<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 4, 2000 AT 10:00 A.M.
TO ALL STOCKHOLDERS OF NATIONAL DENTEX CORPORATION:
Notice is hereby given that the 2000 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 4, 2000 at 10:00 a.m. for the following purposes:
1. To fix the number of directors of the Company at five and to elect such
number of directors for the ensuing year and until their respective
successors are chosen and qualified;
2. To consider and approve the proposed amendment to the Company's 1992
Employees' Stock Purchase Plan (the "ESPP") to increase the number of
shares of Common Stock reserved for issuance under the ESPP by 100,000
shares (representing approximately 2.8% of the outstanding shares);
3. 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, 2000; and
4. 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 15,
2000, 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 3, 2000 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 4, 2000 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, custodians,
nominees and other fiduciaries to solicit their customers for shares of the
Company registered in their names. 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, 1999 are being mailed together on
or about March 3, 2000 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 15, 2000
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 15, 2000, there were
outstanding and entitled to vote 3,551,083 shares of Common Stock, $.01 par
value per share (the "Common Stock"). Each share is entitled to one vote.
<PAGE> 4
OWNERSHIP OF VOTING SECURITIES
The following table sets forth certain information as of February 15, 2000
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 Common Stock by directors, certain
executive officers and all executive officers and directors 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>
David V. Harkins*........................................... 28,000 0.8%
Jack R. Crosby(2)*.......................................... 5,589 0.2%
William H. McClurg*......................................... 7,321 0.2%
Norman F. Strate*........................................... 2,113 0.1%
David L. Brown(3)*+......................................... 23,517 0.7%
Eloy V. Sepulveda(4)+....................................... 18,581 0.5%
Donald E. Merz(5)+.......................................... 15,187 0.4%
Thomas E. Gildersleeve(6)+.................................. 36,166 1.0%
Arthur B. Champagne(7)+..................................... 5,166 0.2%
Richard F. Becker, Jr.(8)+.................................. 20,664 0.6%
Estate of William M. Mullahy (9)+........................... 168,288 4.7%
Wasatch Advisors, Inc. ..................................... 1,219,053 34.3%
150 Social Hall Avenue
Salt Lake City, UT 84111
Goldman Sachs Group, L.P. .................................. 588,800 16.6%
85 Broad Street
New York, NY 10004
Dalton, Greiner, Hartman, Maher & Co. ...................... 246,100 6.9%
1100 Fifth Avenue South
Naples, FL 34102
Artisan Partners Ltd. Partnership........................... 194,200 5.5%
1000 North Water Street
Milwaukee, WI 58203
All executive officers and directors as a group (13
persons)(10).............................................. 358,589 9.8%
</TABLE>
- ---------------
* Director of the Company. Such person's address is c/o National Dentex
Corporation, 526 Boston Post Road, Wayland, MA 01778.
+ Current or former executive officer of the Company. 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 15, 2000
pursuant to the exercise of
2
<PAGE> 5
outstanding options, warrants or conversion privileges. Information with
respect to beneficial ownership is based upon information furnished by such
stockholder.
(2) 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 Common Stock
held by Rust Capital, Ltd; however, Mr. Crosby disclaims beneficial
ownership of such shares.
(3) Mr. Brown holds options issued by the Company for 17,000 shares, of which
11,000 are exercisable within 60 days of February 15, 2000.
(4) Mr. Sepulveda holds options issued by the Company for 15,000 shares, of
which 11,000 are exercisable within 60 days of February 15, 2000.
(5) Mr. Merz holds options issued by the Company for 14,500 shares, of which
9,166 are exercisable within 60 days of February 15, 2000. His holdings
also include 233 shares held by his son, as to which Mr. Merz disclaims
beneficial ownership.
(6) Mr. Gildersleeve holds options issued by the Company for 34,666 shares, all
of which are exercisable within 60 days of February 15, 2000.
(7) Mr. Champagne holds options issued by the Company for 8,500 shares, of
which 5,166 are exercisable within 60 days of February 15, 2000.
(8) Mr. Becker holds options issued by the Company for 13,000 shares, of which
8,999 are exercisable within 60 days of February 15, 2000.
(9) Mr. Mullahy, formerly the Company's Chief Executive Officer, passed away in
July, 1999. His estate holds options issued by the Company for 6,666
shares, all of which are exercisable within 60 days of February 15, 2000.
(10) Certain officers, other than the executive officers named in the table,
hold options issued by the Company for 18,000 shares, of which 12,333 are
exercisable within 60 days of February 15, 2000.
3
<PAGE> 6
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 FIVE 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 five 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. All of the nominees were elected directors
by the stockholders at the Company's Special Meeting in Lieu of Annual Meeting
of Stockholders in 1999. 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>
David V. Harkins.............................. 59 Chairman of the Board and Director 1982
Jack R. Crosby................................ 73 Director 1992
William H. McClurg............................ 63 Director 1994
Norman F. Strate.............................. 59 Director 1997
David L. Brown................................ 59 President and Director 1998
</TABLE>
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 President of Thomas
H. Lee Partners, L.P., a private equity investment firm, and has been associated
with the Thomas H. Lee Company since its founding in 1975. Mr. Harkins is
currently a director of Conseco, Inc., Cott Corporation, First Security
Services, Inc., Fisher Scientific International, Inc., Freedom Securities
Corporation, Metris Companies, Inc., Stanley Furniture Company, 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 CinemaStar Luxury Theaters, Inc.
and Propaganda Film Holdings. 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
is a former member of the Board of Fellows of the Harvard School of Dental
Medicine. Mr. Strate joined the Board of Directors of the Company in 1997.
4
<PAGE> 7
Mr. Brown served as the Company's Vice President-Finance from 1984 to 1998,
as its Chief Financial Officer from 1984 to 1999, and as its Treasurer from 1991
to the present. He was appointed President and a director of the Company in
December, 1998. Prior to joining the Company, Mr. Brown held a number of
financial positions with the William Underwood Company.
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 Executive Committee, of which Messrs. Harkins,
McClurg and Brown are members, met three times during 1999.
The role of the Compensation Committee is described in detail below under
"Executive Compensation -- Report of Compensation Committee on Executive
Compensation." The Compensation Committee, of which Messrs. Harkins, Crosby,
McClurg and Strate are members, met three times during 1999.
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 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 Audit Committee,
of which Messrs. Harkins, Crosby, McClurg and Strate are members, met three
times during 1999.
During the fiscal year ended December 31, 1999, the Board of Directors met
three times. All of the current Directors attended 100% of the meetings of the
Board of Directors and all of the committee meetings of which they were members.
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 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 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.
5
<PAGE> 8
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 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.
6
<PAGE> 9
With respect to Mr. Brown, the Company's President, the Committee increased
his 1999 base pay by approximately 8.3%, from $120,000 to $130,000. In
recognition of Mr. Brown's increased duties and responsibilities during 1999
following the untimely death of the Company's long-time Chief Executive Officer,
William Mullahy, on July 18, 1999, as well as the Company's financial
performance during the year, the Committee increased Mr. Brown's participation
under the executive cash incentive plan referred to above from 50% of base
salary to 60% for 1999.
With respect to the other executive officers named in the compensation
tables below (with the exception of Mr. Mullahy), the Committee reviewed and
recommended approval by the Board of the cash compensation proposals made for
such officers by Mr. Brown as President. These included increases in bonuses
based on short-term performance factors.
The Committee did not make any stock option grants to executive officers
during 1999, after several years of making relatively modest grants, most
recently in December, 1998.
Jack R. Crosby
David V. Harkins
William H. McClurg
Norman F. Strate
7
<PAGE> 10
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into employment and change of control severance
agreements with David L. Brown and Richard F. Becker (the "Agreements"). The
Company's employment agreements with Messrs. 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 for certain specified reasons.
8
<PAGE> 11
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, 1999
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>
12-31-94 100.00 100.00 100.00
12-31-95 257.89 127.97 128.82
12-31-96 211.84 147.20 146.28
12-31-97 231.58 161.98 146.68
12-31-98 176.32 173.02 134.50
12-31-99 176.32 297.02 129.16
</TABLE>
(1) Assumes $100 invested on December 31, 1994 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.
9
<PAGE> 12
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the current 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 EXECUTIVE
NAME AGE EXECUTIVE POSITIONS AND OFFICES HELD OFFICER
---- --- ------------------------------------ -------------
<S> <C> <C> <C>
David L. Brown 59 President, Treasurer, Assistant Clerk and 1984
Director
Donald E. Merz 61 Senior Vice President 1987
Richard F. Becker, Jr. 47 Vice President-Finance, Chief Financial Officer 1990
and Assistant Treasurer
Richard G. Mariacher 55 Vice President-Technical Services 1982
Arthur B. Champagne 59 Group Vice President 1986
James F. Dodd, III 60 Group Vice President 1993
Eloy V. Sepulveda 64 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 Mr. Brown, whose background is
summarized on page 5 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. 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 and Chief Financial Officer. Prior to joining the
Company, Mr. Becker held a number of financial management positions with Etonic,
Inc. and Kendall Company, subsidiaries of Colgate-Palmolive, Adage Corporation,
William Underwood Company and Rix Corporation.
Mr. Mariacher has served as Vice President-Technical Services of the
Company since 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 and the Academy of Esthetic Dentistry.
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 and Delaware. Mr. Champagne has been employed by the Company or its
predecessors for over 40 years.
Mr. Dodd has been a Vice President of the Company since 1993 and has
operational responsibility for the Company's four dental laboratories in
Indiana, Tennessee, Florida and Washington. He was the founder and President of
Dodd Dental Laboratories, Inc., from 1963 until its acquisition by the Company
in 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.
10
<PAGE> 13
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 seven dental laboratories in the states of
Texas, Louisiana, Oklahoma, Mississippi and Arizona.
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 certain persons who served as executive officers of
the Company during 1999 and whose annual compensation for 1999 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($)(3) OPTIONS(#) ($)(4)
- ------------------ ---- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
William M. Mullahy............................... 1999 94,230 265,452 -- 2,356
Former Chief Executive 1998 175,000 105,000 -- 4,000
Officer(1) 1997 175,000 105,000 20,000 3,500
David L. Brown................................... 1999 130,000 100,000 -- 2,500
President and Treasurer 1998 120,000 60,000 6,000 2,500
1997 100,000 73,250 6,000 2,000
Donald E. Merz................................... 1999 80,000 117,453 -- 2,046
Senior Vice President 1998 70,000 107,455 6,000 1,750
1997 58,000 98,185 4,000 1,160
Eloy V. Sepulveda................................ 1999 80,000 75,007 -- 2,000
Group Vice President 1998 80,000 69,066 3,000 2,000
1997 67,000 89,276 6,000 1,340
Arthur B. Champagne.............................. 1999 70,000 74,672 -- 1,900
Group Vice President 1998 70,000 50,943 3,000 1,750
1997 60,000 49,157 4,000 1,200
Richard F. Becker, Jr............................ 1999 92,000 48,000 -- 2,298
Vice President-Finance 1998 86,000 40,000 4,000 2,150
and Chief Financial Officer 1997 72,000 49,600 4,000 1,440
Thomas E. Gildersleeve........................... 1999 94,230 107,496 -- --
Former Vice President 1998 85,000 50,000 6,000 2,125
and Chief Operating Officer(2) 1997 61,539 60,000 4,000 1,230
</TABLE>
- ---------------
(1) Mr. Mullahy passed away on July 18, 1999. The 1999 salary shown was paid to
him between January 1 and July 18, 1999. The 1999 bonus shown includes
payments made to his surviving spouse under the terms of an Employment
Agreement dated April 1, 1995 and a Salary Continuation Agreement dated
April 1, 1985.
(2) Mr. Gildersleeve's employment with the Company ended on December 13, 1999.
(3) Paid for services rendered in 1997, 1998 or 1999 under the Corporate
Executives Incentive Compensation Plan, as to Messrs. Mullahy, Brown, Merz,
Sepulveda, Champagne, Becker and Gildersleeve, and under the Company's
Laboratory Incentive Compensation Plan, as to Messrs. Merz, Sepulveda and
Champagne.
(4) 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
"Code"). The matching contribution is 100% of the first 1% of salary
contributed by the employee and 50% of the next 3% of salary contributed.
11
<PAGE> 14
AGGREGATED OPTION EXERCISE IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning options
exercised during 1999, and the unexercised options held as of December 31, 1999,
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 ($)(9)
ON EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William M. Mullahy.............. -- -- 6,666(2) -- -- --
David L. Brown.................. 2,000 14,500 11,000(3) 6,000 16,500 6,000
Donald E. Merz.................. 1,500 10,875 9,166(4) 5,334 16,500 6,000
Eloy V. Sepulveda............... -- -- 11,000(5) 4,000 19,500 3,000
Arthur B. Champagne............. -- -- 5,166(6) 3,334 1,500 3,000
Richard F. Becker, Jr........... -- -- 8,999(7) 4,001 15,500 4,000
Thomas E. Gildersleeve.......... -- -- 34,666(8) -- 25,500 --
</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 July 18, 2000.
(3) Mr. Brown's options were granted on 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 $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.
(4) Mr. Merz's options were granted on 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 $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.
(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. Champagne's options were granted on April 8, 1996 (1,500 shares),
October 27, 1997 (4,000 shares) and December 21, 1998 (3,000 shares) at
exercise prices of $19.75, $20.50 and $15.25, respectively, and expire April
8, 2006, October 27, 2007 and December 21, 2008, respectively.
(7) Mr. Becker's options were granted on April 4, 1995 (3,000 shares), April 8,
1996 (2,000 shares), October 27, 1997 (4,000 shares) and December 21, 1998
(4,000 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.
(8) 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 (2,666 shares) and December 21, 1998 (2,000 shares) at exercise
prices of $12.25, $19.75, $18.50, $20.50 and $15.25, respectively, and
expire March 13, 2000.
(9) The value of unexercised in-the-money options at the end of fiscal year 1999
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, 1999 ($16.75 per share) and the exercise price of the options
granted.
12
<PAGE> 15
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 1999
have been complied with on a timely basis.
PROPOSAL NO. 2
INCREASE IN SHARES RESERVED UNDER 1992 EMPLOYEES'
STOCK PURCHASE PLAN
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE 1992 EMPLOYEES' STOCK PURCHASE PLAN.
BACKGROUND OF THE PLAN
The Company has a 1992 Employees' Stock Purchase Plan (the "ESPP") which is
available to certain employees of the Company. The ESPP was adopted by the Board
of Directors of the Company on May 22, 1992, and received stockholder approval
on May 26, 1992.
The ESPP is intended to encourage ownership of common stock by employees of
the Company and to provide additional incentive for employees to promote the
success of the business of the Company by enabling eligible employees to
purchase shares of Common Stock at a discount from market value through a
payroll deduction program. The ESPP is intended to be an "Employee Stock
Purchase Plan" within the meaning of Section 423 of the Code. This is a
broad-based plan, open to substantially all of the Company's full-time
employees.
As of December 31, 1999 71,888 shares had been purchased under the ESPP and
it is estimated that an additional 21,000 will be purchased in the current plan
year on or about March 31, 2000. As a result, without the proposed amendment,
only approximately 7,000 shares would remain available for future purchases.
PROPOSED AMENDMENT OF THE PLAN
The Board of Directors of the Company approved an amendment to the ESPP on
January 25, 2000, subject to stockholder approval at the Meeting, to increase
the number of shares of Common Stock available for issuance under the ESPP by
100,000 shares. In all other respects, the ESPP would remain unchanged.
CONCLUSION AND RECOMMENDATION
The Board of Directors recommends a vote "for" approval of the amendment.
The Board of Directors believes that the additional 100,000 shares, which
represent approximately 2.8% of the current number of outstanding shares of
Common Stock, are necessary (i) in order for the Company to continue to attract
and retain key personnel, and (ii) in order to continue to more closely align
the interests of such personnel with those of the stockholders.
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 amendment
shall be required for its 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.
13
<PAGE> 16
PROPOSAL NO. 3
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 2000 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 2000 will be permitted to
stand unless the Board finds other good reason for making a change.
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, 1999, 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
2001 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 3, 2000.
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.
14
<PAGE> 17
<TABLE>
<CAPTION>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
<S> <C> <C> <C> <C>
- --------------------------- 1. Proposal to fix the number of directors at For All With- For All
NATIONAL DENTEX CORPORATION five and to elect the following persons as Nominees hold Except
- --------------------------- directors.
[ ] [ ] [ ]
Mark box at right if an address change [ ]
or comment has been noted on the reverse (01) David L. Brown (03) David V. Harkins
side of this card. (02) Jack R. Crosby (04) William H. McClurg
(05) Norman F. Strate
RECORD DATE SHARES:
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 nominee(s) in the
list above.
2. Proposal to approve the amendment to the For Against Abstain
Company's 1992 Employees' Stock Purchase [ ] [ ] [ ]
Plan (the "ESPP") to increase the number
of shares of common stock reserved for
issuance under the ESPP by 100,000 shares
(representing approximately 2.8% of the
outstanding shares).
3. Proposal to approve the appointment of For Against Abstain
Arthur Andersen LLP as Auditors. [ ] [ ] [ ]
Please be sure to -------------- 4. In their discretion on any other matters as may properly come before the
sign and date this Proxy. Date meeting or at any adjournment or postponement thereof.
- ----------------------------------------------
- ----------------------------------------------
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
</TABLE>
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
4, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
NATIONAL DENTEX CORPORATION
<PAGE> 18
NATIONAL DENTEX CORPORATION
PROXY FOR THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF SHAREHOLDERS ON APRIL 4, 2000
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) David V.
Harkins, David L. Brown, and Richard F. Becker 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 4, 2000 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 1,2, AND 3.
The undersigned hereby confer(s) upon said proxies, and each of them,
discretionary authority to vote (a) upon any other matters or proposals not
known at the time of solicitation of this proxy which may properly come before
the meeting, and (b) with respect to the selection of Directors in the event of
any unforeseen emergency.
Attendance of the undersigned at said meeting or at any adjournment or
postponement thereof will not be deemed to revoke this proxy unless the
undersigned shall affirmatively indicate thereat his or her intention to vote
said shares in person. If a fiduciary capacity is attributed to the undersigned
hereon, this proxy will be deemed signed by the undersigned in that capacity.
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- ---------------------------------------------------------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------------------------ ---------------------------------------------------
- ------------------------------------------------------ ---------------------------------------------------
- ------------------------------------------------------ ---------------------------------------------------
</TABLE>
