SCHEDULE 14A (Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
International Electronics, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- -------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
5) Total fee paid:
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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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INTERNATIONAL ELECTRONICS, INC.
427 Turnpike Street
Canton, Massachusetts 02021
------------------------------------------
Notice of Special Meeting in Lieu of the
Annual Meeting of Shareholders
------------------------------------------
Notice is hereby given that a Special Meeting in Lieu of the Annual
Meeting of Shareholders of International Electronics, Inc., a Massachusetts
corporation (the "Company") will be held at the offices of Cohan Rasnick Myerson
LLP at One State Street, Boston, Massachusetts at 2:00 p.m., local time, on
Wednesday, April 2, 2003, for the following purposes:
1. To elect two Class III Directors to serve for three years and until each
of their successors is chosen and qualified.
2. To transact such other business as may come before the meeting.
Only shareholders of record at the close of business on February 7, 2003
are entitled to notice of and to vote at the meeting.
Please complete, sign, and date the enclosed proxy, and mail it as
promptly as possible in the enclosed self-addressed envelope. If you attend the
meeting and desire to vote in person, the proxy will not be used.
By order of the Board of Directors,
Peter Myerson, Clerk
Canton, Massachusetts
February 21, 2003
INTERNATIONAL ELECTRONICS, INC.
427 Turnpike Street
Canton, Massachusetts 02021
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Proxy Statement
-------------------------------
The accompanying proxy is solicited by the Board of Directors of
International Electronics, Inc., a Massachusetts corporation ("IEI") for use at
a Special Meeting in Lieu of the Annual Meeting of Shareholders to be held April
2, 2003.
PROXY SOLICITATION
Proxies in the accompanying form, properly executed and received prior to
the meeting and not revoked, will be voted as specified, or if no instructions
are given, will be voted in favor of the proposals described herein. Proxies may
be revoked at any time prior to the meeting by written notice given to the Clerk
of IEI. No dissenter to any action proposed will have any right to appraisal as
a result of voting against a proposed action. The cost of this solicitation
shall be borne by IEI. Solicitation of the Proxies by telephone or in person may
be made by IEI's Directors, Officers or other employees, but any such
solicitations will be carried on during working hours and for no additional
cost, other than the time expended and telephone charges in making such
solicitations. The approximate date on which this Proxy Statement and the
accompanying proxy card will be mailed to shareholders is February 21, 2003.
INFORMATION AS TO VOTING SECURITIES
Each outstanding share of IEI's common stock, $0.01 par value per share, is
entitled to one vote. Only shareholders of record at the close of business on
February 7, 2003 will be entitled to vote at the meeting. On that date, there
were 1,608,731 shares of common stock of IEI outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Set forth below is information concerning ownership of IEI's $0.01 common
stock as of January 31, 2003, (i) by all persons known by IEI to own
beneficially 5% or more of the outstanding common stock, (ii) by each director
and Named Executive Officer of IEI and (iii) by all directors and executive
officers as a group.
Number of Shares Percent of
And Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership (1) Owned
- ------------------------------------ --------------------- -----
Executive Officers and Directors:
John Waldstein 282,380 (2) 16.3%
c/o International Electronics, Inc.
427 Turnpike Street
Canton, Massachusetts
Steven Tannenbaum 239,927 (3) 14.9%
C/o Greenwood Investments, Inc.
68 Harvard Street, 3/rd/ Floor
Brookline, Massachusetts
Page 1
Number of Shares Percent of
And Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership (1) Owned
- ------------------------------------ --------------------- -----
Executive Officers and Directors:
Heath Paley 44,852 (4) 2.8%
c/o International Electronics, Inc.
427 Turnpike Street
Canton, Massachusetts
Christopher Hentschel 32,218 (5) 2.0%
c/o International Electronics, Inc.
427 Turnpike Street
Canton, Massachusetts
Diane Balcom 19,012 (6) 1.2%
1403 Sharps Hill Road
Pittsburgh, Pennsylvania
All directors and executive officers
as a group (5 persons) 618,389 (7) 34.8%
5% Shareholder:
Warren Paley 217,268 13.5%
3 Mill Street
New Baltimore, New York
(1) Except as otherwise indicated below, the named owner has sole voting
and investment power with respect to the shares set forth. No
arrangements are known to IEI, which may result in a change in control.
The number of shares shown does include shares which may be acquired
through the exercise of options and warrants, which are exercisable
currently or within sixty (60) days after January 31, 2003.
(2) Includes vested options and warrants to purchase an aggregate 126,375
shares of IEI's common stock granted at prices ranging from $0.74-
$2.12 per share. Includes 6,234 shares of common stock held by Mr.
Waldstein's wife. Mr. Waldstein disclaims beneficial ownership of these
shares.
(3) Includes 181,977 shares of common stock held by Greenwood Capital
Limited Partnership ("GCLP"). Mr. Tannenbaum serves as the president,
sole stockholder and sole director of Greenwood Investments, Inc.,
which is the sole general partner of GCLP and has sole voting and
investment power with respect to such shares. With respect to the
remaining 57,950 shares of common stock, Mr. Tannenbaum holds such
shares jointly with his wife and has shared voting and investment
power.
(4) Includes vested options to purchase an aggregate 14,500 shares of IEI's
common stock granted at prices ranging from $0.81-$2.81 per share.
(5) Includes vested options to purchase an aggregate 17,250 shares of IEI's
common stock at prices ranging from $0.81-$2.54 per share. Includes
1,634 shares of common stock held by Mr. Hentschel's wife. Mr.
Hentschel disclaims beneficial ownership of these shares.
(6) Includes vested options to purchase an aggregate 10,500 shares of IEI's
common stock at prices ranging from $0.88-$2.81 per share.
(7) Includes vested options and warrants to purchase an aggregate 168,625
shares of IEI's common stock granted at prices ranging from $0.74-$2.81
per share.
Page 2
PROPOSAL ONE
ELECTION OF DIRECTORS
Shares represented by proxies in the enclosed form, unless the proxies
otherwise direct, will be voted as follows: to elect John Waldstein and Steven
Tannenbaum each to a three-year term as Class III Directors to IEI's Board of
Directors and until their respective successor is chosen and qualified.
The following table sets forth the name and age of each executive officer,
director and nominee of IEI. The narrative following the table describes the
principal employment of each executive officer, director and nominee. For each
person presently serving as director, the table sets forth the date on which
he/she was first elected director.
Year
Position with Director Current Term Class of
Name Age the Company Since Will Expire Director
- ---- --- ----------- ----- ----------- --------
John Waldstein 49 President, Chief Executive 1982 2003 III
Officer, Treasurer, Chief
Financial Officer, Chairman
of the Board, and a Director
Diane Balcom 60 Director 1989 2005 II
Heath Paley 54 Director 1990 2004 I
Steven Tannenbaum 42 Director 2002 2003 III
Christopher Hentschel 58 Vice President of Engineering - - -
Directors of IEI hold office on the following basis and thereafter until
their successors are chosen and qualified. Class I Directors will serve in
office for a three-year term beginning March 29, 2001. Class II Directors will
serve in office for a three-year term beginning March 26, 2002. Class III
Directors will serve in office until this annual meeting on April 2, 2003, and
if elected thereafter will serve for three-year terms. The officers of IEI hold
office until their successors are chosen and qualified. The following is a
summary of the background of those individuals listed in the above table.
John Waldstein has been employed by IEI since 1978, has been Treasurer
since March 1982, was Vice President between January 1983 and May 1988, Chief
Financial Officer since February 1988, Chief Operating Officer from February
1988 to May 1988, President and Chief Executive Officer since May 1988, and
Chairman of the Board since November 1990. Mr. Waldstein is a graduate of
Harvard College. See "Executive Compensation."
Diane Balcom became a member of the Board of Directors in 1989. Since June
2002, Ms. Balcom has served as Director of Development of Achieva, a non-profit
agency providing services for people with disabilities and their family members.
From February 2001 to June 2002, Ms. Balcom served as an independent consultant
to a variety of non-profit organizations in southwestern Pennsylvania. From
October 1998 to February 2001, Ms. Balcom served as the Executive Director of
the Pittsburgh Mercy Foundation. From September 1997 to September 1998, she held
the position of Director of Development for Children's Hospital of Pittsburgh.
From August 1994 to August 1997, Ms. Balcom was the Chapter Director of the
Juvenile Diabetes Foundation of Western Pennsylvania. She has been an adviser to
IEI on corporate and financial matters since 1985. From January 1989 to August
1994, Ms. Balcom operated a consulting practice, which provided services related
to private and public financing for small and medium-sized companies. From March
1987 to January 1989, she served as Vice President and Chief Financial Officer
for Environmental Diagnostics, Inc., a publicly held company. Prior to that, Ms.
Balcom held various senior management positions in Corporate Finance and
Research for 13 years with brokerage firms on the West Coast.
Heath Paley became a member of the Board of Directors in 1990. Since March
1997, Mr. Paley has served as President of Comorant, Inc., a manufacturer and
retailer of glass wind chimes marketed under the name Goose Rock Designs. Since
May 1996, Mr. Paley has also been a self-employed computer consultant. He had
been IEI's Director of Management Information Systems from
Page 3
September 1994 until May 1996 and was IEI's Chief Operating Officer and
Executive Vice President from June 1990 to August 1994. From 1983 to June 1990,
Mr. Paley was President and a founder of Ecco Industries, Inc. From 1980 to
1983, he was President of the Maine Woods Shoe Division of Bennett Industries.
Heath Paley is the son of Warren Paley. See "Security Ownership of Certain
Beneficial Owners and Management".
Steven Tannenbaum became a member of the Board of Directors in March 2002.
Since 1993, Mr. Tannenbaum has been the President of Greenwood Investments,
Inc., which serves as the general partner of Greenwood Capital Limited
Partnership and other partnerships engaged in investment and real estate
development.
Christopher Hentschel was appointed IEI's Vice President of Engineering in
March 1995 and had previously been Chief Engineer since 1989. Before joining
IEI, Mr. Hentschel was a founder and Vice President of Engineering of Guard
Aware, Inc. Mr. Hentschel is a graduate of Wentworth Institute. See "Executive
Compensation".
Kenneth Moyes resigned from IEI's Board of Directors in August 2002.
During the fiscal year ending August 31, 2002, the Board of Directors held
six meetings (including regularly scheduled and special meetings).
The Board of Directors has an Audit Committee. The Audit Committee is
comprised of Diane Balcom, Heath Paley and Steven Tannenbaum, the majority of
whom are independent, as defined by Rule 4200(a)(15) of the National Association
of Securities Dealers (the "NASD"). The Audit Committee reviews the professional
services provided by IEI's independent accountants, the independence of such
accountants from IEI's management, IEI's annual and quarterly financial
statements and IEI's system of internal accounting controls. The Audit Committee
also reviews such other matters with respect to its accounting, auditing and
financial reporting practices as it may find appropriate or may be brought to
its attention. The Audit Committee operates pursuant to a written charter (the
"Audit Committee Charter"), which was revised by the Board of Directors in light
of the additional responsibilities resulting from the recently enacted
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). A copy of the revised
charter may be found on IEI's web site at www.ieib.com and is attached to this
proxy statement as Appendix A. The Board of Directors is in the process of
reviewing the additional responsibilities of the Audit Committee resulting from
the Sarbanes-Oxley Act and will reassess the adequacy of the Audit Committee
Charter following the final adoption of the new corporate governance standards
currently proposed by the NASD and the new rules regarding audit committee
compensation and responsibility contemplated by the Sarbanes-Oxley Act. In
November 2002, the Audit Committee approved the adoption of a Policy on
Reporting and Investigating Complaints relating to Corporate Reporting and
Disclosure, Accounting and Auditing Controls and Procedures, and Securities
Compliance pertaining to Fraud against Shareholders. The Audit Committee, during
the year ended August 31, 2002, held four meetings. For additional information
concerning the Audit Committee, see "Independent Auditors - Report of the Audit
Committee".
IEI's Compensation Committee of the Board of Directors is comprised of
Diane Balcom, Heath Paley and Steven Tannenbaum. The Compensation Committee is
responsible for evaluating and approving the compensation arrangements for each
of IEI's executive officers, including the granting of options to purchase
shares of common stock under IEI's stock option plans. The Compensation
Committee, during the year ended August 31, 2002, held two meetings. IEI has no
nominating committee.
The Board of Directors recommends that shareholders vote FOR the election
of John Waldstein and Steven Tannenbaum as Class III Directors on the Board of
Directors to serve for a three-year term and until each of their successors is
chosen and qualified.
Page 4
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation for
each of the last three fiscal years ended August 31, 2002, of IEI's President
and Chief Executive Officer, and two other executive officers of IEI who
received at least $100,000 of compensation during any of these years (the "Named
Executive Officers"):
Summary Compensation Table
Long-Term
Annual Compensation (2) Compensation
------------------------------------- ------------
Commission/
----------- Options All Other
Name Year Salary Bonus (3) (Shares) Compensation(1)
- ---- ---- ------ --------- -------- ---------------
John Waldstein 2002 $164,592 $50,000 - $16,632
President and 2001 155,536 9,091 7,000 15,656
Chief Executive Officer 2000 145,217 50,000 12,500 16,234
James Brierley, Jr. (4) 2002 125,000 6,500 - -
Vice President of 2001 124,885 - - -
Sales and Marketing 2000 120,065 9,500 5,000 -
Christopher Hentschel 2002 124,384 12,600 - -
Vice President of 2001 116,550 - - -
Engineering 2000 105,196 6,000 5,000 -
(1) Represents the cost of a split dollar whole life insurance policy with a
face value of $1,005,000, a term insurance policy with a face value of
$1,000,000 and a long-term disability policy. IEI is a beneficiary of the
whole life insurance policy to the extent of all premiums paid upon the
death of John Waldstein. Mr. Waldstein may purchase the whole life
insurance policy upon termination of his employment for the cash surrender
value as of August 31, 2001.
(2) Does not include perquisites, which do not exceed 10% of annual salary.
(3) Amount represents commissions and/or bonus earned during the applicable
year.
(4) Mr. Brierley resigned his position on October 31, 2002.
IEI's Board of Directors, commencing in fiscal 1993, established an annual
bonus plan for officers and certain key employees. The available funds for the
plan shall be up to five percent of income before taxes. The final amount and
subsequent distribution to employees and officers shall be determined by IEI's
Compensation Committee.
Options Granted During Fiscal 2002
There were no options granted to any of the Named Executive Officers during
the fiscal year ended August 31, 2002.
Compensation on Involuntary Termination
John Waldstein has an employment contract with IEI which provides for
certain compensation to be paid to him if he is discharged by IEI without cause,
as defined, before the end of the term of his contract. Mr. Waldstein has a
continuous three-year employment contract with a current minimum annual salary
of approximately $167,000, subject to adjustment for inflation, plus an annual
minimum bonus of $50,000 payable upon the achievement of specified goals and
objectives. The salary and bonus of Mr. Waldstein is subject to performance
reviews and annual adjustment as determined by IEI's Compensation Committee.
Page 5
If the employment of Mr. Waldstein is terminated by IEI without cause,
including the election of a slate of board of director members not approved by
Mr. Waldstein or a change in status as a result of an acquisition, merger or
sale of assets (an "Acquisition"), IEI is obligated to pay at such termination
an amount equal to his total salary and benefits to the conclusion of the
contract period. In the event of an Acquisition of IEI, Mr. Waldstein's base
salary shall increase to a minimum annual salary of $175,000, based on future
adjustments for inflation. As of November 1, 2002, John Waldstein's base salary
to the conclusion of his contract period is approximately $501,000, plus future
cost of living adjustments.
After an Acquisition of IEI, provided Mr. Waldstein continues his
employment for at least a six-month period, and he subsequently voluntarily
resigns, he shall be paid severance of one year's compensation and benefits. For
each additional six months that he works thereafter, in the event Mr. Waldstein
subsequently voluntarily resigns, he shall be paid severance of an additional
six months compensation and benefits provided any such severance payments shall
not exceed three years of compensation.
In addition to the foregoing, IEI also has employment letters with certain
key management (including Mr. Hentschel) that require salary and benefit
continuation for a one year period in the event of a termination of such
employment as a result of an Acquisition. As of August 31, 2002, the annual
salaries of such management personnel represent an aggregate of approximately
$440,000.
Year End Option Table
The following table sets forth the number and value of unexercised options
held as of August 31, 2002 by the Named Executive Officers:
Aggregated Option Exercises In Last Fiscal
Year and Fiscal Year End Option Values
Value of Unexercised
Number of Unexercised In-the-Money Options at
Shares Options at End of Fiscal 2002 End of Fiscal 2002 (1)
Acquired on Value ----------------------------- ---------------------
Name Exercise Realized (3) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ------------ ----------- ------------- -------------------------
John Waldstein (2) 11,667 $27,709 122,125 18,875 $246,451 $32,419
James Brierley, Jr. (4) - - 32,500 2,500 58,450 1,850
Christopher Hentschel 13,334 23,768 16,000 3,333 28,240 3,217
(1) Difference between the fair market value of the underlying common stock on
November 4, 2002 and the exercise price.
(2) Includes warrants to purchase an aggregate of 35,000 shares of common
stock. See Note 9 to the Consolidated Financial Statements.
(3) Difference between fair market value of the underlying common stock on the
date of exercise and the exercise price, multiplied by the number of shares
issued upon exercise.
(4) Mr. Brierley resigned his position on October 31, 2002.
Compensation of Directors
Directors who are not officers receive $500 for each Board of Directors
meeting and $500 for each Committee meeting that they attend in person or by
telephone conference call. For the fiscal year ended August 31, 2002, directors'
fees were paid in the amounts of $5,000 to Ms. Balcom, $5,500 to Mr. Moyes,
$4,500 to Mr. Paley and $2,500 to Mr. Tannenbaum.
Other Matters
Section 16(a) of the Securities Exchange Act of 1934 requires IEI's
executive officers, directors, and persons who own more than ten percent of a
registered class of IEI's equity securities to file reports of ownership with
the Securities and Exchange Commission ("SEC") and NASD. Executive
Page 6
officers, directors, and greater than ten-percent stockholders are required by
SEC regulation to furnish IEI with copies of all Section 16(a) forms they file.
IEI believes that all filing requirements applicable under Section 16(a) to
its executive officers, directors and 10% stockholders were complied with for
fiscal 2002 except Ms. Balcom inadvertently filed one Form 4 late in conjunction
with one transaction, Messrs. Heath Paley, Waldstein and Hentschel each
inadvertently filed one Form 4 late in conjunction with two transactions and Mr.
Moyes, while a director, inadvertently filed two Form 4's late in conjunction
with eight transactions.
INDEPENDENT AUDITORS
General
Deloitte & Touche LLP has served as IEI's independent auditors since 1982.
IEI's management anticipates that Deloitte & Touche LLP will also serve as IEI's
auditors in connection with the financial statements to be prepared for the
fiscal year ending August 31, 2003. No representative of Deloitte & Touche LLP
is expected to attend the meeting of Shareholders.
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for services completed
during the year ended August 31, 2002 were $80,000 for its audit and quarterly
reviews.
Financial Information Systems Design and Implementation Fees
During the year ended August 31, 2002, Deloitte & Touche LLP did not
provide any services to IEI relating to financial information systems design and
implementation.
All Other Fees
Deloitte & Touche LLP billed $30,712 during the year ended August 31, 2002
for all other non-audit services, which included services rendered in connection
with tax planning and compliance services and participation in a filing with the
Securities and Exchange Commission.
Report of the Audit Committee
The Audit Committee's purpose is to assist the Board of Directors in its
oversight of IEI's financial accounting, reporting and internal controls. The
Audit Committee operates pursuant to the Audit Committee Charter approved by the
Board of Directors, which is attached as Appendix A.
Management is responsible for the preparation, presentation and integrity
of IEI's consolidated financial statements, the selection of appropriate
accounting and financial reporting principles, and for the maintenance of
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The independent auditors,
Deloitte & Touche LLP, are responsible for performing an independent audit of
the consolidated financial statements in accordance with generally accepted
auditing standards. The Audit Committee periodically meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of IEI's internal controls and the overall
quality of IEI's financial reporting.
In performing its oversight role, the Audit Committee reviewed and
discussed the audited financial statements with management and the independent
auditors. The Audit Committee also discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees including the quality and acceptability of
IEI's accounting principles as applied in its financial reporting. The Audit
Committee received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees. The Audit Committee also considered whether
the provision of non-audit services by the independent auditors is compatible
with maintaining the auditors' independence and has discussed with the auditors
their independence.
Page 7
Based upon the Audit Committee's review and discussions as described above
with management and the independent auditors and the Audit Committee's review of
the representations of management, and the report of the independent auditors to
the Audit Committee, the Audit Committee recommended that the Board of Directors
include the audited consolidated financial statements in IEI's Annual Report on
Form 10-KSB for the year ended August 31, 2002, as filed with the Securities and
Exchange Commission on November 25, 2002.
Respectively submitted by the Audit Committee
Diane Balcom, Heath Paley, and Steven Tannenbaum
PROPOSALS BY SHAREHOLDERS
Any Shareholder who wishes to include a proposal for presentation at the
next annual meeting of IEI must send such proposal to IEI and such proposal must
be received by IEI no later than October 20, 2003. Any proposal submitted by a
Shareholder must comply with the provision of Rule 14A-8 of the Exchange Act of
1934 as amended.
OTHER MATTERS
As of the date hereof, IEI has not been informed of any matters to be
presented for action at the meeting other than those listed in the notice of
meeting and referred to herein. If any other matters come before the meeting or
any adjournment thereof, it is intended that the proxies will be voted in
respect thereof in accordance with the judgment of the persons named therein.
FINANCIAL STATEMENTS
A copy of IEI's Annual Report for the fiscal year ending August 31, 2002
and IEI's Form 10-QSB for the quarter ending November 30, 2002 is being mailed
to all shareholders herewith. The Annual Report and IEI's Form 10-QSB are not to
be regarded as proxy solicitation material.
Shareholders are urged to sign the enclosed form of proxy and return it at
once in the envelope enclosed for that purpose.
By Order of the Board of Directors,
Peter Myerson, Clerk
Canton, Massachusetts
February 21, 2003
Page 8
Appendix A
International Electronics, Inc.
Audit Committee Charter
Purpose
The primary purpose of the International Electronics, Inc.'s (the
"Corporation") Audit Committee (the "Committee") is to assist the Board of
Directors of the Corporation (the "Board") in fulfilling its oversight
responsibilities to its stockholders and to the investment community by
reviewing:
. the financial reports and other financial information provided by
the Corporation to its stockholders, to any governmental body or
to the public;
. the Corporation's systems of internal accounting and financial
controls and disclosure controls and procedures;
. the Corporation's auditing, accounting and financial reporting
processes generally;
. the independence, qualifications and performance of the
Corporation's independent auditor; and
. any legal compliance and ethics programs established by
management and/or the Board.
The Committee will maintain free and open communication among the
Committee, the independent auditor and management of the Corporation.
An additional purpose of the Committee is to establish procedures for:
(i) the receipt, retention and treatment of certain complaints; and (ii) the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
Composition
The Committee shall be appointed by the Board and may be removed or
replaced, from time to time, by the Board. Except as provided in the following
sentence, the Committee shall be comprised of three or more directors, at least
a majority of whom shall be "independent" as defined by the applicable rules of
The Nasdaq Stock Market, Inc. ("Nasdaq"), Section 10A(m) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Section 301 of the Sarbanes-Oxley
Act of 2002 and the rules and regulations of the Securities and Exchange
Commission (the "Commission"). At such date as the Exchange Act, the Commission
or Nasdaq require that all of the members of the Committee be independent, as
defined, then by such date each member of the Committee shall be independent.
Each Committee member also shall be free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. The Chairman of the Committee
shall be appointed by the Board. All members of the Committee shall be able to
read and understand fundamental financial statements, including the
Corporation's balance sheet, income statement, and cash flow statement. When
required by applicable Nasdaq and Commission rules, at least one member of the
Committee shall be an "Audit Committee Financial Expert" as defined by
applicable Nasdaq and Commission rules or the Corporation shall disclose in its
filings that it does not have an "Audit Committee Financial Expert" on its
Committee. All members of the Committee shall participate in continuing
education programs as set forth in the rules developed by the Nasdaq Listing and
Hearings Review Council. The Board shall determine the compensation of Committee
members. No member of the Committee may receive any compensation from the
Corporation other than director's fees.
Procedures and Administration
Meetings
The Committee shall meet at least quarterly. The Committee shall meet
whenever it deems a meeting necessary with management and/or the independent
auditor, or in separate executive sessions, to discuss any matters that the
Committee or either of these groups believes should be discussed privately. The
Committee may meet by telephone and may delegate specific functions to one or
more of its members. The Committee shall keep such records of its meetings as it
shall deem appropriate.
Page A-1
Investigations
In discharging its oversight role, the Committee is empowered: (i) to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Corporation; and (ii) to retain outside
counsel or other experts for this purpose. The Committee shall have the
authority to conduct or authorize investigations into any matters within the
scope of its responsibilities as it shall deem appropriate, including the
authority to request any officer, employee or advisor of the Corporation to meet
with the Committee or any advisors engaged by the Committee. The Committee shall
have the authority to engage and determine funding for such independent legal,
accounting and other advisors as it deems necessary or appropriate to carry out
its responsibilities. Such independent advisors may be the regular advisors to
the Corporation. The Committee is empowered, without further action by the
Board, to cause the Corporation to pay the compensation of such advisors as
established by the Committee.
Responsibilities and Duties
To fulfill its purpose, the Committee shall:
Review Charter and Financial Statements
1. At least annually, review and reassess this Charter, and recommend
changes to the Board as conditions dictate.
2. Review the Corporation's annual financial statements and any report
of other financial information submitted to the stockholders, any governmental
body or the public, including any certification, report, opinion or review
rendered by the independent auditor. The Committee is not responsible for
preparing the Corporation's financial statements or auditing those financial
statements.
Independent Auditor
3. Appoint the Independent Auditor. The Committee shall have the sole
authority to appoint, determine funding for and oversee the independent auditor
or nominate the independent auditor for shareholder approval. The Committee
shall have the sole authority to approve all audit engagement fees and terms. On
an annual basis, the Committee should review and discuss with the independent
auditor its written statement concerning all relationships the auditor has with
the Corporation to determine whether such relationships might impact the
objectivity and independence of the auditor. The Committee should report to the
Board whether the provision of permitted non-audit services by the auditor is
compatible with maintaining the independent auditor's independence from
management.
4. Set the compensation of the independent auditor and cause the
Corporation to pay the compensation of the independent auditor established by
the Committee.
5. Pre-approve all audit services and permitted non-audit services to
be provided by the independent auditor. The Committee shall cause the
Corporation to disclose in its SEC periodic reports the approval by the
Committee of any permitted non-audit services to be performed by the independent
auditor.
6. Confirm the regular rotation of the lead audit partner and
reviewing partner as required by Section 203 of the Sarbanes-Oxley Act.
7. Recommend to the Board policies of the Corporation, if applicable,
for hiring employees or former employees of the independent auditor.
8. Review the performance of the independent auditor and either retain
or terminate the independent auditor when circumstances warrant.
9. Periodically consult with the independent auditor out of the
presence of management about internal controls and the completeness and accuracy
of the Corporation's financial statements.
Page A-2
10. Review periodically as appropriate the reports required to be made
by the independent auditor pursuant to paragraph (k) of section 10A of the
Securities Exchange Act of 1934 regarding:
(a) Critical accounting policies and practices.
(b) Alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditor.
(c) Other material written communications between the
independent auditor and management.
11. Meet with the independent auditor prior to the audit to discuss
the planning and scope of the audit for each fiscal year.
Controls and Procedures
12. Oversee the Corporation's internal accounting controls, disclosure
controls and procedures and code of conduct. The Committee shall review the
reports of the CEO and CFO required by Section 302 of the Sarbanes-Oxley Act of
2002 (and the applicable rules thereunder) and Rule 13a-14 of the Exchange Act.
13. Consider and review with the independent auditor and management:
(a) The adequacy of the Corporation's internal controls including
computerized information system controls and security.
(b) Any related significant findings and recommendations of the
independent auditor together with management's responses thereto.
(c) The reports on internal accounting controls contemplated by
Sections 103 and 404 of the Sarbanes-Oxley Act.
14. Establish procedures for (a) the receipt, retention and treatment
of complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters; and (b) the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.
15. Review all related party transactions on an ongoing basis and
approve all such transactions as appropriate.
Financial Reporting Process
16. In consultation with the independent auditor, review the adequacy
of the Corporation's financial disclosure and reporting processes, including any
significant risks and uncertainties with respect to the quality, accuracy and
completeness of the Corporation's financial disclosure and reporting processes.
17. Consider the independent auditor's judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.
18. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as suggested by
the independent auditor or management.
19. Prepare a Committee report to be included in the Corporation's
annual proxy statement to the stockholders of the Corporation as required by the
rules of the Commission.
Systems and Conflicts
Page A-3
20. Establish systems for management and the independent auditor to
report to the Committee any significant judgments made in management's
preparation of the financial statements and the appropriateness of such
judgments.
21. Following the completion of the annual audit, review separately
with each of management and the independent auditor any significant difficulties
encountered during the course of the audit, including any restrictions on the
scope of work or access to required information.
22. Review and discuss with the independent auditor any significant
disagreement between management and the independent auditor with regard to the
preparation of the financial statements.
23. Review with the independent auditor and management the extent to
which changes or improvements in financial or accounting practices, as approved
by the Committee, have been implemented.
Review of Financial Statements and Information
24. Review and discuss with the Corporation's management and
independent auditor the Corporation's audited financial statements, including
the matters required to be discussed by Statement on Auditing Standards No. 61,
and recommend to the Board where appropriate that the Corporation's audited
financial statements be included in the Corporation's Annual Report on Form
10-KSB.
25. Prepare for inclusion where necessary in a proxy or information
statement of the Corporation relating to an annual meeting of security holders
at which directors are to be elected (or special meeting or written consents in
lieu of such meeting), the report described in Item 306 of Regulation S-K.
26. Review and discuss with the Corporation's management and
independent auditor interim financial information prior to disclosure.
27. Review and discuss with the Corporation's management and
independent auditor interim financial information to be included in the
Corporation's Quarterly Reports on Form 10-QSB and the matters required to be
discussed by Statement on Auditing Standards No. 61.
Miscellaneous
28. Review such other reports, adopt such other policies and implement
such other procedures as shall be necessary to comply with the rules and
regulations that may, from time to time, be established by Nasdaq or the
Commission.
* * *
This charter has been adopted by resolution of the Board of Directors on
February 4, 2003.
Page A-4
SPECIAL MEETING OF SHAREHOLDERS OF
INTERNATIONAL ELECTRONICS, INC.
April 2, 2003
------------------------------
COMPANY NUMBER
Please date, sign and mail your proxy card ------------------------------
in the envelope provided as soon as possible. ACCOUNT NUMBER
------------------------------
| |
\|/ Please detach and mail in the envelope provided. \|/
- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. To elect Class lll Directors to serve for 3 years and until their successors
are chosen and qualified.
NOMINEES: Class lll Directors to serve 3 years:
[_] FOR ALL NOMINEES o John Waldstein
o Steven Tannenbaum
[_] WITHHOLD AUTHORITY
FOR ALL NOMINEES
[_] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
- ------------
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: o
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To change the address on your account, please check the box at
right and indicate your new address in the address space above. [_]
Please note that changes to the registered name(s) on the account
may not be submitted via this method.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To consider and act upon such other business or [_] [_] [_]
further business as may properly come before the meeting.
Management recommends a vote FOR this action.
Management knows of no other matters that may properly be, or which are likely
to be, brought before the meeting. However, if any other matters are properly
brought before the meeting, the person named in this Proxy or his substitute
will vote in accordance with his best judgment.
Signature of Shareholder Date:
-------------------------------- -----------------
Signature of Shareholder Date:
-------------------------------- ------------------
Note: This proxy must be signed exactly as the name appears hereon. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
PROXY
INTERNATIONAL ELECTRONICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John Waldstein with full power of substitution,
as the true and lawful attorney in fact and proxy for the undersigned to vote
all shares of common stock of International Electronics, Inc. (the "Company")
which the undersigned is entitled to vote at a Special Meeting of Shareholders
to be held at the offices of Cohan Rasnick Myerson LLP, One State Street,
Boston, Massachusetts 02109, at 2:00 p.m. on April 2, 2003 or any adjournment
thereof, such proxy being directed to vote as specified on the reverse on the
election of directors and being authorized to vote in his own discretion for
each proposal as to which a specified vote is not directed. The above named
proxy is directed to vote all of the undersigned's shares as follows:
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS INDICATED. IF NO
SPECIFICATION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NAMED NOMINEES AND FOR THE PROPOSAL.
(Continued and to be signed on the reverse side)