SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
INRAD, 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):
/ / 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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INRAD, INC.
181 Legrand Avenue
Northvale, New Jersey 07647
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of INRAD, Inc.
(the "Company") will be held at the offices of Lowenstein, Sandler, PC, 65
Livingston Avenue, Roseland, New Jersey on Wednesday, June 6, 2001 at 10:00 a.m.
for the following purposes:
1. To elect five directors to serve until the next Annual Meeting of
Shareholders.
2. To consider and act upon other matters that may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 30, 2001, as the
date for determining the shareholders of record entitled to receive notice of,
and to vote at, the Annual Meeting. Whether or not you expect to be present at
the Annual Meeting, you are requested to complete and sign the enclosed proxy
and return it in the enclosed envelope as promptly as possible. Shareholders who
are present at the meeting may revoke their proxies and vote in person. We hope
you will attend.
By Order of the Board of Directors
William S. Miraglia, Secretary
Northvale, New Jersey
April 30, 2001
INRAD, INC.
PROXY STATEMENT
The following statement is furnished in connection with the solicitation of
proxies by the Board of Directors of INRAD, Inc., a New Jersey corporation with
its principal offices at 181 Legrand Avenue, Northvale, New Jersey 07647 (the
"Company"), to be used at the Annual Meeting of Shareholders of the Company to
be held at the offices of Lowenstein, Sandler, PC, 65 Livingston Avenue,
Roseland, New Jersey on Wednesday, June 6, 2001 at 10:00 a.m. This Proxy
Statement and the enclosed form of proxy are first being sent to shareholders on
or about April 30, 2001.
SHAREOWNERS ENTITLED TO VOTE
Only shareowners of record at the close of business on April 30, 2001, the
record date fixed by the Board of Directors, will be entitled to notice of, and
to vote at, the Annual Meeting. At the close of business on the record date,
there were 4,953,078 shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), outstanding and entitled to vote at the meeting.
Each share is entitled to one vote.
The presence in person or by proxy of owners of a majority of the outstanding
shares of the Company's Common Stock will constitute a quorum for the
transaction of business at the Company's Annual Meeting. Assuming that a quorum
is present, the election of directors will require the affirmative vote of a
plurality of the shares of Common Stock represented and entitled to vote at the
Annual Meeting. For purposes of determining the votes cast with respect to any
matter presented for consideration at the Annual Meeting, only those cast "for"
are included. Abstentions and broker non-votes are counted only for the purpose
of determining whether a quorum is present at the Annual Meeting. Owners of
Common Stock are not entitled to cumulative voting in the election of directors.
VOTING: REVOCATION OF PROXIES
A form of proxy is enclosed for use at the Annual Meeting if a shareowner is
unable to attend in person. Each proxy may be revoked at any time before it is
exercised by giving written notice to the secretary of the Meeting. All shares
represented by valid proxies pursuant to this solicitation (and not revoked
before they are exercised) will be voted as specified in the form of proxy. If
no specification is given, the shares will be voted in favor of the Board's
nominees for directors described in this Proxy Statement.
COSTS OF SOLICITATION
The entire cost of soliciting these proxies will be borne by the Company. In
following up the original solicitation of the proxies by mail, the Company may
make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to the beneficial owners of the
stock and may reimburse them for their expenses in so doing. If necessary, the
Company may also use its officers and their assistants to solicit proxies from
the shareholders, either personally or by telephone or special letter.
PRINCIPAL SHAREHOLDERS
The following table presents certain information with respect to the
security ownership of the directors of the Company and the security ownership of
each individual or entity known by the Company to be the beneficial owner of
more than 5% of the Company's Common Stock as of March 1, 2001. Percentages that
include ownership of options or convertible securities are calculated assuming
exercise or conversion by each individual or entity of the options or
convertible securities owned by each individual or entity separately without
considering the dilutive effect of option exercises and security conversions by
any other individual or entity. The Company has been advised that all
individuals listed have the sole power to vote and dispose of the number of
shares set opposite their names in the table.
2
Percent of
Name and Address Number of shares Common Stock
- -------------------------------------------------------------------------------
Clarex, Ltd. 3,106,914 (1) 53.1
c/o Bank of Nova Scotia
Trust Company Bahamas Ltd.
Nassau, Bahamas
Warren Ruderman 1,467,046 29.6
45 Duane Lane
Demarest, NJ 07627
Hoechst Celanese Corp. 300,000 6.1
Routes 202-206 North
Box 2500
Somerville, NJ 08876
Daniel Lehrfeld 198,000 (2) 3.9
c/o INRAD, Inc.
Frank Wiedeman 56,250 (3) 1.1
c/o INRAD, Inc.
Thomas Lenagh 31,250 (4) .6
c/o INRAD, Inc.
John Rich 12,000 (5) .2
c/o INRAD, Inc.
Jan Winston 4,000 (6) .1
c/o INRAD, Inc.
Directors and Executive 420,450 (7) 8.1
Officers as a group
(10 persons)
(1) Including 900,000 shares subject to convertible preferred stock
exercisable or convertible within 60 days.
(2) Including 98,000 shares subject to convertible preferred stock and
stock options convertible within 60 days.
(3) Including 6,250 shares subject to options exercisable within 60
days.
(4) Including 6,250 shares subject to options exercisable within 60
days.
(5) Including 12,000 shares subject to convertible preferred stock
exercisable or convertible within 60 days.
(6) Including 4,000 shares subject to convertible preferred stock
exercisable or convertible within 60 days.
(7) Including 245,450 shares subject to convertible preferred stock,
stock options, and warrants exercisable within 60 days.
3
PROPOSAL ONE
ELECTION OF DIRECTORS
Five directors are to be elected to serve a term of one year and thereafter
until their respective successors shall have been elected and shall have
qualified. Unless a shareowner checks the box "withhold authority" on his proxy
or indicates that his shares should not be voted for certain nominees, it is
intended that the persons named in the proxy will vote for the persons listed in
the table below to serve as directors. Discretionary authority is solicited to
vote for the election of a substitute for any nominee who, for any reason,
presently unknown, cannot be a candidate for election.
NOMINEES
The following table sets forth the names and ages of the nominees for election
to the Board of Directors, the principal occupation or employment of each
nominee for the past five years, the principal business of the organization in
which said occupation is or was carried on, the name or any other public
corporation for which each nominee served as Board member, and the period during
which each nominee has served as a director of the Company.
Director Positions; Business
Name and Age Since Experience
- ------------ ----- ----------
Thomas Lenagh, 1998 Chairman of the Board of Directors (May 2000-
74 Present)
Management Consultant (1990 - Present)
Past Chairman and CEO, Systems Planning
Corporation
Financial Vice President, the Aspen Institute
Treasurer and Chief Investment Officer, The Ford Foundation
Captain, US Navy Reserve (ret.)
Daniel Lehrfeld, 1999 Director
57 President and Chief Executive Officer (2000-present),
President and Chief Operating Officer
(1999-2000),
Vice President/General Manager (1995-1999)
Raytheon/GM Hughes Electro-Optics Center,
President (1989-1991)
New England Research Center, (subsidiary)
Deputy General Manager (1989-1995) &
Director, Business Development,
International Business, Operations, Cryogenic Products
Magnavox Electronic Systems E. Coast Div.,
Deputy Sector Director & Program Director
Philips Laboratories Briarcliff
North American Philips,
Group Leader/Project Leader
Grumman Aerospace Corporation
Frank Wiedeman, 1998 Director
86 Executive Director (1980 - Present)
American Capital Management Inc.
Sr. Vice President (1937 - 1980) United Trust Company
4
Jan Winston 2000 Director
64 Principal (1997-Present) Winston
Consulting,
Division Director/General Manager (1981-1997) IBM
Corporation. Executive positions held in Development,
Finance and Marketing.
John Rich, 2000 Director
63 Vice President/General Manager (1999-Present) Power
ElectronicsDivision, C&D Technologies
President (1990-1999), Raytheon/GM Hughes Optical
Systems
Vice President (1983-1989), Perkin Elmer Microlithography,
Electro-Optics, and Systems
Colonel, Commander, Air Force Avionics Laboratory and Air
Force Weapons Laboratory
During 2000, seven meetings of the Board of Directors were held. Each
non-employee director is paid $500 for each Board Meeting they attend, and $250
for each conference call meeting they participate in. During 2000, each director
attended or participated in all the Board Of Director meetings held.
The Board has an Audit Committee whose members presently are Jan Winston,
Chairman, Tom Lenagh and John Rich. The Audit Committee reviews the
independence, qualifications and activities of the Company's independent
accountants. It meets privately with them as well as with management. The
Committee recommends to the Board the appointment of the independent
accountants.
The Board has no separate Nominating Committee. The entire Board selects
management nominees for election as directors. While the Board will consider
nominees recommended by stockholders, it has not established formal procedures
for this purpose.
The directors serve one-year terms. Pursuant to prior agreements between the
Company and CNA Holdings, Inc. ("CNA"), CNA may designate a representative for
nomination to the Company's Board of Directors. During 2000 CNA agreed to
relinquish its right to designate a representative for nomination.
Pursuant to an agreement between INRAD and Clarex, Ltd. ("Clarex"), the Company
has agreed to use its best efforts to have two individuals selected by Clarex
elected to the Board of Directors as long as any of the subordinated convertible
notes are outstanding. Although the subordinated convertible notes had been
converted during 2000, Clarex has selected Messrs. Wiedeman and Winston as
representatives, and the Company will continue to use its best efforts to have
these individuals elected to the Board of Directors.
5
Executive Officers
The following table sets forth the name and age of each executive officer
of the Company, the period during which each such person has served as an
executive officer and the positions with the Company held by each such person:
NAME AND AGE SINCE POSITION WITH THE COMPANY
- ------------ ----- -------------------------
Daniel Lehrfeld, 57 1999 President and Chief Executive Officer
Maria Murray, 43 1993 Sr. Vice President - Business Development
William S. Miraglia, 51 1999 Chief Financial Officer and Secretary
Relinda Walker, 53 1999 Vice President - Manufacturing
Devaunshi Sampat, 47 1999 Vice President - Sales and Marketing
Thomas A. Caughey, 51 2000 Vice President - Product R&D
Daniel Lehrfeld has served as Chief Executive Officer and President since
May 2000. He joined the Company in 1999 as President and Chief Operating
Officer. Prior to joining the Company, Mr. Lehrfeld held the position of Vice
President and General Manager of Electro-Optic Systems, a division successively
of the Raytheon, GM/Hughes Electronics and Magnavox Electronic Systems
Corporations. He has also held executive positions with Philips Laboratories and
Grumman Aerospace Corporation. Mr. Lehrfeld holds B.S. and M.S. degrees from
Columbia University School of Engineering and Applied Science and an M.B.A.
degree from the Columbia Graduate School of Business.
Maria Murray joined the Company in January 1989, became Vice President of
R&D Programs in 1993, and was appointed Sr. Vice President, Business Development
in 1999. Prior to joining INRAD, Ms. Murray held positions in electronic design
engineering in the laser and communication industries. She holds a B.S. degree
in Electrical Engineering from the University of Central Florida.
William S. Miraglia joined the Company as Secretary and Chief Financial
Officer in June 1999. Previously, he held the position of Vice President of
Finance for a division of UNC, Inc., a NYSE aviation company. Prior to his last
position, Mr. Miraglia has held management positions in the aerospace industry
and in public accounting. He holds a B.B.A. from Pace University, and an M.B.A
from Long Island University and is a Certified Public Accountant.
Relinda C. Walker joined the Company as Vice President, Manufacturing in
May 1999. Previously, Ms. Walker held the position of Vice President at
Instruments, SA where she directed a business unit. Ms. Walker holds a B.S. and
M.S. in Mathematics from Emory University.
Devaunshi Sampat joined the Company in 1998. In 1999 she was appointed
Vice President of Marketing and Sales. Prior to joining the Company, Ms. Sampat
held sales management positions within the Photonics industry with Princeton
Instruments and Oriel Instruments. Ms. Sampat holds a B.S. in Medical Technology
from the University of Bridgeport.
Thomas A. Caughey joined the Company in 1978. He has focused on the
development and improvement of the Company's crystal devices and systems, and on
their application by the Company's numerous customers. In 2000, he was appointed
Vice President of R&D and Customer Support. Prior to joining INRAD, Dr. Caughey
was a Research Associate at Texas Tech University. He holds a Doctorate in
Physical Chemistry from the University of Wisconsin - Madison, and a B.S. degree
in Chemistry from the University of Michigan - Ann Arbor.
Each of the executive officers has been elected by the Board of Directors
to serve as an officer of the Company until the next election of officers, as
provided by the Company's by-laws.
Warren Ruderman founded INRAD and served as Chief Executive Officer and Chairman
of the Board of Directors of the Company until his retirement in May 2000. Prior
to 1973, he founded and served as the President of Isomet Corporation, a
manufacturer of acousto-optic devices for the laser industry, and was a Teaching
Fellow, Lecturer in Chemistry, Research Scientist and Consultant at Columbia
University.
6
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth, for the years ended December 31, 2000, 1999 and
1998, the cash compensation earned and stock options issued by the Company and
its subsidiaries, to or with respect to the Company's Officers.
STOCK
NAME AND POSITION YEAR (A) SALARY BONUS OPTIONS
- ----------------- -------- ------ ----- -------
Daniel Lehrfeld, 2000 $164,000 $50,000 410,000
President and 1999 $ 40,000* N/A 100,000
Chief Executive Officer 1998 N/A N/A N/A
Warren Ruderman, 2000 $ 52,350** none none
Chairman and 1999 $130,000 none none
Chief Executive Officer 1998 $130,000 none none
Maria Murray, 2000 $121,000 none 60,000
Vice President, 1999 $110,000 $9,500 16,500
Business Development 1998 Less than $100,000 none 30,000
Devaunshi Sampat, 2000 $150,000 $17,600 31,500
Vice President, 1999 $111,000 $22,600 20,000
Sales and Marketing 1998 Less than $100,000 none 7500
Relinda Walker 2000 $116,000 $18,000 18,000
Vice President, 1999 Less than $100,000 N/A N/A
Manufacturing 1998 N/A N/A N/A
William Miraglia 2000 $110,000 $17,500 18,000
Vice President, 1999 Less than 100,000 N/A N/A
Chief Financial Officer 1998 N/A N/A N/A
* Compensation as of September 1999 Employment Date.
** Retired May 2000
(A) The Company pays a fixed percentage of the premium costs of group
medical, dental, and life insurance that is the same for all of its
employees. Premium cost subsidies attributable to the officers named
above are not included in the table. No officer received perquisites
during the fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS GRANT DATE
VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
% Total Options
Number of Securities Granted to Grant Date
Underlying Options Employees in Exercise Expiration Market Value
Name Granted (#) Fiscal Year ($/Sh) Date $
- ----------------------------------------------------------------------------------------------------------------------------------
Daniel Lehrfeld 50,000 8.4% $5.00 2010 $5.00
Daniel Lehrfeld 310,000 52.1% $2.00 2010 $2.00
Daniel Lehrfeld 50,000 8.4% $2.00 2010 $2.00
Maria Murray 60,000 10.1% $5.00 2010 $5.00
Devaunshi Sampat 31,500 5.3% $5.00 2010 $5.00
Relinda Walker 18,000 3.0% $5.00 2010 $5.00
William S. Miraglia 18,000 3.0% $5.00 2010 $5.00
7
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS
In March 1999, Devaunshi Sampat, Vice President of Sales and Marketing, entered
into an employment agreement with the Company. The agreement specifies a base
salary of $109,000 and the award of 20,000 stock options to purchase the common
stock of the Company at a price of $1.00 per share. In the event of termination
other than for cause, Ms. Sampat is eligible for up to 9 months severance pay.
In May 1999, Relinda Walker entered into a two-year employment agreement with
the Company as Vice President of Manufacturing. The agreement specifies an
annual salary of $115,000. The agreement also provided for a $10,000 bonus and
7,500 stock options to purchase the Company's common stock at $1.00 per share.
In the event of termination for other than "good cause" during the two-year
period, Ms. Walker is eligible for up 6 months of severance pay.
In September 1999, Daniel Lehrfeld entered into an employment agreement with the
Company, which expires when he reaches the age of 65. Mr. Lehrfeld joined the
Company as President and Chief Operating Officer, and as CEO- designate, with
spring of 2000 identified as the timeframe for his assuming those additional
responsibilities. The agreement provides for an annual salary of $160,000 per
annum, subject to such merit increases, as the Board of Directors shall
determine to grant. Additionally, Mr., Lehrfeld is eligible to participate in
the Company's incentive compensation plans, which provide for possible cash
bonuses for all employees and stock option bonuses for certain employees, whose
amounts are set annually and are tied to achievement of specific annual
performance goals that are established by the Board. In accordance with the
employment agreement, the Board granted Mr. Lehrfeld options to purchase 100,000
shares of common stock at a price of $0.625 per share in September of 1999.
Additionally, the employment agreement provides for the grant of additional
options following Mr. Lehrfeld assuming the responsibilities of CEO, and
whenever otherwise so deemed by the Board. In May of 2000, Mr. Lehrfeld was
granted 360,000 options to purchase the Company's common stock at $2.00 per
share. In September of 2000, the Board increased Mr. Lehrfeld's salary to
$175,000. The agreement also provides that in the event of termination of
employment for reasons other than "good cause" as defined in the agreement, Mr.
Lehrfeld would be paid severance benefits which include 12 months salary and
bonuses. In the event of a "change in control" as defined in the agreement, and
Mr. Lehrfeld's responsibilities are materially diminished or for certain other
circumstances; Mr. Lehrfeld would be eligible for the same severance benefits as
for termination for "other than good cause".
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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 SEC 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 are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on the review of copies of reports and
other information furnished to the Company, all Section 16(a) filing
requirements applicable to the Company's officers, directors and greater than
ten percent shareowners were complied with.
8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the years ended December 31, 2000, 1999 and 1998 approximately 3%,
6%, and 4%, respectively of the Company's net product sales were through a
foreign agent, in which, Warren Ruderman a principal shareholder has an
investment. Terms of sales to this foreign agent were substantially the same as
to unrelated foreign agents.
On December 31, 1998, Clarex, Ltd. a shareowner and debt holder converted
$1,234,730 of notes and $322,917 of accrued interest into 1,294,186 shares of
the Company's Common Stock.
During 1999, Clarex, Ltd., a shareowner and debt holder purchased 500
shares of Series A 10% convertible Preferred stock for $500,000.
During 2000, Clarex, Ltd., a shareowner and debt holder purchased 1000
shares of Series B 10% convertible preferred stock for $1,000,000, converted a
10% convertible secured note and received 200,000 shares of the Company's common
stock and exercised 345,000 of warrants and received 345,000 shares of the
Company's common stock.
During 2000, the following directors and officers of the Company purchased
263 shares of Series B 10% convertible preferred stock for $263,000:
Daniel Lehrfeld, President and CEO $120,000 (1)
John Rich, Director $ 30,000
Jan Winston, Director $ 10,000
Maria Murray, VP business Development $ 50,000 (1)
Devaunshi Sampat, VP Sales & Marketing $ 20,000 (2)
William S. Miraglia, Chief financial Officer $ 23,000 (1)
Relinda Walker, VP Manufacturing $ 10,000 (3)
1- Due as of December 31, 2000
2- $10,000 due as of December 31, 2000
3- $5,000 due as of December 31, 2000
All amounts due are payable to the Company no later than April 30, 2001
without interest.
9
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Holtz Rubenstein & Company, LLP, (the "Auditors") independent accountants,
has been selected by the Board of Directors to examine and report on the
financial statements of the Company for the fiscal year ending December 31,
2001.
AUDIT FEES AND RELATED MATTERS
Audit Fees. The Corporation was billed $51,210 for the audit of the
Corporation's annual financial statements for the year ended December 31, 2000
and for the review of the financial statements included in the Corporation's
Quarterly Reports on Form 10-Q filed during 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN IMPLEMENTATION FEES
The Auditors did not provide any of the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of the SEC's Regulation S-X (in general,
information technology services) during the year ended December 31, 2000.
ALL OTHER FEES
The Auditors did not provide any non-audit services during the year
ended December 31, 2000.
OTHER MATTERS
The Audit Committee of the Board of Directors has considered whether the
provision of information technology services and other non-audit services is
compatible with maintaining the independence of the Corporation's principal
accountant. The Company did not utilize such services during 2000.
Of the time expended by the Corporation's principal accountant to audit
the Corporation's financial statements for the year ended December 31, 2000,
less than 50% of such time involved work performed by persons other than the
principal accountant's full-time, permanent employees.
/s/ Thomas Lenagh
- ---------------------------
Thomas Lenagh
/s/ John Rich
- ---------------------------
John Rich
/s/ Jan Winston
- ---------------------------
Jan Winston
10
OTHER MATTERS
At the time this Proxy Statement was mailed to shareholders, management was not
aware that any other matter will be presented for action at the Annual Meeting.
If other matters properly come before the Meeting, it is intended that the
shares represented by proxies will be voted with respect to those matters in
accordance with the best judgment of the persons voting them.
NOTICE REGARDING FILING OF SHAREOWNER PROPOSALS
AT 2002 ANNUAL MEETING
As a result of regulations issued by the Securities and Exchange Commission, all
shareowner proposals for the 2002 Annual Meeting must be received by the Company
by December 30, 2002.
By Order of the Board of Directors
William S. Miraglia, Secretary
Dated: April 30, 2001
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2000, INCLUDING CONSOLIDATED FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY
STATEMENT. THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL
OR AS A COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
11
EXHIBIT A
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board of Directors of Inrad, Inc.
("Inrad") to assist the Inrad Board in monitoring (a) the integrity of the
financial statements of Inrad and its subsidiaries (the "Company") and (b) the
independence of performance of the Company's external and, if applicable,
internal auditors.
The members of the Audit Committee shall meet the independence and
experience requirements of the National Association of Securities Dealers, Inc.,
subject to such qualifications and exceptions as may be permitted by such
requirements. The members of the Audit Committee shall be appointed from time to
time by the Inrad Board. The Inrad Board reserves the right to amend, modify or
replace this Charter in its discretion at any time.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Audit Committee. The Audit
Committee may request any officer or employee of the Company, the Company's
outside counsel or independent auditor to attend meetings of the Audit Committee
or to meet with any members of, or consultants to, the Audit Committee.
The primary goals of this Charter are to specify the following:
o the scope of the Audit Committee's responsibilities and the approaches to
be used in carrying out those responsibilities, including structure,
processes and membership requirements;
o the Audit Committee's responsibility for (a) insuring its receipt from the
Company's independent auditor of a formal written statement delineating
all relationships between such auditor and the Company, consistent with
Independence Standards Board Standard No. 1, (b) actively engaging in a
dialogue with such auditor with respect to any disclosed relationships or
services that may impact the objectivity and the independence of the
auditor and (c) taking, or recommending that the Inrad Board take,
appropriate action to oversee the independence of the independent auditor;
and
o the independent auditor's ultimate accountability, to the Inrad Board and
the Audit Committee, as representatives of the shareholders of Inrad and
the ultimate authority and responsibility of the Inrad Board and/or the
Audit Committee to select, evaluate and, where appropriate, replace the
independent auditor (or, if applicable, to nominate the independent
auditor to be proposed for shareholder approval in any proxy statement).
To the extent any statement set forth below is inconsistent with the three
principles set forth above, the three principles set forth above shall govern.
12
The Audit Committee shall make regular reports to the Inrad Board, as
required by the Delaware General Corporation Law.
Pursuant to this Charter:
1. THE COMMITTEE
The Audit Committee of the Board of Directors of Inrad, Inc. will consist
of at least three members of the Board including a Chairman designated by
the Board. Members of the Audit Committee may not be employees of the
Company. The Committee will meet at least three times a year, with
additional meetings if circumstances require, for the purpose of
satisfying its responsibilities.
2. SCOPE
The Committee serves at the pleasure of and is subject to the control and
direction of the Board of Directors.
3. RESPONSIBILITIES OF THE COMMITTEE
- To assist the Board in fulfilling its fiduciary responsibilities to
the shareholders with respect to matters relating to the Company's
business, accounting, reporting, audit and internal controls
practices.
- To maintain a direct line of communications between the Board and
the Company's independent auditors and internal auditors to provide
for an exchange of views and information.
4. FUNCTIONS OF THE COMMITTEE
The Committee will satisfy its responsibilities by completing the
following functions:
- Discuss the results of the annual internal and independent audits
with management and the internal and independent auditors.
- Consider the comments from the independent auditors and internal
auditors with respect to internal accounting and management controls
and the consideration given or action taken by management.
- Recommend, for appointment by the Board, the selection of
independent auditors for the coming year.
- Appraise the effectiveness of the independent audit effort through
discussions with the independent auditors regarding their planned
arrangements and scope of the annual audit, including fees.
- Review the scope of planned activities and budget along with a
review of the effectiveness of the Company's internal auditors, if
any.
- Review the anticipated scope and related fees of any non-audit
services to be provided by the independent auditors to ensure that
these services do not detract from the independence of the auditors
in their audit function.
- Consider the comments from the independent auditors with respect to
internal accounting and management controls and the consideration
given or action taken by management.
- Review the Committee's responsibilities and functions, evaluate its
performance, and institute appropriate modifications to reflect
changes in the business environment.
- Monitor the procedures or systems used in preparing the financial
statements of the Company.
- Obtain the assessment of management and the independent auditors as
to the adequacy of:
- the Company's internal accounting procedures and controls.
13
- the Company's procedures for complying with SEC Regulations
and The Foreign Corrupt Practices Act.
- Receive and review the assessment of management as to the quality
and depth of staffing in the accounting and financial departments
worldwide. Receive from the Company's independent auditor a formal
written statement delineating all relationships between such auditor
and the Company, consistent with Independence Standards Board
Standard No. 1.
- Engage in dialogue with the Company's independent auditor with
respect to any disclosed relationships or services that may impact
the objectivity and independence of such firm.
- Recommend to the Inrad Board appropriate actions to ensure the
independence of the Company's independent auditor.
I. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Inrad Board for approval.
II. Audit Committee should meet with independent auditor without management
present.
III. Review the interim financial statements and financial results with
independent auditor prior to filing Form 10-Qs.
IV. Review Year-End financial statements and financial results prior to filing
Form 10-K.
V. Discuss required communication with independent auditor as required by SAS
61 of GAAS.
- - Review any information submitted to the Audit Committee pursuant to
Section 10A of the Private Securities Litigation Reform Act of 1995.
- - Prepare the report to the Company's Board of Directors for inclusion in
the Company's annual proxy statement.
- - Review with the independent auditor any material problems or difficulties
the auditor may have encountered during an audit including any
restrictions on the scope of activities or access to required information;
review any management letter provided by the auditor and the Company's
response to that letter.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate or are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations.
14
(FRONT)
INRAD, INC.
181 LEGRAND AVENUE, NORTHVALE, NJ 07647
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Thomas Lenagh and Daniel Lehrfeld, and each of them, as
Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, for and on behalf of the undersigned,
all the shares of common stock of INRAD, Inc. held of record by the undersigned
on April 30, 2001 at the Annual Meeting of Shareholders of the Company to be
held on June 6, 2001 or any adjournment thereof, upon matters properly coming
before the meeting, as set forth in the Notice of Annual Meeting and Proxy
Statement, both of which have been received by the undersigned and upon all such
other matters that may properly be brought before the meeting, as to which the
undersigned confers discretionary authority upon said proxies. Without otherwise
limiting the general authorization given hereby, said proxies are instructed to
vote as directed on the reverse side.
Dated:_______________________, 2001
________________________________
THIS PROXY MUST BE SIGNED
EXACTLY AS NAME APPEARS HEREON
Give full title if an Attorney, Executor,
Administrator Trustee, Guardian, etc. For an
account in the name of two or more persons only
one signature is required unless the parties have
agreed otherwise.
(BACK)
UNLESS OTHERWISE SPECIFIED IN THE SQUARES BELOW, THIS PROXY WILL BE VOTED FOR
ALL OF THE PROPOSALS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
PROPOSAL ONE: Election of the Board's nominees for Directors.
|_| FOR all nominees listed below (except as marked to the contrary
below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: Thomas Lenagh, Frank Wiedeman, Daniel Lehrfeld, John Rich, Jan Winston
INSTRUCTIONS: To withhold authority to vote for any nominees, write those
nominees' names on the line provided below
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY NEVERTHELESS VOTE IN
PERSON IF YOU ATTEND.