregate fair market value of Common Stock
(determined as of the date of the option grant) for which an incentive stock
option may for the first time become exercisable in any calendar year may not
exceed $100,000. The exercise price for nonqualified stock options is
established by the Compensation Committee, and may be more or less than the fair
market value of the Common Stock on the date of grant.
-13-
Generally, options granted under the 1995 Plan are exercisable over the
term of the option, depending upon the optionee's years of service with the
Company at the time of grant, as provided by the Compensation Committee. Upon
any merger or consolidation, if the Company is not the surviving corporation,
all outstanding options granted shall terminate unless such options are assumed
or other options are substituted therefor by the successor corporation, or the
vesting of such shares is accelerated by the Compensation Committee.
Under the 1995 Plan awards may be made to key executive employees of
restricted stock which is forfeitable unless the employee remains in the employ
of the Company for five years and does not violate other terms of the award,
such as non-transferability. Exceptions to forfeiture are provided for the cases
of retirement at age 65 or death while in employment.
The Board of Directors may, upon recommendation of the Compensation
Committee and without stockholder approval, terminate the 1995 Plan at any time
or modify the 1995 Plan to make certain administrative changes, such as changes
imposed by changing tax laws. The Board of Directors may not, without
stockholder approval, increase the total number of shares of Common Stock
subject to the 1995 Plan, change the class of persons eligible to receive grants
under the 1995 Plan or increase the benefits accruing to persons granted options
or restricted stock awards under the 1995 Plan.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE 1995 PLAN
The federal income tax consequences of an employee's participation in
the 1995 Plan are complex and subject to change. The following discussion is
only a summary of the general rules applicable to the 1995 Plan. All
participants have been and are encouraged to consult their own tax advisors
since a taxpayer's particular situation may be such that some variation of the
rules described below will apply.
INCENTIVE STOCK OPTIONS. If an option granted under the 1995 Plan is
treated as an incentive stock option, the optionee will not recognize any income
upon either the grant or the exercise of the option, and the Company will not be
allowed a deduction for federal tax purposes. Upon a sale of the shares, the tax
treatment to the optionee and the Company will depend primarily upon whether the
optionee has met certain holding period requirements at the time he or she sells
the shares. In addition, as discussed below, the exercise of an incentive stock
option may subject the optionee to alternative minimum tax liability.
If an optionee exercises an incentive stock option and does not dispose
of the shares received within two years after the date of such option or within
one year after the transfer of the shares to him or her, any gain realized upon
the disposition will be characterized as a long-term capital gain and, in such
case, the Company will not be entitled to a federal tax deduction.
If the optionee disposes of the shares either within two years after
the date the option is granted or within one year after the transfer of the
shares to him or her, such disposition will be treated as a disqualifying
disposition and an amount equal to the lesser of (1) the fair market value of
the shares on the date of exercise minus the purchase price, or (2) the amount
realized on the disposition minus the purchase price, will be taxed as ordinary
income to the optionee in the taxable year in which the disposition occurs.
(However, in the case of gifts, sales to related parties, and certain other
transactions, the full difference between the fair market value of the stock on
the date of exercise and the purchase price will be treated as compensation
income, even if the fair market value on the date of exercise was greater than
the value at the time of the transaction). The excess, if any, of the amount
realized upon disposition over the fair market value at the time of the exercise
of the option will be treated as a long-term capital gain if the shares have
been held for more than one year following the exercise of the option.
The exercise of an incentive stock option may subject an optionee to
alternative minimum tax liability because the excess of the fair market value of
the shares at the time an incentive stock option is exercised over the purchase
price of the shares is included in income for purposes of the alternative
minimum tax even though it is not included in taxable income for purposes of
determining the regular tax liability of an employee. Consequently, an optionee
may be obligated to pay alternative minimum tax in the year he or she exercises
an incentive stock option.
-14-
In general, there will be no federal income tax deductions allowed to
the Company upon the grant, exercise or termination of an incentive stock
option. However, in the event an optionee sells or disposes of stock received on
the exercise of an incentive stock option in a disqualifying disposition, the
Company will be entitled to a deduction for federal income tax purposes in an
amount equal to the ordinary income, if any, recognized by the optionee upon
disposition of the shares, provided that the deduction is not otherwise
disallowed under the Internal Revenue Code of 1986, as amended ("Code").
NONQUALIFIED STOCK OPTIONS. Nonqualified stock options granted under
the 1995 Plan do not qualify as "incentive stock options" and will not qualify
for any special tax benefits to the optionee. An optionee generally will not
recognize any taxable income at the time he or she is granted a nonqualified
option. However, upon its exercise, the optionee will recognize ordinary income
for federal tax purposes measured by the excess of the then fair market value of
the shares over the exercise price. The income realized by the optionee will be
subject to income and other employee withholding taxes.
The optionee's basis for determination of gain or loss upon the
subsequent disposition of shares acquired upon the exercise of a nonqualified
stock option will be the amount paid for such shares plus any ordinary income
recognized as a result of the exercise of such option. Upon disposition of any
shares acquired pursuant to the exercise of a nonqualified stock option, the
difference between the sale price and the optionee's basis in the shares will be
treated as a capital gain or loss and generally will be characterized as a
long-term capital gain or loss if the shares have been held for more than one
year at their disposition.
In general, there will be no federal income tax deduction allowed to
the Company upon the grant or termination of a nonqualified stock option or a
sale or disposition of the shares acquired upon the exercise of a nonqualified
stock option. However, upon the exercise of a nonqualified stock option, the
Company will be entitled to a deduction for federal income tax purposes equal to
the amount of ordinary income that an optionee is required to recognize as a
result of the exercise, provided that the deduction is not otherwise disallowed
under the Code.
RESTRICTED STOCK AWARDS. Generally, the grant of a restricted stock
award does not immediately produce taxable income to a recipient or a tax
deduction to the Company. At the time the restrictions and conditions expire,
however, a recipient will recognize ordinary income in an amount equal to the
fair market value of the shares on the date the restrictions and conditions
expire and the Company will be entitled to a corresponding income tax deduction.
A recipient who elects under Section 83(b) of the Code within 30 days after the
date of the grant, however, will have ordinary income on the date of the grant
equal to the fair market value on that date of the shares of restricted stock as
if the shares were unrestricted and could be sold immediately. With respect to
the sale or exchange of shares after the restrictions have expired, the holding
period to determine whether the recipient has a long-term or short-term capital
gain or loss will commence on the date the restrictions expire. If the recipient
makes a timely election pursuant to Section 83(b) of the Code, to be taxed as of
the date of the grant, the holding period will commence on the date of the grant
and the tax basis will be equal to the fair market value of the shares on the
date of grant as if the shares were unrestricted and could be sold immediately.
If no election has been made under Section 83(b) of the Code, any dividends
received from the restricted stock while the restrictions are in effect will be
taxed as additional compensation, and the Company will be entitled to a
corresponding compensation deduction. Otherwise, dividends paid on restricted
stock will be taxed to the recipient at ordinary income rates and will not be
deductible by the Company.
RECOMMENDATION OF THE BOARD OF DIRECTORS CONCERNING THE PROPOSED AMENDMENT OF
THE 1995 PLAN
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSAL TO AMEND THE 1995 PLAN TO INCREASE THE NUMBER OF SHARES
AVAILABLE FOR ISSUANCE THEREUNDER FROM 900,000 SHARES TO 1,150,000 SHARES.
PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
-15-
PROPOSAL NO. 3 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the
Audit Committee, has selected BDO Seidman, LLP to serve as independent auditors
of the Company for the fiscal year ending December 31, 2002. BDO Seidman, LLP
were the Company's independent auditors for the fiscal year ended December 31,
2001 and are considered by management of the Company to be well qualified. The
Company has been advised by that firm that neither it nor any member thereof has
any financial interest, direct or indirect in the Company or any of its
subsidiaries, in any capacity. One or more representatives of BDO Seidman, LLP
is expected to be present at this year's Annual Meeting of Stockholders with an
opportunity to make a statement if he or she desires to do so and to answer
appropriate questions with respect to that firm's examination of the Company's
financial statements and records for the fiscal year ended December 31, 2001.
Although the submission of the appointment of BDO Seidman, LLP is not
required by law or the By-Laws of the Company, the Board is submitting it to the
stockholders to ascertain their views. If the stockholders do not ratify the
appointment, the Board will not be bound to seek other independent auditors for
2002, but the selection of other independent auditors will be considered in
future years.
AUDIT AND OTHER FEES PAID TO INDEPENDENT AUDITORS
AUDIT FEES
For the fiscal year ended December 31 2001, the aggregate fees billed
by BDO Seidman, LLP for professional services rendered for the audit of the
Company's annual financial statements and the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q filed during the
fiscal year ended December 31, 2001 were approximately $162,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage BDO Seidman, LLP to provide advice and
related services regarding financial information systems design and
implementation during the fiscal year ended December 31, 2001.
ALL OTHER FEES
For the fiscal year ended December 31, 2001, the aggregate fees
incurred by the Company to BDO Seidman, LLP for all other services (other than
audit services and financial information systems design and implementation
services) were approximately $90,000. These fees include approximately $62,000
for tax services and approximately $16,000 for audits of the Company's 401(k)
and pension plans.
The audit committee has reviewed the non-audit services currently
provided by our independent auditors and has considered whether the provision of
such services is compatible with maintaining the independence of our independent
auditors.
RECOMMENDATION OF THE BOARD CONCERNING THE RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE 2002 FISCAL YEAR. PROXIES RECEIVED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
OTHER BUSINESS
Management knows of no other matters that will be presented at the
Annual Meeting of Stockholders. However, if any other matter properly comes
before the meeting, or any adjournment or postponement thereof, it is intended
that proxies in the accompanying form will be voted in accordance with the
judgment of the persons named therein.
-16-
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be included in the Company's proxy
statement for presentation at the 2003 Annual Meeting of Stockholders pursuant
to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, must be
received by the Company's Chief Financial Officer at One Jake Brown Road, Old
Bridge, New Jersey 08857 on or before December 4, 2002, to be eligible for
inclusion in such proxy statement.
If notice of a stockholder proposal intended to be presented at the
2003 Annual Meeting of Stockholders is not received by the Company on or before
February 17, 2003 (whether or not the stockholder wishes the proposal to be
included in the proxy statement for such annual meeting), the Company (through
management proxy holders) may exercise discretionary voting authority on such
proposal when and if the proposal is raised at the annual meeting without any
reference to the matter in the proxy statement.
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2001 ACCOMPANIES THIS PROXY STATEMENT. THE COMPANY WILL
FURNISH TO EACH PERSON WHOSE PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST, ANY
EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-K, UPON THE PAYMENT, IN
ADVANCE, OF REASONABLE FEES RELATED TO THE COMPANY'S FURNISHING SUCH EXHIBIT(S).
REQUESTS FOR COPIES OF SUCH EXHIBIT(S) SHOULD BE DIRECTED TO ERIC SKOLNIK, CHIEF
FINANCIAL OFFICER, AT THE COMPANY'S PRINCIPAL ADDRESS AS SHOWN ON THE COVER PAGE
OF THIS PROXY STATEMENT.
By Order of the Board of Directors
James A. Luksch
Chairman of the Board, Chief Executive
Officer and President
Date: April 3, 2002
Old Bridge, New Jersey
-17-
EXHIBIT A
PROPOSED AMENDMENT TO
1995 LONG TERM INCENTIVE PLAN
FOURTH AMENDMENT TO
BLONDER TONGUE LABORATORIES, INC.
1995 LONG TERM INCENTIVE PLAN
The Blonder Tongue Laboratories, Inc. 1995 Long Term Incentive PLAN, as
heretofore amended (the "PLAN"), is hereby amended as follows:
1. The first sentence of Section 3.1 of the Plan is hereby amended and
restated in its entirety as follows:
"Subject to adjustment pursuant to the provisions of Section 3.2
hereof, the number of shares of Stock of the Company which may be
issued and sold or awarded under the Plan shall not exceed
1,150,000 shares, of which shares issued and sold pursuant to
Incentive Stock Options under the Plan shall not exceed 1,125,000
and shares subject to restricted stock awards may not exceed
25,000."
2. Ratification. Except as expressly set forth in this Fourth Amendment
to the Plan, the Plan is hereby ratified and confirmed without
modification.
3. Effective Date. The effective date of this Fourth Amendment to the
Plan shall be February 22, 2002.
A-1
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BLONDER TONGUE LABORATORIES, INC.
MAY 3, 2002
Please Detach and Mail in the Envelope Provided
A /X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
FOR WITHHOLD NOMINEES: John E. Dwight
1. Election of three Class I [ ] [ ] Robert E. Heaton
Directors to hold office James A. Luksch
until the 2005 Annual Meeting
of Stockholders or until their
successors have been elected and qualified.
(To withhold authority to vote for any individual nominee write that nominee's
name on the space provided below.)
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FOR AGAINST ABSTAIN
2. Proposal to amend 1995 Long [ ] [ ] [ ]
Term Incentive Plan to increase
shares issuable pursuant to
options or grants thereunder
from 900,000 to 1,125,000
FOR AGAINST ABSTAIN
3. Proposal to ratify the appointment [ ] [ ] [ ]
of BDO Seidman, LLP as independent
auditors for the fiscal year ending
December 31, 2002.
In their discretion, the Proxies are authorized to vote upon such other matters
as may properly come before the meeting and at any postponements or adjournments
thereof. If no direction is made on this Proxy Card, this Proxy will be voted
FOR the election of all nominees to serve as Class I Directors and FOR proposals
2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE _____________________________________________________________
SIGNATURE IF HELD JOINTLY ______________________________________________
DATED: ___________ , 2002
NOTE: Please sign exactly as name appears above. When shares are held by
joint tenants, both stockholders should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give
full title as such. If a Corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership's name by authorized person.
BLONDER TONGUE LABORATORIES, INC.
ONE JAKE BROWN ROAD
OLD BRIDGE, NJ 08857
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS
---------------------------------------------
MAY 3, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The Undersigned hereby appoints James A. Luksch and Robert J. Palle, Jr.,
and either of them (with full power to act alone), as Proxies of the
undersigned, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on this Proxy Card, all
shares of Common Stock of Blonder Tongue Laboratories, Inc. ("the Company") held
of record by the undersigned on the record date of March 20, 2002, at the Annual
Meeting of Stockholders to be held on May 3, 2002 and at any postponements or
adjournments thereof, all as in accordance with the Notice of Annual Meeting of
Stockholders and Proxy Statement furnished with this Proxy.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)