SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
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14a-6(e)(2))
National Dentex Corporation
(Name of Registrant as Specified In Its Charter)
National Dentex Corporation
(Name of Person(s) Filing Proxy Statement)
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NATIONAL DENTEX CORPORATION
---------------------
NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
---------------------
The 2004 Special Meeting in Lieu of Annual Meeting of Stockholders of
National Dentex Corporation will be held as follows:
DATE: Tuesday, April 13, 2004
TIME: 10:00 a.m.
PLACE:Posternak Blankstein & Lund LLP
Prudential Tower
800 Boylston Street, 33rd Floor
Boston, MA 02199-8004
MATTERS TO BE VOTED ON:
1. To elect five directors.
2. Approval of a proposed amendment to the 2001 Stock Plan to increase the
number of shares reserved for issuance under the Plan from 300,000 to
550,000.
3. Ratification of the appointment of PricewaterhouseCoopers LLP as our
independent auditors for 2004.
4. Any other matters properly brought before the meeting.
The Board of Directors has fixed the close of business on February 20, 2004
as the record date for determining stockholders entitled to notice of and to
vote at the meeting.
YOUR VOTE AT THE MEETING IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER
OF SHARES YOU OWN. PLEASE VOTE YOUR SHARES, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, BY COMPLETING THE ENCLOSED PROXY CARD AND RETURNING IT TO US IN THE
ENCLOSED ENVELOPE.
By Order of the Board of Directors,
DONALD H. SIEGEL P.C.
Clerk
This notice and proxy statement and form of proxy are being distributed on or
about March 12, 2004.
CONTENTS
<Table>
<Caption>
PAGE
----
General Information......................................... 2
Stock Ownership............................................. 5
Proposal No. 1: Election of Directors....................... 7
Executive Compensation...................................... 10
Proposal No. 2: Increase in Shares Reserved Under the 2001
Stock Plan................................................ 17
Proposal No. 3: Appointment of Independent Auditors......... 21
Other Matters............................................... 22
</Table>
NATIONAL DENTEX CORPORATION
526 BOSTON POST ROAD
WAYLAND, MASSACHUSETTS 01778
---------------------
PROXY STATEMENT
GENERAL INFORMATION
WHAT IS THIS DOCUMENT? This is the Notice of our 2004 Special Meeting in
Lieu of Annual Meeting of Stockholders of National Dentex Corporation (the
"Company"), combined with our Proxy Statement which provides important
information for your use in voting your shares of our Company's common stock at
the meeting.
WHO CAN VOTE? You can vote your shares of common stock if our records show
that you owned the shares on February 20, 2004. A total of 3,433,901 shares of
common stock are eligible to vote at the meeting. You are permitted one vote for
each share of common stock you owned on February 20, 2004, including (1) shares
held in your name as a stockholder of record, and (2) shares held in "street
name" for you as the beneficial owner through a broker, trustee, or other
nominee, such as a bank. The enclosed proxy card shows the number of shares you
can vote.
HOW DO I VOTE BY PROXY? Follow the instructions on the enclosed proxy card
to vote on each proposal to be considered at the meeting. Sign and date the
proxy card and mail it back in the enclosed envelope. The proxyholders named on
the proxy card will vote your shares as you instruct. If you sign and return the
proxy card but do not vote on a proposal, the proxyholders will vote for you on
that proposal. Unless you instruct otherwise, the proxyholders will vote in
accordance with the Board of Director's recommendations below.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE
PROPOSALS? The Board of Directors recommends that you vote:
FOR the election of the five nominees to serve as directors;
FOR the approval of the proposed amendment to our 2001 Stock Plan to
increase the number of shares reserved for issuance under the plan from 300,000
to 550,000; and
FOR the ratification of the selection of PricewaterhouseCoopers LLP as our
independent auditors for 2004.
WHAT IF OTHER MATTERS COME UP AT THE MEETING? The matters described in
this proxy statement are the only matters we know that will be voted on at the
meeting. If other matters are properly presented at the meeting, the
proxyholders will vote your shares in their discretion.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD? Yes. At any time before
the meeting, you can change your vote either by sending our Corporate Clerk a
written notice revoking your proxy card or by signing, dating, and returning to
us a new proxy card. We will honor the proxy card with the latest date.
CAN I VOTE IN PERSON AT THE MEETING RATHER THAN BY COMPLETING THE PROXY
CARD? Although we encourage you to complete and return the proxy card even if
you plan to attend the meeting to ensure that your vote is counted, you can
always vote your shares in person at the meeting.
WHO WILL COUNT THE VOTES? The votes will be counted, tabulated and
certified by our transfer agent and registrar, Registrar and Transfer Company. A
representative of Registrar and Transfer Company will serve as the inspector of
elections at the meeting.
WILL MY VOTE BE KEPT CONFIDENTIAL? Yes, your vote will be kept
confidential and we will not disclose your vote, unless (1) we are required to
do so by law (including in connection with the pursuit or defense of a legal or
administrative action or proceeding), or (2) there is a contested election for
the Board of Directors. The
2
inspector of elections will forward any written comments that you make on the
proxy card to management without providing your name, unless you expressly
request disclosure on your proxy card.
WHAT DO I DO IF I AM A BENEFICIAL OWNER AND MY SHARES ARE HELD IN "STREET
NAME"? If your shares are held in the name of your broker, a bank, or other
nominee, that party will give you instructions for voting your shares, which
should be enclosed with this document.
WHAT CONSTITUTES A QUORUM? In order for business to be conducted at the
meeting, a quorum must be present. A quorum consists of the holders of a
majority of the shares of common stock issued, outstanding and entitled to vote
at the meeting, or at least 1,716,951 shares. If a quorum is not present, the
meeting will be adjourned until a quorum is obtained.
Shares of common stock represented in person or by proxy (including "broker
non-votes" and shares that abstain or do not vote with respect to one or more of
the matters to be voted upon) will be counted for the purpose of determining
whether a quorum exists. "Broker non-votes" are those shares that are held in
"street name" by a broker, bank, or other nominee that indicates on its proxy
that it does not have discretionary authority to vote on a particular matter.
WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS? In the
election of directors, the five persons receiving the most number of "FOR" votes
at the meeting will be elected. All other proposals require the affirmative
"FOR" vote of a majority of those shares present in person or represented by
proxy and entitled to vote on those proposals at the meeting. If you hold shares
beneficially in street name and do not provide your broker with voting
instructions, your shares may constitute "broker non-votes." Generally, broker
non-votes occur on a matter when a broker is not permitted to vote on that
matter without instructions from you, as the beneficial owner. In counting the
voting result for any particular proposal, broker non-votes are not considered
entitled to vote on that proposal. Thus, broker non-votes will not affect the
outcome of any matter being voted at the meeting, assuming that a quorum is
obtained. An abstention will have the same effect as voting against the
proposal.
WHERE CAN I FIND THE VOTING RESULTS? We will report the voting results in
our Quarterly Report on Form 10-Q for the first quarter of fiscal 2004, which we
expect to file with the Securities and Exchange Commission in May 2004. The
results will be contained in Part II, Item 4 of this Quarterly Report, which
will be available via Internet on the Securities and Exchange Commission's
website, www.sec.gov.
WHO PAYS FOR THIS PROXY SOLICITATION? We do. In addition to sending you
these materials, one of our officers, directors or employees may contact you by
telephone, by mail, or in person. None of these persons will receive any extra
compensation for doing this. If necessary, we may retain the proxy solicitation
firm Morrow & Co., at a cost which we would not expect to exceed $5,000.
WHERE CAN I GET DIRECTIONS TO THE MEETING? Directions to the meeting
location are available at www.pbl.com.
HOW AND WHEN MAY I SUBMIT A STOCKHOLDER PROPOSAL FOR CONSIDERATION AT NEXT
YEAR'S ANNUAL MEETING OF STOCKHOLDERS (OR SPECIAL MEETING IN LIEU THEREOF) OR TO
NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS? You may submit proposals, including
director nominations, for consideration at future stockholder meetings.
STOCKHOLDER PROPOSALS: If you are interested in submitting a proposal for
inclusion in our proxy statement for the annual meeting next year (or special
meeting in lieu of the annual meeting), or would like to recommend a nominee for
director, we must receive your written proposal at our principal executive
offices no later than December 14, 2004. If the date of next year's annual
meeting (or special meeting in lieu of the annual meeting) is moved more than 30
days before or after the anniversary date of this year's meeting, the deadline
for inclusion of proposals in our proxy statement is instead a reasonable time
before we begin to print and mail our proxy materials next year. Such proposals
also will need to comply with Securities and Exchange Commission regulations
under Rule 14a-8 regarding the inclusion of shareowner proposals in company-
sponsored proxy materials. Under our articles of organization, by-laws, and
applicable Massachusetts law that
3
will be in effect next year, no proposal or other business can be considered at
next year's meeting that is not included in the notice we mail for next year's
meeting. Any proposals should be addressed to:
National Dentex Corporation
526 Boston Post Road
Wayland, Massachusetts 01778
ATTN: Richard F. Becker, Jr.,
Vice President-Treasurer, CFO and Assistant Clerk
Fax: (508)-358-6199
COPY OF BY-LAW PROVISIONS: You may contact our Assistant Clerk (Mr.
Becker) at our principal executive offices for a copy of the relevant by-law
provisions regarding the requirements for making stockholder proposals. Our
by-laws also are available on the Investor Relations page on our website at
http://www.nationaldentex.com.
HOW MAY I COMMUNICATE WITH THE BOARD OF DIRECTORS OR THE NON-MANAGEMENT
DIRECTORS ON THE BOARD OF DIRECTORS? You may submit an e-mail to our Board of
Directors at bod@nationaldentex.com. All directors have access to this e-mail
address. Communications intended for non-management directors should be directed
to the attention of Mr. Norman F. Strate at the e-mail address above.
DOES THE COMPANY HAVE A POLICY REGARDING THE ATTENDANCE OF DIRECTORS AT THE
MEETING? Our by-laws mandate that the Board of Directors hold a meeting
immediately after each annual meeting of stockholders, or the special meeting in
lieu thereof. As a result, as a practical matter we normally expect each of our
directors to be present at the stockholders' meeting.
HOW MANY DIRECTORS ATTENDED LAST YEAR'S MEETING? Four of our five
directors attended last year's meeting.
DOES THE COMPANY HAVE A CODE OF CONDUCT APPLICABLE TO ALL DIRECTORS,
OFFICERS, AND EMPLOYEES? Yes. In accordance with Section 406 of the
Sarbanes-Oxley Act and Rule 4350(n) of the new Nasdaq listing rules, we have
adopted a Code of Conduct that is applicable to all directors, officers and
employees. Our Code of Conduct provides for an enforcement mechanism and
requires that waiver of its provisions for any of our directors or officers must
be approved by our Board of Directors. We are required to disclose any such
waivers on a Form 8-K within five business days.
IS THE CODE OF CONDUCT PUBLICLY AVAILABLE? Yes. It is available on the
Investor Relations page of our Company website at www.nationaldentex.com.
HOW CAN I OBTAIN AN ANNUAL REPORT ON FORM 10-K? A copy of our Annual
Report on Form 10-K for the year ended December 31, 2003 is enclosed with this
proxy statement. Stockholders may request another free copy of our 2003 Annual
Report on Form 10-K by making a written or oral request to:
National Dentex Corporation
526 Boston Post Road
Wayland, MA 01778
Attn.: Richard F. Becker, Jr.
Telephone: (508) 358-4422
WHO SHOULD I CONTACT IF I HAVE ANY QUESTIONS? If you have any questions
about the meeting or any matters relating to this proxy statement, please
contact Mr. Richard F. Becker, Jr., at the address and telephone number above.
4
STOCK OWNERSHIP
The following table shows the number of shares of common stock beneficially
owned as of February 20, 2004 by:
- each nominee for director;
- each executive officer shown in the summary compensation table below;
- all executive officers and directors as a group; and
- each person who we believe beneficially owns more than 5% of our common
stock.
<Table>
<Caption>
PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME SHARES(1) SHARES(2)
- ---- --------- -------------
David V. Harkins*........................................... 30,625 0.9%
Jack R. Crosby*............................................. 1,400 --
Daniel A. Grady*............................................ 2,265 0.1
Norman F. Strate*........................................... 5,191 0.2
David L. Brown(3)*+......................................... 149,172 4.2
Donald E. Merz(4)+.......................................... 59,021 1.7
Richard F. Becker, Jr.(5)+.................................. 44,516 1.3
James F. Dodd III(6)+....................................... 33,166 1.0
Arthur B. Champagne(7)+..................................... 31,166 0.9
All executive officers and directors as a group (13
persons)(8)............................................... 454,301 11.9
Artisan Partners Ltd. Partnership........................... 631,801 18.4
85 East Wisconsin Ave., #200
Milwaukee, WI 58202
FMR Corp. .................................................. 348,000 10.1
82 Devonshire Street
Boston, MA 02109
Royce & Associates, L.L.C. ................................. 319,700 9.3
1414 Avenue of the Americas
New York, NY 10019
Dalton, Greiner, Hartman, Maher & Co. ...................... 247,200 7.2
565 Fifth Avenue
New York, NY 10017
Federated Investors, Inc. .................................. 195,005 5.7
Federated Investors Tower
Pittsburgh, PA 15222
</Table>
- ---------------
* Nominee for Re-election as Director. The address of this person is c/o
National Dentex Corporation, 526 Boston Post Road, Wayland, MA 01778.
+ Executive officer. The address of this person is c/o National Dentex
Corporation, 526 Boston Post Road, Wayland, MA 01778.
(1) The number of shares beneficially owned by each entity, person, director or
named executive officer is determined under rules of the Securities and
Exchange Commission, particularly Rule 13d-3, and the information is not
necessarily indicative of beneficial ownership for any other purposes. Under
such rules, each entity or individual is considered the beneficial owner of
any shares as to which they have the sole or shared voting power or
investment power. Such persons are also deemed under the same rules to
beneficially own any shares that they have the right to acquire within 60
days of February 20, 2004,
5
through the exercise of stock options or other similar rights. This stock
ownership information is based upon information furnished to us by the
persons named on the table.
(2) Ownership percentage is reported based on 3,433,901 shares of common stock
outstanding on February 20, 2004, plus, as to each holder thereof and no
other person, the number of shares (if any) that the person has the right to
acquire by April 20, 2004, through the exercise of stock options or other
similar rights.
(3) Mr. Brown owns 14,006 shares and holds options for 144,500 shares, of which
135,166 are exercisable within 60 days of February 20, 2004.
(4) Mr. Merz owns 6,355 shares and holds options for 62,000 shares, of which
52,666 are exercisable within 60 days of February 20, 2004.
(5) Mr. Becker owns 9,850 shares and holds options for 44,000 shares, of which
34,666 are exercisable within 60 days of February 20, 2004.
(6) Mr. Dodd owns 5,000 shares and holds options for 37,500 shares, of which
28,166 are exercisable within 60 days of February 20, 2004.
(7) Mr. Champagne holds options for 40,500 shares, of which 31,166 are
exercisable within 60 days of February 20, 2004.
(8) Certain executive officers, other than the executive officers named in the
table, own a total of 10,149 shares and hold options for 111,900 shares, of
which 87,630 are exercisable within 60 days of February 20, 2004.
6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The entire Board of Directors, to consist of five members, will be elected
at the meeting. The directors elected will hold office until their successors
are elected, which should occur at the next annual meeting or special meeting in
lieu thereof, in accordance with our by-laws.
VOTE REQUIRED
The five nominees receiving the most votes will be elected. Votes withheld
for a nominee will not be counted.
NOMINATIONS
At the meeting, we will nominate the persons named in this proxy statement
for re-election as directors. Although we know of no reason why any of these
nominees might not be able to serve, the Board of Directors (on the
recommendation of the Nominating Committee) may either propose to reduce the
number of directors or propose a substitute nominee if any nominee is not
available for election.
GENERAL INFORMATION ABOUT THE NOMINEES
All of the nominees profiled below currently serve as directors. Each has
agreed to be named in this proxy statement and to serve as a director if
elected.
<Table>
<Caption>
DIRECTOR NAME AGE OFFICE HELD
- ------------- --- -----------
David V. Harkins....................... 63 Chairman of the Board and Director
David L. Brown......................... 63 President, Chief Executive Officer and
Director
Jack R. Crosby......................... 77 Director
Daniel A. Grady........................ 67 Director
Norman F. Strate....................... 63 Director
</Table>
Mr. Harkins is a founder of the Company and has served as Chairman of the
Board and as a director since its inception. Mr. Harkins is President of Thomas
H. Lee Partners, L.P., a private equity investment firm, and has been associated
with the Thomas H. Lee Company since its founding in 1975. Mr. Harkins is
currently a director of Cott Corporation, Inc., Metris Companies, Inc., Syratech
Corporation, and Conseco, Inc. Mr. Harkins served as interim Chairman of the
Board and Chief Executive Officer of Conseco, Inc. from April 2000 to June 2000
without compensation for such service. In December 2002, Conseco, Inc.
voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
Mr. Brown was appointed President and a director of the Company in
December, 1998, and Chief Executive Officer in 2000. He joined us in 1984 as
Vice President-Finance and Chief Financial Officer, and was appointed as
Treasurer in 1991. Mr. Brown serves on the Board of Directors of the American
Dental Trade Association and the National Association of Dental Laboratories,
and on the Board of Fellows of the Harvard School of Dental Medicine.
Mr. Crosby is Chairman of The Rust Group, a private investment partnership
headquartered in Austin, Texas. Mr. Crosby serves as Chief Executive Officer and
director of CinemaStar Luxury Theaters, Inc. (which filed for protection under
Chapter 11 of the U.S. Bankruptcy Code during 2001 and emerged from bankruptcy
in August 2002), as well as numerous other entities which are privately held.
Mr. Crosby has been a director of the Company since 1992.
Mr. Grady is Vice President-Finance and Chief Financial Officer of Bose
Corporation, a designer and manufacturer of high quality home audio and other
electronics equipment. Mr. Grady also serves as a director of Welch Foods Inc.
and as a trustee of the Dedham Savings Bank. Mr. Grady joined the Board at our
annual meeting in 2001.
7
Mr. Strate is President and Chief Executive Officer of Protonex Technology
Corporation, a fuel cell company focused on affordable power sources. He served
as Chief Executive Officer of J.F. Jelenko & Co., a supplier of dental products
to dental labs, from 1986 until it was acquired by Heraeus, GmbH in 1996. He is
also a partner in The Strate Group, a merger and acquisitions firm. Mr. Strate
is a former member of the Board of Fellows of the Harvard School of Dental
Medicine, a member of the Lehigh University Alumni Association Board, and a
member of the Permanent Board of Directors of The William J. Gies Foundation for
the Advancement of Dentistry of the American Dental Education Association. Mr.
Strate has been a director of the Company since 1997.
COMPENSATION OF DIRECTORS. Non-employee directors receive a retainer fee
of $20,000 annually, and may elect to receive such compensation in cash or
common stock. All of our directors except Mr. Brown are non-employee directors.
All of our directors are reimbursed for travel and similar expenses incurred in
connection with their services.
DIRECTOR INDEPENDENCE. The Board of Directors has determined that each of
the director-nominees is an "independent" director as defined under applicable
Nasdaq rules, except for Mr. Brown, who serves as our President and Chief
Executive Officer. The "independent" directors thus constitute a majority of our
Board of Directors.
BOARD COMMITTEE MATTERS. Our Board of Directors has four principal
committees: the Executive Committee, the Compensation Committee, the Nominating
Committee, and the Audit Committee. All of the members of the Compensation
Committee and Nominating Committee are "independent" directors as defined under
applicable Nasdaq rules. Each of the members of the Executive Committee is
"independent" under applicable Nasdaq rules, except for Mr. Brown.
Each of the three members of the Audit Committee is "independent" under
applicable Nasdaq rules which impose additional independence criteria in
determining eligibility for director service on audit committees, except Mr.
Grady, who fails to meet the additional independence criteria for audit
committee composition because his 34 year-old son was named a partner in late
2003 in the Hartford, Connecticut office of PricewaterhouseCoopers LLP ("PwC"),
our independent auditors. The Board of Directors has availed itself of a
provision under the new Nasdaq rules that will permit Mr. Grady to continue to
serve on our Audit Committee for up to an additional two years (but not in his
prior capacity as chairman). In making this determination, the Board of
Directors has determined that Mr. Grady's continued service on our Audit
Committee is required by the best interests of the Company and its shareholders
in these exceptional and limited circumstances. In making this determination,
the Board of Directors considered a variety of factors, including (1) its desire
to maintain an Audit Committee of three members, as mandated under the Nasdaq
rules, (2) its recognition of the fact that Mr. Grady has served as an integral
member of the Audit Committee insofar as he has served as the Committee's
chairman and qualifies as an "audit committee financial expert" under applicable
rules of the Securities and Exchange Commission, (3) its recognition of the fact
that it would be extremely difficult to locate a suitable individual to replace
Mr. Grady's expertise on our Audit Committee, especially in the current
environment where audit committee expertise is at a premium among other
similarly-situated public companies, (4) the fact that Mr. Grady ceased to be
"independent" for reasons outside his reasonable control, namely the adoption of
the new Nasdaq rules and the independent decision of PwC to make his son a
partner, and (5) its acknowledgement that Mr. Grady's son has no involvement
with PwC's rendering of professional services to us insofar as PwC's engagement
team operates out of PwC's Boston office and Mr. Grady's son practices out of
PwC's Hartford office where his work relates to clients in the insurance
industry. The Board will continue to monitor this situation and will re-evaluate
its determination if conditions warrant.
8
The following chart describes the function and membership of each committee
of the Board of Directors and the number of times it met in 2003:
EXECUTIVE COMMITTEE -- 1 MEETING
<Table>
<Caption>
FUNCTION MEMBERS
- -------- -------
- - Approve terms of acquisitions of dental laboratories David V. Harkins (Chairman)
or other businesses under $1.0 million in purchase Norman F. Strate
price David L. Brown
</Table>
COMPENSATION COMMITTEE -- 4 MEETINGS
<Table>
<Caption>
FUNCTION MEMBERS
- -------- -------
- - Review and approve compensation and benefit programs David V. Harkins (Chairman)
- - Approve compensation of senior executives Jack R. Crosby
- - Administer stock option plans Daniel A. Grady
</Table>
See the report of the Compensation Committee on page 10.
AUDIT COMMITTEE -- 7 MEETINGS
<Table>
<Caption>
FUNCTION MEMBERS
- -------- -------
- - Engage the independent auditors Norman F. Strate (Chairman)
- - Review the annual financial statements Jack R. Crosby
- - Review control procedures and accounting practices Daniel A. Grady
- - Monitor accounting and reporting practices
- - Review compliance with the conflict-of-interest
policy
- - Review the capital structure of the Company
- - Exercise such other functions as mandated by the
Sarbanes-Oxley Act and other applicable law and
regulations
</Table>
Mr. Grady served as Chairman of the Audit Committee during fiscal 2003. Mr.
Strate became Chairman of the Audit Committee effective March 3, 2004.
See the report of the Audit Committee on page 21.
NOMINATING COMMITTEE -- 1 MEETING
<Table>
<Caption>
FUNCTION MEMBERS
-------- -------
- - Review and recommend to the full Board nominations for David V. Harkins (Chairman)
election to the Board of Directors Jack R. Crosby
Norman F. Strate
Daniel A. Grady
</Table>
The Nominating Committee has adopted a charter which is attached hereto as
Appendix B, a copy of which is also available on the Investor Relations page of
our Company website at www.nationaldentex.com.
The Nominating Committee will consider director candidates recommended by
our stockholders to the extent such nominations are provided no later than the
deadline for stockholder proposals and in the manner for stockholder proposals
outlined above on page 3. The Nominating Committee believes that all nominees
must possess, as a minimum qualification, the personal integrity necessary to
comply with all applicable legal and regulatory duties imposed on directors of
public companies, including without limitation, the fiduciary duties of care and
loyalty, and must possess sufficient business and other relevant experience to
be able to exercise business judgment in the best interests of the Company and
its stockholders. The Nominating Committee is committed to evaluating nominees
recommended by our stockholders no differently than other nominees, other than
to the extent to which the Committee may, as a preliminary matter, need to
consider the
9
extent to which any such individual possesses the minimum qualifications to be a
nominee, and the extent to which any such individual possesses business
experience and other criteria that would make his or her service as a director
of the Company an asset to the Company and its shareholders.
The full Board of Directors held four meetings during 2003. Each director
attended all of the meetings of the Board and of each committee that he belongs
to, except Mr. Harkins, who attended two of the four meetings of the Board of
Directors and Mr. Crosby, who attended six of the seven Audit Committee
meetings.
EXECUTIVE COMPENSATION
The following report and the performance graph on page 15 do not constitute
soliciting materials and are not considered filed or incorporated by reference
into any other Company filing with the Securities and Exchange Commission,
unless we state otherwise.
REPORT OF THE COMPENSATION COMMITTEE
This report sets forth the duties of the Compensation Committee and the
current strategy and components of National Dentex Corporation's ("NDX" or the
"Company") compensation programs for its executive officers. This report also
describes the basis on which the committee made compensation determinations with
respect to these executive officers for the year ended December 31, 2003.
COMPENSATION COMMITTEE PARTICIPATION. The Compensation Committee,
currently composed of three non-employee directors who qualify as "independent"
under applicable Nasdaq rules, is responsible for the review and recommendation
to the full Board of Directors of the compensation of NDX's Chief Executive
Officer, review and approval of the compensation of the other executive officers
and review and approval of other employee benefit plans. We are aware of no
interlocking compensation committee relationships between our directors and
executive officers and the directors and executive officers of any other public
company. The Committee's goals are to:
- provide compensation competitive with similar companies;
- reward executives consistent with the performance of the Company;
- recognize individual performance;
- retain and attract qualified executives; and
- encourage our executives to increase stockholder value by aligning their
interests with the interests of our stockholders.
To achieve these goals, the Committee has put in place an executive
compensation program with three basic elements; base salary, annual cash bonus,
and stock options. The Committee intends to review its compensation policies
from time to time in order to take into account factors which are unique to the
Company.
BASE SALARY. The Committee determines the base salary of each executive
officer. The Committee considers competitive industry salaries, the nature of
the officer's position, the officer's contribution and experience, and the
officer's length of service. Base salaries are conservatively pegged to a level
we subjectively believe to be competitive with the average levels of base salary
in organizations of similar size.
ANNUAL CASH BONUS. The Committee grants annual cash bonuses to executive
officers based directly on the short-term financial performance of both our
operating dental laboratories and the Company as a whole. This annual cash bonus
is designed to provide better-than-competitive pay only for
better-than-competitive financial performance.
The Company has established cash incentive plans which reward:
- dental laboratory management and other key employees who directly
influence the financial performance of an individual dental laboratory;
10
- key executives based upon our achievement of corporate earning targets,
expressed in terms of pre-tax income, as compared to our budget for each
year; and
- group managers based upon the achievement of earnings within each
manager's group of dental laboratories.
STOCK OPTIONS. The Committee administers the Company's stock option plans,
which reward executives and other employees for delivering long-term value to
our stockholders. The goals of our stock option plans are to:
- reward executives for long-term strategic management and the enhancement
of stockholder value through appropriate equity ownership in the Company;
- support a performance-oriented environment that rewards plan participants
for improving the Company's financial performance; and
- attract and retain key executives and employees critical to our long-term
success.
COMPENSATION OF CHIEF EXECUTIVE OFFICER IN 2003. In fiscal year 2003,
President and Chief Executive Officer David L. Brown's base salary was $275,000.
The Compensation Committee increased Mr. Brown's base salary to this amount
effective January 2003, following the review and analysis presented to it by an
independent compensation consulting firm. The annual incentive for Mr. Brown was
determined under the Corporate Executive's Incentive Plan. This payment is tied
to the achievement of corporate earnings targets. Despite a difficult economic
environment, National Dentex, under the leadership of Mr. Brown and the rest of
the management team, was able to achieve certain financial goals, while
continuing to develop a foundation for longer term business success. Mr. Brown,
as Chief Executive Officer, has a larger percentage of his total compensation at
risk under this plan than do the other executive officers. In addition,
consistent with our equity-based program outlined above, Mr. Brown was granted
stock options for 8,000 shares on January 21, 2003 exercisable at the fair
market value of the common stock on that date. These grants were designed to
provide incentive throughout the terms of the options by aligning the interests
of the grantee with both the short term and long term interests of the
stockholders.
COMPENSATION OF OTHER EXECUTIVE OFFICERS IN 2003. The base salaries of the
other executive officers named in the summary compensation table below were
increased as follows: Mr. Merz to $170,000, Mr. Dodd and Mr. Becker to $160,000,
and Mr. Champagne to $150,000. All of these increases were effective January
2003 and were warranted by the individual performances of these individuals,
including their contributions towards the achievement of financial goals and
people management. In our subjective view these base salaries are competitive
with compensation levels being provided by comparable companies for similar
positions.
In addition, during 2003, the Committee made option grants of 8,000 shares
to each of the executive officers named in the summary compensation table below,
at the then fair market value. These grants, like that of Mr. Brown, were
designed to provide incentive throughout the terms of the options to perform in
a manner that will directly affect both the short term and long term interests
of the stockholders.
Submitted by:
DAVID V. HARKINS
JACK R. CROSBY
DANIEL A. GRADY
11
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth our current executive officers, their ages,
the positions and offices held by each person, and the year each person first
served as an executive officer of the Company. The officers serve at the
discretion of the Board of Directors.
<Table>
<Caption>
FIRST YEAR AS
AN EXECUTIVE
NAME AGE OFFICES HELD OFFICER
- ---- --- ------------ -------------
David L. Brown.................. 63 President, Chief Executive 1984
Officer, and Director
Donald E. Merz.................. 65 Senior Vice President 1987
Richard F. Becker, Jr........... 51 Vice President-Treasurer, Chief 1990
Financial Officer and Assistant
Clerk
James F. Dodd, III.............. 64 Vice President-Business 1993
Development
Richard G. Mariacher............ 59 Vice President-Technical 1982
Services
Arthur B. Champagne............. 63 Group Vice President 1986
Eloy V. Sepulveda............... 68 Group Vice President 1994
Lynn D. Dine.................... 52 Vice President-Research & 2003
Development
Wayne M. Coll................... 40 Corporate Controller & Assistant 2003
Treasurer
</Table>
Mr. Brown's background is summarized on page 7 above.
Mr. Merz has been in the dental laboratory industry for over 35 years with
the Company or its predecessors. He has been a Vice President of the Company
since 1987. In 1998, Mr. Merz became Senior Vice President and in 2000, the
Chairman of our Laboratory Operations Committee.
Mr. Becker served as our Corporate Controller of the Company from 1984 to
1990, as Vice President and Corporate Controller from 1990 to 1996, and is
currently Vice President-Treasurer and Chief Financial Officer. Prior to joining
the Company, Mr. Becker held a number of financial management positions with
Etonic, Inc. and Kendall Company, subsidiaries of Colgate-Palmolive, Adage
Corporation, William Underwood Company and Rix Corporation.
Mr. Mariacher has served as Vice President-Technical Services of the
Company since our inception. Mr. Mariacher has been with the Company or its
predecessors for over 30 years. He is the author of many technical articles, a
Trustee of the National Board for Certification of Dental Laboratories, a
Technical Editor of Laboratory Management Today, the Chairman of the Board of
Directors of the CAL-Lab Group and a member of the American Prosthodontic
Society and the American Academy of Esthetic Dentistry.
Mr. Champagne has been a Vice President of the Company since 1986. In 2000,
he became a member of our Laboratory Operations Committee. Mr. Champagne has
been employed by the Company and its predecessors for over 40 years.
Mr. Dodd has been a Vice President of the Company since 1993 and is a
member of our Laboratory Operations Committee. He was the founder and President
of Dodd Dental Laboratories, Inc. from 1963 until we acquired it in 1992. Mr.
Dodd has also served as President of the Dental Laboratory Conference, President
of the Delaware Dental Laboratory Association, and as Director, Secretary and
Treasurer of the American Fund for Dental Health.
Mr. Sepulveda has been employed by the Company and its predecessors for
over 40 years. He has served as a Vice President since 1994 and is also a member
of our Laboratory Operations Committee.
12
Mr. Dine was elected to the position of Vice President, Research and
Development in April 2003. He has worked for the Company and its predecessors
for over 25 years, including Laboratory President at Ito & Koby Dental Studio
and most recently as Director of Research and Development.
Mr. Coll has been employed by the Company since 1990 and has been our
Corporate Controller since 1996. He was elected to the position of Assistant
Treasurer in April 2003. Prior to joining the Company Mr. Coll held several
financial management positions, including Assistant Controller at Depot
Distributors, Inc.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS COMPENSATION(2)
- --------------------------- ---- -------- -------- ---------- ---------------
David L. Brown.......................... 2003 $273,385 $65,000 8,000 $172,064
President and Chief 2002 215,000 75,000 12,000 171,814
Executive Officer 2001 200,000 0 100,000 127,938
Donald E. Merz.......................... 2003 169,192 70,812 8,000 28,540
Senior Vice President 2002 140,000 93,193 12,000 28,290
2001 133,846 73,483 20,000 28,166
Richard F. Becker, Jr................... 2003 159,462 35,000 8,000 10,416
Vice President-Treasurer 2002 140,000 30,000 12,000 10,166
and Chief Financial Officer 2001 129,231 20,000 9,000 10,043
James F. Dodd, III...................... 2003 159,462 35,000 8,000 85,000
Vice President Business 2002 140,000 30,000 12,000 84,750
Development 2001 129,231 20,000 9,000 60,708
Arthur B. Champagne..................... 2003 149,327 33,997 8,000 19,972
Group Vice President 2002 125,000 51,127 12,000 19,722
2001 120,000 45,536 9,000 19,599
</Table>
- ---------------
(1) Paid for services rendered in 2002 and 2003 to all of the officers named
above, and in 2001 to Mr. Becker and Mr. Dodd under the Corporate Executives
Incentive Compensation Plan. Paid under the Company's Laboratory Incentive
Compensation Plan as to Messrs. Merz and Champagne for 2001, 2002 and 2003.
(2) Represents the Company-paid portion of life insurance premiums to fund our
Supplemental Executive Retirement Plan. Also includes the Company's matching
contribution for the account of the officers named above under the Company's
Dollar Plus Plan, a plan qualified under Section 401(k) of the Internal
Revenue Code of 1986, as amended. The matching contribution is 100% of the
first 1% of salary contributed by the employee and 50% of the next 3% of
salary contributed.
13
OPTIONS GRANTED IN 2003
The following table shows the options granted to the executive officers
named in the summary compensation table above during the fiscal year ended
December 31, 2003. These incentive stock options were granted on January 21,
2003, vest in equal installments over a three year period from date of grant,
and expire ten years from the date of grant.
<Table>
<Caption>
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATE OF STOCK
SHARES TOTAL OPTIONS PRICE APPRECIATION(1)
UNDERLYING GRANTED TO EXERCISE PRICE EXPIRATION ---------------------
NAME OPTIONS GRANTED ALL EMPLOYEES PER SHARE DATE AT 5% AT 10%
- ---- --------------- ------------- -------------- ---------- --------- ---------
David L. Brown............ 8,000 10.3% $20.05 1/21/13 $100,880 $255,600
Donald E. Merz............ 8,000 10.3 20.05 1/21/13 100,880 255,600
Richard F. Becker, Jr. ... 8,000 10.3 20.05 1/21/13 100,880 255,600
James F. Dodd, III........ 8,000 10.3 20.05 1/21/13 100,880 255,600
Arthur B. Champagne....... 8,000 10.3 20.05 1/21/13 100,880 255,600
</Table>
- ---------------
(1) Represents the hypothetical net gains from exercise of these options, based
on assumed rates of stock price appreciation over the options' terms. The
table is not intended to forecast possible future appreciation of the common
stock. The actual net gains, if any, will be dependent on the actual future
performance of the common stock. There can be no assurance that the assumed
rates of stock price appreciation utilized in calculating the amounts
reflected in these columns will be achieved.
OPTION EXERCISES AND YEAR-END VALUE
The following table sets forth information concerning options exercised
during 2003 and the unexercised options held as of December 31, 2003 by the
executive officers named above.
<Table>
<Caption>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR END(2)
STOCK ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ----------- ----------- ------------- ----------- -------------
David L. Brown....... -- $ -- 95,166 49,334 $423,315 $143,385
Donald E. Merz....... -- -- 39,334 22,666 240,627 56,597
Richard F. Becker,
Jr. ............... -- -- 25,000 19,000 135,000 42,850
James F. Dodd, III... -- -- 18,500 19,000 84,125 42,850
Arthur B. Champagne.. -- -- 21,500 19,000 102,125 42,850
</Table>
- ---------------
(1) The value realized upon the exercise of an option is determined by
multiplying the number of options exercised by the difference between the
market price of the common stock on the date of exercise of the options and
the exercise price of the options exercised.
(2) The value of unexercised in-the-money options at the end of fiscal year 2003
is determined by multiplying the number of options held by the difference
between the market price of the common stock underlying the options on
December 31, 2003 ($24.00 per share) and the exercise price of the options.
14
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of our
common stock during the five fiscal years ended December 31, 2003 with the
cumulative total return of the Nasdaq Industrial Index and a peer group index
described more fully below.
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
AMONG THE COMPANY ("NADX"), NASDAQ INDUSTRIAL INDEX
AND PEER GROUP INDEX (2)
(PERFORMANCE GRAPH)
<Table>
<Caption>
12-31-98 12-31-99 12-31-00 12-31-01 12-31-02 12-31-03
-------- -------- -------- -------- -------- --------
NADX............................... 100.00 100.00 117.16 144.36 116.66 143.28
NASDAQ............................. 100.00 171.67 113.70 106.51 78.95 122.96
Peers.............................. 100.00 95.11 155.03 194.13 172.85 173.28
</Table>
(1) Assumes $100 invested on December 31, 1998 in our common stock, the Nasdaq
Industrial Index and the Peer Group Index, including reinvestment of any
dividends paid on the investment.
(2) The Peer Group Index consists of Dentsply International, Inc. and Patterson
Dental Company. We believe that these companies represent the other publicly
traded companies within the dental service community.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS.
The Company has entered into employment agreements with David L. Brown and
Richard F. Becker which provide for annual base salaries which may be increased
at the discretion of the Board of Directors. These agreements also provide for
participation in our Executive Incentive Compensation Plan, reimbursement of
expenses, and the same benefits offered to the Company's executives generally.
The agreements provide for automatic renewal for one-year terms until
termination by the Company or by the employee.
The Company also has entered into Change of Control Severance Agreements
with Messrs. Brown, Merz, Becker, Dodd, Mariacher, Champagne and Sepulveda,
which provide for a severance benefit upon termination of employment within two
years after a change in control of the Company. These agreements provide that,
in the event that the executive is terminated without cause or the executive
terminates his
15
employment for certain specified reasons within two years of a change of
control, such as a reduction in compensation or duties, the executive will
receive severance benefits equal to two times his base salary in effect
immediately prior to the date of termination, plus two times the average amount
of the bonus payable for the two fiscal years ending on or immediately prior to
the date of termination. These severance benefits are three times salary and
three times the average bonus over the two preceding years in the case of Mr.
Brown.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act ("Exchange Act") requires our
officers, directors and greater than 10% stockholders ("Reporting Persons") to
file certain reports ("Section 16 Reports") with respect to beneficial ownership
of our equity securities. Based solely on a review of the Section 16 Reports
furnished to us by or on behalf of the Reporting Persons and, where applicable,
any written representation by any of them that Section 16 Reports were not
required, we believe that all Section 16(a) filing requirements applicable to
our Reporting Persons during and with respect to 2003 have been complied with on
a timely basis, except for (1) late filings on Form 4 in respect of stock option
grants made on January 21, 2003 to each of Messrs. Brown, Becker, Dodd,
Mariacher, Sepulveda, Champagne and Merz, which were filed on March 5, 2004, and
(2) late filings on Form 4 in respect of a stock option grant under the Employee
Stock Purchase Plan awarded on April 1, 2003 to Messrs. Brown and Sepulveda,
which were filed on March 5, 2004. In each of such cases, the late filings were
due to an inadvertent error in connection with prior attempts to file such
reports electronically.
16
PROPOSAL NO. 2
INCREASE IN SHARES RESERVED UNDER THE 2001 STOCK PLAN
We have a 2001 Stock Plan (the "Plan") which is available to certain
employees, officers and directors of the Company. The Plan was adopted by the
Board of Directors on January 23, 2001 and received stockholder approval on
April 10, 2001. The Plan allows grants of either incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended, or non-qualified
stock options.
As of February 20, 2004, no options granted under the Plan had been
exercised and options for 298,300 shares remained outstanding. As a result, in
the absence of any action by our directors and stockholders, only 1,700 shares
remain available for future grants.
The Board of Directors approved an amendment to the Plan on February 11,
2004, subject to stockholder approval, to increase the number of shares of
Common Stock available for issuance under the Plan by 250,000 shares from
300,000 to 550,000. In all other respects, the Plan would remain unchanged.
The Board of Directors recommends a vote "FOR" approval of this amendment.
The Board of Directors believes that reserving an additional 250,000 shares for
issuance under the Plan, which represents approximately 7.3% of the current
number of outstanding shares of Common Stock, is necessary (1) for the Company
to continue to attract and retain key personnel, (2) to continue to align the
interests of those key personnel with those of the stockholders, and (3) to be
available as a potential management incentive in the Company's acquisition
program. The number of options to be granted to any individual from the shares
to be added to the Plan by this amendment will continue to be determined at the
discretion of the Compensation Committee of the Board of Directors.
VOTE REQUIRED
If a majority of the shares of common stock represented and entitled to
vote at the meeting vote in favor, the amendment to the Plan will be approved.
Abstentions and broker non-votes, if any, will therefore have no effect on the
outcome of the vote.
SUMMARY OF THE PLAN
Below is a summary of the significant terms of the Plan as currently in
effect and as proposed to be amended.
Total Number of Shares Covered. The Plan originally provided for the
issuance of up to 300,000 shares of common stock (subject to adjustment for
stock splits and similar changes in capitalization). If the proposal to add
250,000 shares of common stock to the Plan is approved, then the Company may
issue up to an aggregate of 550,000 shares of Common Stock under the Plan. Of
this amount, options for the issuance of 298,300 shares were outstanding as of
February 20, 2004.
Purpose. The purpose of the Plan, is to provide a long-term equity
incentive in the form of stock options to persons whose present and potential
contributions are important to our continued success, to afford such persons an
opportunity to acquire a proprietary interest in the Company, and to enable us
to continue to enlist and retain the best available talent for the successful
conduct of our business.
Administration. The Plan is administered by the Compensation Committee of
the Board. Subject to the Plan, the Committee determines the persons who are to
receive awards, the number of shares subject to each award, the terms and
conditions of such awards and the dates of grants. The Committee also has the
authority to construe and interpret any of the provisions of the Plan or any
options granted thereunder. Such interpretations are binding on the Company and
on the optionees.
Eligibility. All employees, prospective employees, officers, directors
(whether or not also employees), advisors, consultants and other key persons of
the Company, and of any present or future parent or subsidiary of the Company,
are eligible to receive options under the Plan.
17
Option Awards. Both incentive stock options ("ISOs"), as defined in
Section 422(b) of the Internal Revenue Code (the "Code"), and nonqualified stock
options ("NQSOs"), may be granted under the Plan. The Committee determines
whether an option granted under the Plan will be an ISO or a NQSO. ISOs may be
granted only to employees, and are subject to a number of restrictions.
Grant Limitations. No eligible individual shall be granted options to
acquire in the aggregate more than 100,000 shares of common stock in any one
fiscal year.
Terms of the Options. Each option granted pursuant to the Plan is
evidenced by a stock option grant (the "Grant") issued by the Company. An
exercise notice and agreement (the "Exercise Notice") is to be completed by the
optionee at the time an option is exercised. The Company does not receive any
consideration from an optionee at the time an option is granted. The forms of
the Grant and the Exercise Notice may be determined by the Committee from time
to time, subject to the terms of the Plan.
Options may be granted under the Plan until the tenth anniversary of the
date of the adoption of the Plan.
Subject to the provisions of the Plan, the Committee may determine the
vesting schedule of each option and other terms and conditions of
exercisability. Generally, options granted under the Plan must be exercised
within ten years from the option grant date.
The Committee determines the exercise price of each option granted, which
is set forth in the Grant. Under the Plan, the exercise price of each option
granted may not be less than the fair market value per share of the Company's
common stock on the date the option is granted; except that, over the life of
the Plan, options for an aggregate of up to 30,000 shares may be granted with
exercise prices below fair market value. The Board of Directors voted to reduce
this number from 50,000 to 30,000 on April 10, 2001, in connection with our
stockholders' approval of the Plan. We have never granted such discounted price
options in the past, and have no current intention to do so in the future.
Payment for shares purchased upon exercise of an option may be made (a) in
cash or by check, (b) at the discretion of the Committee, through delivery or
withholding of shares of common stock, (c) at the discretion of the Committee
and consistent with applicable law, through a broker-assisted "cashless"
exercise, or (d) by any combination of the above.
Nontransferability. Options granted under the Plan may not be transferred
by the optionee other than by will or by the laws of descent and distribution,
unless the Committee determines otherwise. During the lifetime of the optionee,
an option may be exercised only by the optionee.
Termination of Employment. If an optionee's employment is terminated for
any reason other than death, any outstanding option must generally be exercised
by the optionee within 90 days following such termination. If termination is on
account of death, any outstanding option must generally be exercised within 12
months following the participant's death. The Committee has the authority under
the Plan to vary the provisions of an award applicable upon termination of
employment.
Capital Changes. If the number of our outstanding shares of common stock
is changed by a stock dividend, stock split, combination, reclassification or
similar change in the capital structure of the Company, the number of shares of
common stock available for option grants under the Plan, the number of shares
and the exercise price per share for each outstanding option and the other
numerical limitations noted above will be proportionately adjusted by the
Committee, subject to any required action by the Board or stockholders.
Change of Control. The Committee may in its discretion provide in any
option Grant agreement, or at any time thereafter, for acceleration of the
vesting of any options granted pursuant to the Plan and for any option to become
fully vested and exercisable in the event of a "Change of Control" of the
Company, as defined in the Plan.
Amendment and Termination. The Committee may amend or terminate the Plan
at any time and in any respect, except that the Committee cannot, without the
approval of the stockholders of the Company, amend the Plan in any manner that
requires stockholder approval pursuant to the Code or the regulations
18
thereunder or pursuant to Rule 16b-3 of the Exchange Act. No amendment of the
Plan may adversely affect any outstanding option without the optionee's written
consent.
On April 10, 2001, the Board amended the Plan to restrict "repricing" by
prohibiting the amendment of an outstanding option to reduce its exercise price,
and the cancellation of an option in exchange for the grant of a replacement
option within six months before or after any such cancellation.
If an option granted pursuant to the Plan expires or terminates for any
reason without being exercised in whole or in part, the shares released from
such option or award will again become available for grant and purchase under
the Plan.
CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION
General. The following is a general summary of the current United States
federal income tax consequences associated with participation in the Plan. The
federal tax laws may change and the federal, state and local tax consequences
for any participant will depend upon his or her individual circumstances. This
information may not be applicable to participants who are not residents of the
United States. All participants have been and are encouraged to seek the advice
of a qualified tax advisor regarding the tax consequences of participation in
the Plan.
TAX TREATMENT OF THE OPTIONEE
Nonqualified Stock Options. An optionee will not recognize any taxable
income at the time a NQSO is granted. However, upon exercise of a NQSO the
optionee will generally include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the optionee's purchase price. The included amount will be treated as
ordinary income and reported on an employee's W-2 form, or in the case of a
non-employee, on a 1099 form and will be subject to income tax and FICA
withholding by the Company (either by payment in cash or withholding out of the
optionee's salary) if the optionee is an employee. Upon the sale of the shares
by the optionee, any subsequent appreciation or depreciation in the value of the
shares will be treated as short term or long term capital gain or loss depending
upon whether or not the optionee held the shares for more than one year
following exercise of the NQSO.
Incentive Stock Options. The optionee will recognize no income upon grant
of an ISO and incur no tax on its exercise unless the optionee is subject to the
alternative minimum tax described below. If the optionee holds the stock
acquired upon exercise of an ISO (the "ISO Shares") for more than one year after
the date the option was exercised and for more than two years after the date the
option was granted, the optionee generally will realize long-term capital gain
or loss (rather than ordinary income or loss) upon disposition of the ISO
Shares. This gain or loss will be equal to the difference between the amount
realized upon such disposition and the amount paid for the ISO Shares.
If the optionee disposes of ISO Shares prior to the expiration of either of
the above required holding periods (a "disqualifying disposition"), the gain
realized upon such disposition, up to the difference between the fair market
value of the ISO Shares on the date of exercise and the option exercise price,
will be treated as ordinary income and reported on the employee's W-2 form.
Income tax withholding on this income is optional. Any additional gain or loss
will be long-term or short-term capital gain or loss, depending upon whether or
not the ISO Shares were held for more than one year following the date of
exercise by the optionee. A disposition of ISO Shares for this purpose includes
not only a sale or exchange, but also a gift or other transfer of legal title
(with certain exceptions).
Alternative Minimum Tax. Generally, the difference between the fair market
value of stock purchased by exercise of an ISO (generally measured as of the
date of exercise) and the amount paid for that stock upon exercise of the ISO is
an adjustment to income for purposes of the alternative minimum tax. An
alternative minimum tax adjustment applies unless a disqualifying disposition of
the ISO Shares occurs in the same calendar year as exercise of the ISO. The
alternative minimum tax (imposed to the extent it exceeds the taxpayer's regular
tax) is 26% of an individual taxpayer's alternative minimum taxable income for
alternative minimum taxable income up to $175,000 ($87,500 for a married
individual, filing separately) and 28%
19
thereafter. Alternative minimum taxable income is determined by adjusting
regular taxable income for certain items, increasing that income by certain tax
preference items and reducing this amount by the applicable exemption amount
($58,000 in the case of a joint return, subject to reduction under certain
circumstances).
TAX TREATMENT OF THE COMPANY
Deductions. The Company will be entitled to a deduction in connection with
the exercise of a NQSO by a domestic optionee to the extent that the optionee
recognizes ordinary income provided that the deduction is not disallowed under
the provisions of Section 162(m) of the Code. The Company will be entitled to a
deduction in connection with the disposition of ISO Shares only to the extent
that the optionee recognizes ordinary income on a disqualifying disposition of
the ISO Shares and will not be entitled to any deduction upon exercise of an ISO
in the absence of any such disqualifying disposition.
ERISA. The Company believes that the Plan is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974, nor is it
qualified under Section 401(a) of the Code.
ADDITIONAL STOCK PLAN INFORMATION
The Company maintains two incentive stock option plans that were approved
by our Board of Directors and our stockholders. In 1992 the Board and
stockholders adopted the 1992 Long-Term Incentive Plan ("1992 LTIP"). Key
employees, officers and directors were eligible to receive grants under this
plan. Effective May 2002, no additional options may be granted under this plan.
In January 2001 the Board adopted the 2001 Stock Plan, which was approved by
stockholders in April 2001. Key employees, officers and directors are eligible
to receive grants under this plan. In addition, the Company maintains an
Employee Stock Purchase Plan ("ESPP") that is qualified under section 423 of the
Internal Revenue Code. Summary plan information is as follows:
<Table>
<Caption>
NUMBER OF SHARES NUMBER OF SHARES
OF NATIONAL DENTEX OF NATIONAL DENTEX
CORPORATION CORPORATION
COMMON STOCK TO COMMON STOCK
BE ISSUED UPON WEIGHTED AVERAGE REMAINING
EXERCISE OF EXERCISE PRICE OF AVAILABLE FOR
PLAN NAME OUTSTANDING OPTIONS OUTSTANDING OPTIONS FUTURE ISSUANCE
- --------- ------------------- ------------------- ------------------
1992 LTIP......................... 341,313 $17.80 None
2001 Plan......................... 298,300 $21.88 1,700(1)
ESPP.............................. -- -- 82,055
======= ====== ======
Total........................... 639,613 $19.70 83,755
======= ====== ======
</Table>
- ---------------
(1) Does not include an additional 250,000 shares of common stock proposed to be
added to the 2001 Plan, as described above.
20
PROPOSAL NO. 3
APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, we have appointed the
accounting firm of PricewaterhouseCoopers LLP ("PwC") as our independent
auditors to examine the Company's financial statements for the year ending
December 31, 2004. A resolution to ratify the appointment will be presented at
the meeting. We recommend that you vote for ratification of the appointment of
PwC. A majority of the votes cast must vote in favor to ratify the appointment.
Abstentions and broker non-votes, if any, will have no effect on the outcome of
the vote. Stockholder approval of the appointment of PwC is not required by law.
However, if the stockholders do not ratify the appointment, we will reconsider
our selection.
PwC audited and reported upon the Company's financial statements for 2003.
In connection with that audit, PwC also reviewed the Company's Annual Report,
quarterly financial statements for quarters ended March 2003, June 2003 and
September 2003, and the Company's filings with the Securities and Exchange
Commission, and consulted with management as to the financial statement
implications of matters under consideration. A representative of PwC will be at
the meeting and will have the opportunity to make a statement if he or she
desires to do so, and will be available to answer questions.
The Board of Directors has appointed an Audit Committee. The Audit
Committee's current written charter was adopted by our Board of Directors on
March 3, 2004.
All members of the Company's Audit Committee are "independent" within the
definition of that term as provided by Rule 4200(a)(15) of the Nasdaq corporate
governance rules, except for Mr. Grady, who fails to so qualify solely because
his 34 year old son was recently named a partner in the Hartford, Connecticut
office of PricewaterhouseCoopers LLP. The Board of Directors has determined that
Mr. Grady's continued service on the Audit Committee in these exceptional and
limited circumstances is required by the best interests of the Company and its
stockholders and is warranted for the reasons set forth more fully above on page
8 under the caption "Board Committee Matters." Pursuant to the applicable Nasdaq
rule provision that empowers the Board of Directors to make this determination,
Mr. Grady will be able to continue to serve on the Audit Committee for up to two
additional years and Mr. Norman F. Strate has been appointed as Chairman of the
Audit Committee.
The Board of Directors has also determined that Mr. Grady is an "audit
committee financial expert" as defined by applicable regulations promulgated
pursuant to Section 407 of the Sarbanes-Oxley Act of 2002.
REPORT OF THE AUDIT COMMITTEE
The following report does not constitute soliciting material and is not
considered filed or incorporated by reference into any other Company filing with
the Securities and Exchange Commission, unless we state otherwise.
The Audit Committee hereby states that it:
- Has reviewed and discussed the audited financial statements as of and for
the year ended December 31, 2003 with the Company's management;
- Has discussed with the Company's independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees), as may be modified or
supplemented;
- Has received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with the independent auditors the
independent auditors' independence; and
- Based upon the above mentioned reviews and discussions, has recommended
to the Board of Directors of the Company that the audited financial
statements be included in the Company's Annual Report on
21
Form 10-K for the fiscal year ended December 31, 2003 for filing with the
Securities and Exchange Commission.
The Audit Committee is solely responsible for the appointment, compensation
and oversight of the work of the independent auditors for the purpose of
preparing and issuing an audit report.
Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls.
The independent auditors audit the annual financial statements prepared by
management, express an opinion as to whether those financial statements fairly
present the financial position, results of operations and cash flows of the
Company in conformity with generally accepted accounting principles and discuss
with us any issues they believe should be raised with us.
The Audit Committee certifies that it has adopted a formal written Audit
Committee Charter attached hereto as Appendix A and that the Audit Committee has
a policy in accordance with the applicable new Nasdaq listing rules and
standards of reviewing and reassessing the adequacy of this Charter on an annual
basis.
During 2003, the Company paid no fees to PricewaterhouseCoopers LLP for
consulting work outside of the review and audit of their financial statements,
the audit of their 401(k) plan and the related tax work.
Submitted by:
NORMAN F. STRATE, Chairman
JACK R. CROSBY
DANIEL A. GRADY
FEES TO INDEPENDENT AUDITORS FOR FISCAL 2002 AND 2003
The following table represents fees for professional services rendered by
PricewaterhouseCoopers LLP ("PwC") for the audit of our annual financial
statements for fiscal 2002 and fiscal 2003 and fees billed for audit-related
services, tax services, and all other services by PwC for fiscal 2002 and 2003.
<Table>
<Caption>
2002 2003
------- --------
Audit fees.................................................. $93,400 $104,450
Audit-Related fees.......................................... 15,252 20,600
Tax fees.................................................... 12,000 17,000
All other fees.............................................. -- --
</Table>
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the meeting. If any other matters come before the meeting, the persons
named in the enclosed proxy may vote in accordance with their best judgment.
22
APPENDIX A
NATIONAL DENTEX CORPORATION
AUDIT COMMITTEE CHARTER
ROLE
The purpose of the Audit Committee (the "Committee") appointed by the Board
of Directors (the "Board") of National Dentex Corporation (the "Corporation") is
to oversee the Corporation's accounting and financial reporting process and the
audits of the Corporation's financial statements and to assist the Board:
1. In its oversight of the Corporation's accounting and financial
reporting principles and policies and internal accounting and disclosure
controls and procedures;
2. In its oversight and supervision of the Corporation's internal
audit function;
3. In its oversight of the certification of the Corporation's
quarterly and annual financial statements and disclosures and assessment of
internal disclosure controls by the Corporation's Chief Executive Officer
("CEO") and Chief Financial Officer ("CFO");
4. In its oversight of the Corporation's consolidated financial
statements and the independent external audit thereof, including the
appointing, compensating, overseeing (including resolving any disagreements
between management and the independent external auditor regarding financial
reporting); and
5. In evaluating the independence of the external auditors.
MEMBERSHIP
The members of the Committee shall meet the independence and experience
requirements of Nasdaq and any other applicable laws and regulations. These
requirements specifically include the rules of the Securities and Exchange
Commission ("SEC") regarding audit committee financial experts, as defined.
1. The number and names of persons determined to be audit committee
financial experts will be disclosed in the Corporation's annual report.
2. The Corporation will disclose in the annual report whether the
audit committee financial experts are independent of management, and if
not, why.
3. If it is determined that the Corporation does not have a financial
expert on the Committee, it must disclose that fact and explain why it does
not.
Members of the Committee shall be appointed annually by majority vote of
the Board and will serve until the next annual meeting of the Board, in a manner
consistent with the Corporation's By-Laws and any other applicable law.
MEETINGS
The Committee shall meet four times annually or more frequently as
circumstances require:
1. To discuss with the Senior Staff Auditor and/or the outsourced
internal auditor the status of completion of the annual audit plan and
audit reports arising therefrom.
2. To discuss with management the annual audited financial statements
and quarterly financial results and the required certifications of the CEO
and CFO.
3. At least annually, the Committee will meet separately with the
internal auditor and the independent external auditor, without any members
of management being present, to discuss matters that the Committee or any
of these persons or firms believes should be discussed privately.
A-1
4. The Committee may request any officer or employee of the
Corporation, or independent counsel, or independent external auditors to
attend a meeting.
RESPONSIBILITIES
OVERSEEING FINANCIAL REPORTING AND DISCLOSURES
The Committee shall be responsible for ensuring receipt from its outside
auditors of a formal written statement delineating all relationships between the
auditor and the Corporation, consistent with Independence Standards Board
Standard 1, and shall be responsible for actively engaging in a dialogue with
the auditor with respect to any disclosed relationships or services that may
impact the objectivity and independence of the auditor, and shall also be
responsible for taking, or recommending that the full Board take, appropriate
action to oversee the independence of the outside auditor.
The Committee shall also have the responsibilities and authority set forth
in Rule 4350(d)(3) under the applicable Nasdaq listing standards, including,
without limitation, the responsibility and authority necessary to comply with
Rules 10A-3(b)(2), (3), (4) and (5) promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, (subject to
the exemptions provided in Rule 10A-3(c)) concerning responsibilities of the
Audit Committee relating to: (i) registered public accounting firms, (ii)
complaints relating to accounting, internal accounting controls or auditing
matters, (iii) authority to engage advisors, and (iv) funding as determined by
the Audit Committee.
In furtherance of these responsibilities, the Audit Committee, shall,
without limitation:
1. Read and approve, prior to filing, the Corporation's annual
audited financial statements filed with the SEC and consider whether they
accurately and appropriately reflect their knowledge of the financial
condition of the Corporation and its results of operations. Specific
consideration will be given to the accuracy of the financial statements,
off-balance-sheet transactions, disclosure of pro forma financial
information, and real time issuer disclosure matters.
2. Determine that management has put in place procedures to report to
the SEC, changes in Corporation stockholdings by directors, executive
officers, and more than 10% stockholders of the Corporation.
3. Ensure that the Corporation has established adequate procedures to
ensure that quarterly and annual financial statements and disclosures are
accurate and complete. This will include reviewing and approving the
quarterly and annual CEO and CFO certifications.
4. Determine that the Corporation has complied with requirements of
the SEC to disclose in periodic reports whether or not the Corporation has
established a Code of Ethics.
5. Determine that the Corporation has complied with requirements of
the SEC to disclose the approval by the Committee of all non-audit services
to be performed by the Corporation's independent external auditor.
INTERNAL AUDIT SUPERVISION
The Committee shall:
1. Review the appointment of the Senior Staff Auditor and/or
outsourced internal auditor; and
2. Evaluate the effectiveness of the internal audit function.
INDEPENDENT EXTERNAL AUDITOR
The Committee shall:
1. Recommend the appointment and/or discharge of the independent
external auditor;
2. Pre-approve the external auditor's fee;
A-2
3. Evaluate the external auditor's independence; and
4. Pre-approve all permissible non-audit services to be provided by
the external auditors.
INTERNAL AND EXTERNAL AUDIT PLANS AND RESULTS
The Committee shall:
1. Review and approve the annual audit plans of the internal audit
function and the independent external auditor;
2. Approve any changes to the annual audit plans;
3. Meet with the Senior Staff Auditor and/or outsourced internal
auditor to discuss the status of completion of the annual internal audit
plans and the periodic internal audit reports;
4. Review with management the results of the independent external
auditor's quarterly financial statements reviews;
5. Review with management and the independent external auditor the
results of the annual financial statements audit;
6. Review with management and the independent external auditor their
assessment of the quality of the Corporation's accounting principles, the
adequacy of internal accounting and disclosure controls and resolution of
identified significant deficiencies or material weaknesses and reportable
conditions in internal accounting and disclosure controls;
7. Review compliance with laws and regulations and other audit
reports deemed significant by the Committee;
8. Receive certain communications from the independent external
auditors on an annual basis which include required communications under
generally accepted auditing standards; and
9. Based on these reviews, the Committee shall make its
recommendation to the Board as to the inclusion of the audited consolidated
financial statements in the Corporation's annual report on Form 10-K.
ANNUAL PROXY STATEMENT DISCLOSURE
The Committee should report activities to the Board and issue an annual
report to be included in the Corporation's proxy statement. In addition, the
Committee shall re-approve the Committee Charter annually, with a copy of the
charter filed with the SEC every three (3) years, and after any amendments.
FRAUD REPORTING AND HANDLING OF COMPLAINTS
The Committee shall have the responsibility for establishing procedures
for:
1. Receipt, retention, and treatment of complaints received by the
Corporation regarding accounting, internal controls, or auditing matters;
and
2. The confidential, anonymous submission by employees of the
Corporation of concerns regarding questionable accounting or auditing
matters.
RESOURCES AND AUTHORITY
The Committee shall:
1. Meet with the Corporation's outside legal counsel, when
appropriate;
2. Retain independent legal counsel at its discretion; and
A-3
3. Engage independent legal counsel, auditors, or other advisors as
it determines necessary to carry out its duties.
FUNDING
The Corporation shall provide the Committee with appropriate funding, as
determined by the Committee, for payment of compensation:
1. To the registered independent external auditor employed by the
Corporation for the purpose of rendering or issuing an audit report, and
2. To any advisors employed by the Committee.
A-4
APPENDIX B
NATIONAL DENTEX CORPORATION
NOMINATING COMMITTEE CHARTER
This Nominating Committee Charter (the "Charter") is intended to assist the
Nominating Committee (the "Committee") of the Board of Directors (the "Board")
of National Dentex Corporation, a Massachusetts corporation, (the "Company") in
carrying out its duties and responsibilities. This Charter is in addition to,
and is not intended to change or interpret, any federal or state law or
regulation, the rules of the Securities and Exchange Commission ("SEC"),
Nasdaq's listing standards, applicable Massachusetts state laws, or the
Company's Articles of Organization or By-Laws. This Charter is not intended to,
and does not, create any legal or fiduciary duties or responsibilities or form
the basis for a breach of fiduciary duty or potential liability if not complied
with. There are no third party beneficiaries to the Charter. This Charter is
subject to modification and interpretation by the Board.
A. GENERAL ROLE
The Committee is responsible for identifying and recommending for approval
by the Board a slate of director nominees for election at each of the Company's
annual meetings of shareholders (or special meeting in lieu thereof), and
otherwise for recommending the Board's other committee members and chairmen,
subject to Board ratification, as well as recommending to the Board director
nominees to fill vacancies or new positions on the Board or its committees that
may occur or be created from time to time, all in accordance with the Company's
By-Laws and applicable law.
B. MEMBERS
The Committee shall consist of at least three directors, one of whom shall
be the Chairman, all of whom shall meet the independence and other requirements
of the SEC, Nasdaq's listing standards, other applicable laws and the Company's
By-Laws. Committee members may be removed in accordance with the Company's
By-Laws.
C. MEETINGS
Absent unusual circumstances, the Committee shall meet at least annually.
In addition, special meetings shall be held as circumstances require as
determined by the Committee's Chairman or by any two other members of the
Committee in accordance with the Company's By-Laws. The Committee may invite to
its meetings such other directors, members of Company management and such other
persons or advisors as the Committee or its Chairman deems necessary or
appropriate in order to carry out the Committee's duties and responsibilities.
The Committee, through its Chairman, shall report its activities to the Board at
the Board meeting next following each Committee meeting so that the Board is
kept fully informed of the Committee's activities on a current basis. Minutes of
each Committee meeting shall also be distributed to the Board as and when
appropriate.
D. RESPONSIBILITIES
The Committee's Responsibilities shall include the following:
1. To establish criteria for prospective director nominees.
2. To establish and effectively communicate to shareholders a method
for shareholders to recommend director nominees in accordance with the
applicable federal securities laws and regulations and the Company's
By-Laws for the Committee's consideration.
3. To evaluate all prospective director nominees, including those
nominated by shareholders, in accordance with the Company's By-Laws.
B-1
4. To conduct appropriate inquiries into the backgrounds and
qualifications of prospective director nominees.
5. To annually select and recommend for approval by the Board and the
election by the Company's shareholders a slate of director nominees, and to
otherwise recommend for approval by the Board director nominees to fill
vacancies or new positions on the Board as they may occur or be created
from time to time, all in accordance with the Company's By-Laws.
6. To review and recommend to the Board an appropriate course of
action with respect to or upon the resignation, retirement or removal of
any then currently serving director, including whether a new director
should be appointed by the Board prior to the Company's next shareholder
meeting, all in accordance with the Company's By-Laws.
7. To annually determine and propose to the Board which directors
shall serve as members and chairmen of the Board's other committees. In
making its determinations, the Committee shall take into consideration (a)
balancing the benefits derived from continuity against the benefits derived
from the diversity of experience and viewpoints of the various directors
which may result from the rotation of committee members and chairmen; (b)
subject matter expertise; (c) applicable SEC, IRS, Nasdaq and other
applicable legal and regulatory requirements; (d) tenure; and (e) the
desires of individual Board members.
8. To plan in advance for continuity on the Board as current directors
are expected to retire from the Board.
9. If a then serving director shall retire or otherwise undergo a
change in the employment position that he or she held when he or she first
became a member of the Board, the Committee shall review the continued
appropriateness of such director's Board membership and shall take such
action as the Committee deems necessary or appropriate, subject to
ratification by the Board and compliance with the Company's By-Laws.
10. To, from time to time, if the Committee determines it to be
necessary or appropriate, select and retain independent consultants, search
firms and experts to provide independent advice to the Committee with
respect to the Company's director nominees and nominating policies,
practices and procedures and to help identify, screen and check potential
director candidates, and to otherwise assist the Committee in carrying out
its duties and responsibilities. The cost of such consultants, search firms
and experts shall be paid for by the Company.
11. To, from time to time, if the Committee determines it to be
necessary or appropriate, conduct such reviews, investigations and surveys
as the Committee may consider necessary or appropriate in the exercise of
its duties and responsibilities.
E. UNRESTRICTED COMMITTEE COMMUNICATIONS
The Committee shall have unrestricted lines of communication with the
Company's chief executive officer, chief financial officer, principal accounting
officer, independent auditors and outside legal counsel at all times. The
Committee may also, as it deems necessary or appropriate, obtain advice and
assistance from independent legal, accounting or other advisors, which advisors
shall be paid for by the Company.
F. ANNUAL REVIEW OF CHARTER
The Committee shall, at least annually, review and reassess the adequacy of
this Charter and, if determined necessary or appropriate, make recommendations
to the Board. During this review process, the Committee may seek the input of
the Company's chief executive officer, chief legal counsel and/or other experts
or advisors with regard to the adequacy of this Charter and the necessity or
desirability of any amendments.
B-2
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE NATIONAL DENTEX CORPORATION
PROXY FOR THE SPECIAL MEETING IN LIEU OF ANNUAL
MEETING OF SHAREHOLDERS ON APRIL 13, 2004
THIS PROXY IS BEING SOLICITED BY
THE BOARD OF DIRECTORS
WITH- FOR ALL
FOR HOLD EXCEPT
The undersigned, having received the Notice of 1. Proposal to elect the following persons as [ ] [ ] [ ]
Special Meeting in Lieu of Annual Meeting of directors.
Shareholders, Proxy Statement and the Annual
Report of National Dentex Corporation (the (01) DAVID L. BROWN (04) DAVID V. HARKINS
"Company"), hereby appoint(s) David V. Harkins, (02) JACK R. CROSBY (05) NORMAN F. STRATE
David L. Brown, and Richard F. Becker or any one (03) DANIEL A. GRADY
of them, proxies for the undersigned, with full
power of substitution in each of them, to INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
represent the undersigned at the Special Meeting NOMINEE(S), MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME(S)
in Lieu of Annual Meeting of Shareholders of the IN THE SPACE PROVIDED BELOW.
Company to be held at Posternak Blankstein & Lund
LLP, Prudential Tower, 800 Boylston Street, _____________________________________________________________________
33rd Floor, Boston, Massachusetts, 02199 at 10:00
a.m. on Tuesday, April 13, 2004 and at any FOR AGAINST ABSTAIN
adjournment or postponement thereof, and thereat, 2. Proposal to approve an amendment to the 2001 [ ] [ ] [ ]
to vote and act in regard to all matters which may Stock Plan, increasing the number of shares
properly come before said meeting (except those of common stock reserved for issuance under
matters as to which authority is hereinafter the Plan by 250,000 shares from 300,000 to
withheld) upon and in respect of all shares of 550,000 shares.
Common Stock of the Company upon or in respect of
which the undersigned would be entitled to vote or 3. Proposal to approve the appointment of [ ] [ ] [ ]
act and with all powers the undersigned would PricewaterhouseCoopers LLP as Auditors.
possess, if personally present, and especially
(but without limiting the general authorization 4. In their discretion on any other matters as may properly come before
and power hereby given) to vote and act as the meeting or at any adjournment or postponement thereof.
indicated hereon.
MARK BOX AT RIGHT IF AN ADDRESS CHANGE OR COMMENT [ ]
HAS BEEN NOTED ON THE BOTTOM PORTION OF THIS CARD.
PLEASE CHECK THE BOX AT RIGHT IF YOU PLAN TO [ ]
ATTEND THE MEETING ON APRIL 13.
________________________ THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY
Please be sure to sign and date Date THE SHAREHOLDER. IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY
this Proxy in the box below. WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
___________________________________________________________
__ Shareholder sign above ___ Co-holder (if any) sign above
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
NATIONAL DENTEX CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
The undersigned hereby confer(s) upon said proxies, and each of them, discretionary authority to vote (a) upon any other matters or
proposals not known at the time of solicitation of this proxy which may properly come before the meeting, and (b) with respect to
the selection of Directors in the event of any unforeseen emergency.
Attendance of the undersigned at said meeting or at any adjournment or postponement thereof will not be deemed to revoke this proxy
unless the undersigned shall affirmatively indicate thereat his or her intention to vote said shares in person. If a fiduciary
capacity is attributed to the undersigned hereon, this proxy will be deemed signed by the undersigned in that capacity.
- ----------------------------------------------------------------------------------------------------------------------------------
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE
ENVELOPE PROVIDED.
_________________________________________
_________________________________________
_________________________________________