SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ASTRO-MED, 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)
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Astro-Med, Inc.
Astro-Med Industrial Park
600 East Greenwich Avenue
West Warwick, Rhode Island 02893
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 15, 2001
To the Shareholders of Astro-Med, Inc.:
Notice is hereby given that the 2001 Annual Meeting of Shareholders of
Astro-Med, Inc. (the "Company") will be held at the offices of the Company,
Astro-Med Industrial Park, 600 East Greenwich Avenue, West Warwick, Rhode
Island on Tuesday May 15, 2001, beginning at 10:00 a.m., for the purpose of
considering and acting upon the following:
(1) Electing five directors to serve until the next annual meeting of
shareholders or until their successors are elected and have
qualified.
(2) Approving an increase in the maximum number of shares available under
the Company's 1998 Non-Qualified Stock Option Plan by 600,000 shares
to 1,000,000 shares in the aggregate.
(3) Transacting such other business as may properly come before the
meeting.
The close of business on March 23, 2001 has been fixed as the record date
for determining shareholders entitled to vote at the Annual Meeting or any
adjournment thereof.
By Order of the Board of Directors
Margaret D. Farrell
Margaret D. Farrell
Secretary
April 17, 2001
Kindly fill in, date and sign the enclosed proxy and promptly return it in
the enclosed addressed envelope, which requires no postage if mailed in the
United States. If you are personally present at the meeting, the proxy will
not be used without your consent.
Astro-Med, Inc.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 15, 2001
Solicitation and Revocation of Proxies
The accompanying proxy is solicited by the Board of Directors of Astro-Med,
Inc. (herein called the "Company") in connection with the annual meeting of the
shareholders to be held May 15, 2001. The Company will bear the cost of such
solicitation. It is expected that the solicitation of proxies will be primarily
by mail. Proxies may also be solicited personally by regular employees of the
Company at nominal cost. The Company may reimburse brokerage houses and other
custodians, nominees and fiduciaries holding stock for others in their names,
or in those of their nominees, for their reasonable out-of-pocket expenses in
sending proxy material to their principals or beneficial owners and obtaining
their proxies. Any shareholder giving a proxy has the power to revoke it at any
time prior to its exercise, but the revocation of a proxy will not be effective
until notice thereof has been given to the Secretary of the Company. Every
properly signed proxy will be voted in accordance with the specification made
thereon. This proxy statement and the accompanying proxy are expected to be
first sent to shareholders on or about April 17, 2001.
Election of Directors
At the annual meeting, five directors are to be elected to hold office until
the next annual meeting or until their respective successors are elected and
qualified. The persons named in the accompanying proxy, who have been
designated by the Board of Directors, intend to vote, unless otherwise
instructed, for the election to the Board of Directors of the persons named
below, all of whom are now directors of the Company. Certain information
concerning such nominees is set forth below:
Name and Age Business Experience During Past Five Years Director Since
- ------------ ------------------------------------------ --------------
Albert W. Ondis (75).... Chairman of the Company 1969
Everett V. Pizzuti
(64)................... President of the Company 1985
Jacques V. Hopkins Former Partner, Hinckley, Allen & Snyder LLP
(70)................... (Attorneys at Law) (Retired 1997) 1969
Hermann Viets, Ph.D. President, Milwaukee School of Engineering
(58)................... (since 1991) 1988
Neil K. Robertson (63).. Independent investment research consultant 1991
1
Amendment of the 1998 Non-Qualified Stock Option Plan
At the 1998 annual meeting, shareholders approved the 1998 Non-Qualified
Stock Option Plan (the "Non-Qualified Plan") and reserved 400,000 shares of
common stock for issuance thereunder.
Options have been granted under the 1998 Non-Qualified Plan as follows:
Number Average Exercise
Grantee of Options Price Per Share
- ------- ---------- ----------------
Albert W. Ondis................................ 162,000 $5.88
Chairman & Chief Executive Officer
Everett V. Pizzuti............................. 162,000 $5.88
President & Chief Operating Officer
Joseph P. O'Connell,........................... 25,000 $7.50
Vice President & Treasurer, Chief Financial
Officer
John B. Chatten................................ None N/A
President, Grass-Telefactor
Elias G. Deeb.................................. None N/A
Vice President, Media Manufacturing
All Executive Officers As A Group.............. 399,000 $5.88
Of the 400,000 shares of common stock reserved for issuance under the Non-
Qualified Plan, all options have been awarded, and the Board of Directors has
concluded that it would be advisable to amend the 1998 Non-Qualified Plan for
the reservation of an additional 600,000 shares for issuance thereunder
pursuant to future option grants. The 1998 Non-Qualified Plan, as amended to
reflect the above is attached as Exhibit A to this Proxy statement. Shareholder
approval is required for the reservation of additional shares under the Plan.
The following is a description of the Non-Qualified Plan as approved by the
shareholders.
Operation of the Non-Qualified Plan. The Non-Qualified Plan is administered
by the Compensation Committee. None of the members of the Compensation
Committee shall be an officer or other employee of the Company. Awards may be
granted to executive officers and other key employees of the Company and its
subsidiaries as well as other individuals who perform services for the Company
and its subsidiaries. The Non-Qualified's Plan's eligibility criteria are
intended to encompass a group which is currently estimated at less than 10
individuals. The Compensation Committee bases its selection of award
recipients, and its determination of the number of shares of common stock to be
covered by each award, on the nature of employees' duties and present and
potential contributions to the Company's success and other factors it deems
relevant.
Awards. The Non-Qualified Plan provides for the grant of non-qualified stock
options which are not "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). The option
price of the stock options will not be less than fifty percent (50%) of the
market price of common stock on the date of grant. The aggregate number of
shares of common stock subject to grant hereunder to any one person during any
one calendar year shall not exceed 200,000 shares. Shares covered by expired or
terminated options may be available for subsequent awards. No options may be
granted after May 19, 2008.
2
Options become exercisable as determined by the Compensation Committee. The
Committee may, in its discretion, determine as a condition of any option, that
all or a stated percentage of the options shall become exercisable in
installments or otherwise, only after completion of a specified service
requirement. The Committee may also accelerate the exercisability of any option
at any time. An option may be exercised by payment of the option price in cash
or, in the discretion of the Compensation Committee, in already owned shares of
common stock or a combination thereof.
Unless the Committee otherwise determines options will not be transferable
otherwise than by will or the laws of descent and distribution and may be
exercised during the holder's lifetime only by the holder or by the holder's
guardian or legal representative. During the holder's lifetime, with the
approval of the Committee and subject to such conditions as the Committee may
prescribe, an optionee may, upon providing written notice to the Company, elect
to transfer any or all such non-qualified stock options to members of his or
her immediate family, or to trusts for the benefit of the optionee and/or the
optionee's immediate family members or to partnerships in which the optionee
and/or such family members are the only partners provided, however, that no
such transfer by any optionee may be made in exchange for consideration.
Under the Non-Qualified Plan, the Board of Directors may provide that, in
the event it recommends that the Company sell substantially all of its assets
or that the shareholders sell or exchange their shares or that the Company
merge or consolidate with another corporation or be liquidated or dissolved,
that a holder of any outstanding options must exercise such options by a
specified date (not less than 60 days from the date of any notice to that
effect) and any nonexercised options will expire on such date.
Plan Amendment. The Board of Directors may modify, revise or terminate the
Non-Qualified Plan at any time and from time to time, except that no action of
the Board may, unless duly approved by the shareholders (i) increase the
maximum number of shares subject to the Non-Qualified Plan, (ii) change the
minimum option price, (iii) extend the period within which options may be
granted, (iv) extend the termination date of the Non-Qualified Plan, or (v)
change the class of persons eligible to receive options under the Non-Qualified
Plan.
New Plan Benefits. Since awards under the Non-Qualified Plan are
discretionary, total awards that may be granted for the current fiscal year are
not determinable until completion of the year.
Anti-Takeover Effects. Unless the Compensation Committee determines
otherwise, all outstanding options shall become immediately exercisable upon a
Change of Control Event. A Change of Control Event includes (i) any purchase of
common stock pursuant to a tender offer or exchange offer (other than by the
Company), (ii) the acquisition of 30% or more of the beneficial ownership of
the combined voting securities of the Company by any person or group other than
the Company or any employee benefit plan of the Company or any current officer
or director of the Company which person or group did not theretofore
beneficially own 30% or more of the combined voting securities of the Company,
(iii) approval by Company shareholders of a consolidation, a merger in which
the Company does not survive, or the sale of substantially all of the Company's
assets, or (iv) a change in the composition of a majority of the Company's
Board over a two-year period unless the selection or nomination of each of the
new members is approved by two-thirds of those remaining members of the Board
who were members at the beginning of the two-year period. The provisions of the
Non-Qualified Plan permitting acceleration of the exercise of outstanding
options may have an anti-takeover effect.
3
Federal Income Tax Considerations. There will be no federal income tax
consequences to either the optionee of the Company on the grant of a non-
qualified option. Upon the exercise of a non-qualified the optionee has taxable
ordinary income equal to the excess of the fair market value of the shares of
common stock received on the exercise date (or the date on which any
substantial risk of forfeiture lapses) over the option price of the shares. The
Company will be entitled to a federal income tax deduction in an amount equal
to such excess. Upon a subsequent sale or taxable exchange of shares acquired
upon exercise of an option, an optionee will recognize long-term or short-term
capital gain or loss equal to the difference between the amount realized on the
sale and the tax basis of such shares.
The exercise of any portion of an option that is accelerated as a result of
a Change of Control Event, may cause payments with respect to such accelerated
options to be treated as "parachute payments" as defined in the Code. Any such
parachute payments may be non-deductible, in whole or in part, and may subject
the employee to a non-deductible 20% federal excise tax on all or a portion of
such payment (in addition to other taxes ordinarily payable).
The Board of Directors recommends a vote FOR approval of the amendment of
the 1998 Non-Qualified Stock Option Plan, as amended (item 2 on the proxy
card).
Voting at Meeting
Only shareholders of record at the close of business on March 23, 2001 will
be entitled to vote at the meeting. On the record date, there were 4,230,224
shares of common stock of the Company outstanding. There was no other
outstanding class of voting securities. Each shareholder has one vote for every
share owned.
4
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of March 23, 2001 (except as noted) the
record and beneficial ownership of the Company's outstanding shares of common
stock by each person who is known to the Company to own of record or
beneficially more than 5 percent of such stock, by each director of the
Company, by each executive officer named in the Summary Compensation Table and
by all directors and executive officers of the Company as a group:
Number of Shares Percent
Name of Beneficial Owner Beneficially Owned of Class
- ------------------------ ------------------ --------
Albert W. Ondis.................................. 1,299,384(1) 29.7%
600 East Greenwich Avenue
West Warwick, Rhode Island
Everett V. Pizzuti............................... 500,243(2) 11.0%
600 East Greenwich Avenue
West Warwick, Rhode Island
Dimensional Fund Advisors, Inc................... 346,850(3) 8.2%
1299 Ocean Avenue
Santa Monica, California
Jacqueline B. Ondis.............................. 310,000 7.3%
40 Oak Grove Street
Warwick, Rhode Island
Hermann Viets.................................... 131,212(4) 3.1%
Jacques V. Hopkins............................... 90,321(5) 2.1%
Joseph P. O'Connell.............................. 93,394(6) 2.1%
Elias G. Deeb.................................... 68,763(7) 1.6%
John B. Chatten.................................. 33,567(8) *
Neil K. Robertson................................ 23,000(9) *
All directors and executive officers of the
Company as a group (13)......................... 2,349,232(10) 46.9%
- --------
*Less than 1%
(1) Includes 116,871 shares held in trust for children, 150,000 shares deemed
to be beneficially owned because of exercisable options to acquire shares
and 2,626 shares allocated to his account under the Company's Employee
Stock Ownership Plan.
(2) Includes 324,875 shares deemed to be beneficially owned because of
exercisable options to acquire shares and 2,614 shares allocated to his
account under the Company's Employee Stock Ownership Plan.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940, is
deemed to have beneficial ownership of the number of shares shown as of
December 31, 2000, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in a series of the DFA Investment Trust
5
Company, Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans. Dimensional serves as investment advisor or manager to all of
such entities. Dimensional disclaims beneficial ownership of all such
shares.
(4) Includes 112 shares held by Dr. Viets as custodian for a child and 5,000
shares deemed to be beneficially owned because of exercisable options to
acquire shares.
(5) Includes 76,821 shares held as a trustee of a trust for the benefit of the
children of Mr. Ondis, and 5,000 shares deemed to be beneficially owned
because of exercisable options to acquire shares.
(6) Includes 92,500 shares deemed to be beneficially owned because of
exercisable options to acquire shares and 616 shares allocated to his
account under the Company's Employee Stock Ownership Plan.
(7) Includes 313 shares held by Mr. Deeb's wife, 57,250 shares deemed to be
beneficially owned because of exercisable options to acquire shares and
2,061 shares allocated to his account under the Company's Employee Stock
Ownership Plan.
(8) Includes 33,332 shares deemed to be beneficially owned because of
exercisable options to acquire shares and 235 shares allocated to his
account under the Company's Employee Stock Ownership Plan.
(9) Includes 18,000 shares held by Mr. Robertson as trustee of a trust for his
benefit and 5,000 shares deemed to be beneficially owned because of
exercisable options to acquire shares.
(10) Includes 777,207 shares deemed to be beneficially owned because of
exercisable options to acquire shares and 11,450 shares allocated to the
accounts of officers under the Company's Employee Stock Ownership Plan.
Other Information Relating to Directors
During the fiscal year ended January 31, 2001, the Board of Directors held
four formal meetings and six meetings by telephone conference. The Board has an
Audit Committee consisting of Mr. Robertson (Chairman), Dr. Viets and Mr.
Hopkins, whose primary duties and responsibilities include recommending an
accounting firm to be engaged as the Company's independent accountants and
meeting with the Company's independent accountants to review the annual audit
scope, the audit of financial statements, the adequacy of internal controls and
other relevant matters. The Audit Committee held one formal committee meeting
and one meeting by telephone conference during the fiscal year ended January
31, 2001. The Board has a Compensation Committee comprised of Dr. Viets
(Chairman), Mr. Robertson and Mr. Hopkins, which reviews and approves
recommendations on executive compensation and administers the Company's stock
option plans. The Compensation Committee held two formal meetings and one
meeting by telephone conference during the fiscal year ended January 31, 2001.
Dr. Viets, Mr. Robertson and Mr. Hopkins have been paid an annual retainer fee
of $3,500 plus $500 for each Board meeting attended.
Those directors who are not also officers and employees of the Company
receive options to purchase common stock under the Company's Non-Employee
Director Stock Option Plan (the "Director Plan") as compensation for their
services to the Company. Under the Director Plan, each non-employee director
received an initial non-qualified option to purchase 1,000 shares of common
stock on May 21, 1996, the date the Company's shareholders approved the
Director Plan. Non-employee directors who are elected after May 21, 1996 will
receive an initial non-qualified option to purchase 1,000 shares of common
stock on the date of the director's initial election to the Board of Directors.
Beginning in 1997, each non-employee director (other than a director first
elected after June 30 of the prior year) receives an annual non-qualified
option to purchase 1,000
6
shares of common stock as of the first business day of January of each year.
All options have an exercise price equal to the market price of the common
stock on the day of the grant and are exercisable for a term of ten years.
Options vest six months after the grant date, unless automatically accelerated
in the event of death, disability, or a change of control. A total of 30,000
shares have been reserved for issuance under the Director Plan. Messrs.
Hopkins, Robertson and Viets each received options to acquire 1,000 shares at
$3.75 per share on January 2, 2001. Options for an aggregate of 18,000 shares,
with an exercise price ranging from $3.75 to $9.25 per share were outstanding
at January 31, 2001.
Directors who are also officers and employees of the Company are not
entitled to receive any compensation in addition to their compensation for
services as officers or employees.
The law firm of Hinckley Allen & Snyder LLP, of which Mr. Hopkins is a
retired partner, provides legal services to the Company.
Other than as described under "Indebtedness of Management", no officer,
director or nominee for director of the Company or any associate of any of the
foregoing had during the fiscal year ended January 31, 2001 any material
interest, direct or indirect, in any material transaction or any material
proposed transaction to which the Company was or is to be a party.
Report On Executive Compensation
The Board of Directors has delegated to the Compensation Committee the
authority to fix compensation (including stock options) for the Company's key
employees. The Compensation Committee is comprised of the Company's three non-
employee directors, Dr. Viets (Chairman), Mr. Robertson and Mr. Hopkins. Mr.
Ondis meets with the Compensation Committee to review the compensation program
and make recommendations for senior executive officers. Compensation consists
of three principal elements (salary, bonus and stock options).
Executive Compensation Philosophy. Compensation of the Company's executive
officers should link management initiatives with the actual financial
performance of the Company. Similarly, the compensation should attract, retain
and motivate highly qualified individuals to achieve the Company's business
goals and link their interests with shareholder interests.
Salary. Base salaries for executive officers were established a number of
years ago after reviewing compensation for competitive positions at
manufacturing companies of comparable size and profitability operating in a
similar industry. Base salaries have since been increased at annual rates which
approximate the general rates of increase of compensation for all employees of
the Company and for generally publicized competitive positions elsewhere in
industry.
Bonus. The Company maintains a bonus pool for the purpose of providing
incentives in the form of a quarterly cash bonus to employees of the Company.
Awards are intended to reflect Company profitability, achievement of overall
Company objectives and individual performances, considered both in terms of
effort and results. The size of the bonus pool and of individual awards may
vary, up or down, from year to year. No bonus payments were made in fiscal year
1999. Bonuses paid or accrued during fiscal years 2000 and 2001 amounted to
$369,488 ($158,000 to executives) and $225,000 ($28,500 to executives),
respectively.
Stock Options. Total executive compensation includes long-term incentives
afforded by stock options. Stock option grants are made by the Compensation
Committee upon consideration of recommendations made
7
by senior management. The objectives of option grants are to align the long-
term interests of executives and key employees with shareholder interest, by
creating a strong and direct link between compensation and total shareholder
return. In this connection, grants are intended to enable recipients to develop
and maintain significant long-term stock ownership in the Company. Stock
options are the principal vehicle for the payment of long-term compensation.
Grants of stock options reflect subjective consideration of such matters as
other compensation and the employee's position in the Company and contributions
to the Company.
Compensation of Chief Executive Officer. Mr. Ondis is eligible to
participate in the same executive compensation plans available to other senior
executives. Effective in August 2000, his base salary was increased from
$240,000 to $247,200, representing a 3% increase, deemed consistent with salary
increases among executives in comparable positions in similar industries. Non-
qualified option grants for 75,000 common shares at an exercise price of $7.50
were made to Mr. Ondis during fiscal year 2001.
Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
limits the deductibility of compensation paid to a public company's five
highest paid executive officers to the extent any such officer's annual
compensation exceeds $1,000,000, subject to certain exceptions. The Board of
Directors has deferred adopting a policy on this issue as it does not expect
the compensation of these individuals to reach relevant levels in the near
future.
Conclusion. Through the program described above, the Compensation Committee
firmly believes a direct link has been established between the Company's
financial performance, executive compensation and resultant stock price
performance.
Compensation Committee
Hermann Viets, Ph.D. (Chairman)
Neil K. Robertson
Jacques V. Hopkins
8
Executive Compensation
The following table sets forth the total annual compensation paid or
accrued, together with other information for the fiscal years ended January 31,
2001, 2000 and 1999, for the Chief Executive Officer and each of the four most
highly compensated executive officers of the Company whose total annual salary
and bonus for the fiscal year ended January 31, 2001 exceeded $100,000.
Summary Compensation Table
Annual Compensation Securities
------------------------------- Underlying
Name and Principal Options All Other
Position Year Salary($) Bonus($) Other ($)(a) Granted(#) Compensation($)(b)
- ------------------ ---- --------- -------- ------------ ---------- ------------------
Albert W. Ondis......... 2001 243,324 -- 48,970 75,000 4,561
Chairman, Chief 2000 240,220 40,000 37,524 25,000 4,693
Executive Officer 1999 232,865 -- 2,741 25,000 4,782
Everett V. Pizzuti...... 2001 221,908 -- 38,152 75,000 4,739
President, Chief 2000 203,737 40,000 44,561 25,000 4,824
Operating Officer 1999 228,324 -- 8,957 25,000 4,782
Joseph P. O'Connell.....
Vice President and 2001 158,817 -- 6,812 50,000 4,289
Treasurer, 2000 145,947 40,000 3,872 20,000 4,841
Chief Financial Officer 1999 143,796 -- 3,713 10,000 4,488
John B. Chatten(c)......
President, Grass- 2001 150,000 -- -- 15,000 2,056
Telefactor 2000 21,635 -- -- 35,000 --
Product Group 1999 -- -- -- -- --
Elias G. Deeb........... 2001 129,528 10,000 -- 15,000 3,955
Vice President, Media 2000 122,603 19,375 -- 10,500 4,143
Manufacturing 1999 119,500 -- -- 7,500 3,830
- --------
(a) Represents imputed interest on indebtedness of management in the amount of
$20,070 for Mr. Ondis and $8,213 for Mr. Pizzuti and reimbursement for
taxes attributable to use of Company provided vehicles and cash
compensation in lieu of Company provided vehicles.
(b) Amounts consist of the Company's annual contributions, including matching
contributions, to the Astro-Med, Inc. Retirement Savings Plan and $1,059
for each individual to the Astro-Med, Inc. Employee Stock Ownership Plan.
(c) Mr. Chatten joined the Company in December 1999.
9
Indebtedness of Management
The following information describes loans to directors and executive
officers of the Company whose indebtedness to the Company exceeded $60,000 at
any time during the fiscal year ended January 31, 2001.
Largest
Amount of Indebtedness
Indebtedness Amount of
Outstanding Outstanding
Name at Any Time at Year End
- ---- ------------ ------------
Albert W. Ondis, Chairman and Director................ $321,640 $321,640
Everett V. Pizzuti, President and Director............ 131,624 131,624
The indebtedness is comprised of unsecured non-interest bearing demand notes
for loans made from time to time to the persons named.
Profit-Sharing Plan
The Company has a qualified Profit-Sharing Plan which provides retirement
benefits to substantially all employees of the Company and provides for
contributions into a trust fund in such amounts as the Board of Directors may
annually determine. Each eligible employee shares in contributions on the basis
of relative (limited to $170,000) compensation.
In addition, participants are permitted to defer up to 15% of their cash
compensation and make contributions of such deferral to this Plan through
payroll deductions. The Company makes matching contributions equal to 50% of
the first percent of compensation contributed and 25% of the second, third,
fourth and fifth percent. The deferrals are made within the limits prescribed
by Section 401(k) of the Internal Revenue Code.
The Plan provides for the vesting of 100% of contributions made by the
Company to the account of an employee after five years of service.
Contributions by an employee are 100% vested immediately. The Company's
contributions paid or accrued for the fiscal year ended January 31, 2001
totaled $230,000.
Employee Stock Ownership Plan
The Company has an Employee Stock Ownership Plan which provides retirement
benefits to substantially all employees of the Company. Contributions in such
amounts as the Board of Directors may annually determine are allocated among
eligible employees on the basis of relative (limited to $100,000) compensation.
Participants are 100% vested in any and all allocations to their accounts.
Contributions, which may be in cash or stock, are invested by the Plan's
Trustees in shares of common stock of the Company. The Company's contributions
paid or accrued for the fiscal year ended January 31, 2001 totaled $130,000.
10
Stock Option Plans
The Company has a Non-Qualified Stock Option Plan adopted in the fiscal year
ended January 31, 1999, under which options for an aggregate of 400,000 shares
of common stock may be granted to officers and key employees as well as
consultants or other persons who render services to the Company at an exercise
price of not less than 50% of the market price on the date of grant. Options
granted under this plan for an aggregate of 225,000 shares, with an exercise
prices ranging from $5.00 to $7.50 were granted during the fiscal year ended
January 31, 2001. Options granted under this plan for an aggregate of 276,000
with exercise prices ranging from $4.94 to $7.50 per share were outstanding at
January 31, 2001. Options were granted subsequent to January 31, 2001 for an
aggregate of 124,000 shares with an exercise price of $4.31 per share. No
shares remain eligible for option grants under this plan. Accordingly, the
Company is recommending that the plan be amended to increase the number of
shares authorized for issuance under the plan.
The Company also has an Incentive Stock Option Plan adopted in the fiscal
year ended January 31, 1994 under which options for an aggregate of 250,000
shares of common stock may be granted to officers and key employees at an
exercise price of not less than 100% of the market price on the date of grant.
Options granted under this plan for an aggregate of 118,500 shares with an
exercise price of $7.50 were granted during the fiscal year ended January 31,
2001. Options granted under this plan for an aggregate of 204,000 shares with
exercise prices ranging from $6.125 to $10.25 per share were outstanding at
January 31, 2001. Options were granted subsequent to January 31, 2001 for an
aggregate of 46,000 shares with an exercise price of $4.31 per share. No shares
remain available for option grants under this plan.
In addition, the Company has an Incentive Stock Option Plan adopted in the
fiscal year ended January 31, 1998 and amended in the fiscal years ended
January 31, 1999 and 2001, under which options for an aggregate of 1,250,000
shares of common stock may be granted to officers and key employees at an
exercise price of not less than 100% of the market price on the date of grant.
Options granted under this plan for an aggregate of 222,000 shares with
exercise prices ranging from $4.00 to $7.50 were granted during the fiscal year
ended January 31, 2001. Options granted under this plan for an aggregate of
492,200 shares with exercise prices ranging from $4.00 to $8.125 per share were
outstanding at January 31, 2001. Options were granted subsequent to January 31,
2001 for an aggregate of 192,000 shares with an exercise price of $4.31 per
share. A total of 556,300 shares remain available for option grants under this
plan.
11
The following tables present certain information concerning stock options
granted and exercised by each executive officer named in the Summary
Compensation Table during the fiscal year ended January 31, 2001, and the year-
end value of unexercised options held by each of those officers.
Aggregated Option Exercises in Fiscal Year Ended
January 31, 2001 and Options Held at January 31, 2001
Securities Underlying Value of Unexercised
Unexercised Options at In-The-Money Options
Shares Value Fiscal Year End(#) at Fiscal Year End($)(b)
Acquired Realized ------------------------- -------------------------
On Exercise(#) ($)(a) Exercisable Unexercisable Exercisable Unexercisable
-------------- -------- ----------- ------------- ----------- -------------
Albert W. Ondis......... -- -- 150,000 -- -- --
Everett V. Pizzuti...... -- -- 324,875 31,000 19,688 --
Joseph P. O'Connell..... -- -- 92,500 -- -- --
John B. Chatten......... -- -- 33,332 16,668 -- --
Elias G. Deeb........... 1,000 917 57,250 -- -- --
- --------
(a) Amount represents excess of market value over exercise price on date of
exercise. Income taxes which may have been payable by individual are not
reflected.
(b) Amount represents excess of market value as of January 31, 2001 over
exercise price.
Option Grants--Fiscal Year
Ended January 31, 2001
% Of Total
Option Options Granted Per Share Grant Date
Grants to Employees in Exercise Expiration Value
Name (#)(a) Fiscal Year Price ($) Date ($)(d)
- ---- ------ --------------- --------- ---------- ----------
Albert W. Ondis ..... 75,000 13.3% 7.50 3/20/10 178,500
Everett V. Pizzuti .. 75,000 13.3% 7.50 3/20/10 178,500
Joseph P. O'Connell
.................... 50,000(b) 8.8% 7.50 3/20/10 119,000
John B. Chatten ..... 15,000(c) 2.7% 7.50 3/20/10 35,700
Elias G. Deeb........ 15,000 2.7% 7.50 3/20/10 35,700
- --------
(a) All options became exercisable on October 20, 2000, except as noted.
(b) Options became exercisable on October 20, 2000 and January 1, 2001.
(c) Options will became exercisable on January 1, 2002 and January 1, 2003.
(d) Amounts represent the fair value of each option granted and were estimated
as of the date of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions: expected volatility of 36%;
expected life of 5 years; risk-free interest rate of 6.25% and dividend
yield of 2.9%.
12
Performance Graph
Set forth below is a line graph comparing the cumulative total return on
the Company's common stock against the cumulative total return of a NASDAQ
market index and a peer index for the period of five fiscal years ended
January 31, 2001. The University of Chicago's Center for Research in Security
Prices (CRSP) total return index for the NASDAQ Stock Market is calculated
using all companies which trade on the NASDAQ National Market System (NMS) or
on the NASDAQ supplemental listing. It includes both domestic and foreign
companies. The index is weighted by the then current shares outstanding and
assumes dividends reinvested. The return is calculated on a monthly basis. The
peer group index, the CRSP Index for NASDAQ Electronic Components Stock
designated below as the industry index, is comprised of companies classified
as electronic equipment manufacturers. The total returns assume $100 invested
on February 1, 1996 with reinvestment of dividends.
ASSUMES $100 INVESTED ON FEBRUARY 1, 1996
ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING JANUARY 31, 2001
Fiscal Years Ended January 31
---------------------------------------
1996 1997 1998 1999 2000 2001
---- ------ ------ ------ ------ ------
Astro-Med, Inc.......................... 100 92.95 88.54 68.73 75.13 55.83
Peer Group Index........................ 100 206.25 202.21 325.98 604.79 489.54
Nasdaq Market Index..................... 100 130.34 152.99 235.00 370.87 259.89
13
Audit Committee Report
The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal
controls. The Audit Committee is composed of three directors, each of whom is
independent as defined by the National Association of Securities Dealers'
listing standards. The Audit Committee operates under a written charter
approved by the Board of Directors, a copy of which is attached to this Proxy
Statement as Exhibit B.
Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing
an independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.
The Audit Committee's responsibilities focus on two primary areas: (1) the
adequacy of the Company's internal controls and financial reporting process and
the reliability of the Company's financial statements; and (2) the independence
and performance of the Company's independent accountants.
The Audit Committee has met with management and the Company's independent
accountants, Arthur Andersen LLP, to review and discuss the January 31, 2001
financial statements. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Audit Committee has reviewed
and discussed the consolidated financial statements with management and the
independent accountants. The Audit Committee also discussed with the Arthur
Andersen LLP the matters required by Statement on Auditing Standards No.61
(Communication with Audit Committees). The Audit Committee also received from
Arthur Andersen LLP written disclosures and the letter regarding independence
as required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committee) and has discussed with Arthur Andersen LLP
that firm's independence.
The Audit Committee received the following information concerning the fees
of Arthur Andersen LLP for the year ended January 31, 2001, and has considered
whether the provision of these services is compatible with maintaining the
independence of the independent accountants:
. Audit Fees (including review of interim financial statements
included in Form 10-Qs)............................................ $119,000
.Financial Information Systems Design and Implementation Fees....... $ 0
.All Other Fees..................................................... $ 95,200
The Audit Committee has determined that the provision of non-audit services
by Arthur Andersen LLP is compatible with maintaining that firm's independence.
Based upon the review and discussions referred to above, we recommended that
the Board of Director's include the audited consolidated financial statements
in the Company's Annual Report on Form 10-K for the year ended January 31,
2001, to be filed with the Securities and Exchange Commission.
Audit Committee
Neil K. Robertson (Chairman)
Hermann Viets, Ph.D.
Jacques V. Hopkins
14
Independent Accountants
The Company selected Arthur Andersen LLP as independent accountants to audit
the financial statements of the Company for fiscal year ended January 31, 2001.
This firm has audited the Company's financial statements annually since the
fiscal year ended January 31, 1982. Although no accountants have yet been
selected to audit the financial statements of the Company for the fiscal year
ending January 31, 2002 it is expected that Arthur Andersen LLP will again be
selected. It is further expected that a representative of Arthur Andersen LLP
will be present at the annual meeting with the opportunity to make a statement,
if he or she so desires, and that such representative will be available to
respond to appropriate questions.
Financial Reports
A copy of the annual report of the Company for the fiscal year ended January
31, 2001 including the Company's annual report to the Securities and Exchange
Commission on Form 10-K, accompanies this proxy statement. Such report is not
part of this proxy statement.
Proposals For 2002 Annual Meeting
The 2002 annual meeting of the shareholders of the Company is scheduled to
be held on May 14, 2002. If a shareholder intending to present a proposal at
that meeting wishes to have such a proposal included in the Company's proxy
statement and form of proxy relating to the meeting, the shareholder must
submit the proposal to the Company not later than December 16, 2001.
Other Matters
No business other than that set forth in the attached Notice of Meeting is
expected to come before the annual meeting, but should any other matters
requiring a vote of shareholders arise, including a question of adjourning the
meeting, the persons named in the accompanying proxy will vote thereon
according to their best judgment in the interests of the Company. In the event
any of the nominees for the office of director should withdraw or otherwise
become unavailable for reasons not presently known, the persons named as
proxies will vote for other persons in their place in what they consider the
best interests of the Company.
You are urged to sign and return your proxy promptly to make certain your
shares will be voted at the meeting. You may revoke your proxy at any time
before it is voted.
By Order of the Board of Directors
/s/ Margaret D. Farrell
Margaret D. Farrell
Secretary
Dated: April 17, 2001
15
EXHIBIT A
ASTRO-MED, INC.
1998 NON-QUALIFIED STOCK OPTION PLAN
(As Proposed To Be Amended)
1. Purpose. The purpose of this 1998 Non-Qualified Stock Option Plan (the
"1998 Non-Qualified Plan") is to attract and retain key employees of Astro-Med,
Inc. (the "Company") and to motivate them by providing an opportunity to
acquire a proprietary stake in the Company and its future growth. It is the
view of the Company that this goal may best be achieved by granting stock
options.
2. Administration. (a) The 1998 Non-Qualified Plan shall be administered by
a committee of the Board of Directors (the "Board"), consisting of not less
than two members (the "Compensation Committee"). It is the intention of the
Company that so long as the Company has a class of securities registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the 1998
Non-Qualified Plan shall be administered by persons who shall be "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act but the
authority and validity of any act taken or not taken by the Compensation
Committee shall not be affected if any person administering the 1998 Non-
Qualified Plan is not a non-employee director; and provided, that, with respect
to individual participants who are not subject to Section 16(b) of the Exchange
Act, the Compensation Committee may delegate authority to administer the 1998
Non-Qualified Plan to another committee of directors (the "Employee Committee")
which committee may include directors who are not non-employee directors.
Unless the context otherwise required, the term "Committee" shall refer to both
the Compensation Committee and the Employee Committee.
(b) The Committee shall have plenary authority in its discretion,
subject to and not inconsistent with the express provisions of the 1998
Non-Qualified Plan to grant options, to determine the purchase price of the
shares of common stock covered by each option, the term of each option, the
persons to whom, and the time or times at which options shall be granted,
and the number of shares to be covered by each option; to interpret the
1998 Non-Qualified Plan; to prescribe, amend and rescind rules and
regulations relating to the 1998 Non-Qualified Plan; to determine the terms
and provisions of the option agreements (which need not be identical)
entered into in connection with awards under the 1998 Non-Qualified Plan;
and to make all other determinations deemed necessary or advisable for the
administration of the 1998 Non-Qualified Plan. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon all persons who have received awards, the
Company and all other interested persons. No member or agent of the
Committee shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the 1998 Non-
Qualified Plan or awards made thereunder, and all members and agents of the
Committee shall be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation. No Committee
member shall be liable for any action, determination or interpretation made
in good faith and all members of the Committee shall be fully indemnified
and protected by the Company in respect of any such action, determination
or interpretation.
3. Amount of Stock Subject to Plan. The amount of stock which may be issued
under options pursuant to the 1998 Non-Qualified Plan is one million
(1,000,000) shares of the Company's $.05 par value common stock (the "common
stock"). If any options terminate or expire for any reason without having been
exercised in full, the shares not purchased under the options may again be
subjected to options granted under the 1998 Non-Qualified Plan to the extent
not prohibited by Rule 16b-3.
A-1
4. Eligibility. Key employees of the Company or any subsidiary as well as
consultants or other persons who render services to the company or any
subsidiary (regardless of whether they are employees) shall be eligible to
participate in the 1998 Non-Qualified Plan, except that directors who are not
full time officers or employees shall not be eligible to participate. Key
employees shall be those employees, including officers, who are deemed by the
Committee to be of primary importance in the operation of the Company's
business. The Committee may in its discretion from time to time grant options
to any or all eligible persons to purchase such number of shares as the
Committee shall determine. As used in the 1998 Non-Qualified Plan, the term
"subsidiary" has the meaning ascribed to "subsidiary corporation" by (S)424(f)
of the Internal Revenue Code of 1986, as amended (the "Code").
5. Aggregate Annual Limit. The aggregate number of shares of common stock
subject to granted hereunder to any one person during any one calendar year
shall not exceed 200,000 shares.
6. Option Price and Payment. The option price of the shares of common stock
subject to each option will be fixed by the Committee but will not be less than
fifty percent (50%) of fair market value of the common stock determined as of
the date of the granting of the option. Upon the exercise of the option, the
option price may be paid in one or more of the following ways, as the Committee
in its discretion determines: (i) in full in cash; or (ii) by exchanging other
shares of the Company's common stock owned by the owner of such option. The
term "fair market value" shall be deemed to be the mean between the high and
low selling prices on any exchange on which the stock is listed (or over-the-
counter if such stock is not then listed on such exchange), on the date the
option is granted or, if no sale has taken place, the mean between bid and
asked prices on such date.
7. Term of Option. (a) The term of each option shall be ten (10) years, or
such shorter period as may be determined by the Committee, from the date of
grant of the option, unless sooner terminated in accordance with its terms. The
Committee may, in its sole discretion, determine, as a condition of any option
that all or a stated percentage of the options shall become exercisable in
installments or otherwise, only after completion of a specified service
requirement and may accelerate the exercisability of any option at any time. No
option shall be granted after the termination of the 1998 Non-Qualified Plan,
but options theretofore granted may be exercised thereafter in accordance with
their terms and the provisions of the 1998 Non-Qualified Plan.
(b) Except as otherwise determined by the Committee or permitted under
Paragraph 10 in the case of death of the holder of an option, in the event
the employment of an employee to whom an option has been granted under the
1998 Non-Qualified Plan shall be terminated (except as set forth in
Paragraph 10) no option will be exercisable unless at the time of the
exercise of the option the holder thereof is still employed by the Company
or one or more subsidiaries; provided, however, that if the holder's
employment has terminated not more than ninety (90) days before the
exercise of such option under circumstances acceptable to the Committee
(whose determination in this regard shall be final and conclusive), then
the option will nevertheless be exercisable during the ninety (90) day
period notwithstanding termination of employment; and provided, further,
that if the holder's employment has terminated not more than one (1) year
before the exercise of such option as a result of the holder becoming
disabled (within the meaning of 22(e)(3) of the Code), then the option will
nevertheless be exercisable during such one (1) year period.
(c) Military or sick leave not exceeding ninety (90) days will not be
deemed to interrupt or terminate employment for the purposes of this
Paragraph 7. Whether military or sick leave in excess of ninety (90) days
or other authorized leave of absence will be deemed to interrupt or
terminate employment for the purposes of this Paragraph 7 will be
determined by the Committee whose determination shall be final and
conclusive.
A-2
8. Change of Control. Unless the Committee determines otherwise, all
outstanding options shall become immediately exercisable upon a Change of
Control Event. A Change of Control Event shall include (i) any purchase of
common stock pursuant to a tender offer or exchange offer (other than by the
Company), (ii) the acquisition of 30% or more of the beneficial ownership of
the combined voting securities of the Company by any person or group (as such
terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the
Company or its subsidiaries or any employee benefit plan of the Company or any
person who was an officer or director of the Company on the effective date of
the 1998 Non-Qualified Plan, which person or group did not theretofore
beneficially own 30% or more of the combined voting securities of the Company,
(iii) approval by Company shareholders of a consolidation, a merger in which
the Company does not survive, or the sale of substantially all of the Company's
assets, or (iv) a change in the composition of a majority of the Company's
Board over a two-year period unless the selection or nomination of each of the
new members is approved by two-thirds of those remaining members of the Board
who were members at the beginning of the two-year period.
9. Other Terms and Conditions; Waivers. Options will be evidenced by option
agreements in such form and containing such terms and conditions as the
Committee may determine (but not inconsistent with the provisions of the 1998
Non-Qualified Plan) including, without being limited to, the following:
(a) Each option will be granted on the condition that the purchase of
stock thereunder will be for investment purposes and not with a view to
resale or distribution, except that such condition will be inoperative if
the stock subject to such option is registered under the Securities Act of
1933, as amended, or if in the opinion of counsel for the Company such
stock may be resold without registration;
(b) Unless the Committee otherwise determines, no option will be
transferable by the holder thereof otherwise than by will or by the laws of
descent and distribution, and such option will be exercisable during the
lifetime of the holder thereof only by the holder; provided, however, that
during an optionee's lifetime, with the approval of the Committee and
subject to such conditions as the Committee may prescribe, an optionee may,
upon providing written notice to the Company, elect to transfer any or all
such non-qualified stock options granted under the 1998 Non-Qualified Plan
to members of his or her immediate family, including, but not limited to,
the optionee's spouse, children, grandchildren and the spouses of children
and grandchildren or to trusts for the benefit of the optionee and/or such
immediate family members or to partnerships in which the optionee and/or
such family members are the only partners ("Permitted Transferees");
provided, however, that no such transfer by any optionee may be made in
exchange for consideration; and
(c) The Committee, in particular cases, before or after the issuance of
stock options under the 1998 Non-Qualified Plan, may waive any of the
conditions imposed by the 1998 Non-Qualified Plan upon the issuance or
exercise of options.
10. Termination of Employment upon Death. In the event an employee to whom
an option has been granted under the 1998 Non-Qualified Plan dies while in the
employ of the Company or any subsidiary, unless the Committee otherwise
determines, his or her options shall end automatically six (6) months after
such death, unless sooner ended by their terms. Prior to the expiration of such
six (6) month period, during the term of such options, the executor or
administrator of the estate of such eligible employee shall have the right to
exercise any option previously granted to such employee hereunder.
11. Readjustment of Stock or Recapitalization. Upon any recapitalization or
readjustment of the Company's capital stock whereby the character of the
present common stock shall be changed, appropriate
A-3
adjustments shall be made so that the stock to be purchased under the 1998 Non-
Qualified Plan shall be the equivalent of the present common stock after such
readjustment or recapitalization. In the event of a subdivision or combination
of the shares of common stock, the Board will proportionately adjust number of
shares that may be optioned and sold to an eligible person and the number of
shares which are the subject of outstanding options and the price therefor. In
case of reclassification or other change in the shares of common stock, such
action will be taken as in the opinion of the Board will be appropriate under
the circumstances. Accordingly, in such cases the maximum number of authorized
but unissued shares, or shares held as treasury stock, which are subject to the
1998 Non-Qualified Plan may be adjusted by the Board without shareholder or any
other action.
12. Sale of Assets, Stock Exchange, etc. If the Board recommends that the
Company sell substantially all of its assets, or that the holders of
substantially all of the shares of outstanding stock sell or exchange their
shares to or with any person, firm or corporation, or that the Company merge or
consolidate with another corporation, or that the Company be liquidated and
dissolved, then in any such event, the Committee may by notice in writing
mailed or delivered to each holder of an outstanding option set a date (which
date shall be not less than sixty (60) days from the date of mailing or
delivering of such written notice) on or before which such outstanding options
may be exercised, and all such outstanding options which have not been
exercised on or before such date will thereafter expire and be of no further
force and effect.
13. Term of the Plan. The 1998 Non-Qualified Plan shall become effective on
the date of its approval by the shareholders, and subsequent adoption and
ratification by the Board, and shall continue in effect until the expiration of
ten (10) years from the date of such approval by the shareholders unless sooner
terminated as provided herein. The powers of the Committee shall continue in
effect after the termination of the 1998 Non-Qualified Plan, until exercise or
expiration of all options then outstanding.
14. Amendment and Termination. The Board at any time may amend, suspend or
terminate the 1998 Non-Qualified Plan . No action of the Board, however, may
without the written consent of the holder, alter or impair any option
previously granted under the 1998 Non-Qualified Plan (except pursuant to
Paragraph 11 or Paragraph 12 above). In addition, except as provided in the
1998 Non-Qualified Plan, no action of the Board may, unless duly approved by
the shareholders, (i) increase the maximum number of shares subject to the 1998
Non-Qualified Plan; (ii) change the option price; (iii) extend the period
within which options may be granted; (iv) extend the termination date of the
1998 Non-Qualified Plan; (v) change the class of persons eligible to receive
options under the 1998 Non-Qualified Plan.
15. Obligation of the Company to Issue Shares. Notwithstanding any other
provision of the 1998 Non-Qualified Plan, the Company shall not be obligated to
issue any shares pursuant to any stock option unless or until:
(a) the shares with respect to which the option is being exercised have
been registered under the Securities Act of 1933, as amended, or are exempt
from such registration;
(b) the prior approval of such sale or issuance has been obtained from
any state regulatory body having jurisdiction; and
(c) in the event the stock has been listed on any stock exchange, the
shares with respect to which the option is being exercised have been duly
listed on such exchange in accordance with the procedure specified
therefor.
A-4
EXHIBIT B
ASTRO-MED, INC.
Audit Committee Charter
I.STATEMENT OF PURPOSE
A. The Board of Directors (the "Board") of Astro-Med, Inc. (the "
Company") has oversight responsibilities with respect to the Company's
maintenance of an adequate system of internal control and financial
reporting. Through this charter, the Board delegates certain duties and
responsibilities to its Audit Committee (the "Committee") to assist it
in fulfilling these responsibilities.
B. The Board recognizes that an informed and vigilant Audit Committee
represents an effective influence for ensuring adequate internal
controls and accurate and complete financial reporting. The members of
the Committee are expected to discharge their duties with the same good
faith, diligence, care and skill exercised in performing their duties
as Directors of the Company.
II.ORGANIZATION and GENERAL
A. The Committee shall be composed of three independent directors. To be
considered independent, a member must be a non-management director,
free from any relationship that, in the opinion of the Board, would
interfere with the exercise of independent judgment as a Committee
member.
B. Each member shall be able to read and understand the Company's
financial statements and at least one member of the Committee will have
accounting or related financial management expertise.
C. The Committee shall have a Chairman, appointed by the Board. A record
of the Committee's proceedings will be kept.
D. The Committee shall meet sufficiently often to review the annual
financial statements, the activities and reports of the independent
auditor, and other matters requiring consideration by the Committee
including review of quarterly financial statements as deemed
appropriate by the Committee consistent with its duties and obligations
hereunder. The Committee's Chairman may call other meetings during the
year as necessary.
E. The Committee shall have the power to adopt its own operating rules and
procedures and to call upon assistance from officers and employees of
the Company. The Committee Chairman shall report its activities to the
full Board following each meeting of the Committee to keep the Board
informed of Committee activities and findings on a current basis.
III.OBJECTIVES
A. The primary responsibilities of the Committee are to:
1. Oversee the financial reporting process and internal control systems.
2. Oversee the audit function, both independent and internal.
3. Recommend to the Board the appointment of independent auditors and
annually evaluate their independence.
4. Review compliance with the Corporate Policy on Ethics.
5. Annually review and assess the adequacy of this charter, amend it as
appropriate, and seek and receive Board approval of the proposed
changes.
B-1
IV.AUTHORITY
A. To discharge its oversight responsibilities effectively, the Committee
will maintain open lines of communication with the Chief Financial
Officer and with the Company's independent auditors, each of whom will
have free and direct access to the Committee. The Committee has the
authority to institute, at its discretion, investigations of suspected
improprieties, including the standing authority to retain special
counsel and experts.
V.DUTIES AND RESPONSIBILITIES
A. Oversight of Internal Controls
The Committee shall provide supervisory oversight for and review the
adequacy of the development and maintenance of the systems of internal
controls. These controls should be designed to assure that assets are
safeguarded, transactions are authorized, and that transactions are
properly recorded. Senior management or the independent auditors may be
called upon to discuss the control systems and changes thereto as may
be needed.
B. Independent Auditors
Management shall recommend to the Committee the selection, retention,
or change in the Company's independent auditor. The Committee shall,
after due consideration of management's recommendations, make its
recommendation to the Board concerning the selection, retention, or
change of the independent auditor. The independent auditor is
accountable to the Board and the Committee. The Board and the Committee
are authorized and responsible for selecting, evaluating, and where
appropriate, replacing the outside auditor.
The independence and objectivity of the independent auditor shall be
reviewed annually with management and with the independent auditor. To
assist the Committee, management shall inform the Committee of all
plans to engage the independent auditor to perform management advisory
services or other non-audit services for the Company, when the annual
costs of such services exceed or can reasonably be expected to exceed
the limits established by the Committee.
The Committee shall meet with the independent auditor subsequent to
each audit to review any significant auditing or accounting issues
encountered during the audit, and the level of support provided by the
Company's finance department. The independent auditor will also review
with the Committee any audit findings concerning the adequacy of the
system of internal controls and compliance therewith, including the
responses provided by management of any such findings.
The Committee shall obtain from management a description of issues and
responses whenever a second opinion is sought from another independent
public accountant.
The Committee will obtain an annual written statement from the
independent auditor delineating all relationships between the auditor
and the Company. The Committee will also discuss any relationships that
may impair the auditor's independence and take such actions, or make
recommendations to the Board regarding actions to be taken to remedy
such impairment.
C. Oversight of Financial Reporting
The annual audited financial statements of the Company shall be
reviewed by the Committee. The quarterly financial statements shall be
reviewed by the Committee if the Company's independent
B-2
auditor has identified any matters that are required to be communicated
to the Committee under the auditor's professional standards or as the
Committee otherwise deems appropriate. The purposes of the reviews
shall be to evaluate the financial reporting process to reasonably
assure that the financial statements fairly present the financial
position and results of operations of the Company in accordance with
generally accepted accounting principles, consistently applied. The
Committee shall inquire as to the following:
. Significant variations in financial information between periods.
. Changes in accounting standards or rules promulgated by the Financial
. Accounting Standards Board or the U.S. Securities and Exchange
Commission that have an impact on the financial statements.
. Estimates made by management having a material impact on the
financial statements.
. Changes in accounting principles adopted by the Company, which have a
significant impact on the financial statements.
D. Other
The Committee will comply with all regulations of the U.S. Securities
and Exchange Commission and the NASDAQ Stock Market as they relate to
disclosures and corporate governance.
The Committee will prepare a report for the annual proxy statement that
states whether the Committee has reviewed and discussed the audited
financial statements with management, discuss with the independent
auditors the matters required by Statement on Auditing Standard No. 61
(Communication with Audit Committees), and received and discussed with
the independent auditors the matters required by Independence Standards
Board No. 1 (Independence Discussions with Audit Committees). The
report must also state whether, based on the procedures performed, the
members of the Committee recommended to the Board that the audited
financial statements be included in the Company's Annual Report on Form
10-K.
The Committee shall review annually management's plan for determining
compliance with the Corporate Policy on Ethics.
The Committee shall review significant cases of employee conflict of
interest, misconduct or fraud.
Where appropriate to protect the assets of the Company and the
interests of the shareholders, the Committee shall have the authority
to engage adequate resources and have standing authority to initiate
investigations, including the authority to retain counsel or other
outside experts.
Where appropriate the Company's outside counsel will be asked to meet
with the Committee. At least annually, the Committee will review a
report of outstanding litigation against the Company that may have a
significant impact on the financial statements.
The Committee will periodically review fees paid for external audit
services and other consulting fees.
May 16, 2000,
as amended March 19, 2001
B-3
ASTRO-MED, INC.
Annual Meeting of Shareholders--May 15, 2001
The undersigned, whose signature appears on the reverse side of this proxy,
hereby appoints Albert W. Ondis, Everett V. Pizzuti, Jacques V. Hopkins, Hermann
Viets and Neil K. Robertson, or a majority of such of them as shall be present,
attorneys with power of substitution and with all the powers the undersigned
would possess if personally present, to vote the stock of the undersigned in
ASTRO-MED, INC. at the annual meeting of shareholders to be held May 15, 2001,
in West Warwick, Rhode Island, and at any adjournments thereof, as follows:
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below) _____________ nominees listed
below ________________
Albert W. Ondis, Everett V. Pizzuti, Jacques V. Hopkins, Hermann Viets and
Neil K. Robertson.
(INSTRUCTION: to withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below).
________________________________________________________________________________
2. Approve an increase in the maximum number of shares available under the
Company's 1998 Non-Qualified Stock Option Plan
FOR ____________ AGAINST ____________ ABSTAIN ____________
3. In their discretion, upon such other matters as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE SPECIFIED NOMINEES IN PROPOSAL 1, AND FOR PROPOSAL 2.
PLEASE DATE, SIGN AND RETURN THIS PROXY
Dated _________________________ , 2001 Signed ______________________________
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(Sign exactly as your name appears
hereon. When signing as an attorney,
executor, administrator, trustee,
guardian or in a corporate capacity,
please give full title as such. In case
of joint tenants or multiple owners, each
party must sign.)
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY