<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
National Dentex Corporation
(Name of Registrant as Specified In Its Charter)
National Dentex Corporation
(Name of Person(s) Filing Proxy Statement)
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
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:
- --------------------------------------------------------------------------------
<PAGE> 2
NATIONAL DENTEX CORPORATION
NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 6, 1999 AT 10:00 A.M.
TO ALL STOCKHOLDERS OF NATIONAL DENTEX CORPORATION:
Notice is hereby given that the 1999 Special Meeting in Lieu of Annual
Meeting of Stockholders of National Dentex Corporation (the "Company") will be
held at The Sky Restaurant, 120 Boston Post Road, Sudbury, Massachusetts, on
Tuesday, April 6, 1999 at 10:00 a.m. for the following purposes:
1. To fix the number of directors of the Company at six and to elect such
number of directors for the ensuing year and until their respective
successors are chosen and qualified;
2. To consider and act upon the matter of ratifying the selection of
Arthur Andersen LLP as auditors of the Company for the fiscal year
ending December 31, 1999; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on February 16,
1999, as the record date for determining the stockholders entitled to notice of
and to vote at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND, THE COMPANY REQUESTS THAT YOU FILL IN,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
By Order of the Board of Directors
DONALD H. SIEGEL, Clerk
Dated: March 5, 1999 526 Boston Post Road
Wayland, Massachusetts 01778
<PAGE> 3
NATIONAL DENTEX CORPORATION
526 Boston Post Road
Wayland, Massachusetts 01778
------------------------------
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement is furnished to the stockholders of National Dentex
Corporation (the "Company") in connection with the solicitation of proxies by
the Board of Directors (the "Board") for use at the Special Meeting in Lieu of
Annual Meeting of Stockholders to be held on Tuesday, April 6, 1999 at The Sky
Restaurant, 120 Boston Post Road, Sudbury, Massachusetts, at 10:00 a.m., and any
adjournments or postponements thereof (the "Meeting"). The solicitation of
proxies by mail may be followed by solicitation of certain stockholders by
officers, directors or regular employees of the Company by telephone or other
verbal communications. The Company may also request banks, brokers and their
custodians, nominees and fiduciaries to solicit customers of theirs for shares
of the Company registered in the name of a nominee. The cost of solicitation
will be borne by the Company.
All proxies delivered pursuant to this solicitation are revocable at the
option of the person executing the same by filing a notice of such revocation
with the Clerk of the Company at any time before the voting of such proxy, or by
voting in person at the Meeting. Unless previously revoked, proxies so delivered
will be voted at the Meeting. Where a choice or instruction is specified by the
stockholder thereon, the proxy will be voted in accordance with such
specification. Where a choice or instruction is not specified by such
stockholder, the proxy will be voted as recommended by the directors.
This Proxy Statement, the related form of proxy and the Company's Annual
Report for the fiscal year ended December 31, 1998 are being mailed together on
or about March 5, 1999 to stockholders entitled to notice of and to vote at the
Meeting.
VOTING SECURITIES AND OWNERSHIP THEREOF
OUTSTANDING SHARES AND VOTING RIGHTS
Only stockholders of record at the close of business on February 16, 1999
are entitled to receive notice of and to vote at the Meeting. The transfer books
will not be closed. As of the close of business on February 16, 1999, there were
outstanding and entitled to vote 3,532,031 shares of Common Stock, $.01 par
value per share (the "Common Stock"). Each share is entitled to one vote.
OWNERSHIP OF VOTING SECURITIES
The following table sets forth certain information as of February 16, 1999
with respect to the beneficial ownership of the Company's Common Stock by all
stockholders known by the Company, based on information provided to the Company
by the stockholders, to be beneficial owners of more than 5% of the Company's
Common Stock, and the beneficial ownership of shares of Common Stock by
directors and
<PAGE> 4
nominees for directors, by certain of the Company's executive officers and by
all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENTAGE OF
NAME AND ADDRESS (NUMBER OF OUTSTANDING
OF BENEFICIAL OWNERS SHARES)(1) SHARES(1)
-------------------- --------------------- ---------------------
<S> <C> <C>
William M. Mullahy(2)*+................................ 168,288 4.8%
David V. Harkins*...................................... 28,000 0.8%
Jack R. Crosby(3)*..................................... 5,589 0.2%
William H. McClurg*.................................... 7,321 0.2%
Norman F. Strate*...................................... 1,285 0.04%
David L. Brown(4)*+.................................... 19,331 0.6%
Eloy V. Sepulveda(5)+.................................. 15,973 0.5%
Donald E. Merz(6)+..................................... 12,087 0.3%
Thomas E. Gildersleeve(7)+............................. 29,499 0.8%
Wasatch Advisors, Inc.................................. 1,183,199 33.5%
150 Social Hall Avenue
Salt Lake City, UT 84111
Goldman Sachs Group, L.P............................... 419,200 11.9%
85 Broad Street
New York, NY 10004
Dalton, Greiner, Hartman, Maher & Co................... 224,600 6.4%
1100 Fifth Avenue South
Suite 301
Naples, FL 34102
Robert Fleming, Inc.................................... 183,600 5.3%
320 Park Avenue
11th Floor
New York, NY 10022
All executive officers and directors as a group (13
persons)(8).......................................... 339,087 9.4%
</TABLE>
- ---------------
* Director or nominee for director of the Company. Such person's address is
c/o National Dentex Corporation, 526 Boston Post Road, Wayland, MA 01778.
+ Executive Officer. Such person's address is c/o National Dentex Corporation,
526 Boston Post Road, Wayland, MA 01778.
(1) Unless otherwise indicated, each of the persons named on the table has sole
voting and investment power with respect to the shares set forth opposite
such person's name. With respect to each person or group, percentages are
calculated based on the number of shares outstanding plus shares which may
be acquired by such person or group within 60 days of February 16, 1999
pursuant to the exercise of outstanding options, warrants or conversion
privileges. Information with respect to beneficial ownership is based upon
information furnished by such stockholder.
(2) Mr. Mullahy holds options issued by the Company for 20,000 shares, of which
6,666 are exercisable within 60 days of February 16, 1999.
(3) Includes 5,589 shares held by Rust Capital, Ltd. Mr. Crosby is the President
of Rust Capital, Ltd. and under certain circumstances, he could be deemed to
be indirectly a beneficial owner of the shares of
2
<PAGE> 5
Common Stock held by Rust Capital, Ltd; however, Mr. Crosby disclaims
beneficial ownership of such shares.
(4) Mr. Brown holds options issued by the Company for 17,000 shares, of which
7,000 are exercisable within 60 days of February 16, 1999.
(5) Mr. Sepulveda holds options issued by the Company for 15,000 shares, of
which 8,000 are exercisable within 60 days of February 16, 1999.
(6) Mr. Merz holds options issued by the Company for 14,500 shares, of which
5,833 are exercisable within 60 days of February 16, 1999. His holdings also
include 233 shares held by his son, as to which Mr. Merz disclaims
beneficial ownership.
(7) Mr. Gildersleeve holds options issued by the Company for 40,000 shares, of
which 27,999 are exercisable within 60 days of February 16, 1999.
(8) Certain officers, other than the executive officers named in the table, hold
options issued by the Company for 39,500 shares, of which 17,832 are
exercisable within 60 days of February 16, 1999.
PROPOSAL NO. 1
NUMBER AND ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" FIXING THE
NUMBER OF DIRECTORS AT SIX AND FOR THE ELECTION AS DIRECTORS OF THE NOMINEES
LISTED BELOW.
NUMBER OF AND NOMINEES FOR DIRECTORS
It is the intention of the persons named as proxies to vote the proxies,
unless authority to vote is specifically withheld, to fix the number of
directors at six and to elect as directors the nominees listed below to serve as
such until the next annual meeting of stockholders and until their respective
successors are chosen and qualified. With the exception of Mr. Brown, all of the
nominees were elected directors by the stockholders at the Company's Special
Meeting in Lieu of Annual Meeting of Stockholders in 1998. Mr. Brown joined the
Board of Directors in 1998 and is being nominated for election by the
stockholders for the first time this year. It is believed that each nominee will
be able and willing to serve during the ensuing year. If any one or more of them
should be unable or choose not to serve, the persons named as proxies may either
vote to fix the number of directors at such lesser number as will equal the
number of nominees able and willing to serve, or vote in favor of such other
person or persons as the Board of Directors at that time recommends.
The names and ages of the proposed nominees for directors, their principal
occupations during the past five years, any other directorships held by such
person in any company subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any company registered
as an investment company under the Investment Company Act of 1940, as amended,
and the year in which they first became directors of the Company, are as
follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE OFFICE SINCE
---- --- ------ --------
<S> <C> <C> <C>
William M. Mullahy........................... 63 Chief Executive Officer and Director 1982
David V. Harkins............................. 58 Chairman of the Board and Director 1982
Jack R. Crosby............................... 72 Director 1992
William H. McClurg........................... 62 Director 1994
Norman F. Strate............................. 58 Director 1997
David L. Brown............................... 58 President and Director 1998
</TABLE>
3
<PAGE> 6
Mr. Mullahy was a founder of the Company and has served as a director and
Chief Executive Officer since its inception. In addition, Mr. Mullahy served as
President of the Company from its inception until December, 1998, when he
stepped down as President for personal health reasons. From 1963 to 1979, Mr.
Mullahy held a number of management positions with Warner-Lambert Corporation
and was President of the World-Wide Medical Electronics Group. From 1979 to
1984, Mr. Mullahy acted as an independent consultant for corporations in
turn-around situations, including North American Biologicals, Inc. and First
Alert, Inc. He has more than 20 years of sales and management experience in the
health care and dental industry.
Mr. Harkins was a founder of the Company and has served as Chairman of the
Board and as a director since its inception. Mr. Harkins is a Senior Managing
Director of Thomas H. Lee Company, a private equity investment firm. Mr. Harkins
is currently a director of Cott Corporation, Fisher Scientific Corp., Freedom
Securities Corporation, Metris Companies, Inc. and Syratech Corporation.
Mr. Crosby is Chairman of The Rust Group, a private investment partnership
headquartered in Austin, Texas. Mr. Crosby serves as a director of several
public and privately held companies, including DSI Toys, Inc. and CinemaStar
Luxury Theaters, Inc. Mr. Crosby has been a director of the Company since 1992.
Mr. McClurg has been President of Load Controls, Inc., since 1984. Load
Controls, Inc. manufactures and sells electric motor power sensors and load
controls. Mr. McClurg has been a director of the Company since 1994.
Mr. Strate was Chief Executive Officer of J.F. Jelenko & Co., a supplier of
dental products to dental labs, from 1986 until it was acquired by Heraeus, GmbH
in 1996. He is a partner in The Strate Group, a merger and acquisitions firm. He
also serves on the Board of Fellows of the Harvard School of Dental Medicine.
Mr. Strate joined the Board of Directors of the Company in 1997.
Mr. Brown has been Vice President-Finance and Chief Financial Officer of
the Company since October 1984 and Treasurer since 1991. He was appointed
President and a director of the Company in December, 1998. Mr. Brown served as
International Controller for Charles River Breeding Laboratories for a brief
period in 1984, prior to joining the Company. From 1967 to 1983 he held a number
of financial positions with William Underwood Company, where he was Corporate
Controller from 1979 to 1983.
A quorum being present, the affirmative vote of the holders of a plurality
of the shares of Common Stock voting in person or by proxy at the Meeting is
required to elect each director. Thus, abstentions or broker non-votes, if any,
will not be included in the totals and will have no effect on the outcome of the
vote.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
As permitted by the By-Laws of the Company, the Board has established
standing Executive, Compensation and Audit Committees. The Company does not have
a standing nominating committee or a committee performing similar functions.
The Executive Committee has been empowered, in the absence of a meeting of
the full Board of Directors, to approve the terms of any acquisition by the
Company of dental laboratories or other businesses, the purchase price of which
shall not exceed $1,000,000.
The role of the Compensation Committee is described in detail below under
"Executive Compensation -- Report of Compensation Committee on Executive
Compensation."
The Audit Committee recommends to the Board of Directors the engagement of
independent auditors for the year subject to approval by the stockholders of the
Company, reviews the annual financial statements of the Company and any
recommended changes or modifications in control procedures and accounting
practices
4
<PAGE> 7
and policies, monitors with management and the auditors the Company's system of
internal controls and its accounting and reporting practices, reviews compliance
with the conflict-of-interest policy and other policies of the Company, and
reviews the capital structure of the Company.
The Executive Committee, of which Messrs. Harkins, McClurg and Brown are
members, met once during the Company's last fiscal year. The Compensation
Committee, of which Messrs. Harkins, Crosby, McClurg and Strate are members, met
four times during the Company's last fiscal year. The Audit Committee, of which
Messrs. Harkins, Crosby, McClurg and Strate are members, met twice during the
Company's last fiscal year.
During the fiscal year ended December 31, 1998, the Board of Directors met
four times. All of the Directors attended 100% of the meetings of the Board of
Directors and all of the committee meetings of which they were members, except
for Mr. Mullahy, who attended three of the four meetings of the Board of
Directors.
Any stockholder wishing to make a recommendation of a candidate for
election as a Company director should submit it to the President of the Company.
No director or executive officer is related by blood, marriage or adoption
to any other director or executive officer of the Company.
COMPENSATION OF DIRECTORS
"Non-affiliated" directors are entitled to receive $12,000 annually in
compensation and at their election can take such compensation in cash or Common
Stock of the Company. Mr. McClurg and Mr. Strate are non-affiliated directors
for these purposes. "Affiliated" directors (Messrs. Crosby, Harkins, Mullahy and
Brown) do not receive any fee or remuneration for services as a member of the
Board of Directors or of any committee of the Board of Directors. Affiliated and
non-affiliated directors are reimbursed for expenses incurred in connection with
their services.
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") has
prepared the following report on executive compensation:
The Committee is composed of four directors who are not employees of the
Company. The Committee recommends to the Board the key goals and objectives for
the Chief Executive Officer; recommends compensation for the Chief Executive
Officer and outside Directors; reviews and recommends to the Board compensation
plans submitted by the Chief Executive Officer for all executive officers;
ensures that compensation and benefits are at levels which enable the Company to
attract, retain and motivate high-quality employees; considers, reviews and
recommends to the Board the modification, amendment and establishment of
compensation plans and policies; and, upon recommendation of management, reviews
and recommends to the Board the number of shares, price per share, conditions
and duration for stock issuances under the Company's Long Term Incentive Plan
and other stock plans.
The Committee has attempted to design the components of the compensation
program to meet the Company's pay philosophy. Base salaries, the fixed regular
periodic component of pay, are conservatively pegged to what the Committee
subjectively believes to be competitive with the average level of base salaries
paid to executives holding positions entailing similar responsibilities in
organizations of similar size. Factors
5
<PAGE> 8
considered in determining the appropriate salary grade for each particular
officer include level of responsibility, prior experience and accomplishments
and relative importance of the job in terms of achieving corporate objectives.
Annual bonuses, which are directly linked to the short-term financial
performance of both the operating dental laboratories and the Company as a
whole, are designed to provide better than competitive pay only for better than
competitive financial performance. Finally, the compensation program includes
equity-based plans which reward executives for delivering long-term value to the
Company's stockholders. The Long Term Incentive Plan and the Employees' Stock
Purchase Plan provide rewards to executives and other employees only to the
extent that the stockholders similarly benefit.
The goals of the Company's compensation program are to:
- Reward executives for long-term strategic management and the
enhancement of stockholder value through appropriate equity ownership
in the Company.
- Integrate compensation programs with both the Company's annual and
longer-term strategic planning and measurement processes.
- Support a performance-oriented environment that rewards performance
not only with respect to Company goals but also Company performance.
- Attract and retain key executives critical to the long-term success of
the Company.
The Company has established cash incentive plans which reward dental
laboratory management and other designated key employees who directly influence
the financial performance of an individual dental laboratory, reward key
executives based upon the Company's achievement of corporate earning targets,
expressed in terms of pre-tax income, as compared to the Company's budget for
each year, and reward group managers based upon the achievement of earnings with
each group manager's group of dental laboratories.
The Committee's goal is to use compensation policies to closely align the
interests of management, including attainment of certain short-term performance
goals, with the interests of the Company's stockholders in building long-term
value. The Committee will review its compensation policies from time to time in
order to determine the reasonableness of the Company's compensation program and
to take into account factors which are unique to the Company.
With respect to Mr. Mullahy, the Company's Chief Executive Officer, the
Committee continued to hold Mr. Mullahy's 1998 salary constant, as it had for
several years, based upon the Committee's subjective judgment that this level of
base compensation was appropriate given the Company's continued steady growth.
In addition, Mr. Mullahy participated in the Company's cash Executive Incentive
Compensation Plan. His bonus award under this plan was based solely upon the
Company's level of achievement as compared to its budgeted fiscal year pretax
profit.
With respect to the other executive officers named in the compensation
tables below, the Committee reviewed and recommended approval by the Board of
the cash compensation proposals made for such officers by Mr. Mullahy as Chief
Executive Officer and Mr. Brown as President. These included bonuses based on
the same short-term performance factors taken into account in determining Mr.
Mullahy's cash bonus award. As a long-term incentive, the Committee also
approved Mr. Brown's recommendation of incentive stock option grants to purchase
between 3,000 and 6,000 shares of Common Stock to each of the named officers.
Jack R. Crosby
David V. Harkins
William H. McClurg
Norman F. Strate
6
<PAGE> 9
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into employment and change of control severance
agreements with William M. Mullahy, David L. Brown and Richard F. Becker (the
"Agreements"). The Company's employment agreements with Messrs. Mullahy, Brown
and Becker, which automatically renewed on April 1, 1998, provide for annual
base salaries which may be increased at the discretion of the Board of
Directors.
The Agreements also provide for participation in the Company's Executive
Incentive Compensation Plan, reimbursement of expenses, and the same benefits
offered to the Company's executives generally. The Agreements provide for
automatic renewal for one-year terms until termination by the Company or by the
employee.
The Agreements provide that each may receive severance benefits equal to
two times their respective base salaries in effect immediately prior to the date
of termination plus two times the average amount of the bonus payable for the
two fiscal years ending on or immediately prior to the date of termination in
the event that the executive is terminated by the Company without cause or the
executive terminates his employment agreement for certain specified reasons.
7
<PAGE> 10
COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph compares the Company's cumulative total stockholder
return on its Common Stock during the five fiscal years ended December 31, 1998
with the cumulative total return of the Nasdaq Industrial Index and a peer group
index described more fully below.
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
AMONG THE COMPANY ("NADX"), NASDAQ INDUSTRIAL INDEX AND PEER GROUP INDEX (2)
<TABLE>
<CAPTION>
NADX NASDAQ PEERS
---- ------ -----
<S> <C> <C> <C>
12-31-93 100.00 100.00 100.00
12-31-94 105.56 93.54 80.06
12-31-95 272.22 119.71 103.13
12-31-96 223.61 137.70 117.11
12-31-97 244.44 151.52 117.44
12-31-98 186.11 161.85 107.68
</TABLE>
(1) Assumes $100 invested on December 31, 1993 in the Company's Common Stock,
the Nasdaq Industrial Index and the Peer Group Index, including reinvestment
of any dividends paid on the investment.
(2) The Peer Group Index consists of Dentsply International, Inc. and Patterson
Dental Company. The Company believes that the companies included in the Peer
Group Index represent the publicly traded companies within the dental
services industry.
8
<PAGE> 11
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the executive officers of the Company, their
ages, the positions and offices held by each such person, and the year each such
person first served as an executive officer of the Company:
<TABLE>
<CAPTION>
FIRST YEAR
AS AN
NAME AGE EXECUTIVE POSITIONS AND OFFICES HELD EXECUTIVE OFFICER
---- --- ------------------------------------ -----------------
<S> <C> <C> <C>
William M. Mullahy 63 Chief Executive Officer and Director 1982
David L. Brown 58 President, Treasurer, Chief Financial Officer, 1984
Assistant Clerk and Director
Donald E. Merz 60 Senior Vice President 1987
Thomas E. Gildersleeve 29 Vice President, Business Development and Chief 1996
Operating Officer
Richard F. Becker, Jr. 46 Vice President-Finance and Assistant Treasurer 1990
Richard G. Mariacher 54 Vice President-Technical Services 1982
Arthur B. Champagne 58 Group Vice President 1986
James F. Dodd, III 59 Group Vice President 1993
Eloy V. Sepulveda 63 Group Vice President 1994
</TABLE>
- ---------------
The following is a brief account of the background of each executive
officer of the Company, with the exception of Messrs. Mullahy and Brown, whose
backgrounds are summarized on page 4 above.
Mr. Merz has been in the dental laboratory industry for over 35 years with
the Company or its predecessors. He has been a Vice President of the Company
since 1987. In 1998, Mr. Merz became Senior Vice President and a member of the
Management Committee of the Company.
Mr. Gildersleeve has been employed by the Company since 1995 and has served
as Vice President, Business Development since 1996 and Chief Operating Officer
since 1998. Mr. Gildersleeve also serves on the Management Committee of the
Company. Prior to joining the Company, Mr. Gildersleeve served as an analyst at
Sunbeam-Oster Corporation from 1992-1993. From 1993-1994, he was an associate at
the Helios Group, a private investment group, and acted as an operations
consultant to a number of small companies during 1994 and 1995.
Mr. Becker served as Corporate Controller of the Company from 1984 to 1990,
as Vice President and Corporate Controller from 1990 to 1996, and is currently
Vice President, Finance. Prior to joining the Company, Mr. Becker held a number
of financial management positions with Etonic, Inc. and Kendall Company,
subsidiaries of Colgate-Palmolive, Adage Corporation, William Underwood Company
and Rix Corporation.
Mr. Mariacher has served as Vice President-Technical Services of the
Company since its inception. Mr. Mariacher has been with the Company or its
predecessors for over 30 years. He is the author of many technical articles,
Chairman of the National Board for Certification of Dental Laboratories,
Technical Editor of Laboratory Management Today, serves as Chairman of the Board
of Directors of the CAL-Lab Group and is a member of the American Prosthodontic
Society.
Mr. Champagne has been a Vice President of the Company since 1986 and has
operational responsibility for the Company's five dental laboratory locations in
New England. Mr. Champagne has been employed by the Company or its predecessors
for over 40 years.
9
<PAGE> 12
Mr. Dodd has been a Vice President of the Company since March 1993 and has
operational responsibility for the Company's dental laboratories in Delaware and
the Southeast region. He was the founder and President of Dodd Dental
Laboratories, Inc. ("Dodd"), a dental laboratory, from 1963 until Dodd was
acquired by the Company in February, 1992. Mr. Dodd has also served as President
of the Dental Laboratory Conference (1987-1998), as President of the Delaware
Dental Laboratory Association (1971-1973), as director (1988-1993), Secretary
(1992-1993) and Treasurer (1991-1992) of the American Fund for Dental Health,
and has served as director of the American Dental Trade Association since 1999.
Mr. Sepulveda has been employed by the Company or its predecessors for the
past 40 years. He has served as a Vice President since 1994 and has operational
responsibilities for the Company's eight dental laboratories in the states of
Texas, Louisiana, Oklahoma and Mississippi.
The officers of the Company serve at the discretion of the Board of
Directors.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the past three fiscal years,
information concerning the annual and long-term compensation for services
rendered to the Company by those persons who were at December 31, 1998 (i) the
Chief Executive Officer of the Company and (ii) the four other most highly
compensated executive officers of the Company whose annual compensation during
1998 exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND PRINCIPAL ------------------------------- UNDERLYING COMPENSATION
POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#) ($)(2)
------------------ ---- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
William M. Mullahy.............................. 1998 $175,000 $105,000 -- $4,000
Chief Executive 1997 175,000 105,000 20,000 3,500
Officer 1996 175,000 85,000 -- 2,310
David L. Brown.................................. 1998 120,000 60,000 6,000 2,500
President, Treasurer 1997 100,000 73,250 6,000 2,000
and Chief Financial Officer 1997 93,250 60,000 2,000 1,865
Donald E. Merz.................................. 1998 70,000 107,455 6,000 1,750
Senior Vice President 1997 58,000 98,185 4,000 1,160
1996 58,000 92,168 1,500 1,160
Eloy V. Sepulveda............................... 1998 80,000 69,066 3,000 2,000
Group Vice President 1997 67,000 89,276 6,000 1,340
1996 67,000 92,036 2,000 1,340
Thomas E. Gildersleeve.......................... 1998 85,000 50,000 6,000 2,125
Vice President, 1997 61,539 60,000 4,000 1,230
Business Development 1996 50,000 42,000 25,000 500
and Chief Operating Officer
</TABLE>
- ---------------
(1) Paid for services rendered in 1996, 1997 or 1998 under the Corporate
Executives Incentive Compensation Plan, as to Messrs. Mullahy, Brown, Merz,
Sepulveda and Gildersleeve, under the Company's Laboratory Incentive
Compensation Plan, as to Messrs. Merz and Sepulveda, and under the Group
Managers Incentive Plan, as to Messrs. Merz and Sepulveda.
(2) Represents the Company's matching contribution for the account of the Named
Executive Officer under the Company's Dollars Plus Plan, a plan qualified
under sec.401(k) of the Internal Revenue Code of 1986, as amended. The
matching contribution is 100% of the first 1% of salary contributed by the
employee and 50% of the next 3% of salary contributed.
10
<PAGE> 13
OPTION GRANTS IN 1998
The following table shows the options granted to the Named Executive
Officers during the fiscal year ended December 31, 1998. These options were
granted on December 21, 1998, vest in equal portions over a three year period
from date of grant and expire ten years from date of grant.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATE OF
SECURITIES TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM $(3)
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#) (1) 1998 (2) ($/SH) DATE 5% 10%
---- ---------- ------------ -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
William M. Mullahy..................... -- -- -- -- -- --
David L. Brown......................... 6,000 7.1% 15.25 12/21/08 57,540 145,800
Donald E. Merz......................... 6,000 7.1% 15.25 12/21/08 57,540 145,800
Eloy V. Sepulveda...................... 3,000 3.6% 15.25 12/21/08 28,770 72,900
Thomas E. Gildersleeve................. 6,000 7.1% 15.25 12/21/08 57,540 145,800
</TABLE>
- ---------------
(1) All are incentive stock options.
(2) The Company granted options to purchase a total of 83,930 shares to its
employees in fiscal year 1998, including grants to executive officers.
(3) Net gains from potential stock option exercises are estimated based on
assumed rates of stock price appreciation over the options' terms, as set
forth in rules promulgated by the Securities and Exchange Commission, and
are not intended to forecast possible future appreciation of the Common
Stock. The actual net gains, if any, are dependent on the actual future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the assumed rates of stock price appreciation
utilized in calculating the amounts reflected in these columns will be
achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning options
exercised during 1998 and the unexercised options held as of December 31, 1998,
by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED VALUE YEAR-END(#) AT FISCAL YEAR END $(7)
ON EXERCISE REALIZED ---------------------------- -----------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
William M. Mullahy.............. -- -- 6,666(2) 13,334 -- --
David L. Brown.................. -- -- 8,333(3) 10,667 28,000 9,000
Donald E. Merz.................. -- -- 6,833(4) 9,167 24,375 9,000
Eloy V. Sepulveda............... 3,000 25,500 7,333(5) 7,667 18,000 4,500
Thomas E. Gildersleeve.......... -- -- 22,999(6) 17,001 22,500 9,000
</TABLE>
- ---------------
(1) The value realized upon exercise of the options is determined by multiplying
the number of options exercised by the difference between the market price
of the Common Stock on the date of exercise of the options and the exercise
price of the options exercised.
(2) Mr. Mullahy's options were granted on October 27, 1997 at an exercise price
of $20.50, and expire October 27, 2007.
11
<PAGE> 14
(3) Mr. Brown's options were granted on February 1, 1994 (2,000 shares), April
4, 1995 (3,000 shares), April 8, 1996 (2,000 shares), October 27, 1997
(6,000 shares) and December 21, 1998 (6,000 shares) at exercise prices of
$9.50, $12.25, $19.75, $20.50 and $15.25, respectively, and expire February
1, 1999, April 4, 2005, April 8, 2006, October 27, 2007 and December 21,
2008, respectively.
(4) Mr. Merz's options were granted on February 1, 1994 (1,500 shares), April 4,
1995 (3,000 shares), April 8, 1996 (1,500 shares), October 27, 1997 (4,000
shares) and December 21, 1998 (6,000 shares) at exercise prices of $9.50,
$12.25, $19.75, $20.50 and $15.25, respectively, and expire February 1,
1999, April 4, 2005, April 8, 2006, October 27, 2007 and December 21, 2008,
respectively.
(5) Mr. Sepulveda's options were granted on April 4, 1995 (4,000 shares), April
8, 1996 (2,000 shares), October 27, 1997 (6,000 shares) and December 21,
1998 (3,000 shares) at exercise prices of $12.25, $19.75, $20.50 and $15.25,
respectively, and expire April 4, 2005, April 8, 2006, October 27, 2007 and
December 21, 2008, respectively.
(6) Mr. Gildersleeve's options were granted on April 4, 1995 (5,000 shares),
April 8, 1996 (15,000 shares), December 10, 1996 (10,000 shares), October
27, 1997 (4,000 shares) and December 21, 1998 (6,000 shares) at exercise
prices of $12.25, $19.75, $18.50, $20.50 and $15.25, respectively, and
expire April 4, 2005, April 8, 2006, December 10, 2006, October 27, 2007 and
December 21, 2008, respectively.
(7) The value of unexercised in-the-money options at the end of fiscal year 1998
is determined by multiplying the number of options held by the difference
between the market price of the Common Stock underlying the options on
December 31, 1998 ($16.75 per share) and the exercise price of the options
granted.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and greater than 10% stockholders ("Reporting Persons") to file
certain reports ("Section 16 Reports") with respect to beneficial ownership of
the Company's equity securities. Based solely on a review of the Section 16
Reports furnished to the Company by its Reporting Persons and, where applicable,
any written representation by any of them that Section 16 Reports were not
required, the Company believes that all Section 16(a) filing requirements
applicable to the Company's Reporting Persons during and with respect to 1998
have been complied with on a timely basis, except that a Form 4 for Arthur B.
Champagne, a Group Vice President, disclosing the sale of 500 shares of Common
Stock, was filed late.
PROPOSAL NO. 2
SELECTION OF AUDITORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS.
The Board of Directors has selected Arthur Andersen LLP to act as auditors
for the Company's current fiscal year. A quorum being present, the affirmative
vote of the holders of a majority of the shares of Common Stock voting in person
or by proxy on the appointment of the auditors shall be required for approval.
Thus, abstentions or broker non-votes, if any, will not be included in the
totals and will have no effect on the outcome of the vote.
In the event the appointment of Arthur Andersen LLP as independent auditors
for fiscal year 1999 is not approved by the stockholders, the adverse vote will
be considered as a direction to the Board of Directors to select other auditors
for the following year. However, because of the difficulty in making any
substitution of auditors so long after the beginning of the current year, it is
contemplated that the appointment for the fiscal year 1999 will be permitted to
stand unless the Board finds other good reason for making a change.
12
<PAGE> 15
A representative of Arthur Andersen LLP will be present at the Meeting and
will be provided the opportunity to make a statement if he or she desires to do
so and will be available to respond to appropriate questions from the
stockholders.
The Company's consolidated financial statements for the fiscal year ended
December 31, 1998, were audited and reported upon by Arthur Andersen LLP. In
connection with that audit, Arthur Andersen LLP also reviewed the Company's
Annual Report, quarterly financial statements, and the Company's filings with
the Securities and Exchange Commission and consulted with management as to the
financial statement implications of matters under consideration.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
which may come before the Meeting. If any other matters shall properly come
before the Meeting, it is the intention of the persons named in the enclosed
proxy to vote in accordance with their best judgment. The Board of Directors
knows of no matter to be acted upon at the Meeting that would give rise to
appraisal rights for dissenting stockholders.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for action at the Company's
2000 Annual Meeting of Stockholders must submit the proposal in writing so as to
be received by the Company at its principal executive offices no later than
November 6, 1999.
YOUR VOTE IS IMPORTANT TO US, WHETHER YOU OWN FEW OR
MANY SHARES. PLEASE FILL IN, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
13
<PAGE> 16
NATIONAL DENTEX CORPORATION
PROXY FOR THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF SHAREHOLDERS ON APRIL 6, 1999
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS
The undersigned having received the Notice of Special Meeting in Lieu of Annual
Meeting of Shareholders, Proxy Statement and the Annual Report of National
Dentex Corporation (the "Company"), hereby appoint(s) William M. Mullahy, David
V. Harkins, and David L. Brown, or any one of them, proxies for the
undersigned, with full power of substitution in each of them, to represent the
undersigned at the Special Meeting in Lieu of Annual Meeting of Shareholders of
the Company to be held at The Sky Restaurant, 120 Boston Post Road, Sudbury,
Massachusetts 01776 at 10:00 a.m. on Tuesday, April 6, 1999 and at any
adjournment or postponement thereof, and thereat to vote and act in regard to
all matters which may properly come before said meeting (except those matters
as to which authority is hereinafter withheld) upon and in respect of all
shares of Common Stock of the Company upon or in respect of which the
undersigned would be entitled to vote or act and with all powers the
undersigned would possess, if personally present, and especially (but without
limiting the general authorization and power hereby given) to vote and act as
indicated on the reverse.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
The undersigned hereby confer(s) upon said proxies, and each of them,
discretionary authority to vote (a) upon any other matters or proposals not
known at the time of solicitation of this proxy which may properly come before
the meeting, and (b) with respect to the selection of Directors in the event of
any unforeseen emergency.
Attention of the undersigned at said meeting or at any adjournment or
postponement thereof will not be deemed to revoke this proxy unless the
undersigned shall affirmatively indicate thereat his or her intention to vote
said shares in person. If a fiduciary capacity is attributed to the
undersigned hereon, this proxy will be deemed signed by the undersigned in that
capacity.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
________________________________ ___________________________________
________________________________ ___________________________________
________________________________ ___________________________________
<PAGE> 17
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
=========================== 1. Proposal to fix the
NATIONAL DENTEX CORPORATION number of directors
=========================== at six and to elect
the following persons
as directors:
David L. Brown, For all With- For All
Jack R. Crosby, Nominees hold Except
David V. Harkins, [_] [_] [_]
William H. McClurg,
William M. Mullahy,
AND Norman F. Strate
To withhold authority to vote for any
individual nominee, mark the "For All Except"
box and strike a line through the name(s) of
the nominees in the list above.
RECORD DATE SHARES:
2. Proposal to approve the For Against Abstain
appointment of Arthur [_] [_] [_]
Andersen LLP as auditors
3. In their discretion on any other matters as
may properly come before the meeting or at any
adjournment or postponement thereof.
Mark box at right if an address change or [_]
comment has been noted on the reverse side
of this card.
------------------------------
Please be sure to sign and date this Proxy. Date:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
NATIONAL DENTEX CORPORATION
Dear Shareholder,
Please take note of the important information enclosed with this proxy
card. This is your opportunity to vote on important matters related to the
management and operation of your Company. These are discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right
to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your proxy card must be received prior to the Special Meeting in Lieu of
Annual Meeting of Shareholders, which is scheduled to be held on
April 6, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
NATIONAL DENTEX CORPORATION
