SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</Table>
NUMEREX CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NUMEREX CORP.
1600 PARKWOOD CIRCLE SE
SUITE 200
ATLANTA, GA 30339
Dear Shareholders:
We are pleased to enclose your Notice of Annual Meeting of Shareholders
and Proxy Statement for the Annual Meeting of Shareholders of Numerex Corp. (the
"Company") to be held at 10:00 a.m. on May 3, 2002, at the Parkwood Room at
Hawthorn Suites, 1500 Parkwood Circle, Atlanta, Georgia 30339.
At the Annual Meeting, you will be asked to (i) elect six nominees to
serve as directors of the Company and (ii) ratify the appointment of Grant
Thornton LLP as the independent accountants of the Company.
The Board of Directors hopes that you will be able to attend the
shareholders' meeting. We look forward to meeting each of you and discussing
with you the significant events that have occurred during the Company's past
year and its current prospects. If you are unable to attend in person or to be
otherwise represented, we urge you to vote by signing the enclosed proxy and
mailing it to us in the accompanying stamped enveloped at your earliest
convenience. Please be sure to sign it exactly as the name or names appear on
the proxy. We urge you to read the enclosed proxy statement, which contains
information relevant to the actions to be taken at the meeting.
Sincerely yours,
Stratton J. Nicolaides
Chairman and Chief Executive Officer
April 4, 2002
Enclosures
NUMEREX CORP.
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 2002
--------------------
TO OUR SHAREHOLDERS:
Notice is hereby given that the annual meeting of shareholders of
NUMEREX CORP. (the "Company") will be held on May 3, 2002, at 10:00 a.m. (local
time), at the Parkwood Room at Hawthorn Suites, 1500 Parkwood Circle, Atlanta,
Georgia 30339, for the following purposes:
1. To elect a Board of Directors consisting of six persons to
serve until the next annual meeting of shareholders and until
their respective successors shall have been duly elected and
qualified;
2. To consider and vote upon the ratification of the appointment
by the Board of Directors of Grant Thornton LLP as independent
accountants of the Company for the current fiscal year ending
December 31, 2002; and
3. To transact such other business as may properly come before
this meeting or any postponement or adjournment thereof.
The Board of Directors has fixed April 2, 2002 as the record date for
the determination of shareholders entitled to vote at the annual meeting. Only
shareholders of record at the close of business on that date will be entitled to
notice of, and to vote at, the annual meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
April 4, 2002 By Order of the Board of Directors
Andrew J. Ryan
Secretary
NUMEREX CORP.
1600 Parkwood Circle SE
Suite 200
Atlanta, Georgia 30339
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
------------------------
INTRODUCTION
The Board of Directors of Numerex Corp. (the "Company"), the executive
offices of which are located at 1600 Parkwood Circle SE, Suite 200, Atlanta,
Georgia 30339, hereby solicits your proxy in the form enclosed for use at the
Annual Meeting of Shareholders to be held on May 3, 2002, at 10:00 a.m. (local
time), or at any postponement or adjournment thereof (the "Annual Meeting"). The
expense of soliciting your proxy will be borne by the Company. The approximate
date on which this Proxy Statement and the accompanying form of proxy will first
be sent or given to shareholders is April 4, 2002.
At the Annual Meeting, shareholders will be asked to (i) elect six
nominees to serve as directors of the Company, each to serve until the next
annual meeting and (ii) ratify the appointment of Grant Thornton LLP as the
independent accountants of the Company for the current fiscal year ending
December 31, 2002.
We urge you to date, sign and return your proxy in the enclosed
envelope promptly to make certain that your shares will be voted at the Annual
Meeting.
DATE, TIME, AND PLACE
The Annual Meeting will be held on May 3, 2002, at 10:00 a.m. (local
time), at the Parkwood Room at Hawthorn Suites, 1500 Parkwood Circle, Atlanta,
Georgia 30339.
RECORD DATE; VOTING RIGHTS
The Company had 10,659,000 shares of Class A Common Stock, no par value
(the "Common Stock"), outstanding at the close of business on April 2, 2002, the
record date (the "Record Date"). Only shareholders of record at the close of
business on the Record Date will be entitled to vote at the Annual Meeting. The
presence, in person or by proxy, of holders of a majority of all of the shares
of stock entitled to vote constitutes a quorum. Each share of Common Stock
outstanding is entitled to one vote on each matter that may be brought before
the Annual Meeting. Votes withheld from directors nominees, abstentions, and
broker non-votes will be counted in determining whether a quorum has been
reached.
Directors will be elected by a plurality of the votes cast in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. In all matters, other than the election of directors, the affirmative
vote of the majority of the votes cast in person or represented by proxy at the
Annual Meeting and entitled to vote on the matter will be the act of the
shareholders. Under Pennsylvania law, the act of "voting" does not include
either recording the fact of abstention or failing to vote for a candidate or
for approval or disapproval of a proposal, whether or not the person entitled to
vote characterizes the conduct as voting. In other words, only those who
indicate an affirmative or negative decision on a matter are treated as voting,
so that ordinarily abstention or a mere absence or failure to vote is not
equivalent to a negative decision.
A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power for that particular item and has not received
instructions from the beneficial owner. Broker non-votes, if any, will not be
considered in the calculation of the majority of the votes cast and will not
have an effect on the outcome of the vote on a matter.
The Company is not currently aware of any matters that will be brought
before the Annual Meeting (other than procedural matters) that are not referred
to in the enclosed Notice of Annual Meeting.
VOTING AND REVOCATION OF PROXIES
A form of proxy is enclosed. If properly executed and received in time
for voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the directions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Company's Common Stock for election of all nominees for directors and for the
ratification of the selection of Grant Thornton LLP as the Company's independent
accountants.
Sending in a signed proxy will not affect a shareholder's right to
attend the Annual Meeting nor will it preclude a shareholder from voting in
person because the proxy is revocable at any time prior to the voting of such
proxy. Any shareholder giving a proxy has the power to revoke it by giving
written notice to the Secretary of the Company at any time before the proxy is
exercised, including by filing a later-dated proxy with the Secretary or by
appearing in person at the Annual Meeting and making a written demand to vote in
person.
SOLICITATION OF PROXIES
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, or by directors, officers or employees of the Company without
additional compensation. Upon request by record holders of the Common Stock who
are brokers, dealers, banks or voting trustees, or their nominees, the Company
is required to pay the reasonable expenses incurred by such record holders for
mailing proxy material and annual shareholder reports to any beneficial owners
of Common Stock.
2
FISCAL YEARS
As used in this Proxy Statement, "fiscal 1999" means the Company's
fiscal year ended October 31, 1999, "fiscal 2000" means the Company's fiscal
year ending December 31, 2000 and "fiscal 2001" means the Company's fiscal year
ending December 31, 2001.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 5, 2002, by (i)
each person known by the Company to be the beneficial owner of more than five
percent of the Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company named in the Summary Compensation Table which
follows, and (iv) all current directors and executive officers of the Company as
a group. Except as otherwise indicated below, the beneficial owners of the
Common Stock listed below have sole investment and voting power with respect to
such shares.
3
Name of Beneficial Owner
or Identity of Group Shares Beneficially Owned (1) (2)
- ------------------------------------------------------- ------------------------------------------------
Number Percent
----------------------- --------------------
Gwynedd Resources, Ltd. (3) 3,207,280 29.5%
200 West Ninth Street
Suite 102
Wilmington, DE 19801
Elizabeth Baxavanis, Trustee (4)
Dominion Holdings #5
Revocable Trust for the
Benefit of Maria E. Nicolaides
200 West Ninth Street
Suite 102
Wilmington, DE 19801 3,207,280 29.5%
Maria E. Nicolaides (5)
C/o Salisbury & Ryan LLP
1325 Avenue of the Americas, Seventh Floor,
New York, NY 10019
3,207,280 29.5%
Douglas Holsclaw, MD (6)
42 Llanberries Road
Bala Cynwyd, PA 19004 752,382 6.9%
Kenneth F. Manser
21 Keswick Close
Dunstable, Bedfordshire LU6-3AW
United Kingdom 834,658 7.7 %
George Benson 52,000 *
Matthew J. Flanigan 27,700 *
Geoffrey W. Girdler 47,000 *
Allan H. Liu 8,000 *
Stratton J. Nicolaides (7) 62,000 *
Peter J. Quinn 46,056 *
John G. Raos 69,849 *
Andrew J. Ryan (8) 27,000 *
All Current Directors and Executive Officers as a
group (8 persons) 340,355 3.1%
* Less than 1%
(1) The shares "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
the regulations of the Securities and Exchange Commission. Accordingly,
they may include shares owned by or for, among other things, the wife,
minor children or certain other relatives of such individual, as well
as other shares as to which the individual has or shares voting or
investment power or has the right to acquire within 60 days after March
5, 2002.
4
(2) Includes shares subject to options in the following amounts: Mr.
Benson, 46,000 shares; Mr. Flanigan, 22,700 shares; Mr. Girdler,
43,500; Mr. Liu, 8,000 shares; Mr. Nicolaides 50,000 shares; Mr. Quinn,
40,000 shares; and Mr. Raos, 8,000 shares.
(3) The shareholders of Gwynedd Resources, Ltd. ("Gwynedd") include various
trusts for the benefit of Maria E. Nicolaides and her children (for
which Mrs. Baxavanis is trustee) and Dr. Holsclaw. See footnotes (4),
(5), (6) and (8).
(4) Represents the shares of Common Stock owned by Gwynedd. Trusts for the
benefit of Maria E. Nicolaides and her children, of which Mrs.
Baxavanis, Maria E. Nicolaides' mother-in-law, is trustee, own
approximately 89.8% and 0.9%, respectively, of the outstanding stock of
Gwynedd. Mrs. Baxavanis disclaims beneficial ownership of all shares of
Common Stock owned by Gwynedd. See footnote (5) below.
(5) Represents the shares of Common Stock owned by Gwynedd. Trusts for the
benefit of Maria E. Nicolaides and her children, of which Mrs.
Baxavanis, Maria E. Nicolaides' mother-in-law, is trustee, own
approximately 89.8% and 0.9%, respectively, of the outstanding stock of
Gwynedd. Maria E. Nicolaides disclaims beneficial ownership of 325,651
shares of Common Stock owned by Gwynedd that may be deemed to be
beneficially owned by the other shareholders of Gwynedd, including
trusts for the benefit of her children. See footnote (4) above.
(6) Does not include any shares of Common Stock owned by Gwynedd. Dr.
Holsclaw is the owner of approximately 9.3% of the outstanding stock of
Gwynedd.
(7) Mr. Nicolaides disclaims beneficial ownership of the 3,207,280 shares
of Common Stock owned by Gwynedd.
(8) Mr. Ryan disclaims beneficial ownership of the 3,207,280 shares of
Common Stock owned by Gwynedd. Also excludes 150,000 shares subject to
options granted to Salisbury & Ryan, a law firm of which Mr. Ryan is a
partner. Mr. Ryan's address is: Salisbury & Ryan, 1325 Avenue of the
Americas, Seventh Floor, New York, NY 10019-6026
5
PROPOSAL ONE
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall
consist of not less than three nor more than ten directors and that the number
of directors to be elected, subject to the foregoing limits, shall be determined
from time to time by the Board of Directors. The Board has set the number of
directors at six. At the Annual Meeting six directors, who will constitute the
Company's entire Board of Directors, are to be elected to hold office until the
next annual meeting and until their respective successors have been duly elected
and qualified. The Board has designated the persons listed below to be nominees
for election as directors. The Company has no reason to believe that any of the
nominees will be unavailable for election; however, should any nominee become
unavailable for any reason, the Board of Directors may designate a substitute
nominee. The proxy agents intend (unless authority has been withheld) to vote
for the election of the Company's nominees.
All of the nominees currently serve as directors of the Company and
have consented to being named in this Proxy Statement and to serve if elected.
The Board of Directors will consider shareholder nominations for
directors submitted in accordance with the procedure set forth in the Company's
Bylaws. In general the procedure set forth in the Company's Bylaws provides that
a notice relating to the nomination must be timely given in writing to the
Secretary of the Company prior to the meeting. To be timely, the notice must be
delivered by December 4, 2002. Such notice must be accompanied by the nominee's
written consent, contain information relating to the business experience and
background of the nominee and contain information with respect to the nominating
shareholder.
INFORMATION AS TO DIRECTORS AND NOMINEES
The following table contains information with respect to the nominees
for Directors.
NAME AGE POSITION DIRECTOR SINCE
George Benson(l)(2) 67 Director 1995
Matthew J. Flanigan(l)(2) 56 Director 1994
Allan H. Liu 45 Director 2000
Stratton J. Nicolaides 48 Chairman of the Board and Chief Executive Officer 1999
John G. Raos(l)(2) 53 Director 2000
Andrew J. Ryan 43 Director 1996
(1) Member of Audit Committee
(2) Member of Compensation Committee
GEORGE BENSON has served as a Director of the Company since June 1995.
Since September 1992 Mr. Benson has served as Chairman and Chief Executive
Officer of Wisconsin Wireless Communications Corporation. From September 1992
until July 13, 1999, Mr. Benson also served as Chairman and Chief Executive
Officer of Airadigm Communications Inc. On July 28, 1999, Airadigm
Communications, Inc. filed for Chapter 11 bankruptcy protection and was released
from such protection on October 11, 2000.
MATTHEW J. FLANIGAN has served as a Director of the Company since July
1994. Since April 1994, Mr. Flanigan has been the President of the
Telecommunication Industry Trade Association, a trade association for
telecommunication companies.
ALLAN H. LIU has served as a Director of the Company since January
2000. Since 1997, Mr. Liu has been the President and a member of the Board of
Directors of The China Retail Fund, LDC, a direct
6
investment private equity fund sponsored by American International Group in
conjunction with the Ministry of Internal Trade of the People's Republic of
China.
STRATTON J. NICOLAIDES has served as Chief Executive Officer from April
2000, having served as Chief Operating Officer from April 1999 until March 2000
and as Chairman of the Board since December 1999. From July 1994 until April
1999, Mr. Nicolaides managed a closely held investment partnership and provided
consulting services to Dominion Group Limited.
JOHN G. RAOS has served as a Director of the Company since February
2000. Since early 2000 Mr. Raos has been President and Chief Executive Officer
of Precision Partners, Inc., a precision machining company. From June 1995 until
January 2000, Mr. Raos served as President and Chief Operating Officer of US
Industries, Inc. From February 1999 until January 2000, Mr. Raos also was
Chairman and Chief Operating Officer of Strategic Industries, Inc., a US
Industries subsidiary. Prior to June 1995, Mr. Raos served as President and
Chief Operating Officer of Hanson Industries, Inc.
ANDREW J. RYAN has served as a Director of the Company since May 1996.
Mr. Ryan has practiced law with the law firm of Salisbury & Ryan from August
1994 to present and serves as the Board designee of Gwynedd.
BOARD OF DIRECTORS, COMMITTEES AND ATTENDANCE AT MEETINGS
During fiscal 2001, the Board of Directors of the Company held 5
meetings. Each director attended 75% or more of the meetings of the Board and
committees of which they were members during fiscal 2001.
During fiscal 2001, the Audit Committee held 2 meetings. The purpose of
the Audit Committee is to review all recommendations made by the Company's
independent public accountants with respect to the accounting methods used and
the system of internal control followed by the Company and to advise the Board
of Directors with respect thereto. The current members of the Audit Committee
are George Benson, Matthew J. Flanigan and John G. Raos.
During fiscal 2001, the Compensation Committee held 3 meetings. The
Compensation Committee makes recommendations to the Board with respect to the
compensation of the officers and key employees. The current members of the
Compensation Committee are George Benson, Matthew J. Flanigan and John G. Raos.
ARRANGEMENTS WITH RESPECT TO THE BOARD OF DIRECTORS
The Company has entered into an agreement providing Gwynedd the right
to designate one director to the Board. Additionally, in the event the Board
consists of more than seven directors, Gwynedd, at its option, may designate one
additional director. Any designee's appointment will be subject to the exercise
by the Board of Directors of its fiduciary duties and the approval of the
Company's shareholders upon the expiration of any appointed term at the next
annual meeting of shareholders. Gwynedd's right to designate directors will
cease at such time as Gwynedd's equity interest in the Company drops below ten
percent of the outstanding shares of the Company's Common Stock. Mr. Ryan
currently serves as Gwynedd's designee.
DIRECTOR COMPENSATION
Each director of the Company who is not also an employee of the Company
or a Gwynedd designated director receives an annual fee of $12,000 and a fee of
$250 for each meeting (except telephonic meetings, in which case the fee is
$125) of the Board or a committee thereof attended plus reimbursement of
expenses incurred in attending meetings. No additional fee is paid for committee
meetings held the same day as Board meetings. In addition, in lieu of cash
compensation, each director may elect to have their annual fees either (i) 50%
in cash and 50% in shares of Common Stock, or (ii) 100% in shares of Common
Stock.
7
Under the Company's Non-Employee Director Stock Option Plan (the
"Director Plan") and 1999 Long-Term Incentive Plan (the "1999 Plan"), each
director who is not also an employee of the Company or a Gwynedd designated
director automatically is granted annual options covering 4,000 shares of Common
Stock. On each anniversary of the initial option granted hereunder, such person
shall be granted an option to purchase 4,000 shares of the Common Stock of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES NAMED HEREIN.
PROPOSAL TWO
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee,
has selected the firm of Grant Thornton LLP as independent accountants of the
Company for the fiscal year ending December 31, 2002. This nationally known firm
has no direct or indirect financial interest in the Company.
Although not legally required to do so, the Board is submitting the
appointment of Grant Thornton LLP as the Company's independent accountants for
fiscal 2002 for ratification by the shareholders at the Annual Meeting. If a
majority of the votes cast in person or by proxy at the Annual Meeting is not
voted for ratification, the Board will reconsider its appointment of Grant
Thornton LLP as independent accountants for the current fiscal year.
A representative of Grant Thornton LLP will be present at the Annual Meeting
and will have the opportunity to make a statement if he or she desires to do so.
It is anticipated that such representative will be available to respond to
appropriate questions from shareholders.
Audit and Other Fees:
Audit Fees: $195,500
Financial Information Systems Design and
Implementation Fees: $ 0
All Other Fees: $102,370 - for tax services
The Audit Committee has considered the compatibility of nonaudit
services with the auditor's independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT ACCOUNTANTS FOR FISCAL 2002.
REPORT OF THE AUDIT COMMITTEE
The Board of Directors of the Company has appointed an Audit Committee
composed of three directors, each of whom is independent under the National
Association of Securities Dealers listing standards, as applicable and as may be
modified or supplemented.
The Board of Directors has adopted a written charter for the Audit
Committee. The Audit Committee's job is one of oversight as set forth in its
Charter. It is not the duty of the Audit Committee to prepare the Company's
financial statements, to plan or conduct audits, or to determine that the
Company's financial statements are complete and accurate and are in accordance
with generally accepted accounting principles. The Company's management is
responsible for preparing the Company's financial statements and for maintaining
internal control. The independent accountants are responsible for auditing the
financial statements and for expressing an opinion as to whether those audited
financial statements fairly present the
8
financial position, results of operations, and cash flows to the Company in
conformity with generally accepted accounting principles.
The Audit Committee has reviewed and discussed the Company's audited
consolidated financial statements with management and with Grant Thornton LLP,
the Company's independent accountants for 2001.
The Audit Committee has discussed with Grant Thornton LLP the matters
required to be discussed by Statement on Accounting Standards No. 61.
The Audit Committee has received from Grant Thornton LLP the written
statements required by Independence Standards Board Standard No.1, Independence
Discussions with Audit Committees, and has discussed Grant Thornton's
independence with Grant Thornton.
Based on the review and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001 for filing with the Securities
and Exchange Commission (the "SEC").
THE AUDIT COMMITTEE
George Benson
Matthew J. Flanigan
John G. Raos.
In accordance with and to the extent permitted by applicable law or
regulation, the information contained in the Report of the Audit Committee and
the Audit Committee Charter shall not be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and shall not be deemed to be soliciting
material or to be filed with the SEC under the Securities Exchange Act of 1934.
EXECUTIVE COMPENSATION
Under rules established by the SEC, the Company is required to provide
certain data and information with respect to the compensation and benefits
provided to the Company's Chief Executive Officer and other executive officers
of the Company. The disclosure requirements for the Chief Executive Officer and
other executive officers include the use of tables and a report explaining the
rationale and considerations that led to fundamental compensation decisions
affecting those individuals. In fulfillment of this requirement, the
Compensation Committee of the Company (the "Committee"), at the direction of the
Board of Directors, has prepared the following report for inclusion in this
proxy statement.
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Committee is currently comprised of Matthew J. Flanigan, as
Chairman, George Benson and John G. Raos. The Committee's responsibilities
include reviewing and making recommendations to the Board of Directors regarding
the compensation of the Chief Executive Officer and approving the compensation
paid to the Company's other executives. In addition, the Committee also
considers and recommends to the Board of Directors the award of options to key
employees and executive officers to purchase shares of Common Stock pursuant to
the Company's 1999 Long-Term Incentive Plan (the "1999 Plan").
The compensation structure is aimed at establishing levels of
compensation sufficient to attract and retain qualified executive talent. To do
so, the Company seeks to provide total compensation packages that it believes
are comparable to those offered by other companies of similar size, complexity
and financial performance. The Committee does not, however, rely on survey or
other statistical data when setting levels of compensation. The compensation
program also seeks to align the interests of management with those of
9
the Company's shareholders through the use of stock-based forms of compensation,
including compensation through stock option grants.
COMPENSATION PROGRAM ELEMENTS
During fiscal 2001, the senior employees compensation program consisted
of a base salary, long-term incentive compensation in the form of options to
purchase Common Stock under the 1999 Plan, and miscellaneous fringe benefits,
including group benefits generally available to employees of the Company. During
fiscal 2001, the Compensation Committee did not pay any cash bonuses, although
it may do so in the future. Overall, the Company's process of setting the levels
and mix of each component of compensation is subjective, with no precise,
mathematical weight given to any of the factors discussed below.
Base Salary. The Company's salary levels are subjectively established
based on the Compensation Committee's subjective assessment of each executive
officer's level of responsibility. Salary increases are intended to reflect the
overall financial performance of the Company, as well as the specific
contributions of the individual executive officer.
Stock Options. Grants of stock options are made at the Committee's
discretion based on the level and importance of the management position to the
overall long-term success of the Company and the contribution of the executive
officer. Grants are intended to motivate the executive officers to build
shareholder value and to relate a significant portion of the executive's
compensation directly to the financial performance of the Company.
Other Benefits. In addition to the items of compensation described
above, the Company provides medical and life insurance and a 401(k) plan to its
executive officers, which are generally available to Company employees. The
Company also provides certain executive officers with a company car.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Nicolaides has served as Chief Executive Officer since April 2000,
having served as Chief Operating Officer from April 1999 until March 2000.
During fiscal 2001, Mr. Nicolaides received an annual base salary compensation
of $275,000. The Compensation Committee based Mr. Nicolaides' base salary on its
subjective assessment of his performance and leadership in refocusing the
Company's business strategy.
Consistent with its belief that equity incentives help to align the
interests of the Chief Executive Officer with those of shareholders, in October
2001, the Compensation Committee granted Mr. Nicolaides stock options covering
50,000 shares with an exercise price equal to $6.10 per share vesting over four
years. In making these grants, the Compensation Committee considered its
subjective assessment of Mr. Nicolaides' performance, Mr. Nicolaides' leadership
of the Company, and the Company's historical compensation practices.
The above compensation was based upon the Company's belief that the
background and skills brought to the Company by the Chief Executive Officer, as
well as such person's contribution since commencing employment, were important
to the Company's achievement of its long range strategic goals.
POLICY WITH RESPECT TO SECTION 162(M) OF THE INTERNAL REVENUE CODE
Subject to certain exceptions, Section 162(m) of the Code disallows a
federal income tax deduction for compensation over $1 million paid to any
individual who, as of the close of the taxable year, is the chief executive
officer, or is among the four highest compensated officers (other than the chief
executive officer) for the taxable year. One exception applies to compensation
paid pursuant to shareholder-approved plans that are performance-based. The
Compensation Committee intends that awards made under the 1999 Plan, if approved
by shareholders, will be eligible for the performance-based exception, and
therefore eligible as a federal income tax deduction for the Company. The
Compensation Committee has taken and will
10
continue to take actions necessary to minimize the Company's nondeductible
compensation expense under Section 162(m). While keeping this goal in mind, the
Committee also will try to maintain the flexibility, which the Compensation
Committee believes to be an important element of the Company's executive
compensation program.
THE COMPENSATION COMMITTEE
George Benson
Matthew J. Flanigan
John G. Raos
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth all cash
compensation paid to the Company's Chief Executive Officer and senior executives
of the Company during the Company's fiscal years ended December 31, 2001, 2000,
and October 31, 1999.
ANNUAL LONG TERM
COMPENSATION COMPENSATION
--------------------------------------- ------------------------------
FISCAL ANNUAL BONUS OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION UNDERLYING COMPENSATION
OPTIONS
Stratton J. Nicolaides 2001 $275,000 $ 0 $ 0 50,000 $20,300(1)
Chairman and 2000 273,958 0 0 100,000
Chief Executive Officer 1999 81,250 0 0 0
Geoffrey W Girdler 2001 $175,000 $ 0 $ 0 25,000 $20,915(1)
Executive Vice President
Peter J. Quinn 2001 $150,000 $ 0 $ 0 25,000 $14,400(1)
Executive Vice President 2000 140,000 $ 0 $ 0
And Chief Financial Officer
(1) Reflects accommodation allowance.
The following table sets forth certain information concerning stock
options granted under the Company's 1999 Long-Term Incentive Plan during the
fiscal year ended December 31, 2001 to the executive officers of the Company
named in the Summary Compensation Table.
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OPTION GRANTS IN FISCAL 2001
INDIVIDUAL GRANTS(1)
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR PRICE DATE VALUE(2)
---- ---------- -------------- --------- ---------------- -----------
Stratton J. Nicolaides 50,000 13.2% $6.100 October 26, 2011 $280,500
Chairman and
Chief Executive Officer
Geoffrey W Girdler 15,000 4.0% $6.100 October 26, 2011 $ 84,150
Executive Vice President 10,000 2.6% 8.125 February 16, 2011 74,700
Peter J. Quinn 15,000 4.0% $6.100 October 26, 2011 $ 84,150
Executive Vice President 10,000 2.6% 8.125 February 16, 2011 74,700
And Chief Financial Officer
(1) Generally, options become exercisable at cumulative annual rates of
25%, commencing one year from the date of grant, and expire ten years
from the date of grant. Notwithstanding the foregoing, options are
fully exercisable in the event of a change of control of the Company.
Options generally will terminate three months after the date employment
with the Company or a subsidiary terminates. During such three-month
period, options may be exercised only for the number of shares eligible
to be exercised on the date employment terminates.
(2) The Grant Date Present Value on the date of grant was estimated using
the Black-Scholes options pricing model with the following weighted
average assumptions: no dividend yield; expected volatility of 121%;
risk-free interest rate of 4.86%; and an expected option life of 7.5
years.
The following table sets forth certain information concerning the
number of unexercised options and the value of unexercised options at the end of
the fiscal year ended December 31, 2001 held by the executive officers of the
Company named in the Summary Compensation Table. No options were exercised by
such executive officers in fiscal 2001.
AGGREGATED OPTION EXERCISES IN FISCAL 2001
AND DECEMBER 31, 2001 OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT DECEMBER 31, 2001 OPTIONS AT DECEMBER 31, 2001(1)
------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Stratton J. Nicolaides 50,000 100,000 $ 0 $ 0
Geoffrey W. Girdler 42,000 33,000 $136,500 $22,250
Peter J. Quinn 37,500 37,500 $135,938 $35,938
(1) On December 31, 2001 the fair market value of a share was $7.50.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Ryan is a partner in the law firm of Salisbury & Ryan. Salisbury &
Ryan provided legal services to the Company in 2001 and will continue to provide
such services during 2002. As partial consideration for
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such legal services, the Company granted a stock option to Salisbury & Ryan
covering 50,000 shares on October 26, 2001 at an exercise price of $6.10, the
then fair market value of a share of stock on the grant date. The option has a
10 year term and becomes exercisable in 25% increments beginning on the first
anniversary of the date of grant. In addition, during fiscal 2001 Salisbury &
Ryan charged the Company legal fees of approximately $258,000.
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STOCK PERFORMANCE GRAPH
[GRAPH]
The following graph shows a comparison of the cumulative total return
for the Company's Common Stock, the Nasdaq Composite Index and the Nasdaq
Telecomm Index assuming an investment of $100 in each on December 31, 1996, the
last trading day before the beginning of the Company's five preceding years,
and, in the case of the Indices, the reinvestment of all dividends.
SHAREHOLDER VALUE AT YEAR END
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
NUMEREX CORP. $100.00 $164.04 $73.75 $324.80 $216.54 $196.85
NASDAQ US INDEX $100.00 $122.48 $172.70 $320.87 $193.00 $153.15
NASDAQ TELECOMM INDEX $100.00 $145.97 $241.58 $431.01 $183.57 $122.88
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors and officers and persons who are the beneficial owners of
more than 10% of the Common Stock are required to report their beneficial
ownership of Common Stock and any changes in that ownership to the SEC. Specific
due dates for these reports have been established, and the Company is required
to report any failure to file by these dates during 2001. The Company believes
that all of these filing requirements were satisfied by its directors and
officers and by the beneficial owners of more than 10% of the common stock,
except that Mr. Girdler was late in filing an Initial Statement of Beneficial
Ownership on Form 3 upon his election as an executive officer and in reporting
two grants of options on February 16, 2001 and October 26, 2001, respectively.
In addition, Mr. Nicolaides was late in reporting the grant of options on
October 26, 2001, and Mr. Quinn was late in filing two reports relating to the
grant of options on February 16, 2001 and October 26, 2001, respectively, and
Mr. Ryan was late in filing one report relating to his indirect pecuniary
interest in options granted to the law firm of which he is a partner. In making
the foregoing statements, the Company has relied on copies of the reporting
forms received by it or the written representations from certain reporting
persons that no Forms 5 (Annual Statements of Changes in Beneficial Ownership)
was required to be filed under the applicable rules of the SEC.
OTHER BUSINESS
The Company does not presently know of any matters that will be
presented for action at the meeting other than those set forth herein. If other
matters properly come before the meeting, proxies submitted on the enclosed form
will be voted by the persons named in the enclosed proxy with respect to such
other matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS
It is presently contemplated that the annual meeting of shareholders
following fiscal 2002 will be held on or about May 2, 2003. Under the current
rules of the SEC and the Company's bylaws, in order for any appropriate
shareholder proposal to be considered for inclusion in the proxy materials of
the Company for the fiscal 2003 annual meeting of shareholders, it must be
received by the Secretary of the Company no later than December 4, 2002.
However, if the date of the fiscal 2003 annual meeting is changed by more than
30 days from the date of the fiscal 2002 annual meeting (May 3), then the
deadline for submission of shareholder proposals is a reasonable time before the
Company begins to print and mail its proxy materials.
In addition, pursuant to the Company's Bylaws, notice of a shareholder
proposal or of a nomination by shareholders of individuals for election to the
Company's Board of Directors must be accompanied by the nominee's written
consent, contain information relating to the business experience and the
background of the nominee and contain certain information with respect to the
nominating shareholder and persons acting in concert with the nominating
shareholder. Shareholders are also advised to review the Company's Bylaws, which
contain additional requirements with respect to shareholder proposals and
director nominations. If a shareholder proposal is received after the notice
date, but the presiding officer of the meeting permits the proposal to be made,
the proxies appointed by the Company may exercise discretionary authority when
voting on such proposals.
ANNUAL REPORT
The Annual Report to Shareholders of the Company (the "Annual Report")
for the fiscal year ended December 31, 2001 accompanies this proxy statement.
Copies of the Annual Report are available upon written request to the Company at
its principal executive offices which are located at 1600 Parkwood Circle SE,
Suite 200, Atlanta, Georgia 30339, Attention: Investor Relations. The Form 10-K
report and Annual Report are not part of these proxy solicitation materials.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
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31, 2001 REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING A REQUEST THEREFOR TO: 1600
PARKWOOD CIRCLE SE, SUITE 200, ATLANTA, GEORGIA 30339. OUR SEC FILINGS ARE ALSO
AVAILABLE AT THE SEC'S WEBSITE AT http://www.sec.gov.
By Order of the Board of Directors
Andrew J. Ryan
Secretary
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NUMEREX CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 2002
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Andrew J. Ryan and
Donald L. Colter, and each of them with full power to act alone, as
attorneys-in-fact and proxies of the undersigned, with full power of
substitution for and in the name, place and stead of the undersigned to appear
at the Annual Meeting of Shareholders of NumereX Corp. (the "Company"), to be
held on the 3rd day of May, 2002, and at any postponement or adjournment
thereof, and to vote all of the shares of Common Stock of the Company which the
undersigned is entitled to vote, with all the powers and authority the
undersigned would possess if personally present. The undersigned directs that
this proxy be voted as indicated on the reverse side of this proxy. The proxy
agents present and acting in person or by their substitute (or, if only one is
present and acting, then that one) may exercise all powers conferred by this
proxy.
(TO BE COMPLETED AND SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
NUMEREX CORP.
MAY 3, 2002
- Please Detach and Mail in the Envelope Provided -
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE 1 10029000006 04618 00000010138 6
<Table>
752382
FOR all
nominees
listed (except WITHHOLD AUTHORITY
as marked to to vote for all
the (contrary directors check
below). this box FOR AGAINST ABSTAIN
1. The election of [ ] [ ] NOMINEES: George Benson 2. Proposal to ratify [ ] [ ] [ ]
the nominees Matthew J. Flanigan Grant Thornton LLP
listed at right Allan H. Liu as the Company's
as Directors of Stratton J. independent
the Company, as Nicolaides accountants for
more fully John G. Raos the fiscal year
described in the Andrew J. Ryan ending December
accompanying 31, 2002.
Proxy Statement
3. In their discretion, to transact such
To withhold authority to vote for any individual other business as may properly come
nominee to nominees, write the name of the nominee before the meeting or any postponement
on the space provided below. or adjournment thereof.
- -------------------------------------------------- THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED AS DIRECTED. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED IN THE ITEM 1 AND FOR THE
PROPOSAL LISTED IN ITEM 2. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED,
THE PERSONS NAMED THEREIN INTEND TO VOTE
FOR THE ELECTION OF THE NAMED NOMINEES
FOR DIRECTOR AND FOR THE RATIFICATION OF
GRANT THORNTON LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE CURRENT
FISCAL YEAR.
PLEASE DATE AND SIGN THIS PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
The undersigned hereby
acknowledges receipt of the Company's
2001 Annual Report to Shareholders, Notice
to the Company's 2002 Annual Meeting of
shareholders and the Proxy Statement
relating thereto.
</Table>
NAME DATE
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NAME DATE
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NOTE: Please sign here personally. Signature of the shareholder(s) should
correspond exactly with the name(s) in which the shares are registered.
If the shares are registered in more than one name, each joint owner or
fiduciary should sign personally. Only authorized officers should sign
for corporation.