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INRAD, INC.
181 Legrand Avenue
Northvale, New Jersey 07647
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 3, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of INRAD, Inc.
(the "Company") will be held at our office, 181 Legrand Avenue, Northvale, New
Jersey on Monday, August 3, 1998 at 2:00 p.m. for the following purposes:
1. To elect five directors to serve until the next Annual Meeting of
Shareholders.
2. To consider and act upon other matters which may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 13, 1998, 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
James L. Greco, Secretary
Northvale, New Jersey
July 17, 1998
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INRAD, INC.
PROXY STATEMENT
The following statement is furnished in connection with the solicitation 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"), of
proxies to be used at the Annual Meeting of Shareholders of the Company to be
held at our office, 181 Legrand Avenue, Northvale, New Jersey, Monday, August 3,
1998 at 2:00 p.m. This Proxy Statement and the enclosed form of proxy are first
being sent to shareholders on or about July 17, 1998.
SHAREOWNERS ENTITLED TO VOTE
Only shareowners of record at the close of business on July 13, 1998, 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
2,116,971 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 election of directors will require the affirmative 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 shareowner 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.
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 the only
individuals or entities known by the Company to be the beneficial owner of more
than 5% of the Company's Common Stock as of June 29, 1998. 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.
2
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Percent of
Name and Address Number of shares Common Stock (2)
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Warren Ruderman (1) 1,107,025 52.3
c/o INRAD, Inc.
181 Legrand Avenue
Northvale, NJ 07647
Clarex, Ltd. 1,969,874(3) 52.3
c/o Bank of Nova Scotia
Trust Company Bahamas Ltd.
P.O. Box N1355
Nassau, Bahamas
Hoechst Celanese Corp. 300,000 14.2
Routes 202-206 North
Box 2500
Somerville, NJ 08876
William F. Nicklin 210,527 (4) 9.6
33 Grand Avenue
Newburgh, NY 12550
Aaron Dean 61,675 (5) 2.8
c/o INRAD, Inc.
William Maxson 3,162 (6) 0.1
c/o INRAD, Inc.
Donald H. Gately 16,417 (7) 0.8
c/o INRAD, Inc.
Directors and Executive 1,210,079 (8) 54.8
Officers as a group
(8 persons)
(1) By virtue of his shareholdings, Warren Ruderman may be deemed to be a
"parent" of the Company as that term is defined in the Rules and
Regulations of the Securities Act of 1933, as amended.
(2) Percentage calculated based on each person's actual ownership plus the
number of shares for that person subject to options, warrants or
convertible notes exercisable or convertible within 60 days.
(3) Including 1,646,846 shares subject to options, warrants or convertible
notes exercisable or convertible within 60 days.
(4) Including 80,000 shares subject to convertible notes convertible
within 60 days.
(5) Including 51,675 shares subject to warrants within 60 days.
(6) Including 1,500 shares subject to options exercisable within 60 days.
(7) Including 16,417 shares subject to warrants within 60 days.
(8) Including 91,092 shares subject to options or warrants within 60 days.
3
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1993, the principal shareowner and President of the Company exchanged an
unsecured demand note for a new promissory note maturing on December 31, 1996 in
the amount of $566,049 (including $154,049 of accrued interest) and 494,400
shares of common stock. The new note bears interest at 7% and is unsecured.
Interest expense related to the shareowner loan was approximately $57,000,
$72,000 and $77,000 in 1997, 1996 and 1995, respectively.
Repayment of the shareowner loan has been subordinated to the prior repayment of
the Company's indebtedness to Chase Manhattan Bank and to other secured
indebtedness of the Company. The principal shareowner has guaranteed borrowings
under the Company's existing credit facility with Chase Manhattan Bank. By
mutual informal agreement, the Company has deferred certain interest payments to
its principal shareowner. During the year ended December 31, 1997, the Company
did not make any quarterly interest payments. Subject to adequate cash flow,
the Company will continue to make interest payments to its principal shareowner.
Although by its terms the indebtedness to the shareowner is due on December 31,
1996, it cannot be repaid until the Chase Manhattan Bank debt has been repaid in
full. The shareowner has agreed not to demand payment prior to January 1, 1999.
During the years ended December 31,1997, 1996 and 1995 approximately 4%, 8% and
9%, respectively, of the Company's net product sales were through a foreign
agent, in which the principal shareowner has an investment.
4
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PROPOSAL ONE
ELECTION OF DIRECTORS
Five directors are to be elected to serve a term of one year and thereafter
until their respective successors shall have been elected and shall have
qualified. Unless a shareowner checks the box "withhold authority" on his proxy
or indicates that his shares should not be voted for certain nominees, it is
intended that the persons named in the proxy will vote for the persons listed in
the table below to serve as directors. Discretionary authority is solicited to
vote for the election of a substitute for any nominee who, for any reason,
presently unknown, cannot be a candidate for election.
NOMINEES
The following table sets forth the names and ages of the nominees for election
to the Board of Directors, the principal occupation or employment of each
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 they served as Board members, and the period during which
each nominee has served as a director of the Company.
POSITION WITH COMPANY AND OTHER BUSINESS
NAME AND AGE EXPERIENCE DURING PAST FIVE YEARS DIRECTOR SINCE
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Warren Ruderman (78) Chairman of the Board of Directors, 1973
President and Chief Executive Officer
of the Company (1973-Present)
Aaron Dean (37) Vice President (1995-Present), 1996
M.D. Sass Associates (investment banking
firm); Vice President (1990-1995)
Arnhold and S. Bleichroeder, Inc.
(investment banking firm); Director,
INRAD Inc., (1994-1995)
William B. Maxson (67) Consultant (1989-Present); Vice 1988
President (1984-1989), Air Force
Programs, Cypress International
(Marketing and business development
firm); Officer, United States Air Force
(1952-1984), retiring with Rank of Major
General in 1984
Donald H. Gately (79) Management Consultant (1990-Present); 1995
Chief Operating Officer, Datamax Corporation
(1994-1996)
THOMAS LENAGH (72) Management Consultant (1990-Present) 1998
5
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During 1997, four meetings of the Board of Directors were held. Each
non-employee director is paid $500 for each Board Meeting they attend, and $250
for each conference call meeting the participate in. During 1997, each director
attended or participated in all the meeting held.
The Board has established a Compensation Committee, consisting of Warren
Ruderman and Donald Gately, to administer the Company's Key Employee
Compensation Program. The Compensation Committee did not meet during 1997.
The Board has a standing Audit Committee whose members presently are William B.
Maxson and Donald Gately. 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. The Committee recommends
to the Board the appointment of the independent accountants. This Committee did
not meet during 1997.
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.
The directors serve one-year terms. Pursuant to agreements between the Company
and Hoechst Celanese Corporation ("Hoechst"), Hoechst may designate a
representative for nomination to the Company's Board of Directors; the Company
has agreed to use its best efforts to have a designated representative elected
to the Board of Directors. At the present time, Hoechst has not designated a
representative to the Board.
Pursuant to an agreement between INRAD and Clarex, Ltd. ("Clarex"), the Company
has agreed to use its best efforts to have two individuals selected by Clarex
elected to the Board of Directors as long as any of the subordinated convertible
notes are outstanding. Mr. Dean and Mr. Lenagh have been selected by Clarex as
representatives.
EXECUTIVE OFFICERS
The executive officers of the Company are Warren Ruderman, Maria Murray, and
James Greco.
Warren Ruderman has served as President and Chairman of the Board of Directors
of the Company since he founded it in 1973. Prior to 1973, he founded and
served as the President of Isomet Corporation, a manufacturer of acousto-optic
devices for the laser industry, and was a Teaching Fellow, Lecturer in
Chemistry, Research Scientist and Consultant at Columbia University. Dr.
Ruderman was a founder and served as a director of the Melex Corporation ( a
life sciences company acquired by Revlon, Inc. in 1975). Dr. Ruderman holds a
doctorate in Chemical Physics from Columbia University, and is a Fellow of the
New York Academy of Sciences.
Maria Murray joined the Company in January 1989, became Vice President of R&D
Programs in 1993, and was appointed Vice President, Marketing and Sales in 1995.
Prior to joining INRAD, she held positions in electronic design engineering in
the laser and communications industries. She holds a B.S. in Electrical
Engineering from the University of Central Florida.
James Greco joined the Company as Secretary and Controller in July 1996. Prior
to joining INRAD, he held positions as Controller of Divisions within National
Cleaning Contractors form 1989-1996. He received a B.B.A. form Pace University
and is a certified public accountant.
Each of the executive officers has been elected by the Board of Directors to
serve as an officer of the Company until the next election of officers, as
provided in the Company's by-laws.
6
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EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth, for the years ended December 31, 1997, 1996 and
1995, the cash compensation paid by the Company and its subsidiaries, to or with
respect to the Company's Chief Executive Officer, the only executive officer
whose total annual salary and bonus exceeded $100,000, for services rendered in
all capacities as an executive officer during such period:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(A)
NAME AND CURRENT ---------------------- LONG-TERM ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION ($)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Warren Ruderman, 1997 $130,000 none none none
President and Chief
Executive Officer 1996 $130,000 none none none
1995 $130,000 none none none
</TABLE>
(A) During the periods covered, no Executive 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.
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.
7
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP, 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, 1998. A representative of that firm is
expected to be present at the Annual Meeting and will have an opportunity to
make a statement if he so desires. The representative is expected to be
available to respond to appropriate questions from shareholders.
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.
NOTICE REGARDING FILING OF SHAREOWNER PROPOSALS
AT 1998 ANNUAL MEETING
As a result of regulations issued by the Securities and Exchange Commission, all
shareowner proposals for the 1999 Annual Meeting must be received by the Company
by February 22, 1999.
By Order of the Board of Directors
James Greco, Secretary
Dated: July 17, 1998
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A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
1997, 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.
<PAGE>
INRAD, INC.
181 LEGRAND AVENUE NORTHVALE, NEW JERSEY 07647
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints warren Ruderman and William B. Maxson, and each of
them, as Proxies, each with the power of to appoint his or her substitute,
and hereby authorizes them to represent and to vote, for and on behalf of the
undersigned, all the shares of common stock of Inrad, Inc. held of record by
the undersigned on July 13, 1998 at the Annual Meeting of Shareowners of the
Company to be held on August 3, 1998 or any adjournment thereof, upon matters
properly coming before the meeting, as set forth in the Notice of Annual
Meeting and Proxy Statement, both of which have been received by the
undersigned and upon all such other matters that may properly be brought
before the meeting, as to which the undersigned confers discretionary
authority upon said proxies. Without otherwise limiting the general
authorization given hereby, said proxies are instructed to vote as directed
on the reverse side.
Dated ______________________________, 1998
__________________________________________
THIS PROXY MUST BE SIGNED
EXACTLY AS NAME APPEARS HEREON.
Give full title if an Attorney, Executor,
Administrator, Trustee, Guardian, etc. For
an account in the name of two or more
persons only one signature is required
unless the parties have agreed otherwise.
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UNLESS OTHERWISE SPECIFIED IN THE SQUARES BELOW, THIS PROXY WILL BE VOTED FOR
ALL OF THE BOARD'S NOMINEE'S.
Election of the Board's nominees for Directors. (The Board of Directors
recommends a vote "FOR")
/ / FOR all nominees listed below (except as marked to the contrary below)
/ / WITHOUT AUTHORITY to vote for all nominees listed below
Nominees: Warren Ruderman, Aaron dean, William B. Maxson, Donald H. Gately
and Thomas J. Lenagh
INSTRUCTIONS: To withhold authority to vote for any individuals nominee,
write that nominee's name on the line provided below.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU MAY NEVERTHELESS VOTE IN
PERSON IF YOU ATTEND.
