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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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Definitive Material Pursuant to Section 240.14a-12
INRAD, INC.
- --------------------------------------------------------------------------------
(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)(4) 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 t 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
________________________________________________________________
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INRAD, INC.
181 Legrand Avenue
Northvale, New Jersey 07647
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 27, 2003
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of INRAD, Inc.
(the "Company") will be held at the offices of Lowenstein, Sandler, PC, 65
Livingston Avenue, Roseland, New Jersey on Wednesday, August 27, 2003 at 10:00
a.m. for the following purposes:
1. Consideration of and vote to approve the proposed change of the
Corporation's name to Photonic Products Group, Inc.
2. To elect one Class C Director to hold office for three years.
3. Consideration of and vote to approve the proposed change of the
Corporation's Certificate of Incorporation to increase the total number
of Common Shares authorized.
4. Consideration of and vote to approve the proposed change to increase
the total number of Common Shares authorized for issuance under the
2000 Equity Compensation Program.
5 To consider and act upon other matters that may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 30, 2003, as the
date for determining the shareholders of record entitled to receive notice of,
and to vote at, the Annual Meeting. Whether or not you expect to be present at
the Annual Meeting, you are requested to complete and sign the enclosed proxy
and return it in the enclosed envelope as promptly as possible. Shareholders who
are present at the meeting may revoke their proxies and vote in person. We hope
you will attend.
By Order of the Board of Directors
William S. Miraglia, Secretary
Northvale, New Jersey
July 28, 2003
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INRAD, INC.
PROXY STATEMENT
The following statement is furnished in connection with the solicitation of
proxies by the Board of Directors of INRAD, Inc., a New Jersey corporation with
its principal offices at 181 Legrand Avenue, Northvale, New Jersey 07647 (the
"Company"), to be used at the Annual Meeting of Shareholders of the Company to
be held at the offices of Lowenstein, Sandler, PC, 65 Livingston Avenue,
Roseland, New Jersey on Wednesday, August 27, 2003 at 10:00 a.m. This Proxy
Statement and the enclosed form of proxy are first being sent to shareholders on
or about July 28, 2003.
SHAREOWNERS ENTITLED TO VOTE
Only shareholders of record at the close of business on June 30, 2003, the
record date fixed by the Board of Directors, will be entitled to notice of, and
to vote at, the Annual Meeting. At the close of business on the record date,
there were 5,441,353 shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), outstanding and entitled to vote at the meeting.
Each share is entitled to one vote.
The presence in person or by proxy of owners of a majority of the outstanding
shares of the Company's Common Stock will constitute a quorum for the
transaction of business at the Company's Annual Meeting. Assuming that a quorum
is present, the proposals for the change in the Company's Certificate of
Incorporation to increase the number of shares authorized, the proposal to
increase the number of common shares authorized under the 2000 Equity
Compensation Program, and the proposal to change the name of the corporation,
will require the affirmative vote of a majority of the votes cast by the holders
of shares of Common Stock entitled to vote at the Annual Meeting. The election
of one director to serve a term of three years will require the vote of a
plurality of the shares of Common stock represented and entitled to vote at the
Annual Meeting. For purposes of determining the votes cast with respect to any
matter presented for consideration at the Annual Meeting, only those cast "for"
are included. Abstentions and broker non-votes are counted only for the purpose
of determining whether a quorum is present at the Annual Meeting. Owners of
Common Stock are not entitled to cumulative voting in the election of directors.
VOTING: REVOCATION OF PROXIES
A form of proxy is enclosed for use at the Annual Meeting if a shareholder is
unable to attend in person. Each proxy may be revoked at any time before it is
exercised by giving written notice to the secretary of the Meeting. All shares
represented by valid proxies pursuant to this solicitation (and not revoked
before they are exercised) will be voted as specified in the form of proxy. If
no specification is given, the shares will be voted in favor of the Board's
nominees for directors described in this Proxy Statement, and in favor of the
name change, increase in authorized stock and increase in the 2000 Equity
Compensation Program.
COSTS OF SOLICITATION
The entire cost of soliciting these proxies will be borne by the Company. In
following up the original solicitation of the proxies by mail, the Company may
make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to the beneficial owners of the
stock and may reimburse them for their expenses in so doing. If necessary, the
Company may also use its officers and their assistants to solicit proxies from
the shareholders, either personally or by telephone or special letter.
PRINCIPAL SHAREHOLDERS
The following table presents certain information with respect to the security
ownership of the directors of the Company and the security ownership of each
individual or entity known by the Company to be the beneficial owner of more
than 5% of the Company's Common Stock as of June 30, 2003. Percentages that
include ownership of options or convertible securities are calculated assuming
exercise or conversion by each individual or entity of the options, (including
"out-of-the-money options"), or convertible securities owned by each individual
or entity separately without considering the dilutive effect of option exercises
and
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security conversions by any other individual or entity. The Company has been
advised that all individuals listed have the sole power to vote and dispose of
the number of shares set opposite their names in the table.
<Table>
<Caption>
Percent of
Name and Address Number of shares Common Stock
- -------------------------------------------------------------------------------------------------------------
Clarex, Ltd. 3,266,914 (1) 52.9
Bay Street and Rawson Square
P.O. Box N 3016
Nassau, Bahamas
Welland, Ltd. 2,380,958 (2) 31.1
Bay Street and Rawson Square
P.O. Box N 3016
Nassau, Bahamas
Warren Ruderman 1,467,046 27.8
45 Duane Lane
Demarest, NJ 07627
Daniel Lehrfeld 413,400 (3) 7.4
c/o INRAD, Inc.
Hoechst Celanese Corp. 300,000 5.7
Routes 202-206 North
Box 2500
Somerville, NJ 08876
Thomas Lenagh 86,900 (4) 1.6
c/o INRAD, Inc.
Frank Wiedeman 78,400 (5) 1.5
c/o INRAD, Inc.
John Rich 17,100 (6) 0.3
c/o INRAD, Inc.
Jan Winston 8,000 (7) 0.2
c/o INRAD, Inc.
Directors and Executive 819,235 (8) 13.9
Officers as a group
(8 persons)
</Table>
1) Including 900,000 shares subject to convertible preferred stock
exercisable or convertible within 60 days.
2) Includes 2,380,952 shares subject to a convertible promissory note at
an imputed conversion of $0.42, the market value of the Company's
common shares on the date of issuance of the note.
3) Including 48,000 shares subject to convertible preferred stock and
258,200 shares subject to options exercisable within 60 days.
4) Including 61,900 shares subject to options exercisable within 60 days.
5) Including 28,400 shares subject to options exercisable within 60 days.
6) Including 12,000 shares subject to convertible preferred stock and
3,300 shares subject to options exercisable or convertible within 60
days.
7) Including 4,000 shares subject to convertible preferred stock
exercisable or convertible within 60 days and 3,400 shares subject to
options exercisable or convertible within 60 days.
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8) Including 620,755 shares subject to convertible preferred stock, stock
options, and warrants exercisable within 60 days.
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
During the year ended December 31, 2002, approximately 4% of the Company's
net product sales were through a foreign agent, in which, Warren Ruderman a
principal shareholder has an investment. Terms of sales to this foreign agent
were substantially the same as to unrelated foreign agents.
During 2002, Welland Ltd. received a 6% Subordinated Convertible Promissory
Note due January 31, 2006, resulting in proceeds to the Company of $1,000,000.
Clarex, Ltd and Welland, Ltd. Are related parties, under common control. They
are represented on the Board of Directors by Mr. Frank Wiedeman. The percent of
common stock and convertible instruments, beneficially owned, if combined and
calculated according to the prescribed formula is 84%.
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PROPOSAL ONE
CHANGE OF COMPANY'S NAME
PROPOSAL TO AMEND THE CORPORATION'S CERTIFICATE OF INCORPORATION
TO CHANGE ITS NAME TO "PHOTONIC PRODUCTS GROUP, INC."
On May 13, 2003, the Company's Board of Directors unanimously approved,
subject to stockholder approval, a change of the Company's name to "Photonic
Products Group, Inc.."
The Company has been working to implement business plans that involve
acquiring additional companies and lines of business. However, there can be no
assurance that any such business plan developed by the Company will be
successful or that any businesses will be acquired. The Company's Board of
Directors believes that the change of the Company's name is appropriate in light
of the proposed diversification and change in the nature of the Company's
business.
The Company believes that its new name will reflect its present business
strategy. It will convey the message that the Company is transforming into a
portfolio of businesses serving a greater diversity of sectors in the Photonics
industry with additional branded products carrying names other the INRAD.
If the proposed amendment is adopted by the stockholders, the Company's
Restated Certificate of Incorporation will be amended, as reflected in EXHIBIT
B, to effect the name change as promptly as practicable.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS
OF THE COMPANY VOTE "FOR" THIS PROPOSAL.
After the proposed name change becomes effective, it will NOT be necessary
for shareholders to surrender their present Inrad stock certificates.
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PROPOSAL TWO
ELECTION OF DIRECTORS
At the Annual shareholders' meeting held August 7, 2002 an amendment to our
Certificate of Incorporation providing for the classification of our Board of
Directors into three classes with staggered three-year terms of office was
approved by the shareholders' and implemented by the Board. The essence of the
amendment was to allow the directors be divided into three separate classes
designated Class I, Class II, and Class III. Initially, two Class I directors
were elected for a three-year term of office, two Class II directors were
elected for a two-year term of office, and one Class III director was elected
for a one-year term of office. When directors are elected at all subsequent
Annual Meetings of Shareholders, they will be elected to three-year terms.
The following table sets forth the name and age of the nominee for election to
the Board of Directors, the principal occupation or employment of the nominee
for the past five years, the principal business of the organization in which
said occupation is or was carried on, the name or any other public corporation
for which each nominee served as a Board member, and the period during which
each nominee has served as a director of the Company.
The Board of Directors unanimously recommends that you vote for the election of
John Rich.
<Table>
<Caption>
Director Positions; Business
Name and Age Since Experience
- ------------ ----- ----------
John Rich, 2000 Director
65 VP & General Manager (2000-2002) C&D
Technologies, Power Electonics Division
President (1990-1999), Raytheon/GM
Hughes Optical Systems
Vice President (1983-1989), Perkin Elmer
Microlithography, Electro-Optics, and
Systems
Colonel, Commander, Air Force Avionics
Laboratory and Air Force Weapons
Laboratory
B.A., M.A., PhD., Harvard University
Current Directors
Thomas Lenagh, 1998 Chairman of the Board of Directors
Management Consultant (1990 - Present)
Past Chairman and CEO, Systems Planning
Corporation
Financial Vice President, the Aspen Institute
Treasurer and Chief Investment Officer, The
Ford Foundation
Captain, US Navy Reserve (ret.)
</Table>
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<Table>
Daniel Lehrfeld, 1999 Director
59 President and Chief Executive Officer (2000-present),
President and Chief Operating Officer(1999-2000),
Vice President/General Manager (1995-1999)
Raytheon/GM Hughes Electro-Optics Center,
President (1989-1991)
New England Research Center, (subsidiary)
Deputy General Manager (1989-1995) &
Director, Business Development,
International Business, Operations, Cryogenic Products
Magnavox Electronic Systems E. Coast Div.,
Deputy Sector Director & Program Director
Philips Laboratories Briarcliff
North American Philips,
Group Leader/Project Leader
Grumman Aerospace Corporation
Frank Wiedeman, 1998 Director
89 Executive Director (1980 - Present)
American Capital Management Inc.
Jan Winston 2000 Director
66 Principal (1997-Present) Winston Consulting,
Division Director/General Manager (1981-1997) IBM
Corporation. Executive positions held in Development,
Finance and Marketing.
</Table>
During 2002, five meetings of the Board of Directors were held. Each
non-employee director is paid $400 for each Board Meeting they attend, and $200
for each conference call meeting they participate in. During 2002, each director
attended or participated in all the Board of Director meetings held.
The Board has an Audit Committee whose members presently are Jan Winston,
Chairman, Tom Lenagh and John Rich. The Audit Committee reviews the
independence, qualifications and activities of the Company's independent
accountants. It meets privately with them as well as with management and held
two meetings during 2002. The committee appoints the independent accountants.
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PROPOSAL THREE
INCREASE IN AUTHORIZED SHARES
The Board of Directors has recommended that the stockholders approve an
amendment to the Company's Certificate of Incorporation, as permitted by the New
Jersey Business Corporation Act, to increase the number of authorized shares of
Common Stock from 15,000,000 shares to 40,000,000 shares.
The Company is currently authorized by its Articles of Incorporation to
issue 15,000,000 shares of Common Stock, par value $0.01 per share. As of June
30, 2003, 5,441,353 shares of Common Stock were issued and outstanding. In
addition, the Company has reserved shares of Common Stock for issuance as
follows: 500,000 shares for issuance upon conversion of the Company's Series A,
10% Convertible Preferred Stock, 840,000 shares for issuance upon conversion of
the Company's Series B, 10% Convertible Preferred Stock, (plus an indeterminate
number of shares for issuance upon conversion of rights to receive unpaid
dividends on such shares), 2,400,000 shares for issuance upon conversion of the
Company's Subordinated Convertible Note, 1,500,000 shares, (or if Proposal 2 is
passed, 4,000,000 shares) for issuance upon exercise of authorized stock options
under the Company's stock option plan and 200,000 for warrants issued to Clarex
LTD for loan guarantees. Accordingly, the Company has issued or reserved
10,881,353 shares (and will need to reserve 13,381,353 shares if Proposal 2 is
passed).
The Board of Directors believes that it is desirable to increase the number
of shares of Common Stock to 40,000,000. The purpose of such increase is to
place the Company in a position where it will continue to have a sufficient
number of shares of authorized and unissued Common Stock, which can be issued
for or in connection with such corporate purposes as, may, from time to time, be
considered advisable by the Board of Directors. Having such shares available for
issuance in the future will give the Company greater flexibility and will allow
such shares to be issued as determined by the Board of Directors of the Company
without the expense and delay of a special shareholder's meeting to approve such
additional authorized capital stock. Such corporate purposes could include,
without limitation: (a) issuance in connection with any desirable acquisitions
which may be presented to the Company, (b) the payment of stock dividends or
issuance pursuant to stock splits, (c) the issuance of Common Stock upon
exercise of options granted under the Company's stock options plan or in
connection with other employee benefit plans, (d) the issuance of Common Stock
upon the conversion of any preferred stock, the exercise of warrants or the
conversion of other securities convertible into Common Stock which may be
outstanding from time to time, and (e) issuance in connection with an offering
to raise capital for the Company.
The additional shares of Common Stock, together with other authorized stock
and unissued shares, generally would be available for issuance without any
requirement for further stockholder approval, unless stockholder action is
required by applicable law, the Company's governing documents, or any stock
exchange on which the Company's securities may then be listed.
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Although the Board of Directors will authorize the issuance of additional
shares of Common Stock only when it considers doing so to be in the best
interests of stockholders, the issuance of additional shares of Common Stock
may, among other things, have a dilutive effect on the earnings and equity per
share of Common Stock and on the voting rights of holders of shares of Common
Stock. The increase in the authorized number of shares of Common Stock also
could be viewed as having anti-takeover effects. While the Board of Directors
has no current plans to do so, shares of Common Stock could be issued in various
transactions that would make a change in control of the Company more difficult
or costly and, therefore, less likely. For example, shares of Common Stock could
be privately sold to purchasers favorable to the Board of Directors in opposing
a change in control or to dilute the stock ownership of a person seeking to
obtain control. The Company is not aware of any effort to accumulate shares of
Common Stock or obtain control of the Company by a tender offer, proxy contest,
or otherwise, and the Company has no present intention to use the increased
shares of authorized Common Stock for anti-takeover purposes.
As of the date of this Proxy Statement, there are no present agreements or
arrangements for the issuance of any of the additional shares that would be
authorized by this amendment except pursuant to the stock option plan and
convertible securities and warrants as described herein.
Holders of Common Stock do not have preemptive rights to subscribe to
additional securities that may be issued by the Company, which means that
current stockholders do not have a right to purchase any new issue of capital
stock of the Company in order to maintain their proportionate ownership
interest. However, stockholders wishing to maintain their interests may be able
to do so through normal market purchases.
The affirmative vote of a majority of the votes cast by the holders of
shares entitled to vote thereon is required to approve the proposed amendment.
If the stockholders do not approve the proposed amendment, the number of
authorized shares of Common Stock will remain 15,000,000. Proxies will be voted
in accordance with the specifications marked thereon, and, if no specification
is made, will be voted "FOR" the increase in the number of authorized shares of
Common Stock.
The Board of Directors recommends that the shareholders vote "FOR" the
proposal to increase the number of authorized shares of Common Stock.
If the proposed amendment is adopted by the stockholders, the Company's
Restated Certificate of Incorporation will be amended, as reflected in
EXHIBIT B, to increase the number of shares authorized as promptly as
practicable.
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PROPOSAL FOUR
APPROVAL OF AMENDMENT TO 2000 EQUITY COMPENSATION PROGRAM
At the Annual Meeting, the Shareholders are being asked to approve an
amendment to the Company's 2000 Equity Compensation Program (the "2000 Program")
in order to increase the number of shares reserved for issuance of stock
options, stock appreciation rights and performance shares there-under by
2,500,000 shares, from 1,500,000 shares to 4,000,000 shares of Common Stock. The
amendment would also increase the maximum number of shares of Common Stock
subject to options, separately exercisable stock appreciation rights or other
awards that any individual could receive in one year from 400,000 to 600,000.
As of June 30, 2003 approximately 1,055,000 options were outstanding under
the 2000 Program and 445,000 shares remained available for awards under the 2000
Program. Approval of the amendment to the 2000 Program is intended to ensure
that the Company can continue to provide stock options and other performance
incentives at levels determined appropriate by the Board of Directors, and to
increase flexibility for individual grants. The 2000 Program was adopted by the
Board of Directors in May 2000 and approved by the Stockholders in August 2000.
On May 13, 2003, the Board of Directors adopted this amendment to the plan and
recommends that the Stockholders approve such amendment.
PURPOSE
The purpose of the 2000 Program is to help attract and retain superior
directors, officers, key employees and consultants of the Company and its
subsidiaries and to encourage them to devote their abilities and industry to the
success of the Company.
SHARES AND INCENTIVES AVAILABLE UNDER THE PROGRAM
The 2000 Program provides for grants of options, stock appreciation rights,
and performance shares. If this amendment is approved, an aggregate of 4,000,000
shares of Common Stock will be authorized for issuance under the 2000 Program,
which amount will be proportionately adjusted in the event of certain changes in
the Company's capitalization, a merger, or a similar transaction. If any of the
options (including incentive stock options) or stock appreciation rights granted
under the Program expire or terminate for any reason before they have been
exercised in full, the unissued shares subject to those expired or terminated
options and/or stock appreciation rights shall again be available for purposes
of the 2000 Program. Such shares may be authorized and unissued shares or
treasury shares.
ELIGIBILITY
All directors, officers, employees and consultants of the Company and its
subsidiaries are eligible to receive awards under the 2000 Program. The Company
estimates that as of June 30, 2003, there were approximately 50 individuals
eligible to participate in the 2000 Program. On July 1, 2003, the closing price
of the Common Stock was $0.41.
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DETERMINATION OF ELIGIBILITY; ADMINISTRATION OF THE PROGRAM
The 2000 Program is administered by a committee appointed by the Board (the
"Committee", or the "Program Administrator"). The Program Administrator has full
discretion and authority to: (a) interpret the 2000 Program; (b) define its
terms; (c) prescribe, amend and rescind rules and regulations relating to the
2000 Program; (d) select eligible individuals to receive options, stock
appreciation rights, and performance shares under the 2000 Program; (e)
determine when options, stock appreciation rights, or performance shares shall
be granted under the Program; (f) determine the type, number, and terms and
conditions of awards to be granted and the number of shares of stock to which
awards will relate, and any other terms and conditions of options, stock
appreciation rights, and performance shares; and (g) make all other
determinations that may be necessary or advisable for the administration of the
2000 Program.
TYPES OF AWARDS
The 2000 Program is comprised of four parts: (i) the Incentive Equity
Compensation Program ("Incentive Program"), (ii) the Supplemental Equity
Compensation Program ("Supplemental Program"), (iii) the Stock Appreciation
Rights Program ("SAR Program"), and (iv) the Performance Share Program.
INCENTIVE PROGRAM. The Company intends that options granted pursuant to the
provisions of the Incentive Program will qualify and will be identified as
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Program
Administrator may grant ISOs to purchase Common Stock to any employee of the
Company or its subsidiaries. These options shall expire on the date determined
by the Program Administrator, but they shall not expire later than 10 years from
the date the options are granted. Any ISO granted to any person who owns more
than 10% of the combined voting power of all classes of stock of the Company or
any of its subsidiaries shall expire no later than 5 years from the date it was
granted.
The exercise price of ISOs may not be less than the fair market value of
the Company's Common Stock on the date of grant. However, the exercise price of
an ISO granted to a 10% or more stockholder may not be less than 110% of the
fair market value of the Company's Common Stock on the date of grant. The
aggregate fair market value, determined at the time of grant, of the shares of
Common Stock with respect to which ISOs are exercisable for the first time by an
optionee during any calendar year may not exceed $100,000.
SUPPLEMENTAL PROGRAM. Options granted under this Supplemental Program shall
not be ISOs as defined in Section 422 of the Code. The Program Administrator may
grant supplemental stock options to eligible participants in the 2000 Program.
These options shall expire on the date determined by the Program Administrator,
but they shall not expire later than 10 years from the date the options are
granted. The exercise price of supplemental stock options shall be determined by
the Program Administrator at the time of grant.
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SAR PROGRAM. The Program Administrator may grant stock appreciation rights
("SARs") to eligible participants in the 2000 Program. These SARs may be granted
either together with supplemental stock options or ISOs ("Tandem Options") or as
naked stock appreciation rights ("Naked Rights"). Tandem Options entitle the
holder to receive from the Company an amount equal to the fair market value of
the shares of Common Stock which the recipient would have been entitled to
purchase on that date upon the surrender of the unexpired option, less the
amount the recipient would have been required to pay to purchase the shares upon
the exercise of the option. Naked Rights entitle the holder to receive the
excess of fair market value of those rights at the end of a designated period
over the fair market value of those rights when they are granted. Payments to
recipients who exercise SARs may be made, at the discretion of the Program
Administrator, in cash by bank check, in shares of Common Stock with a fair
market value equal to the amount of payment, in a note in the payment amount, or
any combination of these totaling the payment amount.
PERFORMANCE SHARE PROGRAM. The Program Administrator may grant performance
shares to eligible participants in the 2000 Program. Each grant confers upon the
recipient the right to receive a specified number of shares of Common Stock of
the Company contingent upon the achievement of specified performance objectives
within a specified period (including the recipient's continued employment with
or service to the Company).
Payment may be made, in the discretion of the Program Administrator, in
shares of Common Stock, a check for the fair market value of the shares of
Common Stock to which the performance share award relates (the "payment
amount"), a note in the payment amount, or any combination of these totaling the
payment amount. The Program Administrator shall specify the performance
objectives, determine the duration of the performance objective period (not to
be less than 1 year nor more than 10 years from the date of the grant) and
determine whether performance objectives have been met during the designated
period. All determinations by the Program Administrator with respect to the
achievement of performance objectives shall be final, binding on and conclusive
with respect to each recipient.
EXERCISE
Options may be exercised by providing written notice to the Company,
specifying the number of shares to be purchased and accompanied by payment for
such shares, and otherwise in accordance with the applicable option agreement.
Payment may be made in cash, other shares of Common Stock or by a combination of
cash and shares. The Program Administrator may also permit cashless exercises
pursuant to procedures approved by the Program Administrator.
VESTING OF OPTIONS
Unless otherwise provided by the Program Administrator at the time of grant
or accelerated, stock options vest in 3 annual installments commencing one year
after the date of grant.
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TRANSFERABILITY OF AWARDS
Grants of stock options and other awards are generally not transferable
except by will or by the laws of descent and distribution, except that the
Program Administrator may, in its discretion, permit transfers of supplemental
stock options and/or stock appreciation rights granted in tandem with such
options for estate planning or other purposes subject to any applicable
restrictions under federal securities laws. Common Stock which represents either
performance shares prior to the satisfaction of the stated performance
objectives and the expiration of the stated performance objective periods may
not be sold, pledged, assigned or transferred in any manner.
AWARD LIMITATIONS
The maximum number of shares of Common Stock subject to options, separately
exercisable stock appreciation rights or other awards that an individual may
receive in any calendar year is 600,000 if this amendment is adopted.
ACCELERATION OF VESTING; CHANGE IN CONTROL
The Program Administrator may, in its discretion, accelerate the
exercisability of any option or stock appreciation right or provide that all
restrictions, performance objectives, performance objective periods and risks of
forfeiture pertaining to a performance share award shall lapse upon the
occurrence of a "change in control" of the Company, as defined in the 2000
Program.
If a change in control occurs pursuant to a merger or consolidation or sale
of assets as described above, then each outstanding option, stock appreciation
right, and performance share award shall be assumed or an equivalent benefit
shall be substituted by the entity determined by the Board to be the successor
corporation unless the successor does not so agree at least 15 days prior to the
merger, consolidation or sale of assets. In that instance, each option, stock
appreciation right, or performance share award shall be deemed to be fully
vested and exercisable.
EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE AS A DIRECTOR OR CONSULTANT
Except as otherwise provided in any agreement evidencing an award or
option:
(a) in the event that a participant's employment or service with the
Company is terminated for "cause," any outstanding options and awards of such
participant shall terminate immediately;
(b) in the event that a participant's employment or service with the
Company terminates due to death or disability (within the meaning of Section
22(e)(3) of the Code), all options and stock appreciation rights of such
participant (other than Naked Rights) will lapse unless exercised, to the extent
exercisable at the date of termination, within one year following such date of
termination, all performance awards for which all performance objectives and
conditions have been achieved and satisfied (other than continued employment or
status as a consultant) shall be paid in full (any remaining awards of such
participant will
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be forfeited), and all Naked Rights shall be fully paid by the Company as of the
date of death or disability; and
(c) in the event that a participant's employment or service with the
Company terminates for any other reason: (i) any outstanding options and awards
(other than Naked Rights) shall be exercisable, to the extent exercisable on the
date of termination, for a period of 90 days after the date of such termination
if the recipient resigned, and 12 months after the date of such termination if
it was an involuntary termination other than for cause; (ii) all Naked Rights
not payable on the date of termination shall terminate immediately; and (iii)
all performance share awards shall terminate immediately unless the performance
objectives have been achieved and the performance objective period has expired.
AMENDMENT, SUSPENSION OR TERMINATION OF THE PROGRAM
The 2000 Program will terminate on the day preceding the tenth anniversary
of its adoption, unless sooner terminated by the Board. Prior to that date, the
Program Administrator may amend, modify, suspend or terminate the Program,
provided, however, that (a) stockholder approval is obtained when required by
law, and (b) no such amendment, modification, suspension or termination by the
Program Administrator shall adversely affect the rights of participants, without
their consent, under any outstanding option, stock appreciation right, or
performance share.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS AND AWARDS
BECAUSE OF THE COMPLEXITY OF THE FEDERAL INCOME TAX LAWS AND THE
APPLICATION OF VARIOUS STATE INCOME TAX LAWS, THE FOLLOWING DISCUSSION OF TAX
CONSEQUENCES IS GENERAL IN NATURE AND RELATES SOLELY TO FEDERAL INCOME TAX
MATTERS. PARTICIPANTS OF THE 2000 PROGRAM ARE ADVISED TO CONSULT THEIR OWN
PERSONAL TAX ADVISORS. IN ADDITION, THE FOLLOWING SUMMARY IS BASED UPON AN
ANALYSIS OF THE INTERNAL REVENUE CODE AS CURRENTLY IN EFFECT, EXISTING LAWS,
JUDICIAL DECISIONS, ADMINISTRATIVE RULINGS, REGULATIONS AND PROPOSED
REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE.
ISOs. In general, an optionee granted an ISO will not recognize taxable
income upon the grant or the exercise of the ISO (assuming the ISO continues to
qualify as such at the time of exercise). The excess of the fair market value of
shares of Common Stock received upon exercise of the ISO over the exercise price
is, however, a tax preference item which can result in imposition of the
alternative minimum tax. The optionee's "tax basis" in the shares of Common
Stock acquired upon exercise of the ISO generally will be equal to the exercise
price paid by the optionee, except in the case in which the optionee pays the
exercise price by delivery of the shares of Common Stock otherwise owned by the
optionee (as discussed below).
If the shares acquired upon the exercise of an ISO are held by the optionee
for the "ISO holding period" of at least two years after the date of grant and
one year after the date of exercise, the optionee will recognize long-term
capital gain or loss upon the sale of the ISO Shares equal to the amount
realized upon such sale minus the optionee's tax basis in the shares, and such
optionee will not recognize any
15
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taxable ordinary income with respect to the ISO. As a general rule, if an
optionee disposes of the shares acquired upon exercise of an ISO before
satisfying both holding period requirements (a "disqualifying disposition"), the
gain recognized on the disposition will be taxed as ordinary income equal to the
lesser of (i) the fair market value of the shares at the date of exercise of the
ISO minus the optionee's tax basis in the shares, or (ii) the amount realized
upon the disposition minus the optionee's tax basis in the shares. If the amount
realized upon a disqualifying disposition is greater than the amount treated as
ordinary income, the excess amount will be treated as capital gain for federal
income tax purposes. Certain transactions are not considered disqualifying
dispositions including certain exchanges, transfers resulting from the
optionee's death, and pledges and hypothecations of ISO Shares.
SUPPLEMENTAL EQUITY COMPENSATION PROGRAM. No income will be recognized to
the optionee at the time of the grant of an option, nor will the Company be
entitled to a tax deduction at that time. Upon the exercise of a supplemental
stock option, the optionee will be subject to ordinary income tax equal to the
excess of the fair market value of the stock on the exercise date over the
exercise price. The Company will be entitled to a tax deduction in an amount
equal to the ordinary income realized by the optionee. If shares acquired upon
such exercise are held for more than one year before disposition, any gain on
disposition of such shares will be treated as long-term capital gain.
STOCK APPRECIATION RIGHT. Neither the holder of a Tandem Option nor the
holder of a Naked SAR will be deemed to receive any income at the time a SAR is
granted. When any part of a SAR is exercised, the optionee will be deemed to
have received ordinary income on the exercise date in an amount equal to the sum
of the fair market value of shares and cash received. The Company will be
entitled to a corporate income tax deduction in an equal amount. Income
recognized by an optionee upon the exercise of a SAR will be subject to federal
withholding taxes.
PERFORMANCE SHARES. In general, participants will not realize taxable
income at the time of the grant of such an award. Participants will be subject
to tax at ordinary income rates on the value of such awards when payment is
received. If, however, an award is structured to permit a participant to
postpone payment, the participant becomes taxable at ordinary income rates when
payment is made available or the award is no longer subject to a substantial
risk of forfeiture. If the award is paid in shares, taxable income will be the
fair market value of the shares either at the time the award is made available
or at the time any restrictions (including restrictions under Section 16b of the
Exchange Act) subsequently lapse.
COMPENSATION DEDUCTION LIMITATION. Code Section 162(m) generally disallows
a public company's tax deduction for compensation paid to the Chief Executive
Officer, or to any of the other four most highly compensated officers, in excess
of $1.0 million in any tax year. Compensation that qualifies as
"performance-based compensation" is excluded from the $1.0 million deductibility
cap, if various requirements are satisfied. The Company intends that options and
certain other awards granted to employees whom the Committee expects to be
covered employees at the time a deduction arises in connection with such awards,
qualify as "performance-based compensation," so that such awards will not be
subject to the deductibility cap.
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The affirmative vote of a majority of the votes cast by the holders of
shares entitled to vote thereon is required for approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT TO
THE COMPANY'S 2000 EQUITY COMPENSATION PROGRAM DESCRIBED ABOVE.
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REPORT OF THE AUDIT COMMITTEE
The following is the report of the Audit Committee with respect to the Company's
audited financial statements for the fiscal year ended December 31, 2002,
included in the Company's Annual Report on Form 10-K. The information contained
in this report shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information 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, except to
the extent that the Company specifically incorporates it by reference in such
filing.
MEMBERSHIP AND ROLE OF AUDIT COMMITTEE
Each of the members of the Audit Committee is independent as defined under the
National Association of Securities Dealers' listing standards. The Audit
Committee operates under a written charter adopted by the Board of Directors.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's audited financial
statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT AUDITORS
The Audit Committee has discussed with Holtz, Rubenstein & Company, LLP, the
Company's independent auditors, the matters required to be discussed by SAS 61
(Codification of Statements on Accounting Standards) which includes, among other
items, matters related to the conduct of the audit of the Company's financial
statements.
The Audit Committee has also received written disclosures and the letter from
Holtz, Rubenstein & Company, LLP required by Independence Standards Board
Standards No. 1 (which relates to the accountant's independence from the Company
and its related entities) and has discussed with Holtz, Rubenstein & Company,
LLP their independence from the Company.
CONCLUSION
Based on review and discussions referred to above, the Audit Committee
recommended to the Company's Board that the Company's audited financial
statements be included in the Company's annual report on Form 10-K for the
fiscal year ended December 31, 2002.
AUDIT COMMITTEE
Jan Winston, Chairman
Tom Lenagh
John Rich
The Board has no separate Nominating Committee. The entire Board selects
management nominees for election as directors. While the Board will consider
nominees recommended by stockholders, it has not established formal procedures
for this purpose.
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EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth, for the years ended December 31, 2002, 2001
and 2000, the cash compensation paid by the Company and its subsidiaries, to or
with respect to the Company's Officers, whose total annual salary and bonus
exceeded $100,000, for services rendered in all capacities as an executive
officer during such period:
<Table>
<Caption>
Stock
Name and Position Year Salary Bonus Options
- ----------------- ---- ------ ----- -------
Daniel Lehrfeld, 2002 $ 148,000 $ 32,500* 110,000
President and 2001 $ 156,000 None None
Chief Executive Officer 2000 $ 164,000 $ 50,000 360,000
Maria Murray, 2002 $ 107,000 None 89,000
Vice President, 2001 $ 115,000 None None
Business Development 2000 $ 121,000 None 60,000
Devaunshi Sampat, 2002 $ 105,000 None 59,500
Vice President, 2001 $ 139,000 None None
Sales and Marketing 2000 $ 150,000 $ 17,600 31,000
William Miraglia 2002 $ 101,000 None 45,000
Vice President, 2001 $ 105,000 None None
Chief Financial Officer 2000 $ 110,000 $ 17,500 18,000
James Hoey 2002 LESS THAN $ 100,000** None 60,000
</Table>
* Reflects deferred payout of bonus granted in recognition of asset sale in
2000. Full proceeds invested in Company Series B Preferred stock.
** Reflects payroll paid since hire date, October 2002.
During the periods covered, no Officer received perquisites (i.e., personal
benefits) in excess of the lesser of $50,000 or 10% of such individual's
reported salary and bonus.
The following table sets forth information with respect to each of the Company's
Named Executive Officers concerning the exercise of options during fiscal year
2002 and unexercised options held as of December 31, 2002:
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Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<Table>
<Caption>
Number of Securities
Underlying Unexercised Options Value of Unexercised In-the-Money
Shares at Fiscal Year End Options at Fiscal Year End
Acquired on Value ---------------------------------------------------------------------
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable (1)
------------------------------------------------------------------------------------------------
(#) ($) (#) ($)
Daniel Lehrfeld 341,200/228,800 0
Maria Murray 71,555/94,555 0
Devaunshi Sampat 40,900/66,100 0
William S. Miraglia 13,400/51,600 0
James Hoey 0/60,000 0
</Table>
(1) Calculated on the basis of the fair market value of the underlying
securities at fiscal year end, minus the exercise price.
The Following table sets forth information with respect to each of the Company's
Named Executive Officers regarding options granted in the past fiscal year.
Option Grants in Last Fiscal Year
Individual Grants
<Table>
<Caption>
Potential Realizable Value at
Assumed Annual Rates of
% of Total Options Stock Price Appreciation for
Number of Securities Granted to Exercise or Option Term
Underlying Options Employees in Base Price Expiration ------------------------------
Name Granted Fiscal Year per Share Date 5% 10%
------------------------------------------------------------------------------------------------------------
(#) (#) ($) ($)
Daniel Lehrfeld 110,000 22.1% .85 2012 58,801 149,015
Maria Murray 89,000 17.9% .85 2012 123,226 196,217
Devaunshi Sampat 59,500 11.9% .85 2012 82,381 131,179
William S. Miraglia 45,000 9.0% .85 2012 62,305 99,211
James Hoey 60,000 12.0% .85 2012 83,074 132,281
</Table>
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EXECUTIVE EMPLOYMENT CONTRACTS
Mr. Daniel Lehrfeld has an employment contract with the Company that
provides for base salary requirements, stock options and twelve months continued
salary and benefits if the contract is terminated by the Company without cause.
Ms. Devaunshi Sampat has an employment contract with the Company that provides
for base salary, stock options, and nine months continued salary and benefits if
the contract is terminated by the Company without cause.
Mr. Jim Hoey has an employment contract with the Company that provides for base
salary, stock options, and four months continued salary and benefits if the
contract is terminated by the Company without cause.
Mr. Lehrfeld, Ms. Sampat, Mr. Hoey, and other executives have agreed to
temporary salary reductions of 15% of their base pay for an interim period.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on the review of copies of reports and
other information furnished to the Company, all Section 16(a) filing
requirements applicable to the Company's officers, directors and greater than
ten percent shareowners were complied with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Holtz Rubenstein & Company, LLP, (the "Auditors") independent accountants,
has been selected by the Board of Directors to examine and report on the
financial statements of the Company for the fiscal year ending December 31,
2002.
AUDIT FEES AND RELATED MATTERS
Audit Fees. The Corporation was billed approximately $79,000 for the audit
of the Corporation's annual financial statements for the year ended December 31,
2002, the preparation of federal and state income tax returns, and for the
review of the financial statements included in the Corporation's Quarterly
Reports on Form 10-Q filed during 2002.
FINANCIAL INFORMATION SYSTEMS DESIGN IMPLEMENTATION FEES
The Auditors did not provide any of the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of the SEC's Regulation S-X (in general,
information technology services) during the year ended December 31, 2002.
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ALL OTHER FEES
The Auditors did not provide any non-audit services, other than federal &
state tax return preparation and review of the financial statements included in
the Corporation's Quarterly Reports on Form 10-Q filed during 2002, during the
year ended December 31, 2002.
OTHER MATTERS
The Audit Committee of the Board of Directors has considered whether the
provision of information technology services and other non-audit services is
compatible with maintaining the independence of the Corporation's principal
accountant. The Company did not utilize such services during 2002.
Of the time expended by the Corporation's principal accountant to audit the
Corporation's financial statements for the year ended December 31, 2002, less
than 50% of such time involved work performed by persons other than the
principal accountant's full-time, permanent employees.
/s/ Thomas Lenagh
- --------------------------
Thomas Lenagh
/s/ John Rich
- --------------------------
John Rich
/s/ Jan Winston
- --------------------------
Jan Winston
OTHER MATTERS
At the time this Proxy Statement was mailed to shareholders, management was not
aware that any other matter will be presented for action at the Annual Meeting.
If other matters properly come before the Meeting, it is intended that the
shares represented by proxies will be voted with respect to those matters in
accordance with the best judgment of the persons voting them.
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<Page>
NOTICE REGARDING FILING OF SHAREHOLDERS PROPOSALS
AT 2004 ANNUAL MEETING
Any proposal intended to be presented by a shareholder at the 2004 Annual
Meeting of Shareholders must be received by the company at the company's
principal executive offices, 181 Legrand Avenue, Northvale, NJ 07647 no later
than the close of business on March 11, 2004 to be considered for inclusion in
the Proxy Statement for the 2004 Annual Meeting and by May 24, 2004 in order for
the proposal to be considered timely for consideration at next years Annual
Meeting (but not included in the Proxy Statement for such meeting).
By Order of the Board of Directors
William S. Miraglia, Secretary
Dated: July 28, 2002
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2002, INCLUDING CONSOLIDATED FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY
STATEMENT. THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL
OR AS A COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
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EXHIBIT A
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board of Directors of Inrad, Inc.
("Inrad") to assist the Inrad Board in monitoring (a) the integrity of the
financial statements of Inrad and its subsidiaries (the "Company") and (b) the
independence of performance of the Company's external and, if applicable,
internal auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of the National Association of Securities Dealers, Inc., subject to
such qualifications and exceptions as may be permitted by such requirements. The
members of the Audit Committee shall be appointed from time to time by the Inrad
Board. The Inrad Board reserves the right to amend, modify or replace this
Charter in its discretion at any time.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Audit Committee. The Audit
Committee may request any officer or employee of the Company, the Company's
outside counsel or independent auditor to attend meetings of the Audit Committee
or to meet with any members of, or consultants to, the Audit Committee.
The primary goals of this Charter are to specify the following:
- - the scope of the Audit Committee's responsibilities and the approaches to be
used in carrying out those responsibilities, including structure, processes
and membership requirements;
- - the Audit Committee's responsibility for (a) insuring its receipt from the
Company's independent auditor of a formal written statement delineating all
relationships between such auditor and the Company, consistent with
Independence Standards Board Standard No. 1, (b) actively engaging in a
dialogue with such auditor with respect to any disclosed relationships or
services that may impact the objectivity and the independence of the auditor
and (c) taking, or recommending that the Inrad Board take, appropriate action
to oversee the independence of the independent auditor; and
- - the independent auditor's ultimate accountability, to the Inrad Board and the
Audit Committee, as representatives of the shareholders of Inrad and the
ultimate authority and responsibility of the Inrad Board and/or the Audit
Committee to select, evaluate and, where appropriate, replace the independent
auditor (or, if applicable, to nominate the independent auditor to be
proposed for shareholder approval in any proxy statement).
To the extent any statement set forth below is inconsistent with the three
principles set forth above, the three principles set forth above shall govern.
The Audit Committee shall make regular reports to the Inrad Board, as
required by the Delaware General Corporation Law.
Pursuant to this Charter:
1. THE COMMITTEE
The Audit Committee of the Board of Directors of Inrad, Inc. will consist of
at least three members of the Board including a Chairman designated by the
Board. Members of the Audit Committee may not be employees of the Company.
The Committee will meet at least three times a year, with additional meetings
if circumstances require, for the purpose of satisfying its responsibilities.
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<Page>
2. SCOPE
The Committee serves at the pleasure of and is subject to the control
and direction of the Board of Directors.
3. RESPONSIBILITIES OF THE COMMITTEE
- To assist the Board in fulfilling its fiduciary responsibilities to the
shareholders with respect to matters relating to the Company's business,
accounting, reporting, audit and internal controls practices.
- To maintain a direct line of communications between the Board and the
Company's independent auditors and internal auditors to provide for an
exchange of views and information.
4. FUNCTIONS OF THE COMMITTEE
The Committee will satisfy its responsibilities by completing the
following functions:
- Discuss the results of the annual internal and independent audits with
management and the internal and independent auditors.
- Consider the comments from the independent auditors and internal
auditors with respect to internal accounting and management controls and
the consideration given or action taken by management.
- Appoint the independent auditors for the coming year.
- Appraise the effectiveness of the independent audit effort through
discussions with the independent auditors regarding their planned
arrangements and scope of the annual audit, including fees.
- Review the scope of planned activities and budget along with a review of
the effectiveness of the Company's internal auditors, if any.
- Review the anticipated scope and related fees of any non-audit services
to be provided by the independent auditors to ensure that these services
do not detract from the independence of the auditors in their audit
function.
- Consider the comments from the independent auditors with respect to
internal accounting and management controls and the consideration given
or action taken by management.
- Review the Committee's responsibilities and functions, evaluate its
performance, and institute appropriate modifications to reflect changes
in the business environment.
- Monitor the procedures or systems used in preparing the financial
statements of the Company.
- Obtain the assessment of management and the independent auditors as to
the adequacy of:
- the Company's internal accounting procedures and controls.
- the Company's procedures for complying with SEC Regulations and
The Foreign Corrupt Practices Act.
- Receive and review the assessment of management as to the quality and
depth of staffing in the accounting and financial departments worldwide.
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<Page>
- Receive from the Company's independent auditor a formal written
statement delineating all relationships between such auditor and the
Company, consistent with Independence Standards Board Standard No. 1.
- Engage in dialogue with the Company's independent auditor with respect
to any disclosed relationships or services that may impact the
objectivity and independence of such firm.
- Recommend to the Inrad Board appropriate actions to ensure the
independence of the Company's independent auditor.
I. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Inrad Board for approval.
II. Audit Committee should meet with independent auditor without
management present.
III. Review the interim financial statements and financial results with
independent auditor prior to filing Form 10-Qs.
IV. Review Year-End financial statements and financial results prior to
filing Form 10-K.
V. Discuss required communication with independent auditor as required by
SAS 61 of GAAS.
- Review any information submitted to the Audit Committee pursuant to
Section 10A of the Private Securities Litigation Reform Act of 1995.
- Prepare the report to the Company's Board of Directors for inclusion in
the Company's annual proxy statement.
- Review with the independent auditor any material problems or
difficulties the auditor may have encountered during an audit including
any restrictions on the scope of activities or access to required
information; review any management letter provided by the auditor and
the Company's response to that letter.
While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate or are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations, to
resolve disagreements, if any, between management and the independent auditor or
to assure compliance with laws and regulations.
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<Page>
EXHIBIT B
.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INRAD, INC.
Pursuant to N.J.S. 14A:9-4(3)
Dated: ____________ ___, 2003
The undersigned corporation, having adopted an amendment to its
Certificate of Incorporation, hereby certifies as follows:
1. The name of the Corporation is Inrad, Inc.
2. The Corporation's Certificate of Incorporation, as amended, is
further amended by deleting Article I, in its entirety and substituting for it a
new Article I, changing the name of the Corporation to Photonic Products Group,
Inc. The new Article I will read as follows:
"Article I
The name of the Corporation is Photonic Products Group, Inc."
3. The Corporation's Certificate of Incorporation, as amended, is
further amended by increasing the number of authorized shares of Common Stock
from 15,000,000 to 40,000,000. The first paragraph of Article VI will read as
follows:
"Article VI
The total authorized capital stock of the Corporation shall be
41,000,000 shares, consisting of:
(1) 1,000,000 shares of Preferred Stock, without par value;
and
(2) 40,000,000 shares of Common Stock, par value $.01 per
share."
4. The date of the adoption of the amendment by the shareholders was
August ___, 2003.
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5. The number of shares entitled to vote on the amendment were
______, _______ shares of Preferred Stock were entitled to vote on the amendment
as a class.
6. The number of shares voted for and against the amendment were as
follows:
(a) Common Stock:
For:
Against:
(b) Preferred Stock:
For:
Against:
7. The effective date and time of this amendment (the effective
date) is 11:59 p.m., August ___, 2003.
8. Shareholder approval of the amendment was given at the Annual
Meeting of Shareholders on August ___, 2003.
IN WITNESS WHEREOF, the undersigned corporation has caused this
Certificate to be executed on its behalf by its duly authorized officer as of
the date first above written.
INRAD, INC.
By:_ /Daniel Lehrfeld
Daniel Lehrfeld, President
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