UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No.
__)
Filed by the
Registrant
☑
Filed by a Party
other than the Registrant
☐
Check the
appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule 14a-12
RELM Wireless Corporation
|
(Name of Registrant as Specified In Its Charter)
|
|
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
|
Payment of Filing
Fee (Check the appropriate box):
☑
No
fee required
☐
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each
class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per unit price
or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed
maximum aggregate value of transaction:
(5) Total fee
paid:
☐
Fee
paid previously with preliminary materials.
☐
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount
Previously Paid:
(2) Form, Schedule
or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
RELM Wireless Corporation
7100 Technology Drive
West Melbourne, Florida 32904
April 16,
2018
Dear
Stockholder:
You are cordially
invited to attend the 2018 annual meeting of stockholders of RELM
Wireless Corporation, which
we will hold on
Monday, June 4, 2018, at 10:00 a.m., local time, at our corporate
offices at 7100 Technology Drive, West Melbourne, Florida
32904.
We are pleased to
take advantage of Securities and Exchange Commission rules that
allow issuers to furnish proxy materials to their stockholders on
the Internet. We believe these rules allow us to provide our
stockholders with the information they need, while lowering the
costs of delivery and reducing the environmental impact of our
annual meeting. On or about April 20, 2018, we expect to begin
mailing a Notice of Internet Availability of Proxy Materials, or
E-proxy notice, to our stockholders of record as of the close of
business on April 13, 2018. The E-proxy notice contains
instructions for your use of this process, including how to access
our proxy statement, proxy card and annual report and how to vote
on the Internet. In addition, the E-proxy notice contains
instructions on how you may receive a paper copy of the proxy
statement, proxy card and annual report or elect to receive your
proxy statement, proxy card and annual report over the
Internet.
If you are unable
to attend the meeting in person, it is very important that your
shares be represented and voted at the annual meeting. You may vote
your shares over the Internet as described in the E-proxy notice.
Alternatively, if you received a paper copy of the proxy card by
mail, please complete, sign, date and promptly return the proxy
card in the self-addressed stamped envelope provided. You may also
vote by telephone as described in your proxy card. Voting by
telephone, over the Internet or by mailing a proxy card will not
limit your right to attend the annual meeting and vote your shares
in person.
We look forward to
seeing you at the meeting.
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Sincerely,
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/s/ D. Kyle Cerminara
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D. Kyle Cerminara
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Chairman of the Board of Directors
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RELM WIRELESS CORPORATION
7100 Technology Drive
West Melbourne, Florida 32904
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, JUNE 4, 2018
To the stockholders
of RELM Wireless Corporation:
The 2018 annual
meeting of stockholders of RELM Wireless Corporation will be held
on Monday, June 4, 2018, at 10:00 a.m., local time, at our
corporate offices at 7100 Technology Drive, West Melbourne, Florida
32904, for the following purposes:
1.
To elect seven
directors named in the proxy statement to serve on our board of
directors until the next annual meeting of stockholders and until
their respective successors are duly elected and
qualified;
2.
To ratify the
appointment of Moore Stephens Lovelace, P.A. as our independent
registered public accounting firm for fiscal year
2018;
3.
To approve an
amendment to our Articles of Incorporation to change our corporate
name from RELM Wireless Corporation to BK Technologies, Inc.;
and
4.
To transact such
other business properly brought before the meeting and any
adjournment or postponement of the meeting.
Only stockholders
of record at the close of business on April 13, 2018 are entitled
to notice of, and to vote at, the annual meeting and any
adjournment or postponement of the meeting. Each share of common
stock is entitled to one vote. A list of stockholders entitled to
vote at the annual meeting will be available for inspection by our
stockholders, for any purpose germane to the meeting, at the annual
meeting and during ordinary business hours beginning 10 days prior
to the date of the annual meeting, at our principal executive
offices at 7100 Technology Drive, West Melbourne, Florida
32904.
Whether or not you
plan to attend the meeting in person, please vote your shares over
the Internet, as described in the Notice of Internet Availability
of Proxy Materials, or E-proxy notice. Alternatively, if you
received a paper copy of the proxy card by mail, please complete,
sign, date and promptly return the proxy card in the self-addressed
stamped envelope provided. You may also vote your shares by
telephone as described in your proxy card. Voting by telephone,
over the Internet or by mailing a proxy card will not limit your
right to attend the annual meeting and vote your shares in
person.
All stockholders
are cordially invited to attend the annual meeting.
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By Order of the
Board of Directors,
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/s/ William P. Kelly
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William P. Kelly, Secretary
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West Melbourne,
Florida
April 16,
2018
Important Notice Regarding the
Availability of Proxy Materials for the Annual Stockholder Meeting
to be held on June 4, 2018
: Our proxy statement, proxy card
and annual report on Form 10-K for the year ended December 31, 2017
are available at
https://www.iproxydirect.com
/
RWC
.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE VOTE YOUR PROXY TODAY. YOU CAN VOTE BY INTERNET, BY
TELEPHONE OR BY MAIL USING THE INSTRUCTIONS INCLUDED ON THE NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIALS OR PROXY
CARD.
RELM WIRELESS CORPORATION
________________________________________________________
2018 ANNUAL MEETING OF STOCKHOLDERS
JUNE 4, 2018
________________________________________________________
PROXY STATEMENT
________________________________________________________
This proxy
statement contains information related to the 2018 annual meeting
of stockholders of RELM Wireless Corporation (
“
RELM,
”
the
“
Company,
”
“
we,
”
“
our
”
or
“
us
”
) to be held on Monday, June 4,
2018, at 10:00 a.m., local time, at our corporate offices at 7100
Technology Drive, West Melbourne, Florida 32904, and at any
adjournments or postponements thereof. We are using the Securities
and Exchange Commission rules that allow issuers to furnish proxy
materials to their stockholders on the Internet. On or about April
20, 2018, we expect to begin mailing a Notice of Internet
Availability of Proxy Materials, which is referred to herein as the
“
E-proxy
notice,
”
to each holder
of record of our common stock as of the close of business on April
13, 2018, the record date for the meeting. The E-proxy notice and
this proxy statement summarize the information you need to know to
vote by proxy or in person at the annual meeting. You do not need
to attend the annual meeting in person in order to
vote.
________________________________________________________
T
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A
BOUT THE ANNUAL MEETING
What is the purpose of the
annual meeting?
At the annual
meeting, we are asking stockholders:
●
To elect seven
directors named in this proxy statement to our board of directors
until the next annual meeting of stockholders and until their
respective successors are duly elected and qualified;
●
To ratify the
appointment of Moore Stephens Lovelace, P.A. (
“
Moore Stephens Lovelace
”
) as our independent registered
public accounting firm for the fiscal year ending December 31, 2018
(
“
fiscal 2018
”
);
●
To approve an
amendment to our Articles of Incorporation to change our corporate
name from RELM Wireless Corporation to BK Technologies, Inc.;
and
●
To transact such
other business properly brought before the meeting and any
adjournment or postponement of the meeting.
Why did I receive a Notice of Internet Availability of Proxy
Materials?
The rules of the
Securities and Exchange Commission (the
“
SEC
”
) permit us to make our proxy
materials available to beneficial owners of our common stock
electronically over the Internet without having to mail printed
copies of the proxy materials. Accordingly, on or about April 20,
2018, we are sending a Notice of Internet Availability of Proxy
Materials, which is referred to herein as the
“
E-proxy notice,
”
to our beneficial owners. All
beneficial owners will have the ability to access the proxy
materials, including this proxy statement, the form of proxy card
and our annual report for the fiscal year ended December 31, 2017
(
“
fiscal 2017
”
), on the website referred to in the
E-proxy notice or to request a printed set of the proxy materials.
Instructions on how to access the proxy materials over the Internet
or to request a printed copy may be found in the E-proxy notice. In
addition, beneficial owners may request to receive proxy materials
in printed form by mail or electronically by email on an ongoing
basis.
On or about April
20, 2018, we will begin mailing paper copies of our proxy materials
to stockholders who have requested them. Those stockholders who do
not receive the E-proxy notice, including stockholders who have
previously requested to receive paper copies of proxy materials,
will receive a copy of this proxy statement, the proxy card and our
annual report for fiscal 2017 by mail.
Who is entitled to notice of, and to vote, at the annual
meeting?
You are entitled to
notice of the annual meeting and to vote, in person or by proxy, at
the annual meeting if you owned shares of our common stock as of
the close of business (5:00 p.m. EDT) on April 13, 2018, the record
date of the annual meeting. On the record date, 13,844,584 shares
of our common stock were issued and outstanding and held by 766
holders of record, including Cede & Co., which holds shares on
behalf of the beneficial owners of the Company's common stock..
Holders of record of our common stock on the record date are
entitled to one vote per share at the annual meeting.
Who can attend the meeting?
All stockholders as
of the record date, or their duly appointed proxies, may attend.
Please note that if you hold shares in
“
street name
”
(that is, through a broker or other
nominee), you will need to bring a copy of a brokerage statement
reflecting your stock ownership as of the record date. If you want
to vote shares that you hold in street name in person at the annual
meeting, you must bring a legal proxy in your name from the broker
or other nominee that holds your shares.
What constitutes a quorum?
If a majority of
the shares of our common stock outstanding on the record date is
represented either in person or by proxy at the annual meeting, a
quorum will be present at the annual meeting. Shares held by
persons attending the annual meeting but not voting, shares
represented in person or by proxy and for which the holder has
abstained from voting, and broker
“
non-votes
”
will be counted as present at the
annual meeting for purposes of determining the presence or absence
of a quorum.
What are broker “non-votes”?
A broker non-vote
occurs when a brokerage firm or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the
brokerage firm or other nominee did not receive voting instructions
from the beneficial owner and does not have authority to vote on
that particular proposal. Brokers and other nominees are subject to
the rules of the New York Stock Exchange (the
“
NYSE
”
). The NYSE rules direct that
certain matters submitted to a vote of stockholders are considered
“
routine
”
proposals. Brokers or other
nominees generally may vote on such proposals on behalf of
beneficial owners who have not furnished voting instructions,
subject to the rules of the NYSE concerning transmission of proxy
materials to beneficial owners, and subject to any proxy voting
policies and procedures of those brokerage firms or other nominees.
For
“
non-routine
”
proposals, brokers or other
nominees may not vote on such proposals unless they have received
voting instructions from the beneficial owner, and, to the extent
that they have not received voting instructions, brokers or other
nominees report such number of shares as
“
non-votes.
”
Under NYSE rules,
the election of directors (Proposal 1) and the amendment to our
Articles of Incorporation to change our corporate name (Proposal 3)
are considered to be
“
non-routine
”
matters. This means that brokers or
other nominees who have not been furnished voting instructions from
their clients will not be authorized to vote in their discretion on
these proposals. The ratification of the appointment of an
independent registered public accounting firm (Proposal 2) is a
“
routine
”
matter. This means that brokers or
other nominees who have not been furnished voting instructions from
their clients will be authorized to vote for this proposal. For
beneficial stockholders, if you do not give your broker or other
nominee specific instructions, your shares will not be voted on
Proposals 1 or 3 and may be voted by the brokerage firm or other
nominee on Proposal 2. Broker non-votes will have no effect on the
outcome of the voting on Proposals 1 and 2, but will be treated as
votes “AGAINST” Proposal 3.
How will abstentions be counted?
Because the
election of directors requires only a plurality vote, abstentions
will have no impact upon the election of directors. Abstentions
will also have no impact on the outcome of Proposal 2 (ratification
of the independent registered public accounting firm), but will be
treated as votes “AGAINST” Proposal 3 (amendment to our
Articles of Incorporation to change our corporate
name).
How do I vote?
Whether or not you
plan to attend the annual meeting, we urge you to vote your shares
over the Internet as described in the E-proxy notice.
Alternatively, if you received a paper copy of the proxy card by
mail, please complete, sign, date and promptly return the proxy
card in the self-addressed stamped envelope provided. You may also
vote your shares by telephone as described in your proxy card.
Authorizing your proxy over the Internet, by mailing a proxy card
or by telephone will not limit your right to attend the annual
meeting and vote your shares in person. Your proxy (one of the
individuals named in your proxy card) will vote your shares per
your instructions. If you fail to provide instructions on a proxy
properly submitted via the Internet, mail or telephone, your proxy
will vote, as recommended by the board of directors, (1) to elect
to our board of directors the seven director nominees named in this
proxy statement, (2) to ratify the appointment of Moore Stephens
Lovelace as our independent registered public accounting firm for
fiscal 2018, and (3) to amend our Articles of Incorporation to
change our corporate name from RELM Wireless Corporation to BK
Technologies, Inc.
If you have shares
held by a broker or other nominee, you may instruct your broker or
nominee to vote your shares by following the instructions that the
broker or nominee provides to you. Most brokers and nominees allow
you to vote by mail, telephone and on the Internet. As indicated
above, under NYSE rules, the election of directors (Proposal 1) and
the amendment to our Articles of Incorporation to change our
corporate name (Proposal 3) are
“
non-routine
”
matters, meaning that brokers or
other nominees who have not been furnished voting instructions from
their clients will not be authorized to vote in their discretion on
these proposals. The ratification of the appointment of Moore
Stephens Lovelace as our independent registered public accounting
firm for fiscal 2018 (Proposal 2) is a matter considered
“
routine,
”
meaning that brokers or nominees
who have not been furnished voting instructions from their clients
will be authorized to vote on that proposal.
Can I change my vote after I have voted?
Yes. Voting by
telephone, over the Internet or by mailing a proxy card does not
preclude a stockholder from voting in person at the annual meeting.
A stockholder may revoke a proxy, whether submitted via telephone,
the Internet or mailed, at any time prior to its exercise by filing
with our Corporate Secretary a duly executed revocation of proxy,
by properly submitting, either by telephone, mail or Internet, a
proxy to our Corporate Secretary bearing a later date or by
appearing at the annual meeting and voting in person. Attendance at
the annual meeting will not itself constitute revocation of a
proxy.
What are the board’s recommendations?
The board
unanimously recommends a vote
“
FOR
”
:
●
election to our
board of each of the seven director nominees named in this proxy
statement;
●
ratification of the
appointment of Moore Stephens Lovelace as our independent
registered public accounting firm for fiscal 2018; and
●
the
amendment to our Articles of Incorporation to change our corporate
name from RELM Wireless Corporation to BK Technologies,
Inc.
We do not expect
that any other matters will be brought before the annual meeting.
If, however, other matters are properly presented, the persons
named as proxies will vote the shares represented by properly
executed proxies in accordance with their judgment with respect to
those matters, including any proposal to adjourn or postpone the
annual meeting.
What vote is required to approve the proposals?
Proposal 1: Election of
Directors
. Directors will be elected by a plurality of the
votes cast, either in person or by proxy, at the annual meeting
(meaning that the seven director nominees who receive the highest
number of shares voted
“
for
”
their election are elected). You
may vote
“
for
”
or
“
withhold
”
authority to vote for each of the
director nominees. If you
“
withhold
”
authority to vote with respect to
one or more director nominees, your vote will have no effect on the
election of such nominees. Broker non-votes will also have no
effect on the election of the director nominees.
Proposal 2: Ratification of
Appointment of Moore Stephens Lovelace
. The number of votes
cast
“
for
”
the ratification of the appointment
of Moore Stephens Lovelace as our independent registered public
accounting firm for fiscal 2018, either in person or by proxy, at
the annual meeting must exceed the number of votes cast
“
against
”
ratification. Abstentions and
broker non-votes will have no effect on the outcome of the
vote.
Proposal 3: Amendment to our Articles of
Incorporation to Change Our Corporate Name
. Approval of the
amendment to our Articles of Incorporation to change our corporate
name from RELM Wireless Corporation to BK Technologies, Inc.
requires the affirmative vote of the holders of at least a majority
of the issued and outstanding shares of the Company’s common
stock. You may vote “for” or “against” the
amendment. Abstentions and broker non-votes will be treated as
votes “AGAINST” the proposal.
Other Items
. In the
event that other items are properly brought before the annual
meeting, under Nevada law, each matter other than the election of
directors will be approved if the number of votes cast in favor of
the item by the stockholders entitled to vote exceeds the number of
votes cast in opposition to the matter. A properly executed proxy
marked
“
abstain
”
with respect to any such matter
will not be voted, although it will be counted for purposes of
determining whether there is a quorum. Accordingly, an abstention
will not be counted as a vote cast on the matter and therefore will
not affect the outcome of the matter.
As of the record
date, our directors and executive officers and their affiliates
owned and were entitled to vote approximately 4,566,859 shares of
our common stock, which represented approximately 33% of our common
stock outstanding on that date. We currently anticipate that all of
these persons will vote their and their affiliates
’
shares in favor of the director
nominees, in favor of ratification of the appointment of Moore
Stephens Lovelace and in favor of the amendment to our Articles of
Incorporation to change our corporate name from RELM Wireless
Corporation to BK Technologies, Inc.
Who pays for the preparation of the proxy and soliciting
proxies?
We are making this
solicitation of proxies and have paid the entire expense of
preparing, printing and mailing the E-proxy notice and, to the
extent requested by our stockholders, this proxy statement and any
additional materials furnished to stockholders. In addition to
solicitations by mail, our directors, officers and employees may
solicit proxies from stockholders by telephone, e-mail or other
electronic means, or in person. These persons will not receive
additional compensation for soliciting proxies. Arrangements also
will be made with brokerage houses and other custodians, nominees
and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of stock held of record by these persons, and we
will reimburse them for reasonable out-of-pocket
expenses.
S
ECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table below
sets forth information regarding the beneficial ownership of our
common stock as of the record date, April 13, 2018, by the
following individuals or groups:
●
each
person who is known by us to own beneficially more than 5% of our
common stock;
●
each of
our directors and nominees for director;
●
each of
our named executive officers identified in the
“
Summary Compensation Table For
2016-2017
”
appearing in
this proxy statement (the “Named Executive Officers”);
and
●
all of
our directors and executive officers as a group.
Beneficial
ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to
securities. Shares of our common stock that are subject to our
stock options that are presently exercisable or exercisable within
60 days of April 13, 2018 are deemed to be outstanding and
beneficially owned by the person holding the stock options for the
purpose of computing the percentage of ownership of that person,
but are not treated as outstanding for the purpose of computing the
percentage of any other person.
Unless indicated
otherwise below, the address of our directors, director nominees
and executive officers is c/o RELM Wireless Corporation, 7100
Technology Drive, West Melbourne, Florida 32904. Except as
indicated below, the persons
named in the table
have sole voting and investment power with respect to all shares of
common stock beneficially owned by them. As of April 13, 2018, we
had outstanding 13,844,584 shares of our common stock.
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Shares of Common Stock
Beneficially Owned
|
Name and Address of Beneficial Owner
|
|
Number of Shares
|
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Percent of Class
|
Beneficial Owners of More
Than 5% of Our Common Stock:
|
|
|
|
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Fundamental Global
Investors, LLC and Ballantyne Strong, Inc.
|
|
4,489,264
(1)
|
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32.4%
|
D. Kyle
Cerminara
|
|
4,499,264
(1)(2)(6)(10)
|
|
32.5%
|
Lewis M.
Johnson
|
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4,494,264
(1)(3)(6)(10)
|
|
32.5%
|
Benchmark Capital
Advisors
|
|
1,573,253
(4)
|
|
11.4%
|
Donald F.U.
Goebert
|
|
1,464,538
(5)
|
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10.6%
|
|
|
|
|
|
Directors, Director
Nominees and Named Executive Officers (not otherwise included
above):
|
|
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William P.
Kelly
|
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75,827
(6)(7)(11)
|
|
*
|
Timothy A.
Vitou
|
|
57,500
(6)(11)
|
|
*
|
James R.
Holthaus
|
|
1,000
(6)(11)
|
|
*
|
David P.
Storey
|
|
161,311
(8)(11)
|
|
1.2%
|
Michael R.
Dill
|
|
—
(10)
|
|
—
|
Charles T.
Lanktree
|
|
7,916
(9)(10)
|
|
*
|
General E. Gray
Payne
|
|
15,000
(6)(10)
|
|
*
|
John W.
Struble
|
|
—
(10)
|
|
—
|
Ryan R.K.
Turner
|
|
352
(10)
|
|
*
|
|
|
|
|
|
All current
directors and executive officers as a group (11
persons)
|
|
4,661,859
(12)
|
|
33.4%
|
______________
*Less than
1%
(1)
The amount shown
and the following information is derived from a Schedule 13D/A
filed by Fundamental Global Investors, LLC (
“
Fundamental Global
”
) and its affiliates on February 2,
2018. Fundamental Global is deemed to beneficially own the shares
disclosed as directly owned by certain of its affiliates, including
1,147,087 shares, or 8.3% of outstanding shares, disclosed as
directly owned by Ballantyne Strong, Inc. (
“
Ballantyne Strong
”
), which Fundamental Global is
deemed to beneficially own by virtue of being the largest
stockholder of Ballantyne Strong and D. Kyle Cerminara
’
s positions as the Chief Executive
Officer and Chairman of the Board of Directors of Ballantyne Strong
and as a principal of Fundamental Global. Ballantyne Strong has
shared voting and dispositive power with respect to all 1,147,087
shares reported as directly owned by Ballantyne Strong in the
Schedule 13D/A. Ballantyne Strong
’
s business address is 11422 Miracle
Hills Drive, Suite 300, Omaha, Nebraska 68154. Fundamental Global
expressly disclaims beneficial ownership of the shares disclosed as
directly owned by Ballantyne Strong. According to the Schedule
13D/A, CWA Asset Management Group, LLC (
“
CWA
”
) reports ownership of 1,009,337
shares, or 7.3% of outstanding shares, which are held in its
customer accounts and are included in the number of shares listed
in the table above. CWA has the dispositive power over the shares
held in its customer accounts while CWA
’
s customers retain the voting power
over their shares. CWA
’
s
business address is 9130 Galleria Court, Third Floor, Naples,
Florida 34109. According to the Schedule 13D/A, additional
affiliates of Fundamental Global hold 356,876 shares, which
represents 2.6% of outstanding shares and increases the total
number of shares beneficially owned by Fundamental Global to
4,846,140 shares, or 35% of outstanding shares. Fundamental Global
has shared voting power with respect to 3,479,927 of the shares
listed in the table above and dispositive power with respect to all
of these shares. Fundamental Global
’
s business address is 4201 Congress
Street, Suite 140, Charlotte, North Carolina 28209.
(2)
Mr. Cerminara is
the Chief Executive Officer, Co-Founder and Partner of Fundamental
Global, Co-Chief Investment Officer of CWA, and Chief Executive
Officer and Chairman of the Board of Directors of Ballantyne
Strong. Due to his positions with Fundamental Global and Ballantyne
Strong, Mr. Cerminara is deemed to beneficially own the 4,489,264
shares disclosed as directly owned by certain affiliates of
Fundamental Global, including 1,147,087 shares disclosed as
directly owned by Ballantyne Strong. Mr. Cerminara expressly
disclaims beneficial ownership of these shares. The business
addresses for Mr. Cerminara are c/o Fundamental Global Investors,
LLC, 4201 Congress Street, Suite 140, Charlotte, North Carolina
28209; c/o Ballantyne Strong, Inc., 11422 Miracle Hills Drive,
Suite 300, Omaha, Nebraska 68154; and 131 Plantation Ridge Drive,
Suite 100, Mooresville, North Carolina 28117.
(3)
Mr. Johnson is the
President, Co-Founder and Partner of Fundamental Global, serves as
Co-Chief Investment Officer of CWA, and is a director of Ballantyne
Strong. Accordingly, Mr. Johnson is deemed to beneficially own the
4,489,264 shares disclosed as directly held by affiliates of
Fundamental Global, which includes 1,147,087 shares disclosed as
directly owned by Ballantyne Strong. Mr. Johnson expressly
disclaims beneficial ownership of these shares. The business
addresses for Mr. Johnson are c/o Fundamental Global Investors,
LLC, 4201 Congress Street, Suite 140, Charlotte, North Carolina
28209; and c/o CWA Asset Management Group, LLC, 9130 Galleria
Court, Third Floor, Naples, Florida 34109.
(4)
The amount shown
and the following information is derived from a Schedule 13G/A
filed by Benchmark Capital Advisors (
“
Benchmark
”
) on March 13, 2015. According to
the Schedule 13G/A, Benchmark beneficially owns 1,573,253 shares,
and has sole voting and dispositive power with respect to 882,697
of these shares and shared voting and dispositive power with
respect to 1,573,253 of these shares. Benchmark
’
s business address is 100 Wall
Street, 8th Floor, New York, New York 10005.
(5)
The amount shown is
based on Mr. Goebert
’
s
Form 4 filed on December 30, 2016, plus 6,255 shares acquired upon
option exercises since the filing of the Form 4. Mr.
Goebert’s primary address is 3382 Harbor Road S., Tequesta,
Florida 33469.
(6)
Share ownership of
the following persons includes options to purchase our common
shares presently exercisable or exercisable within 60 days of April
13, 2018 as follows: for Mr. Cerminara
–
10,000 shares; for Mr. Johnson
–
5,000 shares; for Mr.
Kelly
–
49,000 shares;
for Mr. Vitou – 25,000 shares; for Mr. Holthaus – 1,000
shares; and for General Payne – 5,000 shares.
(7)
Includes 26,827
shares held jointly by Mr. Kelly with his wife.
(8)
Mr. Storey, who is
a Named Executive Officer, previously served as our President and
Chief Executive Officer. He resigned from all positions held with
the Company as of the close of business on January 16, 2017. The
amount shown includes 45,000 shares received upon Mr.
Storey’s exercise of a fully vested option on March 8,
2017.
(9)
Includes 7,702
shares directly owned by the Donna B. Lanktree Family Trust, the
trustee of which is Donna B. Lanktree, the spouse of Mr.
Lanktree.
(10)
The named person is
a director and a nominee for director at the annual
meeting.
(11)
The named person is
a Named Executive Officer.
(12)
Includes 4,489,264
shares reported as beneficially owned by Fundamental Global, of
which Messrs. Cerminara and Johnson are deemed to have beneficial
ownership by virtue of their respective positions with Fundamental
Global and Ballantyne Strong. Includes 26,827 shares held jointly
by Mr. Kelly with his wife. Includes 7,702 shares directly owned by
the Donna B. Lanktree Family Trust, the trustee of which is Donna
B. Lanktree, the spouse of Mr. Lanktree. Includes options to
purchase our common shares presently exercisable or exercisable
within 60 days of April 13, 2018 as follows: for Mr. Cerminara
–
10,000 shares; for Mr.
Johnson
–
5,000 shares;
for Mr. Kelly
–
49,000
shares; for Mr. Vitou – 25,000 shares; for Mr. Holthaus
– 1,000 shares; and for General Payne – 5,000 shares.
Henry R. (Randy) Willis, an executive officer of the Company, was
appointed as Chief Operating Officer of the Company effective March
14, 2018, having previously served as
Vice President of Operations since August 2017.
Mr. Willis, who does not directly or beneficially own any common
shares, is not separately
included in the table because he
was not a Named Executive Officer for fiscal 2017.
The following
options are not reflected in the table as they are not presently
exercisable or exercisable within 60 days of April 13, 2018:
options to purchase 29,000 common shares held by Mr. Holthaus,
options to purchase 30,000 common shares held by Mr. Vitou, options
to purchase 36,000 common shares held by Mr. Kelly and options to
purchase 25,000 shares held by Mr. Willis. In addition, the
following options granted on March 14, 2018 are not reflected in
the table: options to purchase 30,000 common shares granted to Mr.
Vitou and options to purchase 20,000 common shares granted to each
of Messrs. Kelly, Holthaus and Willis.
The table also does
not include 5,479 restricted stock units held by each of Messrs.
Cerminara, Dill, Johnson, Lanktree, Struble and Turner and General
Payne, which were granted on June 15, 2017 under the
Company’s 2017 Incentive Compensation Plan. These restricted
stock units vest in full 12 months after the grant date, subject to
the recipient’s continued service as a director of the
Company through such date. Each restricted stock unit represents a
contingent right to receive one share of common stock of the
Company. No restricted stock units have vested as of April 13, 2018
or will vest within 60 days of such date.
P
ROPOSAL 1: ELECTION OF DIRECTORS
General
At the annual
meeting, seven nominees will be elected as directors. Our board of
directors currently consists of seven members, all of whom are
standing for re-election at the annual meeting. At the 2017 annual
meeting, our stockholders elected D. Kyle Cerminara, Michael R.
Dill, Lewis M. Johnson, Charles T. Lanktree, General E. Gray Payne,
John W. Struble and Ryan R.K. Turner as directors. Our board of
directors, based on the recommendation of the nominating and
governance committee, has nominated each of these individuals to
stand for re-election at the annual meeting. We expect each nominee
for director to be able to serve if elected. If any nominee is not
able to serve, proxies will be voted in favor of the remainder of
those nominated and may be voted for substitute nominees, unless
our board of directors chooses to reduce the number of directors
serving on the board.
The directors elected at the annual meeting will serve until the
next annual meeting of stockholders and until their respective
successors are duly elected and qualified.
We are of the view
that the continuing service of qualified incumbent directors
promotes stability and continuity in the function of the board of
directors, contributing to the board
’
s ability to work as a collective
body, while giving us the benefit of the familiarity and insight
into our affairs that our directors have accumulated during their
tenure. With the addition of five new directors in 2017, the
board
’
s composition has
been refreshed to bring the most relevant skill sets and
experiences to the board at this time. When analyzing whether
directors and nominees have the desired experience, qualifications,
attributes and skills, individually and taken as a whole, the
nominating and governance committee and the board of directors
focus on the information as summarized in each of the
directors
’
individual
biographies set forth below. In particular, the board selected Mr.
Cerminara to serve as a director because of his extensive
experience in the financial industry, including investing, capital
allocation, finance and financial analysis of public companies, and
operational experience as the Chief Executive Officer of a
publicly-traded company. He also brings the perspective of one of
our most significant stockholders. Mr. Dill brings over 20 years of
extensive leadership and operational experience to the board,
including experience in developing and implementing strategic
plans. Mr. Johnson brings to the board the perspective of one of
the Company
’
s most
significant stockholders. He has extensive experience in the
financial industry, including investing, capital allocation,
finance and financial analysis of public companies. Mr. Lanktree
brings extensive operational and leadership experience, wireless
communications industry experience and public company experience to
the board, including experience as a Chief Executive Officer.
General Payne brings extensive strategic, operational and
leadership experience and valuable insight into the military
sector, having over 40 years of military operational and strategic
expertise. Mr. Struble provides extensive experience in the
accounting/finance field to the board and qualifies as an
“
audit committee
financial expert
”
under
the SEC
’
s rules. Mr.
Turner brings extensive experience in investment analysis and
capital allocation for a publicly-traded company, as well as
business development experience.
Vote Required
The affirmative
vote of a plurality of the votes cast, either in person or by
proxy, at the annual meeting is required for the election of these
nominees as directors.
Recommendation of the Board
Our board of
directors unanimously recommends that stockholders vote
“
FOR
”
the election of the seven nominees
named in this proxy statement as directors.
Nominees for Election as Directors
The following table
sets forth the nominees to be elected at the annual meeting, the
year each nominee was first elected as a director, each
nominee
’
s age and the
positions currently held by each nominee with our
company:
Name and Year First Elected
|
|
Age
|
|
Position
|
D. Kyle Cerminara
(2015)
(1)(2)
|
|
40
|
|
Chairman of the
Board
|
Michael R. Dill
(2017)
(1)(3)
|
|
53
|
|
Director
|
Lewis M. Johnson
(2016)
(2)
|
|
48
|
|
Director
|
Charles T. Lanktree
(2017)
(1)
|
|
68
|
|
Director
|
General E. Gray
Payne (2017)
(1)(2)(3)
|
|
70
|
|
Director
|
John W. Struble
(2017)
(3)
|
|
41
|
|
Director
|
Ryan R.K. Turner
(2017)
(1)
|
|
39
|
|
Director
|
_____________
(1)
|
Member of the
compensation committee.
|
(2)
|
Member of the
nominating and governance committee.
|
(3)
|
Member of the audit
committee.
|
|
|
The business
experience of each nominee for director is set forth below as of
April 16, 2018.
D. Kyle
Cerminara
was appointed to the board of directors in July
2015 and as Chairman in March 2017. Mr. Cerminara is the Chief
Executive Officer and Chairman of the Board for Ballantyne Strong,
Inc., a holding company with diverse business activities focused on
serving the cinema, retail, financial and government markets. Mr.
Cerminara assumed responsibilities as Chairman of the Board of
Ballantyne Strong in May 2015 and as Chief Executive Officer in
November 2015. Since April 2012, Mr. Cerminara has also served as
the Chief Executive Officer, Co-Founder and Partner of Fundamental
Global Investors, LLC, an SEC registered investment advisor that
manages equity and fixed income hedge funds and is the largest
stockholder of the Company. In addition, Mr. Cerminara is Co-Chief
Investment Officer of CWA Asset Management Group, LLC (d/b/a
Capital Wealth Advisors), a wealth advisor and multi-family office
affiliated with Fundamental Global Investors, LLC, which position
he has held since December 2012. Mr. Cerminara also serves as
President and Trustee of StrongVest ETF Trust and Chief Executive
Officer of StrongVest Global Advisors, LLC. StrongVest Global
Advisors, LLC, a wholly-owned subsidiary of Ballantyne Strong, is
an investment advisor, and CWA Asset Management Group, LLC is a
sub-advisor, to CWA Income ETF, an exchange-traded fund and series
of StrongVest ETF Trust. Mr. Cerminara is a member of the Board of
Directors of a number of publicly held companies focused in the
insurance, technology and communications sectors, including
Ballantyne Strong, Inc. (NYSE American: BTN) since February 2015,
1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), a holding
company, which, through its subsidiaries, is engaged in providing
property and casualty insurance, since December 2016, and Itasca
Capital, Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a
publicly traded investment firm, since June 2016. He also served on
the Board of Directors of Iteris, Inc. (Nasdaq: ITI), a publicly
traded applied informatics company, from August 2016 to November
2017, and Magnetek, Inc., a publicly traded manufacturer, in 2015.
Prior to these roles, Mr. Cerminara was a Portfolio Manager at
Sigma Capital Management, an independent financial adviser, from
2011 to 2012, a Director and Sector Head of the Financials Industry
at Highside Capital Management from 2009 to 2011, and a Portfolio
Manager and Director at CR Intrinsic Investors from 2007 to 2009.
Before joining CR Intrinsic Investors, Mr. Cerminara was a Vice
President, Associate Portfolio Manager and Analyst at T. Rowe Price
from 2001 to 2007 and an Analyst at Legg Mason from 2000 to 2001.
Mr. Cerminara received an MBA from the Darden School of Business at
the University of Virginia and a B.S. in Finance and Accounting
from the Smith School of Business at the University of Maryland,
where he was a member of Omicron Delta Kappa, an NCAA Academic All
American and Co-Captain of the men
’
s varsity tennis team. He also
completed a China Executive Residency at the Cheung Kong Graduate
School of Business in Beijing, China. Mr. Cerminara holds the
Chartered Financial Analyst (CFA) designation.
Michael R.
Dill
was appointed to the board of directors in March 2017.
Mr. Dill has served as Vice President and General Manager of GKW
Aerospace Engine Systems North America, a designer and manufacturer
of aerospace engine components, since April 2017. Mr. Dill
previously served as President of the Aerospace, Power Generation
and General Industrial divisions at AFGlobal Corporation, a
privately
held,
integrated technology and manufacturing company, from August 2014
to April 2017. Prior to joining AFGlobal, Mr. Dill held various
positions in the Aerospace and Defense division of CIRCOR
International, a publicly traded global manufacturer of highly
engineered environment products (NYSE: CIR), including serving as
Group Vice President from 2009 to 2014, Vice President of Business
Development and Strategy from 2010 to 2011 and Director of
Continuous Improvement from 2009 to 2011. From 2007 to 2009, he
served as a Business Unit Director and Facility Leader within the
aerospace group of Parker Hannifin Corporation (NYSE: PH), a
publicly traded diversified manufacturer of motion and control
technologies and systems. Before joining Parker Hannifin
Corporation, he held various positions with Shaw Aero Devices,
Inc., a producer of aerospace components and equipment, from 1996
to 2007, and Milliken and Company, a manufacturing company, from
1988 to 1996. Mr. Dill received a B.S. in Management from the
Georgia Institute of Technology.
Lewis M.
Johnson
was elected to the board of directors in May 2016.
Since April 2012, Mr. Johnson has served as the President,
Co-Founder and Partner of Fundamental Global Investors, LLC, an SEC
registered investment advisor that manages equity and fixed income
hedge funds and is the largest stockholder of the Company. In
addition, since April 2012, Mr. Johnson has served as Co-Chief
Investment Officer of CWA Asset Management Group, LLC (d/b/a
Capital Wealth Advisors), a wealth advisor and multi-family office
affiliated with Fundamental Global Investors, LLC. Prior to
co-founding Fundamental Global Investors, LLC and partnering with
Capital Wealth Advisors, Mr. Johnson was a private investor from
2010 to 2012. From 2008 to 2010, Mr. Johnson served as Portfolio
Manager and Managing Director at Louis Dreyfus Highbridge Energy.
Previously, Mr. Johnson was a Senior Vice President, Portfolio
Manager and Analyst at Pequot Capital from 2006 to 2007. Prior to
joining Pequot Capital, Mr. Johnson was a Vice President and
Analyst at T. Rowe Price from 2000 to 2006. Mr. Johnson worked as
an Analyst at Capital Research and Management in 1999 and as a Vice
President at AYSA from 1992 to 1998. Mr. Johnson received an MBA
from the Wharton School of Business at the University of
Pennsylvania in addition to a M.A. in Political Science and a B.A.
in International Studies from Emory University, where he graduated
Magna Cum Laude and was a member of Phi Beta Kappa. Mr. Johnson has
served on the Board of Directors of Ballantyne Strong, Inc. (NYSE
American: BTN), a holding company with diverse business activities
focused on serving the cinema, retail, financial and government
markets, since May 2016 and on the Board of Directors of 1347
Property Insurance Holdings, Inc. (Nasdaq: PIH), a holding company,
which, through its subsidiaries, is engaged in providing property
and casualty insurance, since April 2017.
Charles T.
Lanktree
was appointed to the board of directors in March
2017. Mr. Lanktree has served as President and Chief Executive
Officer of Eggland
’
s
Best, LLC, a joint venture between Eggland
’
s Best, Inc. and Land O
’
Lakes, Inc. distributing nationally
branded eggs, since 2012. Since 1997, Mr. Lanktree has served as
President and Chief Executive Officer of Eggland
’
s Best, Inc., a franchise-driven
consumer egg business, where he previously served as the President
and Chief Operating Officer from 1995 to 1996 and Executive Vice
President and Chief Operating Officer from 1990 to 1994. Mr.
Lanktree currently serves on the Board of Directors of
Eggland
’
s Best, Inc. and
several of its affiliates and on the Board of Directors of
Ballantyne Strong, Inc. (NYSE American: BTN), a holding company
with diverse business activities focused on serving the cinema,
retail, financial and government markets. From 2010 to 2013, he
served on the Board of Directors of Eurofresh Foods, Inc., a
privately held company, and from 2004 to 2013, he was on the Board
of Directors of Nature
’
s
Harmony Foods, Inc. Prior to joining Eggland
’
s Best, Inc., Mr. Lanktree served as
the President and Chief Executive Officer of American Mobile
Communications, Inc. from 1987 to 1990 and as the President and
Chief Operating Officer of Precision Target Marketing, Inc. from
1985 to 1987. From 1976 to 1985, he held various
executive-
level marketing
positions with The Grand Union Company and Beech
Nut Foods Corporation. Mr. Lanktree
received an MBA from the University of Notre Dame and a B.S. in
Food Marketing from St. Joseph
’
s College. He also served in the
U.S. Army and U.S. Army Reserves from 1971 to 1977.
General E.
Gray Payne
was appointed to the board of directors in
January 2017. General Payne served as Senior Vice President of The
Columbia Group (
“
TCG
”
), from September 2010 to September
2017, where he was responsible for managing the Marine Corps
Programs Division (since September 2010) and the Navy Programs
Division (since October 2013), with combined annual revenue of
approximately $30 million. TCG is a federal consulting firm working
with the Department of Defense, Department of Homeland Security,
NOAA and private clients. TCG consults in the areas of logistics,
acquisitions, program management, information technology, training,
marine architecture and engineering, and command and control
systems. Since December 2011, General Payne has also provided
consulting services to and served on the Advisory Council of
Marstel-Day, LLC, located in Fredericksburg, Virginia, which
consults in the areas of conservation, environmental compliance,
and encroachment. Prior to September 2010, General Payne was on
active duty with the Marine Corps for 10 years, retiring as a Major
General. Prior to March 2001, he worked with a number of companies
in various capacities, including as a management consultant, Chief
Financial Officer, Chief Operating Officer, and Chief Executive
Officer. General Payne currently serves on the following non-profit
boards: The Marine Corps Association & Foundation (since 2005),
where he serves as Chairman of the Board of The Marine Corps
Association, and VetCV (since December 2017). He received a B.S. in
Economics from North Carolina State University and a M.S. in
Strategic Studies from U.S. Army War College.
John W.
Struble
was appointed to the board of directors in March
2017. Mr. Struble has served as Chief Financial Officer of IntraPac
International Corporation, a manufacturing company owned by private
equity investment firm Onex Corporation (TSE: ONEX), since December
2013, where he is responsible for the finance, information
technology and human resources functions. From May 2012 to December
2013, he served as Corporate Controller and Treasurer of IntraPac.
From May 2010 to May 2012, he served as Corporate Controller
(Operations) of Euramax International, Inc., where he was
responsible for the accounting and finance functions for the North
American operations. Euramax is a public company that produces
aluminum, steel, vinyl and fiberglass products for OEM,
distributors, contractors, and home centers in North America and
Europe. Prior to that, he was Controller of Rock
Tenn Company, from December 2008 to
February 2010. Mr. Struble is a Certified Public Accountant. He
received an MBA from the University of Georgia and a B.S. in
Business Administration from the State University of New York at
Buffalo.
Ryan R.K.
Turner
was appointed to the board of directors in
March 2017. Mr. Turner has served as Vice President of Strategic
Investments for Ballantyne Strong, Inc. (NYSE American: BTN), a
holding company with diverse business activities focused on serving
the cinema, retail, financial and government markets, since 2016.
Mr. Turner also serves as President of StrongVest Global Advisors,
LLC, a wholly-owned subsidiary of Ballantyne Strong. He previously
served as Director of Business Development for Ballantyne Strong,
Inc. from 2015 to 2016. From 2012 to 2015, Mr. Turner served as
Director of Research and Research Analyst for Fundamental Global
Investors, LLC, an SEC registered investment advisor that manages
equity and fixed income hedge funds and, together with Ballantyne
Strong, is the largest stockholder of the Company. Prior to joining
Fundamental Global Investors, LLC, Mr. Turner worked as an
Associate Analyst at T. Rowe Price from 2006 to 2012, and as an
Associate in the Product Services & Development Department at
AST Trust Company from 2002 to 2006. Mr. Turner received an MBA
from the Robert H. Smith School of Business at the University of
Maryland and a B.S. in Business Administration from the University
of Arizona. Mr. Turner holds the Chartered Financial Analyst (CFA)
designation.
Executive Officers
The following table
presents information with respect to our executive officers as of
April 16, 2018.
Name
|
|
Age
|
|
Position
|
Timothy A.
Vitou
|
|
61
|
|
President
|
William P.
Kelly
|
|
61
|
|
Executive Vice
President, Chief Financial Officer and Secretary
|
Henry R. (Randy)
Willis
|
|
59
|
|
Chief Operating
Officer
|
James R.
Holthaus
|
|
55
|
|
Chief Technology
Officer
|
Timothy A.
Vitou
has been our President since January 17, 2017.
He previously served as the Company
’
s Senior Vice President of Sales and
Marketing since May 2008. Prior to that, he served as Vice
President of Sales for Mobility Electronics, Inc., from August 2006
to May 2007, Senior Director of Global Go-To-Market, for Motorola
Solutions, Inc., from April 2002 to April 2006, and General
Manager, Americas Region, for Motorola Solutions, from April 2000
to April 2002.
William P.
Kelly
has been our
Executive Vice President and Chief Financial Officer since July
1997, and Secretary since June 2000. From October 1995 to June
1997, he was Vice President and Chief Financial Officer of our
subsidiary, RELM Communications, Inc. From January 1993 to October
1995, he was the Financial Director of Harris Corp. Semiconductor
Sector.
Henry R.
(Randy) Willis
has been our
Chief Operating Officer since March 14, 2018. He previously served
as the Company’s Vice President of Operations since August
2017, overseeing all aspects of manufacturing and quality. Prior to
joining the Company, he held leadership positions in manufacturing,
operations, quality, supply chain, industrial engineering and
program management, including founding and serving as President of
Target Velocity Consulting, Inc., a “Lean/Six Sigma”
firm specializing in operational improvements, from December 2009
to August 2017 and Vice President, Continuous Improvement, for
CIRCOR International, Inc. (NYSE: CIR), from August 2007 to
December 2009. He also served in leadership positions for
Parker-Hannifin Corporation (NYSE: PH) from January 2005 to August
2007 and Honeywell International Inc. (NYSE: HON) from June 1998 to
January 2005. Mr. Willis holds certifications as a Lean Master and
Six Sigma Black Belt and B.S. and M.S. degrees in Industrial
Technology from East Carolina University.
James R.
Holthaus
was appointed as our Chief Technology Officer
effective August 4, 2017. He joined the Company in 2007 and most
recently served as the Vice President – Project 25 Solutions,
responsible for product definition and market analysis with a focus
on development of our P25 mobile and portable radio products. Since
1993, Mr. Holthaus has been active in the development of land
mobile radio products and the P25 Digital Radio Standards. He holds
an M.S. Degree in Electrical Engineering from Southern Methodist
University.
The
board of directors is committed to good business practices,
transparency in financial reporting and the highest level of
corporate governance. The board of directors, which is elected by
the stockholders, is our ultimate decision-making body except with
respect to those matters reserved to our stockholders. It selects
the senior management team, which is charged with the conduct of
our business. Having selected the senior management team, the board
of directors acts as an advisor and counselor to senior management
and ultimately monitors its performance.
Board of Directors Independence
In accordance with
the NYSE American corporate governance listing standards, it is our
policy that the board of directors consist of a majority of
independent directors. Our board of directors reviews the
relationships that each director has with us and other parties.
Only those directors who do not have any of the categorical
relationships that preclude them from being independent within the
independence requirements of the NYSE American corporate governance
listing standards and who the board of directors affirmatively
determines have no relationships that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director are considered to be independent
directors. The board of directors has reviewed a number of factors
to evaluate the independence of each of its members. These factors
include its members
’
current and historic relationships with us and our subsidiaries;
their relationships with management and other directors; the
relationships their current and former employers have with us and
our subsidiaries; and the relationships between us and other
companies of which our board members are directors or executive
officers. After evaluating these factors, the board of directors
has determined that all seven members are
“
independent
”
directors within the independence
requirements of the NYSE American corporate governance listing
standards and all applicable rules and regulations of the
SEC.
There are no family
relationships between any of our directors, director nominees or
executive officers.
Independent members
of our board of directors meet in executive session without
management present, and are scheduled to do so at least once per
year. The board of directors has designated Mr. Cerminara as the
presiding director for these meetings.
Stockholder Communications
Our board of
directors believes that it is important for our stockholders and
other interested parties to have a process to send communications
to the board. Accordingly, stockholders and other interested
parties desiring to send a communication to the board of directors
or to a specific director may do so by delivering a letter to the
Corporate Secretary of RELM at 7100 Technology Drive, West
Melbourne, Florida 32904. The mailing envelope must contain a clear
notation indicating that the enclosed letter is a
“
stockholder-board
communication
”
or
“
stockholder-director
communication
”
(or
“
interested party-board
communication
”
or
“
interested
party-director communication,
”
as appropriate). All such letters
must identify the author as the stockholder or interested party and
clearly state whether the intended recipients of the letter are all
members of our board of directors or certain specified individual
directors. The secretary will open such communications and make
copies, and then circulate them to the appropriate director or
directors and such other individuals in accordance with our
corporate governance policies.
Policy Concerning Director Attendance at Annual Stockholders’
Meetings
While we encourage
all members of our board of directors to attend our annual
stockholders
’
meetings,
there is no formal policy as to their attendance at annual
stockholders
’
meetings.
All seven members of our board of directors attended the 2017
annual stockholders
’
meeting.
Codes of Ethics
Our board of
directors has adopted the Code of Business Conduct and Ethics (the
“
Code of
Conduct
”
) that applies to
all of our directors, officers and employees, including our
principal executive officer, principal financial officer and
principal accounting officer, and the Code of Ethics for the CEO
and Senior Financial Officers (the
“
Code of Ethics
”
) containing additional specific
policies. The Code of Conduct and the Code of Ethics are posted on
our Internet website at www.bktechnologies.com/investor-relations
and are available free of charge, upon request to Corporate
Secretary, 7100 Technology Drive, West Melbourne, Florida 32904;
telephone number: (321) 984-1414.
Any amendment to,
or waiver from, the codes applicable to our directors and executive
officers will be disclosed in a current report on Form 8-K within
four business days following the date of the amendment or waiver
unless the rules of the NYSE American then permit website posting
of such amendments and waivers, in which case we would post such
disclosures on our Internet website.
Meetings and Committees of the Board of Directors
The board of
directors held eight meetings during 2017, and each of the
directors attended at least seventy-five percent (75%) of the total
number of meetings of the board of directors held during the period
for which he was a director and the total number of meetings held
by all committees of the board of directors on which he served
during the periods that he was a member of that
committee.
The board of
directors has a standing audit committee, compensation committee
and nominating and governance committee.
Audit
Committee
.
The
members of the audit committee are John W. Struble, who serves as
chairperson, Michael R. Dill and General E. Gray Payne. The audit
committee has a written charter, which is available at our website
at www.bktechnologies.com/investor-relations. The audit committee
charter requires that the audit committee consist of two or more
members of the board of directors, each of whom are independent as
defined by the corporate governance listing standards of the NYSE
American.
The board of
directors has determined that each of the members of the audit
committee is independent, as defined by Rule 10A-3 of the Exchange
Act and the corporate governance listing standards of the NYSE
American. The board of directors also has determined that Mr.
Struble is an
“
audit
committee financial expert,
”
as defined in Item 407(d)(5) of
Regulation S-K.
The audit committee
has oversight responsibility for the quality and integrity of our
consolidated financial statements and is directly responsible for
the appointment, compensation, retention and oversight of our
independent registered public accounting firm. The committee meets
privately with members of our independent registered public
accounting firm, which has unrestricted access and reports directly
to the committee, and annually reviews their performance and
independence from management in deciding whether to continue to
retain the accounting firm or engage a different accounting firm.
The audit committee also evaluates the lead partner designated by
the independent auditor. As required by the SEC
’
s rules, the committee is directly
involved in the review and selection of the audit partners serving
on the auditor
’
s
engagement team during mandated five-year partner rotations. The
audit committee also oversees audit fee negotiations associated
with our retention of the independent auditor and has the sole
authority to approve such fees. The audit committee met five times
during 2017. The primary functions of the audit committee are to
oversee: (i) the audit of our consolidated financial statements
provided to the SEC and our stockholders; (ii) our internal
financial and accounting processes; and (iii) the independent audit
process. Additionally, the audit committee has responsibilities and
authority necessary to comply with Rules 10A-3(b)(2), (3), (4), and
(5) of the Exchange Act, concerning the responsibilities relating
to: (a) registered public accounting firms, (b) complaints relating
to accounting, internal accounting controls or auditing matters,
(c) authority to engage advisors and (d) funding. These and other
aspects of the audit committee
’
s authority are more particularly
described in the audit committee charter.
The audit committee
has adopted a formal policy concerning approval of audit and
non-audit services to be provided to us by our independent
registered public accounting firm, Moore Stephens Lovelace. The
policy requires that all services to be provided by Moore Stephens
Lovelace, including audit services and permitted audit-related and
non-audit services, must be pre-approved by the audit committee.
The audit committee approved all audit services provided by Moore
Stephens Lovelace to us during 2017. Moore Stephens Lovelace did
not provide any audit-related or non-audit services to us during
2017.
Compensation
Committee
.
The members of the
compensation committee are D. Kyle Cerminara, who serves as
chairperson, Michael R. Dill, Charles T. Lanktree, General E. Gray
Payne and Ryan R.K. Turner. All members of the compensation
committee are independent under the corporate governance listing
standards of the NYSE American and applicable SEC rules and
regulations. The compensation committee has a written charter,
which is available at our website at
www.bktechnologies.com/investor-relations. The functions performed
by the compensation committee include reviewing and approving all
compensation arrangements for our executive officers and
administering our equity incentive plans and programs. The
compensation committee makes all final compensation decisions for
the named executive officers (as identified in the
“
Summary Compensation Table for
2016-2017
”
appearing in
this proxy statement, the
“
Named Executive Officers
”
), including grants of stock
options. Our principal executive officer annually reviews the
performance of each of the Named Executive Officers and other
officers, and makes recommendations regarding the Named Executive
Officers and other officers and managers of the company, while the
compensation committee reviews the performance of our principal
executive officer. The conclusions and recommendations resulting
from our principal executive officer
’
s review are then presented to the
compensation committee for its consideration and approval. The
compensation committee can exercise its discretion in modifying any
of our principal executive officer
’
s recommendations. In performing its
functions, the compensation committee may retain and terminate
outside counsel, compensation and benefits consultants or other
experts. During 2017, the compensation committee met two
times.
Nominating
and Governance Committee
.
The members of the
nominating and governance committee are D. Kyle Cerminara, who
serves as chairperson, Lewis M. Johnson and General E. Gray Payne.
All members of the nominating and governance committee are
independent under the corporate governance listing standards of the
NYSE American. The nominating and governance committee has a
written charter, which is available at our website at
www.bktechnologies.com/
investor-relations
.
During 2017, the nominating and governance committee met
once.
The functions of
the nominating and governance committee include determining and
recommending to the board of directors the slate of director
nominees for election to the board of directors at each annual
stockholders
’
meeting and
identifying and recommending director candidates to fill vacancies
occurring between annual stockholders
’
meetings. In addition, the
nominating and governance committee reviews, evaluates and
recommends changes to our corporate governance guidelines and
policies, including our Code of Conduct and Code of Ethics, and
monitors our compliance with these corporate governance guidelines,
policies and codes.
Board Leadership and Board’s Role in Risk
Oversight
We have a separate
Chairman of the Board and Principal Executive Officer. Our board of
directors believes this board leadership structure is best for the
Company and our stockholders at this time. Our current Chairman of
the Board is D. Kyle Cerminara, an independent director, and our
current Principal Executive Officer is our President, Timothy A.
Vitou.
The board believes
it is in the Company
’
s
best interest to have a separate Chairman of the Board and
Principal Executive Officer so that the Principal Executive Officer
can devote his time and energy on the day-to-day management of the
business while our independent Chairman, currently Mr. Cerminara,
can focus on providing advice and independent oversight of
management. Because our Chairman is appointed annually by our
non-management directors, such directors are able to evaluate the
leadership, performance and independence of our Chairman each
year.
Our board of
directors, through its three standing committees, has an advisory
role in the Company
’
s
risk management process. In particular, the board is responsible
for monitoring and assessing strategic and operational risk
exposure. Our management team maintains primary responsibility for
the Company
’
s risk
management, and the board and its committees rely on the
representations of management, the external audit of our financial
and operating results, our systems of internal controls and our
historically conservative practices when assessing the
Company
’
s risks. The
audit committee considers and discusses financial risk exposures
and the steps management has taken to monitor and control these
exposures, and also provides oversight of the performance of the
internal audit function. The nominating and governance committee
monitors the effectiveness of our corporate governance policies and
the selection of prospective board members and their
qualifications. The compensation committee, in conjunction with the
audit committee, assesses and monitors whether any of the
Company
’
s compensation
policies and programs have the potential to encourage excessive
risk-taking. Each committee must report findings regarding material
risk exposures to the board as quickly as possible. The board
believes that its role in risk oversight does not affect the
board
’
s leadership
structure.
Director Nomination Process
In accordance with
the nominating and governance committee
’
s written charter, the nominating
and governance committee has established policies and procedures
for the nomination of director candidates to the board of
directors. The committee determines the required selection criteria
and qualifications of director candidates based upon our needs at
the time director candidates are considered. Minimum qualifications
for director candidates are set forth in the committee
’
s
“
Policy Regarding Minimum
Qualifications of Director Candidates
”
and include threshold criteria such
as integrity, absence of conflicts of interest that would
materially impair a director
’
s ability to exercise independent
judgment or otherwise discharge the fiduciary duties owed as a
director to the company and our stockholders, ability to represent
fairly and equally all stockholders, demonstrated achievement in
one or more fields of business, professional, governmental,
communal, scientific or educational endeavors, sound judgment, as a
result of management or policy-making experience, that demonstrates
an ability to function effectively in an oversight role, general
appreciation regarding major issues facing public companies of a
size and operational scope similar to the company, and adequate
time to serve. As noted in the policy, the committee, as one of its
considerations, considers the extent to which the membership of the
candidate on the board will promote diversity among the directors,
and seeks to promote through the nominations process an appropriate
diversity on the board of professional background, experience,
expertise, perspective, age, gender, ethnicity and country of
citizenship. The committee also considers the overall composition
of the board and its committee, compliance with the NYSE American
listing standards, and the contributions that a candidate can be
expected to make to the collective functioning of the board based
upon the totality of the candidate
’
s credentials, experience and
expertise, the composition of the board at the time, and other
relevant circumstances.
We are of the view
that the continuing service of qualified incumbent directors
promotes stability and continuity in the function of the board of
directors, contributing to the board
’
s ability to work as a collective
body, while giving us the benefit of the familiarity and insight
into our affairs that our directors have accumulated during their
tenure.
The nominating and
governance committee has adopted procedures consistent with the
practice of re-nominating incumbent directors who continue to
satisfy the committee
’
s
criteria for membership on the board, whom the committee believes
continue to make important contributions to the board and who
consent to continue their service on the board. These procedures
are set forth in the committee
’
s
“
Procedures for Identifying and
Evaluating Director Candidates
”
policy. When evaluating the
qualifications and performance of the incumbent directors that
desire to continue their service on our board, the committee will
(i) consider whether the director continues to satisfy the minimum
qualifications for director candidates adopted by the committee,
(ii) review the assessments of the performance of the director
during the preceding term made by the committee, and (iii)
determine whether there exist any special, countervailing
considerations against re-nomination of the director. When there is
no qualified and available incumbent, the committee will also
solicit recommendations for nominees from persons that the
committee believes are likely to be familiar with qualified
candidates. These persons may include members of our board of
directors and management of the Company. The committee may also
determine to engage a professional search firm to assist in
identifying candidates. As to each recommended candidate that the
committee believes merits consideration, the committee will
consider, among other things, whether the candidate possesses any
of the specific qualities or skills that under the
committee
’
s policies must
be possessed by one or more members of the board, the contribution
that the candidate can be expected to make to the overall
functioning of the board and the extent to which the membership of
the candidate on the board will promote diversity among the
directors.
The nominating and
governance committee has adopted a policy with regard to the
consideration of director candidates submitted by stockholders.
This policy is set forth in the committee
’
s
“
Policy Regarding Director Candidate
Recommendations Submitted by Stockholders.
”
The committee will only consider
director candidates submitted by stockholders who satisfy the
minimum qualifications prescribed by the committee, including that
a director must represent the interests of all stockholders and not
serve for the purpose of favoring or advancing the interests of any
particular stockholder group or other constituency.
In accordance with
this policy, the nominating and governance committee will consider
director candidates recommended by stockholders only where the
committee has determined to not re-nominate an incumbent director.
In addition, the committee will not consider any recommendation by
a stockholder or an affiliated group of stockholders unless such
stockholder or group of stockholders has owned at least five
percent (5%) of our common stock for at least one year as of the
date the recommendation is made. Any eligible stockholder (or
affiliated group of stockholders) who desires to recommend a
director candidate for consideration by the nominating and
governance committee for the 2019 annual meeting of stockholders is
required to do so prior to December 21, 2018. Any such eligible
stockholder (or affiliated group of stockholders) is required to
submit complete information about itself and the recommended
director candidate as specified in the committee
’
s
“
Procedures for Stockholders
Submitting Director Candidate Recommendations
”
policy and as set forth in the
advance notice provisions in our amended and restated bylaws. Such
information must include, among other things, (i) the number of our
common shares beneficially owned by the recommending stockholder
and the length of time such shares have been held, (ii) the name,
age and experience of the director candidate, (iii) whether the
director candidate owns any of our securities, (iv) whether the
director candidate has a direct or indirect material interest in
any transaction in which we are a participant, (v) a description of
all relationships between the director candidate and the
recommending stockholder, and (vi) a statement setting forth the
director candidate
’
s
qualifications. Submissions should be addressed to the nominating
and governance committee care of our Corporate Secretary at our
principal headquarters, 7100 Technology Drive, West Melbourne,
Florida 32904. Submissions must be made by mail, courier or
personal delivery. E-mail submissions will not be
considered.
Copies of the
policies of the nominating and corporate governance committee are
available on our website at
www.bktechnologies.com/
investor-relations
.
The nominating and governance committee evaluated Messrs. D. Kyle
Cerminara, Michael R. Dill, Lewis M. Johnson, Charles T. Lanktree,
General E. Gray Payne, John W. Struble and Ryan R.K. Turner, all of
whom are incumbent directors, and recommended their nomination to
the board of directors. The board, in turn, nominated these seven
persons for election as directors at the annual
meeting.
D
IRECTOR COMPENSATION FOR 2017
Director Compensation Program
Effective
March 17, 2017, the board, upon the recommendation of the
compensation committee, adopted a new director compensation program
for all non-employee directors. The new director compensation
program eliminates meeting fees and increases the annual retainer
fee paid to non-employee directors. The program was adopted to
remain competitive in attracting and retaining qualified board
members and to better align director compensation to other public
companies of comparable size to the Company.
Under
the new program, each non-employee director receives an annual
retainer fee of $50,000, of which $30,000 is payable in quarterly
cash payments of $7,500 and $20,000 is payable in the form of an
annual grant of restricted stock units pursuant to the 2017
Incentive Compensation Plan. The restricted stock units are granted
at the board meeting coinciding with the Company’s annual
stockholders meeting and each restricted stock unit represents a
contingent right to receive one share of the Company’s common
stock. The restricted stock units vest in full 12 months after the
grant date, subject to the recipient’s continued service as a
director of the Company through such date.
In addition, the new director compensation program
provides for an additional $3,000 payable in cash each year for
each board committee served on, or an additional $10,000 payable in
cash each year per committee for service as committee chairman. The
Chairman of the Board also receives an additional $10,000 annual
retainer fee payable in cash.
All non-employee directors are
entitled to reimbursement of reasonable expenses incurred by them
in connection with their attendance at meetings of the board and
any committee thereof on which they serve or otherwise in
furtherance of our business.
If a
non-employee director does not serve on the board or a board
committee or as Chairman of the Board or a board committee chairman
for the full year, the board and any applicable board committee or
chairman retainers are prorated for the portion of the year
served.
Our
2017 Incentive Compensation Plan provides that the aggregate grant
date fair value of all awards granted to any single non-employee
director during any single calendar year (determined as of the
applicable grant date(s) under applicable financial accounting
rules), taken together with any cash fees paid to the non-employee
director during the same calendar year, may not exceed
$200,000.
Prior
to March 17, 2017, we paid to our non-employee directors meeting
fees of $1,000 for attendance in person and $500 for attendance by
telephone at each board meeting. We also paid to each of our
non-employee directors, who served on any committee of the board,
meeting fees of $250 for attendance at each meeting of any such
committee which was held in conjunction with a meeting of the board
and meeting fees of $500 for attendance at each meeting of any such
committee which was not held in conjunction with a board meeting.
Each of our non-employee directors who served as chairperson of any
committee of the board of directors also received an annual fee of
$1,000. In addition, our non-employee directors received an annual
retainer fee of $8,000, and the Chairman of the Board received an
annual retainer fee of $25,000. All non-employee directors were
also entitled to reimbursement of reasonable expenses incurred by
them in connection with their attendance at meetings of the board
and any committee thereof on which they served or otherwise in
furtherance of our business.
The following table
shows the compensation paid to our non-employee directors for
fiscal 2017. David P. Storey, who resigned as a director of the
Company effective as of the close of business on January 16, 2017,
did not receive any compensation for his service as a director as
he was also the President and Chief Executive Officer of the
Company.
Name
|
Fees Earned or Paid in Cash ($)
|
|
|
|
D. Kyle
Cerminara
(1)(8)
|
49,000
|
20,000
|
—
|
69,000
|
Michael R.
Dill
(2)(8)
|
27,000
|
20,000
|
—
|
47,000
|
Lewis M.
Johnson
(8)
|
28,750
|
20,000
|
—
|
48,750
|
Charles T.
Lanktree
(2)(8)
|
24,750
|
20,000
|
—
|
44,750
|
General E. Gray
Payne
(3)(8)
|
32,250
|
20,000
|
5,225
|
57,475
|
John W.
Struble
(2)(8)
|
30,000
|
20,000
|
—
|
50,000
|
Ryan R.K.
Turner
(2)(8)
|
24,750
|
20,000
|
—
|
44,750
|
Donald F. U.
Goebert
(4)
|
—
|
—
|
—
|
—
|
Timothy W.
O
’
Neil
(5)
|
—
|
—
|
—
|
—
|
_________________
(1)
|
Mr. Cerminara was
appointed as Chairman of the Board on March 17, 2017 and re-elected
as director at the 2017 annual stockholders’
meeting.
|
|
|
(2)
|
Messrs. Dill,
Lanktree, Struble and Turner were each appointed to the board on
March 17, 2017 and elected by stockholders at the 2017 annual
stockholders’ meeting.
|
(3)
|
General Payne was
appointed to the board on January 9, 2017 and elected as director
by stockholders at the 2017 annual stockholders’
meeting.
|
|
|
(4)
|
Mr. Goebert
resigned as a director on January 9, 2017 and did not receive any
compensation for his services as a director through such
date.
|
|
|
(5)
|
Mr. O
’
Neil resigned as a director on March
16, 2017 and did not receive any compensation for his services as a
director through such date.
|
|
|
(6)
|
Stock awards
represent the aggregate grant date fair value of 5,479 restricted
stock units, or RSUs, granted on June 15, 2017 after the 2017
annual stockholders’ meeting to each of our non-employee
directors who was elected as a director at the meeting. The RSUs
were granted pursuant to the 2017 Incentive Compensation Plan and
represent a portion of the annual retainer fee payable to our
non-employee directors as described above under “Director
Compensation Program.” Each RSU represents a contingent right
to receive one share of our common stock. The RSUs vest in full 12
months after the grant date, subject to the director’s
continued service as a director of the Company through such date.
In addition, the 2017 Incentive Compensation Plan grants the
compensation committee the discretion to accelerate vesting of the
RSUs upon the occurrence of a “change in control” (as
defined under the plan) or in connection with the termination of
the director’s service for any reason prior to the vesting
date. The amounts shown represent the aggregate grant date fair
value computed in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 718
“Compensation-Stock Compensation” (“FASB ASC
Topic 718”). For a discussion of valuation assumptions, see
Note 10 (Share-Based Employee Compensation) of our consolidated
financial statements included in our Annual Report on Form 10-K for
fiscal 2017.
|
(7)
|
On January 9, 2017,
General Payne received a stock option grant to purchase 5,000
shares of our common stock at an exercise price of $4.95 in
connection with his appointment to the board. The options vested in
full on December 10, 2017. The grant was made pursuant to the terms
of our 2007 Incentive Compensation Plan. The amount shown
represents the aggregate grant date fair value computed in
accordance with FASB ASC Topic 718. The value ultimately realized
by General Payne upon the actual exercise of the stock options may
or may not be equal to the FASB ASC Topic 718 computed value. For a
discussion of valuation assumptions, see Note 10 (Share-Based
Employee Compensation) of our consolidated financial statements
included in our Annual Report on Form 10-K for fiscal
2017.
|
(8)
|
The aggregate
number of option and stock awards outstanding (including
exercisable and unexercised stock options and unvested RSUs) as of
December 31, 2017 for each non-employee director was as
follows:
|
Name
|
|
Option Awards (#)
|
|
Stock Awards (#)
|
|
D.
Kyle Cerminara
|
|
10,000
(all exercisable)
|
|
5,479
RSUs
|
|
Michael R.
Dill
|
|
—
|
|
5,479
RSUs
|
|
Lewis
M. Johnson
|
|
5,000
(all exercisable)
|
|
5,479
RSUs
|
|
Charles T.
Lanktree
|
|
—
|
|
5,479
RSUs
|
|
General E.
Payne
|
|
5,000
(all exercisable)
|
|
5,479
RSUs
|
|
John W.
Struble
|
|
—
|
|
5,479
RSUs
|
|
Ryan R.K.
Turner
|
|
—
|
|
5,479
RSUs
|
|
The restricted
stock units vest in full on June 15, 2018, subject to the
director’s continued service as a director of the Company
through such date. See footnote 6 above for more
information.
Messrs.
O’Neil and Goebert did not have any awards outstanding as of
December 31, 2017.
R
EPORT OF THE AUDIT COMMITTEE
The following report of the
audit committee does not constitute soliciting material and should
not be deemed filed with the Securities and Exchange Commission nor
shall this report be incorporated by reference into any of our
filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
The audit committee
oversees our financial reporting process on behalf of the board of
directors. Management has the primary responsibility for the
consolidated financial statements and the reporting process,
including the systems of internal controls. In fulfilling its
oversight responsibilities, the audit committee has reviewed and
discussed the audited consolidated financial statements included in
our Annual Report on Form 10-K for the fiscal year ended December
31, 2017 with management, including a discussion of the quality,
not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of
disclosures in the consolidated financial statements.
The audit committee
also has reviewed and discussed with our independent registered
public accounting firm, Moore Stephens Lovelace, P.A., which is
responsible for expressing an opinion on the conformity of those
consolidated financial statements with accounting principles
generally accepted in the United States, its judgments as to the
quality, not just the acceptability, of our accounting principles
and such other matters as are required to be discussed with the
committee by the Statement on Auditing Standards No. 1301,
Communications
with Audit Committees
, as adopted by the Public Company
Accounting Oversight Board. In addition, the audit committee has
received the written disclosures and the letter from Moore Stephens
Lovelace, P.A. required by the applicable requirements of the
Public Company Accounting Oversight Board regarding the independent
accountant
’
s
communications with the audit committee concerning independence,
and has discussed with Moore Stephens Lovelace, P.A. its
independence.
Based on the
considerations and discussions referred to above, the audit
committee recommended to our board of directors (and the board
approved) that the audited consolidated financial statements for
2017 be included in our Annual Report on Form 10-K for the year
ended December 31, 2017, as filed with the Securities and Exchange
Commission.
This report is
provided by the following independent directors, who comprise the
audit committee:
|
John W. Struble
(chairperson)
|
|
Michael R.
Dill
General E. Gray
Payne
|
S
UMMARY COMPENSATION TABLE FOR
2016-2017
The following table
provides certain summary information concerning the compensation of
our Named Executive Officers for the last two completed fiscal
years ended December 31, 2017:
Name
and Principal Position
(1)
|
|
|
|
|
|
Non-Equity Incentive Plan
Compensation ($)
|
All Other Compensation
($)
|
|
Timothy A. Vitou
(2)
|
2017
|
247,461
|
50,000
|
—
|
54,295
|
—
|
14,878
(8)
|
366,634
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Storey
(3)
|
2017
|
—
|
—
|
—
|
—
|
—
|
309,029
(9)
|
309,029
|
Former President
andChief Executive Officer
|
2016
|
299,174
|
—
|
—
|
110,900
|
—
|
14,971
(9)
|
425,045
|
|
|
|
|
|
|
|
|
William P. Kelly
|
2017
|
201,283
|
25,000
|
—
|
54,295
|
—
|
14,705
(10)
|
295,283
|
Executive Vice
President, Chief Financial Officer and Secretary
|
2016
|
187,012
|
115,000
|
—
|
22,180
|
—
|
14,709
(10)
|
338,901
|
|
|
|
|
|
|
|
|
James R. Holthaus
(4)
|
2017
|
144,326
|
132,556
(6)
|
—
|
56,790
|
—
|
11,638
(11)
|
345,310
|
Chief Technology
Officer
|
|
|
|
|
|
|
|
|
_____________
(1)
Henry R. (Randy)
Willis was appointed as Chief Operating Officer of the Company on
March 14, 2018, having previously served as Vice President of
Operations since August 2017. Mr. Willis is not included in the
table above as he was not a Named Executive Officer for fiscal
2017.
(2)
Mr. Vitou was
appointed as President of the Company effective January 17, 2017
and was not a Named Executive Officer for fiscal 2016. Mr.
Vitou’s compensation for 2017 includes compensation received
from January 1, 2017 through January 17, 2017 in his role as Senior
Vice President of Sales and Marketing of the Company.
(3)
Mr. Storey resigned
from all positions with the Company effective as of the close of
business on January 16, 2017.
(4)
Mr.
Holthaus was appointed as Chief Technology Officer of the Company
effective August 4, 2017 and was not a Named Executive Officer for
fiscal 2016. Mr. Holthaus’ compensation for 2017 includes
compensation received from January 1, 2017 through August 4, 2017
in his role as Vice President – Project 25 Solutions for the
Company.
(5)
On March 14, 2018,
the compensation committee approved payment of cash bonuses of
$50,000 to Mr. Vitou, $25,000 to Mr. Kelly and $12,500 to Mr.
Holthaus based upon their 2017 performance.
On March 17, 2017, the
compensation committee approved payment of a cash bonus of $115,000
to Mr. Kelly based on his 2016 performance. The committee also
approved payment of a cash bonus of $115,000 to Mr. Vitou based on
his 2016 performance. The bonus paid to Mr. Vitou is not shown in
the table above as he was not a Named Executive Officer for fiscal
2016.
(6)
Includes the
$12,500 cash bonus received by Mr. Holthaus on March 14, 2018 (as
described in footnote 5) and the cash bonus received pursuant to a
sales bonus plan related to Mr. Holthaus’ previous position
as Vice President – Project 25 Solutions for the Company. On
August 30, 2017, the compensation committee approved Mr.
Holthaus’ continued participation in the plan through the end
of fiscal 2017.
(7)
The amounts in this
column represent the aggregate grant date fair value of stock
options granted to the Named Executive Officer computed in
accordance with FASB ASC Topic 718. The value ultimately realized
by the Named Executive Officer upon the actual exercise of the
stock options may or may not be equal to the FASB ASC Topic 718
computed value. For a discussion of valuation assumptions, see Note
10 (Share-Based Employee Compensation) of our consolidated
financial statements included in our Annual Report on Form 10-K for
fiscal 2017.
On February 24,
2016, the compensation committee granted non-qualified stock
options to Messrs. Storey and Kelly to purchase 50,000 shares and
10,000 shares, respectively, of the Company
’
s common stock at an exercise price
of $3.83 per share. Mr. Storey forfeited all of these unvested
options upon his resignation from all positions with the Company
effective as of the close of business on January 16, 2017. On March
17, 2017, the committee granted non-qualified stock options to
Messrs. Vitou, Kelly and Holthaus to purchase 25,000, 25,000 and
5,000 shares, respectively, of the Company’s common stock, at
an exercise price of $5.10 per share. In addition, on August 30,
2017, the committee granted non-qualified stock options to Messrs.
Vitou, Kelly and Holthaus to purchase 10,000, 10,000 and 25,000
shares, respectively, of the Company’s common stock, at an
exercise price of $4.20 per share.
Additional
information about the stock option awards can be found under
“—
Stock Option
Awards.
”
(8)
The amounts in this
column for Mr. Vitou represent our matching contributions for
fiscal 2017 of $6,276 to Mr. Vitou’s account under our 401(k)
plan and our payments for fiscal 2017 of $8,602 for long-term
disability, life and health insurance premiums for the benefit of
Mr. Vitou.
(9)
The amount in this
column for Mr. Storey for fiscal 2017 includes a separation payment
in the gross amount of $300,000, which was paid in equal
installments over a period of 12 months to Mr. Storey pursuant to
the Separation and Release Agreement entered into with the Company
on February 3, 2017, and payments made by the Company to Mr. Storey
for the difference in cost between Mr. Storey’s portion and
COBRA’s actual cost for coverage through December 31, 2017,
which was approximately $9,029 and was paid by the Company pursuant
to the terms of the Separation and Release Agreement. See
“—Separation Agreement with Mr. Storey” for more
information.
The amount
in this column for Mr. Storey for fiscal 2016 represents our
matching contributions for fiscal 2016 of $6,031 to Mr.
Storey’ s account under our 401(k) plan and our payment for
fiscal 2016 of $8,940 for long-term disability, life and health
insurance premiums for the benefit of Mr. Storey.
(10)
The amounts in this
column for Mr. Kelly represent our matching contributions for
fiscal 2017 and fiscal 2016 of $6,142 and $5,847, respectively, to
Mr. Kelly
’
s account under
our 401(k) plan and our payments for fiscal 2017 and fiscal 2016 of
$8,563 and $8,862, respectively, for long-term disability, life and
health insurance premiums for the benefit of Mr.
Kelly.
(11)
The amounts in this
column for Mr. Holthaus represent our matching contributions for
fiscal 2017 of $3,336 to Mr. Holthaus’s account under our
401(k) plan and our payments for fiscal 2017 of $8,302 for
long-term disability, life and health insurance premiums for the
benefit of Mr. Holthaus.
Each of the Named
Executive Officers did not receive any other compensation during
2017 or 2016 except for perquisites and other personal benefits of
which the total aggregate value for each Named Executive Officer
did not exceed $10,000.
Separation Agreement with Mr. Storey
The board of directors accepted Mr. Storey’s
resignation from all positions held with the Company effective as
of the close of business on January 16, 2017. On February 3, 2017,
the Company and Mr. Storey entered into a Separation and Release
Agreement (the “Separation Agreement”). Pursuant to the
terms of the Separation Agreement, Mr. Storey was entitled to a
separation payment in the gross amount of $300,000, paid in equal
installments over a period of 12 months. Mr. Storey also retained
the right to exercise his vested stock options for a period of
three months following his resignation. His unvested stock options
were forfeited upon his separation of service from the Company. Mr.
Storey’s health insurance benefits provided by the Company
ceased on January 31, 2017, and the Company agreed to pay the
difference in cost between Mr. Storey’s portion and
COBRA’s actual cost for coverage through December 31, 2017,
which totaled approximately $9,029.
Mr. Storey’s participation in all benefits
of employment, including but not limited to, accrual of bonuses,
vacation and paid time off, ceased as of January 16,
2017.
The
Separation Agreement also included customary confidentiality,
non-disparagement and non-solicitation covenants and a mutual
release of claims.
Base Salaries
On
March 17, 2017, the compensation committee approved the base
salaries of $250,000 and $200,000 to Messrs. Vitou and Kelly,
respectively.
Effective
August 4, 2017, Mr. Holthaus was appointed as Chief Technology
Officer of the Company. On August 30, 2017, the compensation
committee approved an increase in Mr. Holthaus’s base salary
to a rate of $175,000 per year, effective as of September 1, 2017.
In addition, the committee approved Mr. Holthaus’s continued
participation in a sales bonus plan related to his previous
position as Vice President – Project 25 Solutions of the
Company through the end of fiscal 2017 pursuant to which he
received $120,056.
On
March 14, 2018, the compensation committee approved base salaries
for 2018. The base salaries for Messrs. Vitou and Kelly will remain
at $250,000 and $200,000, respectively, and the base salary for Mr.
Holthaus will increase to $200,000.
Bonus Payments
2017 Discretionary Cash Bonuses
On March 14, 2018, the compensation committee,
upon the recommendation of management, approved the payment of cash
bonuses of $50,000 to Mr. Vitou
, $25,000 to Mr. Kelly and
$12,500 to Mr. Holthaus based on their 2017
performance.
2016 Discretionary Cash Bonuses
On March 17, 2017,
the compensation committee, upon the recommendation of management,
approved the payment of cash bonuses of $115,000 each to Messrs.
Vitou and Kelly based on their 2016 performance.
Stock Option Awards
2018 Awards
On March 14, 2018,
the compensation committee granted non-qualified stock options to
Messrs. Vitou, Kelly and Holthaus to purchase 30,000, 20,000 and
20,000 shares, respectively, of the Company
’
s common stock, at an exercise price
of $3.75 per share. The stock options have ten-year terms and
become exercisable in five equal annual installments beginning on
the first anniversary of the grant date.
2017 Awards
On March 17, 2017,
the compensation committee granted non-qualified stock options to
Messrs. Vitou, Kelly and Holthaus to purchase 25,000, 25,000 and
5,000 shares, respectively, of the Company
’
s common stock, at an exercise price
of $5.10 per share. The stock options have ten-year terms and
become exercisable in five equal annual installments beginning on
the first anniversary of the grant date.
On August 30, 2017,
the compensation committee granted non-qualified stock options to
Messrs. Vitou, Kelly and Holthaus to purchase 10,000, 10,000 and
25,000 shares, respectively, of the Company’s common stock,
at an exercise price of $4.20 per share. The stock options have
ten-year terms and become exercisable in five equal annual
installments beginning on the first anniversary of the grant
date.
2016 Awards
On February 24,
2016, the compensation committee granted non-qualified stock
options to Messrs. Storey and Kelly to purchase 50,000 shares and
10,000 shares, respectively, of the Company
’
s common stock, at an exercise price
of $3.83 per share. The stock options have ten-year terms and
become exercisable in five equal annual installments beginning on
the first anniversary of the grant date. Mr. Storey resigned from
all positions with the Company effective as of the close of
business on January 16, 2017. Pursuant to the Separation Agreement
and Release Agreement, Mr. Storey forfeited all of his unvested
options, including all of the non-qualified stock options granted
to him on February 24, 2016, upon his separation of service from
the Company.
Appointment
of Chief Operating Officer
On March 14, 2018,
the board of directors appointed Henry R. (Randy) Willis as Chief
Operating Officer of the Company effective immediately. Mr. Willis
previously served as Vice President of Operations of the Company
since August 2017. As Chief Operating Officer, Mr. Willis will
receive an annual base salary of $200,000. In addition, the
compensation committee approved for Mr. Willis a $25,000 cash bonus
for 2017 and granted to Mr. Willis non-qualified stock options to
purchase 20,000 shares of the Company’s common stock at an
exercise price of $3.75 per share under the Company’s 2017
Incentive Compensation Plan. The options have a ten-year term and
will become exercisable in five equal annual installments,
beginning on the first anniversary of the grant date. Mr. Willis
was not a Named Executive Officer for fiscal 2017.
2017
Incentive Compensation Plan
The Company’s
stockholders approved the 2017 Incentive Compensation Plan (the
“2017 Plan”) at the Company’s 2017 annual meeting
of stockholders held on June 15, 2017. The 2017 Plan replaces the
Company’s 2007 Incentive Compensation Plan, which was
previously approved by the stockholders in 2007 (the “2007
Plan”). No new awards will be granted under the 2007
Plan.
The objective of
the 2017 Plan is to provide incentives to attract and retain key
employees, non-employee directors and consultants and align their
interests with those of the Company’s stockholders. The 2017
Plan is administered by the compensation committee and has a term
of ten years. All non-employee directors of the Company and
employees and consultants of the Company and its subsidiaries
designated by the committee are eligible to participate in the 2017
Plan and to receive awards, including stock options (which may be
incentive stock options or nonqualified stock options), stock
appreciation rights, restricted shares, restricted share units, or
other share-based awards and cash-based awards.
O
UTSTANDING EQUITY AWARDS AT 2017 FISCAL
YEAR-END
The
following table provides information with respect to outstanding
stock option awards for our shares of common stock classified as
exercisable and unexercisable as of December 31, 2017 for the Named
Executive Officers.
Name
|
Number of Securities Underlying Unexercised
Options (#) Exercisable
(7)
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($)
|
|
Timothy A.
Vitou
|
15,000
(1)
|
—
|
4.07
|
|
|
5,000
(2)
|
—
|
2.23
|
|
|
—
(3)
|
25,000
|
5.10
|
|
|
—
(4)
|
10,000
|
4.20
|
|
|
|
|
|
David P.
Storey
|
—
(5)
|
—
|
—
|
—
|
|
|
|
|
|
William P.
Kelly
|
25,000
(1)
|
—
|
4.07
|
|
|
15,000
(2)
|
—
|
2.23
|
|
|
2,000
(6)
|
8,000
|
3.83
|
|
|
—
(3)
|
25,000
|
5.10
|
|
|
—
(4)
|
10,000
|
4.20
|
|
|
|
|
|
|
James
R. Holthaus
|
—
(3)
|
5,000
|
5.10
|
|
|
—
(4)
|
25,000
|
4.20
|
|
___________
(1)
|
The options were
granted on March 4, 2010 and are fully vested and
exercisable.
|
|
|
(2)
|
The options were
granted on March 12, 2013 and are fully vested and
exercisable.
|
|
|
(3)
|
The options were
granted on March 17, 2017 and vest in five equal annual
installments beginning on March 17, 2018.
|
(4)
|
The options were
granted on August 30, 2017 and vest in five equal annual
installments beginning on August 30, 2018.
|
|
|
(5)
|
Mr. Storey resigned
from all positions held with the Company effective as of the close
of business on January 16, 2017. Upon his resignation, Mr. Storey
forfeited all 50,000 of his unvested options. Mr. Storey’s
fully vested option remained exercisable for three months following
his resignation. Mr. Storey exercised the option for all 45,000
shares on March 8, 2017.
|
|
|
(6)
|
The options were
granted on February 24, 2016 and vest in five equal annual
installments beginning on February 24, 2017.
|
(7)
|
On March 8, 2017,
Mr. Storey exercised options to acquire 45,000 shares of the
Company’s common stock at an exercise price of $4.07 per
share. The options were granted to Mr. Storey on March 4, 2010,
were fully vested and remained exercisable for three months
following his resignation from all positions held with the Company,
which occurred on January 16, 2017. On March 15, 2017, Mr. Vitou
exercised options to acquire 50,000 shares of the Company’s
common stock at an exercise price of $1.75 per share. The options
were granted to Mr. Vitou on May 19, 2008 and became fully
exercisable on May 18, 2011. Messrs. Kelly and Holthaus did not
exercise any options during fiscal 2017.
|
R
ETIREMENT BENEFITS FOR 2017
We
do not have a defined benefit plan for the Named Executive Officers
or other employees. The only retirement plan available to the Named
Executive Officers in 2017 was our qualified 401(k) retirement
plan, which is available to all employees.
POTENTIAL
PAYMENTS UPON TERMINATION IN CONNECTION WITH A CHANGE OF
CONTROL
2016 Change of Control Agreements
Effective as of
February 24, 2016, we entered into change of control agreements
(the
“
2016 Change of
Control Agreements
”
) with
the Named Executive Officers (other than Mr. Holthaus) which were
approved by the compensation committee on that same day. The 2016
Change of Control Agreements replaced and terminated the 2012
Change of Control Agreements that we previously entered into with
the Named Executive Officers, which expired on February 29, 2016,
and are substantially similar to the 2012 Change of Control
Agreements.
Mr. Storey, who
served as our President and Chief Executive Officer and is a Named
Executive Officer for fiscal 2017, resigned from all positions with
the Company effective as of the close of business on January 16,
2017. Accordingly, the discussion below only describes the terms of
the 2016 Change of Control Agreements currently in effect between
the Company and Messrs. Vitou and Kelly. For a description of the
Separation Agreement entered into between the Company and Mr.
Storey, see “Summary Compensation Table for 2016-2017 –
Separation Agreement with Mr. Storey” in this proxy
statement.
Each of the 2016
Change of Control Agreements has a term of four years, unless a
“
change of
control
”
(as defined in
the agreements) of the Company occurs within such four-year period,
in which case each agreement is automatically extended for twelve
months after the date of such change of control. Pursuant to the
2016 Change of Control Agreements, if the applicable Named
Executive Officer
’
s
employment is terminated within twelve months following a change in
control (i) by the Company for any reason other than for
“
cause
”
(as defined in the agreements),
disability or death or (ii) by such Named Executive Officer for
“
good reason
”
(as defined in the agreements), the
applicable Named Executive Officer will receive certain payments
and benefits. A Named Executive Officer is not entitled to any
payments and benefits if the Named Executive Officer terminates the
Named Executive Officer
’
s
employment without good reason.
The payments and
benefits to be paid pursuant to the 2016 Change of Control
Agreements are as follows:
●
Mr. Vitou will
receive (i) a cash payment equal to the sum of (x) 50% of his
then-current base salary and (y) the average of his annual cash
bonuses for the two fiscal years preceding the fiscal year in which
termination occurs, (ii) health, life and disability insurance
benefits for himself and, if applicable, his covered dependents for
a period of six months after the date of termination and (iii)
outplacement services for a period of six months following the date
of termination, provided that the costs of such services to the
Company may not exceed $7,500.
●
Mr. Kelly will
receive (i) a cash payment equal to the sum of (x) 75% of his
then-current base salary and (y) the average of his annual cash
bonuses for the two fiscal years preceding the fiscal year in which
termination occurs, (ii) health, life and disability insurance
benefits for himself and, if applicable, his covered dependents for
a period of nine months after the date of termination and (iii)
outplacement services for a period of nine months following the
date of termination, provided that the costs of such services to
the Company may not exceed $11,250.
Under the 2016
Change of Control Agreements, a change of control will have
occurred if:
●
individuals who, as
of February 24, 2016, constitute the board of directors (the
“
Incumbent
Board
”
)
cease for any reason to constitute at least a majority of the
board, provided that any individual becoming a director subsequent
to that date whose election, or nomination for election by the
company
’
s stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the directors of the company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be considered as though such individual was
a member of the Incumbent Board; or
●
the approval by the
stockholders of the company of a reorganization, merger,
consolidation or other form of corporate transaction or series of
transactions (but not including an underwritten public offering of
the company
’
s common
stock or other voting securities (or securities convertible into
voting securities of the company) for the company
’
s own account registered under the
Securities Act of 1933, as amended (the
“
Securities Act
”
)), in each case, with respect to
which stockholders of the company immediately prior to such
reorganization, merger, consolidation or other corporate
transaction do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged
or consolidated entity
’
s
then outstanding voting securities, or a liquidation or dissolution
of the company or the sale of all or substantially all of the
assets of the company (unless such reorganization, merger,
consolidation or other corporate transaction, liquidation,
dissolution or sale is subsequently abandoned or terminated prior
to being consummated); or
●
the acquisition by
any person, entity or
“
group
”
, within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of more than fifty
percent (50%) of either the then outstanding shares of the
company
’
s common stock or
the combined voting power of the company
’
s then outstanding voting securities
entitled to vote generally in the election of directors
(hereinafter referred to as a
“
Controlling Interest
”
) excluding any acquisitions by (x)
the company or any of its subsidiaries, (y) any employee benefit
plan (or related trust) sponsored or maintained by the company or
any of its subsidiaries or (z) any person, entity or
“
group
”
that as of February 24, 2016 owns
beneficially (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) a Controlling Interest.
Each of the 2016
Change of Control Agreements contains term and post-termination
confidentiality, non-solicitation and non-competition covenants.
The post-termination non-solicitation and non-competition covenants
survive six months for Mr. Vitou and nine months for Mr. Kelly,
while the post-term confidentiality covenants survive indefinitely
for each of them.
Except for the
severance agreement entered into with Mr. Storey on February 3,
2017, we do not have any employment agreements or severance
agreements with any of our Named Executive Officers. In addition to
the 2016 Change of Control Agreements, our equity plans and award
agreements entered into with our Named Executive Officers include
change in control provisions.
2017 Incentive Compensation Plan – Change in Control
Provisions
Our 2017 Incentive
Compensation Plan (the “2017 Plan”) generally provides
for “double-trigger” vesting of equity awards in
connection with a change in control of the Company, as described
below.
To the extent that
outstanding awards granted under the 2017 Plan are assumed in
connection with a change in control, then, except as otherwise
provided in the applicable award agreement or in another written
agreement with the participant, all outstanding awards will
continue to vest and become exercisable (as applicable) based on
continued service during the remaining vesting period, with
performance-based awards being converted to service-based awards at
the “target” level. Vesting and exercisability (as
applicable) of awards that are assumed in connection with a change
in control generally would be accelerated in full on a
“double-trigger” basis, if, within two years after the
change in control, the participant’s employment is
involuntarily terminated without cause, or by the participant for
“good reason.” Any stock options or stock appreciation
rights (SARs) that become vested on a “double-trigger”
basis generally would remain exercisable for the full duration of
the term of the applicable award.
To the extent
outstanding awards granted under the 2017 Plan are not assumed in
connection with a change in control, then such awards generally
would become vested in full on a “single-trigger”
basis, effective immediately prior to the change in control, with
performance-based awards becoming vested at the
“target” level. Any stock options or SARs that become
vested on a “single-trigger” basis generally would
remain exercisable for the full duration of the term of the
applicable award.
The compensation
committee has the discretion to determine whether or not any
outstanding awards granted under the 2017 Plan will be assumed by
the resulting entity in connection with a change in control, and
the committee has the authority to make appropriate adjustments in
connection with the assumption of any awards. The committee also
has the right to cancel any outstanding awards in connection with a
change in control, in exchange for a payment in cash or other
property (including shares of the resulting entity) in an amount
equal to the excess of the fair market value of the shares subject
to the award over any exercise price related to the award,
including the right to cancel any “underwater” stock
options and SARs without payment therefor.
For purposes of the
2017 Plan, subject to exceptions set forth in the 2017 Plan, a
“change in control” generally includes (a) the
acquisition of more than 50% of the Company’s common stock;
(b) the incumbent board of directors ceasing to constitute a
majority of the board of directors; (c) a reorganization, merger,
consolidation or similar transaction, or a sale of substantially
all of the Company’s assets; and (d) the complete liquidation
or dissolution of the Company. The full definition of “change
in control” is set forth in the 2017 Plan.
Whether a
participant’s employment has been terminated for
“cause” will be determined by the compensation
committee. Unless otherwise provided in the applicable award
agreement or in an another written agreement with the participant,
“cause,” as a reason for termination of a
participant’s employment generally includes (a) the
participant’s failure to perform, in a reasonable manner, his
or her assigned duties; (b) the participant’s violation or
breach of his or her employment agreement, consulting agreement or
other similar agreement; (c) the participant’s violation or
breach of any non-competition, non-solicitation, non-disclosure
and/or other similar agreement; (d) any act of dishonesty or bad
faith by the participant with respect to the Company or a
subsidiary; (e) the participant’s breach of fiduciary duties
owed to the Company; (f) the use of alcohol, drugs or other similar
substances in a manner that adversely affects the
participant’s work performance; or (g) the
participant’s commission of any act, misdemeanor, or crime
reflecting unfavorably upon the participant or the Company or any
subsidiary.
For purposes of the
2017 Plan, unless otherwise provided in the applicable award
agreement or in an another written agreement with the participant,
“good reason” generally includes (a) the assignment to
the participant of any duties that are inconsistent in any material
respect with his or her duties or responsibilities as previously
assigned by the Company or a subsidiary, or any other action by the
Company or a subsidiary that results in a material diminution of
the participant’s duties or responsibilities, other than any
action that is remedied by the Company or a subsidiary promptly
after receipt of notice from the participant; or (b) any material
failure by the Company or a subsidiary to comply with its
obligations to the participant as agreed upon, other than an
isolated, insubstantial and inadvertent failure which is remedied
by the Company or subsidiary promptly after receipt of notice from
the participant.
Except as described
above with respect to a change in control, unexercisable stock
options generally become forfeited upon termination of employment.
The stock options that are exercisable at the time of termination
of employment expire (a) twelve months after the termination of
employment by reason of death or disability or (b) three months
after the termination of employment for other reasons.
Our Named Executive
Officers, other employees and directors are prohibited from hedging
or pledging the Company’s securities. Awards granted under
the 2017 Plan also may be subject to forfeiture or recoupment as
provided pursuant to any compensation recovery (or
“clawback”) policy that the Company may adopt or
maintain from time to time.
2007 Incentive Compensation Plan – Change in Control
Provisions
Our 2007 Incentive
Compensation Plan (the “2007 Plan”), under which some
equity awards remain outstanding, also contains provisions
providing for the vesting of equity awards in connection with a
change in control of the Company, as described below.
To the extent that
outstanding awards granted under the 2007 Plan are assumed in
connection with a change in control, then, except as otherwise
provided in the applicable award agreement, all outstanding awards
will continue to vest and become exercisable (as applicable) based
on continued service during the remaining vesting
period.
To the extent
outstanding awards granted under the 2007 Plan are not assumed in
connection with a change in control, then such awards generally
would become vested in full on a “single-trigger” basis
in connection with the change in control. With respect to any
outstanding performance-based awards subject to achievement of
performance goals and conditions, the compensation committee may,
in its discretion, deem such performance goals and conditions as
having been met as of the date of the change in control. Any stock
options or SARs that become vested on a
“single-trigger” basis generally would remain
exercisable for the full duration of the term of the applicable
award.
The compensation
committee has the discretion to determine whether or not any
outstanding awards granted under the 2007 Plan will be assumed by
the resulting entity in connection with a change in control, and
the committee has the authority to make appropriate adjustments in
connection with the assumption of any awards. The committee also
has the right to cancel any outstanding awards in connection with a
change in control, in exchange for a payment in cash or other
property (including shares of the resulting entity) in an amount
equal to the excess of the fair market value of the shares subject
to the award over any exercise price related to the award,
including the right to cancel any “underwater” stock
options and SARs without payment therefor.
For purposes of our
2007 Plan, subject to exceptions set forth in the 2007 Plan, a
“change in control” generally includes: (a) the
acquisition of more than 50% of the Company’s common stock;
(b) the incumbent board of directors ceasing to constitute a
majority of the board of directors; (c) a reorganization, merger,
consolidation or similar transaction, or a sale of substantially
all of the Company’s assets; and (d) the complete liquidation
or dissolution of the Company. The full definition of “change
in control” is set forth in the 2007 Plan.
T
RANSACTIONS WITH RELATED
PERSONS
Any
transaction with a related person is subject to our written policy
for transactions with related persons, which is available on our
website at www.bktechnologies.com/investor-relations. The
nominating and corporate governance committee is responsible for
applying this policy. As set forth in the policy, the committee
reviews the material facts of the transaction and considers, among
other factors it deems appropriate, whether the transaction is on
terms no less favorable than terms generally available to an
unaffiliated third-party under the same or similar circumstances
and the extent of the related person
’
s interest in the transaction. The
policy also prohibits our directors from participating in any
discussion or approval of any interested transaction for which he
is a related person, except that the director is required to
provide all material information concerning the transaction to the
committee.
If a transaction
with a related party will be ongoing, the committee will establish
guidelines for our management to follow in its ongoing
relationships with the related person, will review and assess
ongoing relationships with the related person to determine if such
relationships are in compliance with the committee
’
s guidelines, and based on all the
relevant facts and circumstances, will determine if it is in the
best interests of the Company and our stockholders to continue,
modify or terminate any such interested transaction.
The policy provides
exceptions for certain transactions, including (i) those involving
compensation paid to a director or executive officer required to be
reported in the Company
’
s
proxy statement, (ii) transactions with another company at which a
related person
’
s only
relationship is as an employee (other than an executive officer),
director or beneficial owner of less than 10% of that
company
’
s shares, if the
aggregate amount involved does not exceed the greater of $500,000,
or two percent (2%) of that company
’
s total annual revenues, (iii)
certain charitable contributions, (iv) transactions where all
stockholders of the Company receive proportional benefits, (v)
transactions involving competitive bids, (vi) certain regulated
transactions and (vii) certain banking-related
services.
On March 14, 2018,
Henry R. (Randy) Willis was appointed as Chief Operating Officer of
the Company, having served as
Vice
President of Operations of the Company since August 2017. Prior to
Mr. Willis joining the Company in August 2017, the Company engaged
Target Velocity Consulting, Inc., of which Mr. Willis is President,
to provide operational consulting services to the Company in 2017
for the total fees of $59,616. For his service as Vice President of
Operations from August 2017 to March 2018, Mr. Willis received
payments equal to $80,770 in 2017 and an additional $46,154 in 2018
and a grant of non-qualified stock options to purchase 25,000
shares of the Company’s common stock, at an exercise price of
$4.20 per share, on August 30, 2017. The options have a ten-year
term and become exercisable in five equal annual installments,
beginning on the first anniversary of the grant
date.
Except as set forth
above, during 2017 and 2016, we did not have any transactions with
related persons that were reportable under Item 404 of Regulation
S-K, and we do not have any transactions with related persons
currently proposed for 2018 that are reportable under Item 404 of
Regulation S-K.
R
ELATIONSHIP WITH OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Moore Stephens
Lovelace, an independent registered public accounting firm, audited
our financial statements for fiscal 2017 and fiscal 2016. We had no
disagreements with Moore Stephens Lovelace on accounting and
financial disclosures. Moore Stephens Lovelace
’
s work on our audit for fiscal 2017
was performed by full time, permanent employees and partners of
Moore Stephens Lovelace.
Moore Stephens
Lovelace, which has served as our independent registered public
accounting firm since November 2015, has been reappointed to serve
as our independent registered public accounting firm for fiscal
2018. The audit committee, in discussing the reappointment of Moore
Stephens Lovelace, considered the qualifications, experience,
independence, compliance with regulations, quality control, candor,
objectivity, and professional skepticism of Moore Stephens Lovelace
and the effectiveness of the firm
’
s processes, including its
timeliness and responsiveness and communication and interaction
with management. The audit committee also considered the tenure of
Moore Stephens Lovelace as our independent registered public
accounting firm and its related depth of understanding of our
businesses, operations and systems. The audit committee and the
board of directors believe that the continued retention of Moore
Stephens Lovelace as our independent registered public accounting
firm is in the best interests of the Company and our
stockholders.
P
ROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
General
Our audit committee
has appointed Moore Stephens Lovelace to serve as our independent
registered public accounting firm for fiscal 2018. Representatives
of Moore Stephens Lovelace are expected to be present at the annual
meeting and will have the opportunity to make a statement if they
so desire, and will be available to respond to appropriate
stockholder questions.
Although applicable
law does not require stockholder ratification of the appointment of
Moore Stephens Lovelace to serve as our independent registered
public accounting firm, our board has decided to ascertain the
position of our stockholders on the appointment. If our
stockholders do not ratify the appointment of Moore Stephens
Lovelace, our audit committee will reconsider the appointment. Even
if the selection is ratified, our audit committee in its discretion
may appoint a different independent registered public accounting
firm at any time during the year if it determines that such a
change would be in our best interests and in the best interests of
our stockholders.
Vote Required
This proposal will
be approved if the number of votes cast
“
for
”
the ratification of Moore Stephens
Lovelace as our independent registered public accounting firm
exceed the number of votes cast
“
against
”
ratification. Abstentions and
broker non-votes will have no effect on the outcome of the vote.
Shares represented by properly executed proxies will be voted, if
specific instructions are not otherwise given, in favor of this
proposal.
Recommendation of the Board
Our board of
directors unanimously recommends that stockholders vote
“
FOR
”
the ratification of the appointment
of Moore Stephens Lovelace as our independent registered public
accounting firm.
F
EES PAID TO OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The
rules of the SEC require us to disclose fees billed by our
independent registered public accounting firm for services rendered
to us for each of the years ended December 31, 2017 and 2016. The
following table represents aggregate fees billed for the fiscal
years ended December 31, 2017 and 2016 by Moore Stephens
Lovelace.
Fees
|
|
|
Audit
Fees
(1)
|
$
105,000
|
$
105,000
|
Audit-Related
Fees
(2)
|
—
|
—
|
Tax
Fees
(3)
|
—
|
—
|
All Other
Fees
(4)
|
—
|
—
|
Total
|
$
105,000
|
$
105,000
|
(1)
|
For 2017 and 2016,
includes fees paid to Moore Stephens Lovelace for professional
services rendered for the audit of our annual financial statements
for the years ended December 31, 2017 and 2016 and for reviews of
the financial statements included in our Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, June 30 and September
30 in each of those years.
|
(2)
|
No audit-related
services were performed for us by Moore Stephens Lovelace in 2017
or 2016. Audit-related services include assurance and related
services that are related to the performance of the audit or review
of our financial statements.
|
(3)
|
No tax services
were performed for us by Moore Stephens Lovelace in 2017 or 2016.
Tax services include tax compliance, tax advice and tax planning.
|
(4)
|
No other services
were performed for us by Moore Stephens Lovelace in 2017 or 2016.
|
As previously
discussed, the audit committee has implemented pre-approval
procedures consistent with the rules adopted by the
SEC.
The audit committee
has determined that the provision of the services by Moore Stephens
Lovelace reported hereunder had no impact on its
independence.
P
ROPOSAL 3: AMENDMENT TO OUR ARTICLES OF INCORPORATION
TO CHANGE OUR
CORPORATE
NAME FROM RELM WIRELESS CORPORATION TO BK TECHNOLOGIES,
INC.
General
Our
board has approved, and recommends that our stockholders approve,
an amendment to our Articles of Incorporation to change our
corporate name from RELM Wireless Corporation to BK Technologies,
Inc.
Reasons for the Proposed Name Change
The
board believes that changing our corporate name to BK Technologies,
Inc. is an important step in our efforts to create better alignment
between our corporate and product brands, including our BK Radio
brand. As part of a new branding strategy, the Company has been
conducting business and marketing its products and services under
the “BK Technologies” name. The Company has also been
selling its products under the name of “BK Radio.”
Consistent with this effort, the board believes that changing the
corporate name will more accurately reflect the Company’s
brand identity as the “BK Technologies” name continues
to gain market recognition. Further, the board expects that the
name change will eliminate any confusion in the marketplace, assist
with the Company’s expansion into targeted markets and enable
the Company to compete more effectively in its
industry.
Text of Proposed Amendment; Effects
If
the proposed amendment to the Articles of Incorporation is approved
by stockholders, Article FIRST of our Articles of Incorporation
will be amended in its entirety to provide as follows:
“
FIRST
:
The
name of the corporation (hereinafter called the corporation) is BK
Technologies, Inc.”
The
proposed amendment, if approved, will become effective when a
Certificate of Amendment to our Articles of Incorporation is filed
with and accepted by the Secretary of State of the State of Nevada.
The corporate name change will not affect our corporate structure
or any of our operations or businesses.
Our common stock is currently traded on the NYSE
American under the symbol “RWC.” If the amendment is
approved and the corporate name change becomes effective, we will
continue to be listed on the NYSE American. We expect that our
common stock will begin trading under a new NYSE American symbol,
“BKTI
,”at the time
we effect our name change.
If
the corporate name change becomes effective, the rights of
stockholders holding certificated shares under currently
outstanding stock certificates and the number of shares represented
by those certificates will remain unchanged. The new corporate name
will not affect the validity or transferability of any currently
outstanding stock certificates nor will it be necessary for
stockholders with certificated shares to surrender any stock
certificates they currently hold as a result of the name change.
After the name change, all new stock certificates issued by the
Company and all uncertificated shares held in direct registration
accounts, including uncertificated shares currently held in direct
registration accounts, will bear the name BK Technologies,
Inc.
If
the amendment is not approved by stockholders, the proposed
amendment to our Articles of Incorporation will not be filed, the
corporate name of the Company will remain unchanged and our ticker
symbol for trading our common stock on the NYSE American will
remain unchanged.
Notwithstanding
approval of the proposed amendment by the stockholders, the board
reserves the right to, without further vote by our stockholders,
abandon the proposed corporate name change at any time and not file
the Certificate of Amendment if the board concludes that such
action would be in the best interest of the Company or our
stockholders.
Vote Required
Approval of the
amendment to our Articles of Incorporation to change our corporate
name from RELM Wireless Corporation to BK Technologies, Inc.
requires the affirmative vote of the holders of at least a majority
of the issued and outstanding shares of the Company’s common
stock.
Abstentions and broker
non-votes will be treated as votes “AGAINST” the
proposal.
Shares represented by properly executed proxies
will be voted, if specific instructions are not otherwise given, in
favor of this proposal.
Recommendation of the Board
Our board of
directors unanimously recommends that stockholders vote
“
FOR
”
the amendment to our Articles of
Incorporation to change our corporate name from RELM Wireless
Corporation to BK Technologies, Inc.
E
QUITY COMPENSATION PLAN INFORMATION
The
following table provides information as of December 31, 2017 with
respect to our 2017 Incentive Compensation Plan, under which our
common stock is authorized for issuance, and the 2007 Incentive
Compensation Plan. Our stockholders approved the 2017 Incentive
Compensation Plan at the 2017 annual stockholders’ meeting.
On December 31, 2017, 645,500 shares of our common stock were
available for issuance under the 2017 Incentive Compensation
Plan.
Plan Category
|
(a)
Number of securities to be issued upon exercise of outstanding
options, warrants and rights (1)
|
(b) Weighted- average exercise price of outstanding options,
warrants and rights
|
(c)
Number of securities remaining available for future issuance under
equity compensation plan (excluding securities reflected in column
(a)) (2)
|
Equity compensation
plans approved by security holders
|
354,500
|
$
4.46
|
645,500
|
Equity compensation
plans not approved by security holders
|
—
|
—
|
—
|
Total
|
354,500
|
$
4.46
|
645,500
|
(1)
|
Includes 70,000
shares issuable upon the exercise of awards outstanding under the
2017 Incentive Compensation Plan and 284,500
shares issuable upon the exercise of
awards outstanding under the 2007 Incentive Compensation
Plan.
|
(2)
|
Represents shares
available for issuance under the 2017 Incentive Compensation
Plan.
|
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of
the Exchange Act requires that our directors and executive
officers, and persons who own more than 10 percent of our common
stock, file with the SEC initial statements of beneficial ownership
of common stock and statements of changes in beneficial ownership
of common stock.
Based solely on a
review of the copies of such reports and representations that no
other reports were required, we believe that all Section 16 filing
requirements applicable to our officers, directors and ten percent
(10%) beneficial owners were timely complied with during fiscal
2017, except as follows: General Payne’s Form 4 reporting a
grant of options to purchase shares of our common stock, filed on
January 12, 2017, was inadvertently filed late due to processing
difficulties in obtaining EDGAR filing codes, Messrs. Kelly,
Holthaus and Vitou’s respective Forms 4 reporting a grant of
options to purchase shares of our common stock, filed on September
6, 2017, were inadvertently filed late, and General Payne’s
Form 4 reporting a purchase of shares of our common stock, filed on
February 12, 2018, was inadvertently filed late.
Annual Report on Form
10-K
Copies of our
Annual Report on Form 10-K for fiscal 2017, as filed with the SEC,
are available to stockholders without charge upon written request
to the Corporate Secretary of RELM at 7100 Technology Drive, West
Melbourne, Florida 32904.
Eliminating Duplicative Proxy Materials
A single Notice of
Internet Availability of Proxy Materials or a single copy of our
Annual Report on Form 10-K for fiscal 2017 and this proxy statement
will be delivered to multiple stockholders who live at the same
address. If you live at the same address as another stockholder and
would like to receive your own copy of the Notice of Internet
Availability of Proxy Materials, the 2017 annual report, or this
proxy statement, or would like to receive multiple copies of our
proxy materials in the future, please contact us at 7100 Technology
Drive, West Melbourne, Florida 32904; telephone number: (321)
984-1414. A separate copy of the Notice of Internet Availability of
Proxy Materials, or of our 2017 annual report and this proxy
statement, will be delivered to you promptly and without charge. If
you live at the same address as another stockholder and are
receiving multiple copies of our proxy materials, please contact us
at the telephone number or address above if you only want to
receive one copy of those materials.
Stockholder Proposals
Inclusion of Proposals in our Proxy Statement Pursuant to SEC
Rules
Pursuant to Rule
14a-8 under the Exchange Act, some stockholder proposals may be
eligible for inclusion in our proxy statement for our 2019 annual
meeting of stockholders. To be eligible for inclusion in our 2019
proxy statement, any such proposals must be delivered in writing to
the Corporate Secretary of RELM no later than December 21, 2018,
and must meet the requirements of Rule 14a-8 under the Exchange
Act. The submission of a stockholder proposal does not guarantee
that it will be included in our proxy statement.
Advance Notice Requirements for Stockholder Submission of
Nominations and Proposals
In addition,
pursuant to the advance notice provisions set forth in our bylaws,
for a stockholder
’
s
proposal or nomination to be properly presented at the 2019 annual
meeting of stockholders, but not submitted for inclusion in our
proxy statement, such stockholder
’
s written notice of the intent of
such stockholder to make a nomination of a person for election as a
director or to bring any other matter before the annual meeting
must be delivered to the Corporate Secretary of RELM at the
principal executive offices of the Company no less than 120 days
nor more than 180 days prior to the first anniversary of the date
on which we first mailed our proxy materials for the preceding
year
’
s annual meeting of
stockholders. As a result, proposals for the 2019 annual meeting of
stockholders submitted outside the provisions of Rule 14a-8 will be
considered untimely if submitted prior to October 22, 2018 or after
December 21, 2018. Also, any proxy granted with respect to the 2019
annual meeting of stockholders will confer on management
discretionary authority to vote with respect to a stockholder
proposal or director nomination if notice of such proposal or
nomination is not received by our Corporate Secretary within the
timeframe provided above.
Other Matters
As of the date of
this proxy statement, our board of directors does not know of any
other matters for consideration at the annual meeting other than as
described in this proxy statement. If, however, any other matters
are properly brought before the annual meeting, the persons named
as proxies will vote in accordance with their best judgment with
respect to such matters.
RELM
WIRELESS CORPORATION -
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF
STOCKHOLDERS – JUNE 4, 2018 AT 10:00 A.M., LOCAL
TIME
|
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CONTROL
ID:
|
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REQUEST
ID:
|
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|
The undersigned
stockholder(s) of RELM Wireless Corporation, a Nevada corporation
(the “Company”), hereby revoking any proxy heretofore
given, does hereby appoint Timothy A. Vitou and William P. Kelly,
and each of them, with full power to act alone, the true and lawful
attorneys-in-fact and proxies of the undersigned, with full powers
of substitution, and hereby authorize(s) them and each of them, to
represent the undersigned and to vote all shares of common stock of
the Company that the undersigned is entitled to vote at the 2018
Annual Meeting of Stockholders of the Company to be held on June 4,
2018 at 10:00 a.m., local time, at the Company’s corporate
offices located at 7100 Technology Drive, West Melbourne, Florida
32904, and any and all adjournments and postponements thereof, with
all powers the undersigned would possess if personally present, on
the following proposals, each as described more fully in the
accompanying proxy statement, and any other matters coming before
said meeting.
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(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING
INSTRUCTIONS
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If
you vote by phone, fax or internet, please DO NOT mail your proxy
card.
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MAIL:
|
Please mark, sign,
date, and return this Proxy Card promptly using the enclosed
envelope.
|
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FAX:
|
Complete the
reverse portion of this Proxy Card and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/RWC
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PHONE:
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1-866-752-VOTE(8683)
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ANNUAL MEETING
OF THE STOCKHOLDERS OF
RELM WIRELESS
CORPORATION
|
PLEASE
COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
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PROXY SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal 1
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FOR ALL
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WITHHOLD
ALL
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FOR ALL
EXCEPT
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Election of
Directors:
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☐
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☐
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D. Kyle
Cerminara
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☐
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Michael R.
Dill
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☐
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Lewis M.
Johnson
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☐
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CONTROL
ID:
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Charles T.
Lanktree
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☐
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REQUEST
ID:
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General E. Gray
Payne
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☐
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John W.
Struble
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☐
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Ryan R.K.
Turner
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☐
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Proposal 2
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FOR
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AGAINST
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ABSTAIN
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To ratify the appointment of Moore
Stephens Lovelace, P.A. as our independent registered public
accounting firm for fiscal 2018.
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☐
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☐
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☐
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Proposal 3
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FOR
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AGAINST
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ABSTAIN
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To amend our Articles of
Incorporation to change our corporate name from RELM Wireless
Corporation to BK Technologies, Inc.
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☐
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☐
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☐
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Proposal 4
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FOR
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AGAINST
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ABSTAIN
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To transact such other business
properly brought before the meeting and any adjournment or
postponement of the meeting.
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☐
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☐
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☐
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This proxy will be voted in the
manner directed herein by the undersigned.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE, AND IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED,
“FOR” THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED
IN PROPOSAL 1, “FOR” RATIFICATION OF THE AUDITOR
APPOINTMENT IN PROPOSAL 2, “FOR” THE AMENDMENT TO OUR
ARTICLES OF INCORPORATION TO CHANGE OUR NAME FROM RELM WIRELESS
CORPORATION TO BK TECHNOLOGIES, INC. IN PROPOSAL 3, AND
IN THE DISCRETION OF THE PROXIES ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW.
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MARK “X” HERE IF YOU PLAN TO ATTEND
THE MEETING:
☐
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MARK HERE FOR ADDRESS CHANGE
☐ New Address
(if
applicable):
__________________________
__________________________
__________________________
IMPORTANT:
Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated:
________________________, 2018
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(Print Name of Stockholder and/or Joint
Tenant)
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(Signature of
Stockholder)
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(Second Signature
if held jointly)
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