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 ☐
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the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material under §240.14a-12
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BLONDER
TONGUE LABORATORIES, INC.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
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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
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BLONDER
TONGUE LABORATORIES, INC.
One
Jake Brown Road
Old
Bridge, New Jersey 08857
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held June 11, 2020
To
Our Stockholders:
The
2020 Annual Meeting of Stockholders of Blonder Tongue Laboratories, Inc. (the “Company,” “Blonder,” “we,”
“us” or “our”) will be held at our executive offices located at One Jake Brown Road, Old Bridge, New Jersey,
on June 11, 2020, beginning at 10:00 a.m., local time, for the following purposes:
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1.
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to
elect as Directors constituting Class I of the Board of Directors the three nominees
named in the attached Proxy Statement to serve until the 2023 Annual Meeting of Stockholders;
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2.
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to
approve an amendment to our 2016 Director Equity Incentive Plan to increase the aggregate
number of shares of common stock available for grants and awards by 500,000;
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3.
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to
approve the issuance of shares of our common stock upon conversion of certain of the
Company’s convertible indebtedness pursuant to the requirements of the NYSE American
“Private Placement” rule;
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4.
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to
approve the issuance of shares of our common stock upon conversion of certain of the
Company’s convertible indebtedness pursuant to the requirements of the NYSE American
“Change of Control” rule;
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5.
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to
ratify the appointment of Marcum LLP, certified public accountants, as our independent
registered public accounting firm for the fiscal year ending December 31, 2020; and
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6.
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to
transact any other business as may properly come before the 2020 Annual Meeting or any
adjournments or postponements thereof. In their discretion, the proxies named in the
enclosed proxy card are authorized to vote upon any other business as may properly come
before the 2020 Annual Meeting or any adjournments or postponements thereof.
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Please
read the attached Proxy Statement for further information regarding each proposal. A proxy, if properly executed and received
in time for voting at the 2020 Annual Meeting, will be voted in the manner directed on the proxy. If no direction is made, the
proxy will be voted FOR ALL NOMINEES for the election of directors and FOR Proposals 2, 3, 4 and 5.
Our
Board of Directors has fixed the close of business on April 15, 2020 as the record date for determining stockholders entitled
to notice of and to vote at the 2020 Annual Meeting or any adjournments or postponements thereof. Only stockholders of record
at the close of business on April 15, 2020 are entitled to notice of and to vote at the 2020 Annual Meeting or any adjournments
or postponements thereof.
Stockholders
as of the record date of April 15, 2020 are cordially invited to attend the 2020 Annual Meeting. Attendance at the 2020 Annual
Meeting will be limited to stockholders of record as of the record date or their authorized representatives and our invited guests.
Regardless of whether you plan to attend the 2020 Annual Meeting in person, please complete, date and sign the enclosed proxy
and return it promptly. If you receive more than one form of proxy, it is an indication that your shares are registered in more
than one account, and therefore you should complete and return each proxy if you wish to vote all of your shares that are eligible
to be voted at the 2020 Annual Meeting.
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By Order of the Board of Directors
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Eric Skolnik
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Secretary
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May
11, 2020
Important
Notice Regarding the Availability of Proxy Materials for
the 2020 Annual Meeting of Stockholders to be Held on June 11, 2020
The
Proxy Statement and Annual Report to Stockholders are available at:
http://www.astproxyportal.com/ast/07796
PLEASE
COMPLETE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
TABLE
OF CONTENTS
BLONDER
TONGUE LABORATORIES, INC.
One
Jake Brown Road
Old
Bridge, New Jersey 08857
PROXY
STATEMENT FOR
THE
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON
JUNE
11, 2020
GENERAL
INFORMATION
This
Proxy Statement is being furnished to the stockholders of Blonder Tongue Laboratories, Inc., a Delaware corporation (the “Company,”
“Blonder,” “us” or “we”), in connection with the solicitation of proxies
by our Board of Directors (the “Board”) for our 2020 Annual Meeting of Stockholders (the “Annual Meeting”)
and at any adjournment or adjournments thereof.
Holders
of our common stock, $0.001 par value per share (“Common Stock”) as of the record date of April 15, 2020 are
invited to attend the Annual Meeting on June 11, 2020, at 10:00 a.m., local time. The Annual Meeting will be held at our executive
offices located at One Jake Brown Road, Old Bridge, New Jersey. For those stockholders interested in attending the Annual Meeting
in person, you may obtain directions to our executive offices from our website at www.blondertongue.com/about/directions.aspx.
The
mailing address of our principal executive office is One Jake Brown Road, Old Bridge, New Jersey 08857. Our telephone number is
(732) 679-4000. This Proxy Statement and the enclosed form of proxy will be mailed to stockholders on or about May 11, 2020.
Voting
and Proxies
You
may vote on the matters to be voted on by stockholders at the Annual Meeting by completing, signing, dating and mailing the enclosed
proxy card in the envelope provided. When a proxy is properly executed and delivered, the shares of Common Stock represented by
the proxy will be voted at the Annual Meeting in accordance with your instructions.
You
may also attend the Annual Meeting in person and cast your vote there. If your shares of Common Stock are held in the name of
your broker, bank or other nominee and you wish to attend the Annual Meeting and vote in person, you must bring a legal proxy
from the record holder of your shares indicating that you were the beneficial owner of the shares on April 15, 2020, the record
date for determining the shares of Common Stock entitled to vote at the Annual Meeting, and that you have the right to vote your
shares.
With
regard to the election of Class I Directors to serve until the 2023 Annual Meeting of Stockholders (Proposal 1), stockholders
may (i) vote “FOR” all of the nominees, (ii) “WITHHOLD” their votes as to all nominees or
(iii) “WITHHOLD” their votes as to specific nominees. With regard to Proposals 2, 3, 4 and 5, stockholders
may vote (i) “FOR” the proposal, (iii) “AGAINST” the proposal or (iii) “ABSTAIN”
from voting.
You
should specify your choices on the enclosed proxy card. A proxy, if properly executed and received in time for voting at the 2020
Annual Meeting, will be voted in the manner directed on the proxy card. If no direction is made on the proxy card, the proxy will
be voted FOR ALL NOMINEES for the election of directors and FOR Proposals 2, 3, 4 and 5.
Directors
will be elected by a plurality of the votes cast by the holders of the shares of our Common Stock, voting in person or by proxy
at the Annual Meeting. Votes withheld from one or more nominees for Director will have the same effect as abstentions and will
have no effect on the vote for election of Directors. Approval of Proposals 2, 3, 4 and 5 or any other matters to come before
the Annual Meeting will require the affirmative vote of the holders of a majority of the shares of our Common Stock having voting
power that are present in person or by proxy at the Annual Meeting. Abstentions are deemed to be present at the meeting for purposes
of determining whether a quorum necessary for the conduct of business is present and for determining the shares entitled to vote,
and have the effect of a vote against any matter presented for stockholder action, other than the election of Directors. “Broker
non-votes” occur when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a proposal
because the beneficial owner of the shares has not provided voting instructions and the broker does not have discretionary authority
to vote on the matter. Under applicable rules governing proxy voting by brokers and others, brokers and banks have discretionary
authority to vote shares in the absence of instructions from a beneficial owner on matters that are considered to be “routine,”
such as the ratification of the appointment of the auditors. They do not have discretionary authority to vote shares in absence
of instructions from beneficial owners on “non-routine” matters. The election of directors, the vote to approve the
amendment to our 2016 Director Equity Incentive Plan, the vote to approve the issuance of shares of our common stock upon conversion
of certain convertible indebtedness pursuant to the requirements of the NYSE American “Private Placement” rule and
the vote to approve the issuance of shares of our common stock upon conversion of certain convertible indebtedness pursuant to
the requirements of the NYSE American “Change of Control” rule are considered “non-routine” matters. Broker
non-votes are deemed present for determining whether a quorum necessary for the conduct of business is present but are not considered
to be shares “entitled to vote,” and will not be included in vote totals and will have no effect on the outcome of
any matters to be voted upon at the Annual Meeting.
Revocation
of a Proxy
All
proxies delivered pursuant to this solicitation are revocable at any time before they are exercised by (i) filing written notice
of revocation with our Secretary prior to the Annual Meeting, (ii) signing and delivering a later-dated proxy to our Secretary
prior to the Annual Meeting or (iii) voting in person at the Annual Meeting. Written notices of revocation or later-dated proxies
should be directed to the Secretary at the mailing address of our principal executive offices. Your attendance at the Annual Meeting
alone will not constitute revocation of a proxy previously given by you. You must vote by ballot at the Annual Meeting
in order to revoke a previously-given proxy. If your shares are held in the name of a broker, bank or other nominee, you need
to contact the record holder of your shares regarding how to revoke your proxy.
Voting
on Other Matters
We
currently know of no other business to be transacted at the Annual Meeting, other than the election of Class I Directors and the
other proposals described in the attached Notice of Annual Meeting of Stockholders. If any other matters do arise and are properly
presented at the Annual Meeting, the persons named in the proxy will have the discretion to vote on those matters for you in accordance
with their best judgment.
Costs
of Proxy Solicitation
We
will pay the expenses associated with this solicitation of proxies for the Annual Meeting, including the cost of preparing, assembling
and mailing the notice of Annual Meeting, proxy and Proxy Statement. We will solicit proxies by use of the mails, through brokers
and banking institutions, and by our officers and regular employees. We may also solicit proxies by personal interview, mail,
telephone or facsimile transmission. No additional compensation will be paid to those individuals for any such activities.
Voting
Securities
Only
stockholders of record of our Common Stock at the close of business on April 15, 2020 (the “Record Date”) are
entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof. Each stockholder of record
on the Record Date is entitled to one vote for each share of our Common Stock so held. There is no cumulative voting. On the Record
Date, there were 9,765,870 shares of Common Stock issued, outstanding and entitled to vote.
PROPOSAL
1 - ELECTION OF DIRECTORS
Our
Certificate of Incorporation, as currently in effect, provides that our Board shall consist of between five and eleven members,
as determined from time to time by the Board, divided into three classes as nearly equal in number as possible. The size of the
Board is currently set at nine Directors. Each of Class I, Class II and Class III is currently comprised of three Directors. The
term of the current Class I Directors expires at the 2020 Annual Meeting, the term of the current Class II Directors expires at
the 2021 Annual Meeting and the term of the current Class III Directors expires at the 2022 Annual Meeting. The successors to
each class of Directors whose terms expire at an Annual Meeting will be elected to hold office for a term expiring at the Annual
Meeting of Stockholders held in the third year following the year of their election.
The
Directors whose terms will expire at the 2020 Annual Meeting are Anthony J. Bruno, Stephen K. Necessary and Steven L. Shea, each
of whom has been recommended for nomination by our Nominating & Corporate Governance Committee and nominated by our Board
to stand for re-election as a Director at the Annual Meeting, to hold office until the 2023 Annual Meeting of Stockholders or
until his resignation or removal, and until his successor has been duly elected and qualified. Each nominee has consented to serve
as a Director, if elected.
Recommendation
of the Board of Directors
Our
Board of Directors recommends a vote FOR the election of Anthony J. Bruno, Stephen K. Necessary and Steven L. Shea as Class I
Directors to hold office until the 2023 Annual Meeting of Stockholders.
Proxies
received by the Board of Directors will be voted FOR the election of Anthony J. Bruno, Stephen K. Necessary and Steven L. Shea
as Class I Directors, unless stockholders specify in their proxies a contrary choice.
DIRECTORS
AND EXECUTIVE OFFICERS
Nominees
and Continuing Directors
The
following table sets forth the names and certain information about each of the nominees for election as Director and our continuing
Directors:
Name
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Age
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Director
Since
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Nominees for a three-year term expiring in 2023 (Class I Directors):
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Anthony J. Bruno(1)
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79
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2008
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Stephen K Necessary(2)
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63
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2018
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Steven L. Shea(3)
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61
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2009
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Directors not standing for election this year whose terms expire in 2021 (Class II Directors):
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Robert J. Pallé
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74
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1993
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Gary P. Scharmett(4)
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64
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1997
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John Burke(5)
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57
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2020
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Directors not standing for election this year whose terms expire in 2022 (Class III Directors):
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Charles E. Dietz(6)
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72
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2011
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James F. Williams(7)
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62
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1993
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James H. Williams
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88
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2015
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(1)
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A
member of the Audit and Compensation Committees.
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(2)
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A
member of the Nominating & Corporate Governance and Compensation Committees.
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(3)
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A
member of the Audit, Compensation and Nominating & Corporate Governance Committees.
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(4)
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A
member of the Nominating & Corporate Governance Committee.
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(5)
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Mr.
Burke was appointed to the Board on January 23, 2020.
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(6)
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A
member of the Audit and Compensation Committees.
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(7)
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A
member of the Audit Committee.
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Set
forth below is a brief summary of the recent business experience and background of each of the nominees for election as a Director,
the continuing Directors and our executive officers. The Board believes that each nominee, and each continuing Director, possesses
the qualities and experience that Directors should possess as such criteria for Board membership is described below in the section
entitled “Meetings of the Board of Directors; Committees–Nominating & Corporate Governance Committee.” Also
included below is information about each Director’s specific experience, qualifications, attributes or skills that led the
Board to conclude that he should serve as a Director. As reflected, the Nominating & Corporate Governance Committee seeks
out, and the Board is comprised of, individuals with diverse professional backgrounds, experiences and skills.
Anthony
J. Bruno has been one of our Directors since February 1, 2008. Since 2007, Mr. Bruno has been a financial consultant providing
corporate acquisition advisory services to various companies located in the United States. Prior to 2007, Mr. Bruno was the Vice-President
of Finance for 18 years for Besam Entrance Solutions, the United States subsidiary of ASSA ABLOY Entrance Systems, a Swedish Company,
managing all aspects of its financial activities in North America. Mr. Bruno also previously served as our Vice President of Finance
from 1981 to 1989.
The
Board concluded that Mr. Bruno should serve as a Director due to his significant executive management experience with a large,
multi-national corporation and his expertise in finance and auditing matters, including financial reporting and corporate acquisitions.
John
Burke has been one of our Directors since January 23, 2020. Mr. Burke has served since 2017 as a Managing Partner of Vetust
Advisors, which provides strategic and management consulting services to a variety of businesses. He previously served as Executive
Vice President and Chief Operating Officer of Rovi Corporation (since re-named TiVo) from 2014 to 2016, where he led the transformation
of the company’s content discovery, user interface, and data analytics businesses, including the acquisition of TiVo. Prior
to joining Rovi, Mr. Burke led a number of different businesses for ARRIS Group, Motorola, Motorola Mobility and General Instrument.
The
Board concluded that Mr. Burke should serve as a Director due to his long record of strategic and operational leadership and intimate,
in-depth knowledge of the cable, video and communications markets, which allows him to provide the Board with valuable guidance
on product, market and strategic matters.
Charles
E. Dietz has been one of our Directors since September 2011. Since 2008, Mr. Dietz has been an independent cable industry
consultant to various clients within the cable industry. Prior to 2008, Mr. Dietz was Senior Vice President of Engineering for
12 years at Insight Communications, a multiple systems operator, and from 2001 to 2008 served as Insight Communications’
Chief Technical Officer. Mr. Dietz was responsible for all technical aspects of Insight Communications’ operations, including
technology development and implementation, system construction and maintenance, purchasing, and technical regulatory compliance.
Mr. Dietz has been a member of the Society of Cable Telecommunications Engineers since 1978, and a member of Cable TV Pioneers
since 2010.
The
Board concluded that Mr. Dietz should serve as a Director due to his extensive industry knowledge and executive and technical
experience in the cable television and communications industry, including the analysis, evaluation, purchase, use and deployment
of products, equipment and technology substantially similar to ours. Accordingly, Mr. Dietz brings valuable insight to our customer
and vendor relationships and strong relationships with the cable industry to the Board.
Stephen
K. Necessary has been one of our Directors since January 2018. From 2015 until December 2017, Mr. Necessary served as
Executive Vice President, Product Development and Management at Cox Communications, Inc., where he directed new development
and lifecycle management for all products across residential and business portfolios that generated over $11 billion in
revenue in 2017. Mr. Necessary retired from that position at the end of 2017, continued in 2018 on a part-time consulting
basis, and completely retired as of the end of 2018. From 2005 to 2015, Mr. Necessary served as Vice President, Video Product
Development and Management at Cox Communications.
The
Board concluded that Mr. Necessary should serve as a Director due to his extensive industry knowledge and executive and technical
experience in the cable television and communications industry, including his management experience in directing product development
and lifecycle management. Through his career-long experience in the industry served by the company, Mr. Necessary brings valuable
insight to the Board regarding customer needs, product development and relationships with our key customer base.
Robert
J. Pallé has been one of our Directors since September, 1993. He currently serves as our Managing Director-Strategic
Accounts. He served as our President from May, 2003 until May, 2019 and as our Chief Executive Officer from May, 2015 until December
31, 2019. Prior to that, Mr. Pallé served as our Chief Operating Officer and Secretary since April, 1989, our Executive
Vice President from April, 1989 until May, 2003 and as our Interim Treasurer from March through April, 2001.
The
Board concluded that Mr. Pallé should serve as a Director due to his extensive business and management experience with
us in various senior management positions and his in-depth knowledge of our products, lines of business, long-term strategies,
challenges and opportunities. Mr. Pallé brings a broad perspective to the Board’s deliberations due to his many years
of service to the Company, including as our Chief Executive Officer and President.
Gary
P. Scharmett has been one of our Directors since December, 1997. Since January, 1989, Mr. Scharmett has been a partner in
the law firm of Stradley Ronon Stevens & Young, LLP, our outside counsel, and served on the Board of Directors of that firm
from January, 2001 until December, 2003. He presently serves as the Co-Chair of that firm’s Finance & Restructuring
Practice Group. Mr. Scharmett is a past President, and currently a member of the Board of Directors of The Association of Commercial
Finance Attorneys, Inc., and until December 31, 2019, had served for more than the prior five years as a member of the Board of
Directors of the Philadelphia Chapter of the Turnaround Management Association.
The
Board concluded that Mr. Scharmett should serve as a Director due to the important experience, judgment and perspective he brings
to the Board based upon his forty years of experience as a corporate attorney, representing a diverse range of companies on complex
matters, including financing, regulatory and corporate governance matters. In addition, having served as our principal legal advisor
since 1989, Mr. Scharmett has a unique understanding of our business and the industry in which we operate and compete.
Steven
L. Shea has been one of our Directors since September, 2009 and was appointed to serve as the Chairman of the Board in May
2015. Mr. Shea has more than twenty-five years of investment banking experience. From January 2016 until January 2018, Mr. Shea
served on the Board of Directors of TradeRiver Finance USA. From November 2013 until February 2017, Mr. Shea served as Special
Advisor to Tufton Capital Management, LLC, an SEC registered investment advisor (formerly known as Hardesty Capital Management,
LLC). From November 2013 through May 2015, Mr. Shea also served as Chairman of the Executive Committee of Hardesty Capital Management,
LLC. From January, 2011 until November, 2013, he served as President of Hardesty Capital Management, LLC and Hardesty Capital
Corporation, which provide investment advisory services to corporations, institutions and individuals. Prior thereto, Mr. Shea
was an Executive Vice President of Ferris, Baker Watts, Inc. (“Ferris Baker”), from 1999 until the sale of
such firm in 2008. Mr. Shea also served as the Executive Director of the Capital Markets Division of Ferris Baker and was a member
of their Board of Directors and Executive and Strategic Alternative Committees of its Board of Directors. Prior to his position
at Ferris Baker, Mr. Shea was a Vice President with Mercantile Safe Deposit and Trust Company from 1989 to 1993, and was a Vice
President at Maryland National Bank from 1981 to 1989.
The
Board concluded that Mr. Shea should serve as a Director due to his extensive financial, merchant banking, capital markets and
executive management experience gained as an investment banker, including his knowledge of growth strategies, acquisition analysis
and shareholder relations. He also has an in-depth familiarity with the technology and manufacturing sectors, along with experience
as a director of other corporations.
James
F. Williams has been one of our Directors since September, 1993. Since June 1999, he has served as the Chief Financial Officer
and a Director of OSC Holding, Inc. and its subsidiaries, which provide demolition, environmental and civil contracting services
primarily in the United States and Canada. From July, 2007 through February 2013, Mr. Williams served as a Director, Managing
Member and Vice President of Buffalo City Center Leasing, LLC, which, was a lessor of electronic equipment. Mr. Williams presently
serves on the Board of Directors of Affinity Insurance Ltd. and on the Board of Governors of the Park Country Club of Buffalo.
Mr. Williams is the nephew of James H. Williams, one of our Directors.
The
Board concluded that Mr. Williams should serve as a Director due to his strong experience in strategic planning, leadership, finance
and executive management with various organizations. As a Director for over twenty-five years, Mr. Williams also provides perspective,
institutional knowledge and a deep understanding of our business.
James
H. Williams has been one of our directors since February 2015. He was also a Director of the Company from November, 1988 to
May 2006, and served as our Chairman of the Board from November, 1988 until November, 1994. From 1995 to 2014, Mr. Williams served
as a consultant to us under a written agreement, which agreement was terminated as of December 31, 2014. Mr. Williams is the uncle
of James F. Williams, one of our Directors.
The
Board concluded that Mr. Williams should serve as a Director due to his in-depth knowledge and understanding of our business,
operations and strategies, as well as bringing an important historical perspective of our Company to the Board’s deliberations.
Through Mr. Williams’ years of experience as an entrepreneur and investor in many diverse businesses, he contributes a common
sense approach to our Board discussions and deliberations on strategic and business matters.
Executive
Officers
Edward
R. “Ted” Grauch, 54, currently serves as our Chief Executive Officer and President. Mr. Grauch was appointed as
our President in May, 2019 and assumed the additional role as Chief Executive Officer on January 1, 2020. Prior to his appointment
as President, Mr. Grauch served as our Executive Vice President and Chief Operating Officer since October 30, 2018. Immediately
prior to joining the Company, he served as President of Kaon USA, Inc., the US subsidiary of South Korea-based Kaonmedia Co.,
Ltd., the world’s fifth largest Set-Top and Broadband device manufacturer, where his responsibilities included all management,
finance, technology marketing and differentiation, competing within the North American market as a major electronics supplier.
Mr. Grauch also served as Vice President, Video CPE, Office of the CTO, with Comcast Cable, including Vice President, head of
global marketing at ST Micro’s Advanced SoC video microprocessor division and Senior Vice President at Nagravision SA.
Eric
S. Skolnik, 55, has been a Senior Vice President since May, 2003 and our Chief Financial Officer, Treasurer and Assistant
Secretary since May, 2001. Mr. Skolnik served as our Interim Chief Financial Officer from January, 2001 through April, 2001. He
was our Corporate Controller from May, 2000 through January, 2001. From 1994 until May, 2000, Mr. Skolnik worked as a certified
public accountant with BDO Seidman, LLP.
Ronald
V. Alterio, 50, has been Senior Vice President-Engineering, Chief Technology Officer since January 23, 2020. Prior to his
appointment as Senior Vice President, Mr. Alterio served as our Vice President-Engineering, Chief Technology Officer since July
23, 2018. From 2016 until he joined the Company, Mr. Alterio served as Vice President – Engineering of ARRIS, following
ARRIS’ acquisition of Pace plc. Mr. Alterio served in a variety of positions at the Pace Americas unit of Pace plc since
2000, including Senior Vice President – Engineering from 2015 to 2016.
Allen
Horvath, 68, has been our Senior Vice President-Operations since January 23, 2020. Prior to his appointment as Senior Vice
President, Mr. Horvath served as our Vice President-Operations since May, 2013 and as our Vice President-Manufacturing since May,
2003 and is responsible for our manufacturing operations. Mr. Horvath served as our Manufacturing Manager from 1998 until May,
2003. Since 1976, Mr. Horvath has served us in various management positions in the areas of production testing, engineering, quality
control and manufacturing.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding beneficial ownership of our Common Stock as of April 15, 2020 by (i)
each person who is known by us to beneficially own more than five percent of our Common Stock, (ii) each of our Directors, (iii)
each of our executive officers named in the Summary Compensation Table below, and (iv) all our executive officers and Directors
as a group. Except as otherwise indicated, the persons named in the table have sole voting and investment power with respect to
all shares that they beneficially own, subject to community property laws where applicable.
Name
and Address of Beneficial Owner(1)(2)
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Amount
and Nature of Beneficial Ownership(1)
|
|
|
Percent of Class Beneficially
Owned
|
|
Directors and Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Pallé
|
|
|
4,018,267
|
(3)
|
|
|
36.38
|
%
|
Anthony J. Bruno
|
|
|
420,190
|
(4)
|
|
|
4.22
|
%
|
John Burke
|
|
|
-
|
(5)
|
|
|
-
|
|
Charles E. Dietz
|
|
|
330,020
|
(6)
|
|
|
3.35
|
%
|
Stephen K. Necessary
|
|
|
191,972
|
(7)
|
|
|
1.94
|
%
|
Gary P. Scharmett
|
|
|
394,695
|
(8)
|
|
|
4.00
|
%
|
Steven L. Shea
|
|
|
1,101,971
|
(9)
|
|
|
10.78
|
%
|
James F. Williams
|
|
|
340,017
|
(10)
|
|
|
3.44
|
%
|
James H. Williams
|
|
|
492,522
|
(11)
|
|
|
5.01
|
%
|
Edward Grauch
|
|
|
291,672
|
(12)
|
|
|
2.96
|
%
|
Eric S. Skolnik
|
|
|
181,204
|
(13)
|
|
|
1.82
|
%
|
Allen Horvath
|
|
|
205,501
|
(14)
|
|
|
2.07
|
%
|
Ronald V. Alterio
|
|
|
63,387
|
(15)
|
|
|
|
*
|
All Directors and executive officers as a group (13 persons)
|
|
|
8,031,418
|
|
|
|
63.42
|
%
|
Additional Beneficial Owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Walker
|
|
|
1.020,200
|
(16)
|
|
|
10.45
|
%
|
Carol M. Pallé
|
|
|
1,605,222
|
(17)
|
|
|
15.56
|
%
|
|
(1)
|
Beneficial
ownership as of April 15, 2020 for each person listed includes shares subject to options held by such person which are exercisable
within 60 days after such date and convertible debt securities which may be converted into shares of our common stock within 60
days of such date. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”)
and generally includes voting or investment power with respect to securities, which voting or investment power may be further
described in the footnotes below. This table contains information furnished to us by the respective stockholders or contained
in filings made with the SEC. Certain of our executive officers and Directors may, from time to time, hold some or all of their
Common Stock in brokerage accounts having outstanding margin loan balances secured by the Common Stock and the other investment
securities held in such brokerage accounts.
|
|
(2)
|
Unless
otherwise indicated, the address for each beneficial owner is c/o Blonder Tongue Laboratories, Inc., One Jake Brown Road, Old
Bridge, NJ 08857.
|
|
(3)
|
Includes
200,000 shares of Common Stock owned of record by a limited liability company of which Mr. Pallé and his spouse are the
sole members, 842,000 shares of Common Stock jointly owned by Mr. Pallé and his spouse, 726,667 shares of Common Stock
underlying options granted by us to Mr. Pallé which are exercisable within 60 days after April 15, 2020, 10,000 shares
of Common Stock owned by Mr. Pallé’s spouse, who holds a non-officer position with the Company, 35,834 shares of
Common Stock underlying options granted by us to Mr. Pallé’s spouse, which are exercisable within 60 days after April
15, 2020, and 517,293 shares of Common Stock underlying certain convertible indebtedness of the Company held by Mr. Pallé
and his spouse, which is outstanding as of, and convertible within 60 days after, April 15, 2020. Mr. Pallé disclaims beneficial
ownership of the 10,000 shares of Common Stock owned by his spouse and the 35,834 shares of Common Stock underlying options granted
by us to his spouse. See footnote 17 below.
|
|
(4)
|
Includes
110,000 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020 and
86,216 shares of Common Stock underlying certain convertible indebtedness of the Company held by Mr. Bruno, which is outstanding
as of, and convertible within 60 days after, April 15, 2020.
|
|
(5)
|
Mr.
Burke joined the Company as a Director on January 23, 2020. As of April 15, 2020 he did not beneficially own any shares of Common
Stock.
|
|
(6)
|
Includes
92,500 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020.
|
|
(7)
|
Includes
38,630 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020 and 86,216
shares of Common Stock underlying certain convertible indebtedness of the Company held by Mr. Necessary, which is outstanding
as of, and convertible within 60 days after, April 15, 2020.
|
|
(8)
|
Includes
110,000 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020.
|
|
(9)
|
Includes
110,000 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020 and
344,862 shares of Common Stock underlying certain convertible indebtedness of the Company held by Mr. Shea, which indebtedness
is outstanding as of, and convertible within 60 days after, April 15, 2020. Certain of the securities are beneficially owned by
Mr. Shea through MidAtlantic IRA, LLC FBO Steven L. Shea IRA.
|
|
(10)
|
Includes
110,000 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020.
|
|
(11)
|
Includes
59,166 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15 2020.
|
|
(12)
|
Includes
100,000 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020.
|
|
(13)
|
Includes
172,501 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020.
|
|
(14)
|
Includes
147,501 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020.
|
|
(15)
|
Includes
50,000 shares of Common Stock underlying options granted by us which are exercisable within 60 days after April 15, 2020.
|
|
(16)
|
As
reported on Schedule 13G/A filed by Stephen E. Walker on February 6, 2020. The business address of this stockholder is 1801-R
Brassfield Road, Greensboro, NC 27410.
|
|
(17)
|
Carol
M. Pallé is the spouse of Robert J. Pallé. Includes 200,000 shares of Common Stock owned of record by a limited
liability company of which Mr. and Mrs. Pallé are the sole members, 842,000 shares of Common Stock jointly owned by Mr.
and Mrs. Pallé, 10,000 shares of Common Stock owned by Mrs. Pallé, 35,834 shares of Common Stock underlying options
granted by us to Mrs. Pallé, which are exercisable within 60 days after April 15, 2020 and 517,293 shares of Common Stock
underlying certain convertible indebtedness of the Company held by Mr. and Mrs. Pallé, which indebtedness is outstanding
as of, and convertible within 60 days after April 15, 2020. Except as disclosed in this footnote, Mrs. Pallé disclaims
beneficial ownership of all shares of Common Stock beneficially owned by Mr. Pallé, other than 200,000 shares of Common
Stock owned of record by a limited liability company of which Mr. and Mrs. Pallé are the sole members, 842,000 shares of
Common Stock jointly owned by Mr. and Mrs. Pallé, and 517,293 shares of Common Stock underlying the convertible indebtedness
of the Company held by Mr. and Mrs. Pallé. Mrs. Pallé has entered into an agreement with Mr. Pallé granting
him voting and dispositive power with respect to the 200,000 shares and 842,095 shares of Common Stock referenced in the preceding
sentence.
|
CORPORATE
GOVERNANCE AND BOARD MATTERS
Board
Leadership Structure and Risk Oversight
Historically,
the Board has determined that our Chief Executive Officer was best situated to serve as Chairman of the Board because he was the
Director most familiar with our business and industry, and most capable of effectively identifying strategic priorities and leading
the discussion and execution of strategy. Independent Directors and management have different perspectives and roles in strategy
development. Our independent Directors bring experience, oversight and expertise from outside the company and industry, while
the Chief Executive Officer brings company-specific experience and expertise. Following the resignation of our then-serving Chairman
and CEO in 2015, our Board carefully evaluated our Board governance structure and considered alternative approaches. As a result
of that evaluation and analysis, the Board determined that it was in the Company’s best interests to appoint one of the
independent Directors as Chairman of the Board. As a result, in May 2015, the Board appointed Steven L. Shea to serve as our Chairman
of the Board, and because the Board continues to believe that it is in the best interests of the Company to have an independent
Chairman of the Board, Mr. Shea continues to serve as our Chairman.
The
Board believes that establishing the right “tone at the top” and full and open communication between management and
the Board are essential for effective risk management and oversight. At each regular Board meeting, the Board receives reports
from members of senior management on areas of material risk to the Company, including operational, financial, strategic and performance
risks. The full Board receives these reports from the appropriate “risk owner” within the organization to facilitate
our risk identification, risk management and risk mitigation strategies. This enables the Board to coordinate risk oversight,
particularly with respect to risk interrelationships across corporate disciplines.
The
Board has an active role, as a whole and also at the committee level, in overseeing management of our risks. The Audit Committee
assists the Board in fulfilling its oversight responsibilities with respect to areas of financial reporting and compliance with
laws, rules and regulations applicable to us, including those related to accounting regulation, insider trading, antitrust, and
employment discrimination, whistle blowing and conflicts of interest faced by employees, officers and directors. The Compensation
Committee assists the Board in fulfilling its oversight responsibilities with respect to our compensation policies and programs.
The Nominating & Corporate Governance Committee assists the Board in fulfilling its oversight responsibilities with respect
to the management of risks associated with Board organization and membership, and succession planning for our Directors and senior
executive officers.
Director
Independence
The
Board has considered the independence of our Directors pursuant to Section 803A of the NYSE American Company Guide (“Independence
Rules”). Under the NYSE American Independence Rules, a Director may not be determined to be independent if certain relationships
exist. In addition to reviewing whether any of those specific disqualifying relationships exist under the Independence Rules,
the NYSE American also requires that the Board determine whether any of our Directors has a relationship that it believes would
interfere with the exercise of independent judgment in carrying out the responsibilities of a Director. In the course of this
determination, the Board considered the following relationship and arrangement between a non-management Director and us, which
was determined to be immaterial and not falling within one or more of the disqualifying relationships under the Independence Rules
or which would otherwise interfere with the exercise of the Director’s independent judgment in carrying out the responsibilities
of a Director:
|
●
|
Gary
P. Scharmett: The fees paid by us to the law firm where he is a partner were below 5% of the law firm’s consolidated gross
revenue in each of the prior three years. See “Certain Relationships and Related Transactions” below for more detail
on these fees paid for legal services.
|
Based
on this review, the Board has determined that, except for Robert J. Pallé, who served as our Chief Executive Officer until
January 1, 2020 and continues to be employed by the Company as Managing Director of Strategic Accounts, each of our Directors
is independent pursuant to the Independence Rules. Accordingly, the current Board consists of a majority of independent Directors.
Meetings
of the Board of Directors; Committees
The
Board has three standing committees: the Compensation Committee, the Nominating & Corporate Governance Committee, and the
Audit Committee. During the year ended December 31, 2019, the full Board held 23 meetings, the Compensation Committee held five
meetings, the Nominating & Corporate Governance Committee held seven meetings, and the Audit Committee held five meetings.
Each member of the Board attended (either in person or via teleconference) at least 75% of the aggregate of the total number of
Board meetings and Committee meetings held in 2019 during the period in which he served as a Director and/or committee member.
Compensation
Committee. The Compensation Committee is currently comprised of Anthony J. Bruno, Charles E. Dietz, Stephine K. Necessary,
and Steven L. Shea, each of whom is a non-employee Director. Mr. Necessary serves as the Chairman of the Compensation Committee.
Each of the members of the Compensation Committee who served during the 2019 fiscal year was independent, as independence for
compensation committee members is defined by NYSE American rules.
The
Compensation Committee determines compensation for our executive officers and administers each of our existing stock incentive
plans, other than the Amended and Restated 2005 Director Equity Incentive Plan, the 2016 Director Equity Incentive Plan and the
Amended and Restated Director Stock Purchase Plan, each of which is administered by the Board.
The
Compensation Committee’s responsibilities include, among other duties, the responsibility to:
|
●
|
evaluate
the performance of the Chief Executive Officer/President;
|
|
●
|
review
and approve the base salary (subject to Board approval), bonus, incentive compensation and any other compensation for the Chief
Executive Officer/President;
|
|
●
|
review
the Chief Executive Officer’s recommendations for the compensation of the other executive officers, make appropriate adjustments
and approve such compensation;
|
|
●
|
monitor
our cash bonus and equity-based compensation plans and discharge the duties imposed on the Compensation Committee by the terms
of those plans;
|
|
●
|
review
and approve the proposal regarding the Say on Pay Vote when the same is required to be included in our proxy statement, and to
review and recommend to the Board for approval the frequency with which we will conduct Say on Pay Votes; and
|
|
●
|
perform
other functions or duties deemed appropriate by the Board.
|
Compensation
decisions for the Chief Executive Officer/President and all other executive officers are reviewed and approved by the Compensation
Committee, subject to ratification by the Board of the base salary for the Chief Executive Officer/President. The Compensation
Committee relies upon the Chief Executive Officer to assist the Compensation Committee in performing its duties with regard to
all other executive officers. The Compensation Committee does not delegate any of its authority to other persons. In recent years
the Compensation Committee has not retained a compensation consultant in determining the base salary for our executive officers
or for any other purpose.
With
regard to the compensation of our Chief Executive Officer/President, the Compensation Committee reviews individual performance,
written comments and performance grades received from members of the Board regarding performance, relevant compensation information
from salary surveys (when available), and summary information and periodically, comments from peer review questionnaires. The
Chief Executive Officer also provides the Compensation Committee with a summary review of the President’s (except when the
Chief Executive Officer and the President are the same person) performance. Based upon its review of all of the foregoing information,
the Compensation Committee determines the form and amount of compensation for these officers, subject to Board approval of their
base salaries. The base salary of the Chief Executive Officer/President is presently reviewed every year.
With
regard to compensation for the other executive officers, the Compensation Committee reviews the Chief Executive Officer’s
written summary review of the executive officers’ performance and this information may be supplemented by summary information
and comments from periodic peer review questionnaires. The Chief Executive Officer also provides a recommendation as to the appropriate
form and amount of compensation for each other executive officer. The Compensation Committee reviews and considers the recommendation
of the Chief Executive Officer, makes adjustments as appropriate and approves them. This review and adjustment procedure is performed
annually for the other executive officers.
The
Compensation Committee does not establish the amount or form of Director compensation. These determinations are made and approved
by the full Board. However, the Compensation Committee will periodically review and recommend to the Board compensation, equity-based
plans and benefit programs for non-employee Directors. Grants of stock option awards and/or restricted or unrestricted shares
to non-employee Directors are generally made annually upon consideration and approval by the full Board with each non-employee
Director abstaining from voting on an award to him.
The
Board has adopted a written charter for the Compensation Committee. The Board, in concert with the Compensation Committee, reviews
and reassesses the charter for adequacy on an annual basis. A copy of the Compensation Committee Charter is available on our website
at www.blondertongue.com under the “About Us/Investor Relations/Compensation Committee Charter” caption.
Nominating
& Corporate Governance Committee. The Nominating & Corporate Governance Committee is currently comprised of Gary P.
Scharmett, Stephen K. Necessary and Steven L. Shea, each of whom is a non-employee Director. Mr. Scharmett serves as the Chairman
of the Nominating & Corporate Governance Committee. Each of the members of the Nominating & Corporate Governance Committee
who served during the 2019 fiscal year was independent, as independence for nominating committee members is defined by NYSE American
rules.
The
Nominating & Corporate Governance Committee, among other things, considers and makes recommendations to the Board concerning
the appropriate size of the Board and nominees to stand for election or fill vacancies on the Board, as well as the composition
of our standing committees. In particular, the Nominating & Corporate Governance Committee identifies, recruits, considers
and recommends candidates to fill positions on the Board in accordance with its criteria for Board membership (as such criteria
are generally described below). In searching for qualified Director candidates to nominate for election at an annual meeting of
stockholders, the Nominating & Corporate Governance Committee will initially consider nominating the current Directors whose
terms are expiring and will consider their past performance on the Board, along with the criteria for Board membership, in determining
whether to nominate them for re-election. In connection with nominations for elections at annual meetings or to fill vacancies
in the Board, the Nominating & Corporate Governance Committee may solicit the current members of the Board to identify qualified
candidates through their business and other organizational networks and may also retain director search firms as it determines
necessary in its own discretion. The Nominating & Corporate Governance Committee will then consider the potential pool of
Director candidates derived from the foregoing process, select the top candidates to fill the number of openings based on their
qualifications, the Board’s needs (including the need for independent Directors) and the criteria for Board membership.
The Nominating & Corporate Governance Committee will then conduct a thorough investigation of the proposed candidates’
backgrounds to ensure there is no past history that would disqualify such candidates from serving as Directors. Those candidates
that are selected and pass the background investigation will be recommended to the full Board for nomination.
The
criteria for a nominee to the Board include, among other things:
|
●
|
the
highest personal and professional ethics, strength of character, integrity and values;
|
|
●
|
experience
as a senior manager, chief operating officer or chief executive officer of a relatively complex organization or, if in a professional
or scientific capacity, be accustomed to dealing with complex problems, or otherwise shall have obtained and excelled in a position
of leadership;
|
|
●
|
education,
experience, intelligence, independence, fairness, reasoning ability, practical wisdom, and vision to exercise sound, mature judgments
on a macro and entrepreneurial basis on matters which relate to our current and long-term objectives;
|
|
●
|
competence
and willingness to learn our business, and the breadth of viewpoint and experience necessary for an understanding of the diverse
and sometimes conflicting interests of stockholders and other constituencies;
|
|
●
|
the
nominee should be of such an age at the time of election to assure a minimum of three years of service as a Director, and should
be free and willing to attend regularly scheduled meetings of our Board and its committees over a sustained period and otherwise
be able to contribute a reasonable amount of time to our company affairs;
|
|
●
|
the
stature and capability to represent us before the public, stockholders, and other various individuals and groups that affect us;
and
|
|
●
|
willingness
to objectively appraise the performance of management in the interest of the stockholders and question management’s assumptions
when inquiry is appropriate.
|
The
Nominating & Corporate Governance Committee does not have a formal policy with respect to diversity. However, in order to
enhance the overall quality of the Board’s deliberations and decisions, the Nominating & Corporate Governance Committee
seeks candidates with diverse professional backgrounds and experiences, representing a mix of industries and professions with
varied skill sets and expertise.
The
Board has adopted a written charter for the Nominating & Corporate Governance Committee. The Nominating & Corporate Governance
Committee reviews and reassesses the charter for adequacy on an annual basis. A copy of the Nominating & Corporate Governance
Committee Charter is available on our website at www.blondertongue.com under the “About Us/Investor Relations/Nominating
Committee Charter” caption.
Audit
Committee. The Company has a separately designated standing audit committee that has been established in accordance with Section
3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and Rule 10A-3 promulgated
under the Exchange Act. The Audit Committee is currently comprised of Anthony J. Bruno, Charles E. Dietz, Steven L. Shea, and
James F. Williams, each of whom is a non-employee Director. The Audit Committee, among other things:
|
●
|
oversees
our accounting and financial reporting process and audits of our financial statements;
|
|
●
|
selects,
retains or terminates our independent registered public accounting firm;
|
|
●
|
reviews
the plans and results of the audit engagement with the independent registered public
accounting firm;
|
|
●
|
discusses
with the independent registered public accounting firm all necessary accounting policies
and practices to be used and alternative treatments of financial information discussed
with management;
|
|
●
|
oversees
the work of the independent registered public accounting firm;
|
|
●
|
evaluates
and pre-approves audit and non-audit services provided by the independent registered
public accounting firm;
|
|
●
|
reviews
the independence of the independent registered public accounting firm;
|
|
●
|
assures
the regular rotation of the audit partners;
|
|
●
|
considers
the range of audit and non-audit fees and determines the compensation of the independent
registered public accounting firm;
|
|
●
|
reviews
financial and earnings information released to the public, analysts and other third parties;
and
|
|
●
|
reviews
the adequacy of our internal accounting controls.
|
Each
of the members of the Audit Committee who served during the 2019 fiscal year was independent, as independence for audit committee
members is defined by NYSE American and each also meets the requirements of Rule 10A-3 under the Exchange Act. Our Board has determined
that a member of the Audit Committee, Anthony J. Bruno, qualifies as an “audit committee financial expert” as defined
in Section 407(d)(5)(ii) of Regulation S-K. The Board has adopted a written charter for the Audit Committee. The Board, in concert
with the Audit Committee, reviews and reassesses the charter for adequacy on an annual basis. A copy of the Audit Committee Charter
is available on our website at www.blondertongue.com under the “About Us/Investor Relations/Audit Committee Charter”
caption.
Audit
Committee Report
The
Audit Committee of the Board of Directors has:
|
●
|
reviewed
and discussed the audited financial statements with management;
|
|
●
|
discussed
with the Company’s independent registered public accounting firm the matters required
to be discussed by Statement of Auditing Standards No. 1301, Communications with Audit
Committees as adopted by the Public Company Accounting Oversight Board;
|
|
●
|
received
the written disclosures and the letter from the Company’s independent registered
public accounting firm required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent registered public accounting firm’s communications
with the audit committee concerning independence required by Rule 3526; and
|
|
●
|
discussed
with Company’s independent registered public accounting firm their independence
from the Company and its management required by Rule 3526.
|
Management
is responsible for the preparation, presentation and integrity the Company’s financial statements, the financial reporting
process, accounting principles and internal controls and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The Company’s independent registered public accounting firm is responsible for performing
an independent audit of the financial statements in accordance with Standards of the Public Company Accounting Oversight Board
(United States) and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.
The Audit Committee has relied, without independent verification, on the information provided to it and on the representations
of management and the independent registered public accounting firm that the financial statements have been prepared in conformity
with United States generally accepted accounting principles.
Based
on the review and discussions referred to in the items above, the Audit Committee recommended to the Board that the audited financial
statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
|
The Audit Committee
|
|
|
|
Anthony J. Bruno, Chairman
|
|
Charles E. Dietz
|
|
Steven L. Shea
|
|
James F. Williams
|
Board
Policies Regarding Communications With the Board of Directors and Attendance at Annual Meetings
Our
Board maintains a process for stockholders to communicate with the Board. A stockholder wishing to communicate with our Board,
or any individual member(s) of the Board, can send a written communication to the attention of the Board (or specific individual
Director(s), if applicable) at the following address: c/o Corporate Secretary, One Jake Brown Road, Old Bridge, New Jersey 08857.
Any such communication must state the number of shares beneficially owned by the stockholder making the communication. Our Corporate
Secretary will forward such communication to the full Board or to any individual Director or Directors to whom the communication
is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case our Corporate
Secretary has the authority to discard the communication or take appropriate legal action regarding the communication.
While
we do not have a formal written policy regarding Board member attendance at our Annual Meeting, we actively encourage our Directors
to attend the Annual Meeting of Stockholders. All Directors and officers at the time of our 2019 Annual Meeting of Stockholders
attended the 2019 Annual Meeting, other than James H. Williams and James F. Williams.
2019
DIRECTOR COMPENSATION
Summary
Compensation Table
The
following table discloses the actual compensation paid to or earned by each of our Directors who is not also a named executive
officer in fiscal year 2019:
Name
|
|
Fees Earned or Paid in Cash
($)(1)
|
|
|
Stock and Option Awards
($)(2)
|
|
|
All Other Compensation
($)
|
|
|
Total
($)
|
|
Anthony J. Bruno
|
|
|
44,000
|
|
|
|
15,540
|
(3)
|
|
|
–
|
|
|
|
59,540
|
|
John Burke
|
|
|
–
|
|
|
|
–
|
(4)
|
|
|
–
|
|
|
|
–
|
|
Charles E. Dietz
|
|
|
47,742
|
|
|
|
15,540
|
(3)
|
|
|
–
|
|
|
|
63,282
|
|
Stephen K. Necessary
|
|
|
44,100
|
|
|
|
15,540
|
(3)
|
|
|
–
|
|
|
|
59,640
|
|
Gary P. Scharmett
|
|
|
35,125
|
|
|
|
15,540
|
(3)
|
|
|
–
|
|
|
|
50,665
|
|
Steven L. Shea
|
|
|
74,600
|
|
|
|
15,540
|
(3)
|
|
|
–
|
|
|
|
90,140
|
|
James F. Williams
|
|
|
40,000
|
|
|
|
15,540
|
(3)
|
|
|
–
|
|
|
|
55,540
|
|
James H. Williams
|
|
|
35,000
|
|
|
|
15,540
|
(3)
|
|
|
–
|
|
|
|
50,540
|
|
|
(1)
|
Pursuant
to our Amended and Restated Director Stock Purchase Plan, Directors have the ability
to elect to receive awards of fully vested shares of Common Stock in lieu of cash payment
of director fees otherwise payable to them. During 2019, the following directors elected
to receive shares in lieu of part of all of the cash fees otherwise payable to them:
(i) Mr. Bruno: 21,908 shares; (ii) Mr. Dietz: 27,252 shares; (iii) Mr. Necessary: 56,747
shares; (iv) Mr. Scharmett: 9,427 shares; and (v) Mr. James F. Williams: 21,145 shares.
|
|
(2)
|
The
amounts in the “Stock and Option Awards” column reflect the aggregate grant
date fair value computed in accordance with FASB ASC Topic 718. Assumptions used in the
calculation of these amounts are included in Note 14 to our audited consolidated financial
statements included in our Annual Report on Form 10-K for the year ended December 31,
2019.
|
|
(3)
|
In
2019, each non-employee Director was granted an option to purchase 20,000 shares of Common
Stock. The options vested one year from the date of grant.
|
|
(4)
|
Mr.
Burke joined the Board in January 2020.
|
Director
Compensation Arrangements
We
pay each of our non-employee Directors an annual retainer of $25,000, payable quarterly, and the non-employee Director who serves
as our Chairman of the Board receives an additional annual retainer for serving in that capacity of $25,000, also payable quarterly.
We also pay each non-employee Director a fee of $1,000 for each Board meeting attended in person ($500 if attendance was telephonic)
and a fee of $600 for each committee meeting attended in person ($300 if attendance was telephonic or if attending on the same
date as a Board meeting). We reimburse each Director for certain travel, lodging and related expenses incurred in connection with
attendance at Board and committee meetings. From time to time, in the sole discretion of the Board, we grant equity awards to
our non-employee Directors. We did not pay Mr. Pallé, who served the Company as an executive officer during 2019, any separate
compensation for serving on the Board or any Board committees during 2019.
On
March 19, 2015, the Board adopted the Director Stock Purchase Plan, which was intended to enable outside directors to allocate
portions of their annual retainer fees to be paid in shares of the Company’s Common Stock, in lieu of cash payments. This
plan was designed and derived from the Executive Stock Purchase Plan adopted by the Company in June 2014, which was intended to
enable executive officers of the Company to allocate a portion of their base salary to be paid in shares of the Company’s
Common Stock, in lieu of cash. In March 2016, the Company adopted the Amended and Restated Director Stock Purchase Plan, which
replaced the Director Stock Purchase Plan. Under the Amended and Restated Director Stock Purchase Plan, the portion of directors’
fees (including meeting fees, which were not permitted to be converted into common stock purchases under the Director Stock Purchase
Plan) permitted to be paid in shares of the Company’s Common Stock, in lieu of cash, was increased and the new plan was
made more flexible to encourage the non-employee directors to elect to receive shares of the Company’s Common Stock in lieu
of cash payments.
Director
Benefit Plans
In
May 2005, our stockholders approved the adoption of the Blonder Tongue Laboratories, Inc. 2005 Director Equity Incentive Plan
(the “Original 2005 Director Plan”). In May, 2014, our stockholders approved an amendment and restatement in
its entirety of the Original 2005 Director Plan (as amended and restated, the “A&R 2005 Director Plan”),
effective as of February 7, 2014, which, among other things, (i) increased the number of shares of Common Stock available for
issuance under the A&R 2005 Director Plan, (ii) extended the term of the A&R 2005 Director Plan to February 7, 2024, (iii)
made awards under the A&R 2005 Director Plan subject to clawback provisions under applicable law or under policies that may
be adopted by us from time to time, and (iv) prohibited repricing of stock options absent advance stockholder approval.
The
A&R 2005 Director Plan is administered by our Board. Under the A&R 2005 Director Plan, Directors who are not currently
employed by us or by any of our subsidiaries and who have not been so employed within the past six months, are eligible to receive
equity-based awards from time to time as determined by our Board. Under the A&R 2005 Director Plan, eligible Directors may
be awarded stock options to purchase a number of shares of Common Stock (“Stock Options”), stock appreciation
rights to receive the excess, if any, of the fair market value of a specified number of shares of Common Stock at the time of
exercise over the grant price (“SARS”) or stock awards (“Stock Awards”) at no cost to the
Director, which may be either restricted stock or unrestricted stock. Each grant of Stock Options, SARS or Stock Awards will be
subject to a written Award Agreement, which shall specify the terms and conditions of the grant as determined by the Board; provided,
however, that the exercise price for any Stock Options or SARS granted shall not be less than the fair market value of the underlying
Common Stock on the date of grant. The A&R 2005 Director Plan expires on February 7, 2024.
At
our 2016 Annual Meeting, our stockholders approved the adoption of the Blonder Tongue Laboratories, Inc. 2016 Director Equity
Incentive Plan (the “2016 Director Plan”), which supplements the A&R 2005 Director Plan.
The
2016 Director Plan is administered by our Board. Under the 2016 Director Plan, Directors who are not currently employed by us
or by any of our subsidiaries and who have not been so employed within the past six months, are eligible to receive equity-based
awards from time to time as determined by our Board. The 2016 Director Plan authorizes the award of up to a maximum of 400,000
shares. (Proposal 2 being submitted to stockholders at this Annual Meeting proposes to increase the maximum number of shares by
500,000). Any shares subject to an award issued under the 2016 Director Plan which is terminated, canceled, expired or forfeited
for any reason will again be available for the grant of an award. Under the 2016 Director Plan, eligible Directors may be awarded
Stock Options, SARS or Stock Awards, which may be either restricted stock or unrestricted stock. Each grant of Stock Options,
SARS or Stock Awards will be subject to a written Award Agreement which shall specify the terms and conditions of the grant as
determined by the Board; provided, however, that the exercise price for any Stock Options or SARS granted shall not be less than
the fair market value of the underlying Common Stock on the date of grant. Awards under the 2016 Director Plan are subject to
clawback provisions under applicable law or under policies that may be adopted by us from time to time, and Stock Options awarded
under the 2016 Director Plan cannot be re-priced absent advance stockholder approval. The 2016 Director Plan expires on February
4, 2026.
EXECUTIVE
COMPENSATION
Summary
of Compensation Objectives and 2019 Compensation
Our
Compensation Committee is responsible for evaluating and approving compensation for our executive officers. The individual who
served as our Chief Executive Officer in 2019 and the other individuals included in the Summary Compensation Table on page 17,
are referred to as the “named executive officers.” This section discusses our compensation objectives and provides
an overview of the application of these objectives with regard to the compensation paid to our named executive officers in 2019.
The
primary objective of our executive compensation program is to assist us in attracting, retaining and motivating talented executives
to execute our business strategy and maximize short-term and long-term profits and stockholder value. We seek to achieve these
objectives by:
|
●
|
providing
direct compensation and rewards programs that are externally competitive to attract and
retain the talent needed;
|
|
●
|
rewarding
performance of executives who contribute to strategic and operational goals; and
|
|
●
|
providing
compensation that aligns with long-term business objectives and stockholders’ interests.
|
The
key elements of our executive officer compensation program are:
|
●
|
annual
incentive compensation in the form of cash bonuses; and
|
|
●
|
long-term
incentive compensation.
|
The
Compensation Committee considers various factors when making compensation decisions with regard to the named executive officers,
including external market forces, individual circumstances and performance. A description of these factors and the procedures
followed by the Compensation Committee in determining executive compensation are set forth above under “Meetings of the
Board of Directors; Committees–Compensation Committee.”
Our
compensation program has been designed to promote a performance-based culture which aligns the interests of our named executive
officers and other officers with the interests of our stockholders. Our compensation program makes a substantial portion of executive
pay variable, subject to increase when performance targets are achieved, and subject to reduction when performance targets are
not achieved. This includes annual incentive cash compensation based on the achievement of specified performance objectives. A
substantial portion of our named executive officers’ compensation is also based on equity awards with long-term vesting
requirements, which have been in the form of stock options in recent years. These stock options create long-term incentives as
the executive only benefits if our stock price appreciates over the long-term.
The
historical payouts under our Executive Bonus Plan (as defined below) are evidence of the pay for performance structure of our
compensation program. For example, based on the improvement in operating results in fiscal 2010 as compared to fiscal 2009, bonuses
were paid under the Executive Bonus Plan to the named executive officers upon the achievement of the pre-tax income objectives
set under the Executive Bonus Plan. In contrast, since 2010, we have not paid any bonuses to the named executive officers under
the Executive Bonus Plan, due to the failure to meet the objectives that were set at the beginning of each of the relevant fiscal
years.
Base
Salary. Base salaries are intended to provide a level of cash compensation that is externally competitive in relation to the
responsibilities of the executive’s position, with adjustments reflective of recent performance. Individual salaries for
executive officers are generally reviewed annually by the Compensation Committee in accordance with the procedures described above,
including their respective performance reviews. The performance evaluation focuses on the executive’s performance during
the past year of the responsibilities of such executive’s position, the executive’s improvement in areas where any
deficiencies may have been noted in the past, and the executive’s achievement of any specific goals and objectives which
may have been established for such executive, including achievement of budget objectives. Our overall profit for the fiscal year,
the executive’s individual contribution to that profit, and general economic and industry conditions are also considered.
This assessment of individual performance contributions is, however, subjective and not conditioned upon the achievement of any
specific, pre-determined performance targets.
It
has been and continues to be the philosophy of the Compensation Committee that opportunities for significant increases in annual
compensation by our senior executives should generally be derived from performance based results that are aligned with the interests
of the Company’s stockholders or in connection with significant changes in the scope and nature of the responsibilities
assigned to a particular executive. As such, annual adjustments for our senior executives have historically been modest (and have
even remained flat or have been reduced from time to time), while opportunities to earn substantial bonus payments tied to the
Company’s net profits have been regularly made available under the Executive Bonus Plan.
Bonus
Plan. We provide executives with an annual opportunity to earn cash incentive awards through the Executive Officer Bonus Plan
(the “Executive Bonus Plan”). These cash bonuses are intended to motivate and reward the achievement of short-term
profit, which is a key element of the Compensation Committee’s overall compensation philosophy. Cash bonus awards under
the Executive Bonus Plan are paid to officers during a particular fiscal year based upon and relating to our financial performance
during the prior fiscal year. During the first quarter of each fiscal year, we designate which of our executive officers are to
participate in the Executive Bonus Plan for that year. We then establish one or more objective performance goals for the participants
and a formula to determine bonus payments based on the achievement of the articulated goal(s). Presently, the bonus for any participant
may not exceed 100% of the participant’s base salary. Since the performance goals for 2019 were not met, no bonuses were
paid to the named executive officers for 2019.
Long-Term
Incentive. Long-term incentives are intended to motivate and retain executives and reward them based upon our long-term performance.
Our primary vehicle for providing these incentives is the grant of equity-based and other performance awards under our Amended
and Restated 2005 Employee Equity Incentive Plan (“A&R 2005 Employee Plan”) and our 2016 Employee Equity
Incentive Plan (“2016 Employee Plan”). In 2018 and 2019, the Compensation Committee granted stock options vesting
over a three-year period. The Compensation Committee believes stock options provide long-term incentives to executives while aligning
their interests with those of the public stockholders, as the executive only benefits if the stock price increases after the date
of grant and only by the amount of the increase. While the Compensation Committee subjectively determines the number of options
to be granted, it generally considers the following in making its decisions:
|
●
|
the
number of outstanding options in relation to the number of outstanding shares of our
Common Stock to determine the dilutive effect of additional options;
|
|
●
|
the
number of outstanding options that have an exercise price below the current market price
(and the magnitude of the exercise price below the current market price) to determine
the incentive being created by the outstanding options;
|
|
●
|
the
position and level of responsibility of the executive officer and his or her recent performance;
and
|
|
●
|
the
number of shares owned and options outstanding for an individual executive officer to
determine the incentive effect of further options.
|
The
Compensation Committee believes that restricted stock awards provide the recipients of such awards with an immediate tangible
benefit of “ownership” in a way that awards of stock options do not necessarily provide, and also encourage continuing
loyalty because of the vesting periods applicable to those awards.
Similar
to other types of compensation, the Compensation Committee determines the grant of equity-based awards to the Chief Executive
Officer and the other named executive officers.
Summary
Executive Compensation
The
following table summarizes the total compensation paid to or earned by our Chief Executive Officer, Chief Financial Officer and
our other named executive officers for services rendered to us in all capacities for the fiscal years ended December 31, 2019
and 2018.
Summary
Compensation Table
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
and Option
Awards
($)(1)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Robert J. Pallé
|
|
2019
|
|
$
|
490,542
|
(3)
|
|
$
|
-
|
|
|
$
|
23,310
|
|
|
$
|
20,469
|
(4)
|
|
$
|
534,321
|
|
Former Chief Executive Officer,
|
|
2018
|
|
|
60,154
|
|
|
|
-
|
|
|
|
62,263
|
|
|
|
47,673
|
|
|
|
170,090
|
|
Former President and Assistant Secretary(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Skolnik
|
|
2019
|
|
|
253,017
|
(5)
|
|
|
-
|
|
|
|
15,540
|
|
|
|
10,282
|
(5)
|
|
|
278,839
|
|
Chief Financial Officer,
|
|
2018
|
|
|
190,460
|
|
|
|
-
|
|
|
|
26,462
|
|
|
|
11,434
|
|
|
|
228,356
|
|
Treasurer and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward R. Grauch
|
|
2019
|
|
|
322,578
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,405
|
(7)
|
|
|
323,983
|
|
Chief Executive Officer, President(6)
|
|
2018
|
|
|
41,885
|
|
|
|
-
|
|
|
|
315,500
|
|
|
|
1,449
|
|
|
|
358,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald Alterio
|
|
2019
|
|
|
277,976
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,801
|
(9)
|
|
|
285,777
|
|
Vice President-Operations,
|
|
2018
|
|
|
109,914
|
|
|
|
-
|
|
|
|
182,350
|
|
|
|
3,634
|
|
|
|
295,898
|
|
Chief Technology Officer(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allen Horvath
|
|
2019
|
|
|
227,137
|
|
|
|
-
|
|
|
|
15,540
|
|
|
|
6,818
|
(10)
|
|
|
249,495
|
|
Vice President-Operations
|
|
2018
|
|
|
168,180
|
|
|
|
-
|
|
|
|
26,462
|
|
|
|
13,514
|
|
|
|
208,156
|
|
|
(1)
|
The
amounts in the “Stock and Option Awards” column reflect the aggregate grant date fair value computed in accordance
with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 15 to our audited consolidated
financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.
|
|
(2)
|
Mr.
Pallé served as our Chief Executive Officer and President in 2018. Mr. Pallé served as our Chief Executive Officer
throughout 2019 and as our President until May, 2019.
|
|
(3)
|
Mr.
Pallé agreed to a reduced base compensation for 2018, with payment at an annual rate of $84,000 through March 9, 2018 and
adjusted on that date to an annual rate of $54,476. The Compensation Committee determined to provide a special bonus arrangement
whereby Mr. Pallé would receive a lump sum cash bonus payment of $165,000 upon the completion of a sale of our Old Bridge
Facility. The amounts included in “Salary” for 2019 include the $165,000 payment made to Mr. Pallé in connection
with the completion of the sale of our Old Bridge Facility. This one-time payment was not made pursuant to any of our performance-based
bonus arrangements.
|
|
(4)
|
The
amounts shown in the “All Other Compensation” column for Mr. Pallé include personal use of a company car (except
as noted below), professional fees for tax return preparation and reimbursement of certain legal expenses, our matching contribution
to our 401(k) defined contribution plan for the benefit of Mr. Pallé and the dollar value of life insurance premiums paid
by us with respect to life insurance for the benefit of Mr. Pallé, including the supplemental life insurance for the benefit
of Mr. Pallé as described below under “Compensation Arrangements.” For 2019, $9,000 of the amount shown in
the “Salary” column represents payment for personal use of a company car, and such amount is not included in the “All
Other Compensation.
|
|
(5)
|
The
amounts included in “Salary” for 2019 include a $16,814 payment made to Mr. Skolnik in connection with the completion
of the sale of our Old Bridge Facility. This one-time payment was not made pursuant to any of our performance-based bonus arrangements.
The amounts shown in the “All Other Compensation” column for Mr. Skolnik include personal use of a company car (except
as noted below), our matching contribution to our 401(k) defined contribution plan for the benefit of Mr. Skolnik and the dollar
value of life insurance premiums paid by us with respect to life insurance for the benefit of Mr. Skolnik. For 2019, $9,000 of
the amount shown in the “Salary” column represents payment for personal use of a company car, and such amount is not
included in the “All Other Compensation.
|
|
(6)
|
Mr.
Grauch joined the Company on October 30, 2018 as Executive Vice President and Chief Operating Officer. In May, 2019 he was appointed
as President and assumed the additional role as Chief Executive Officer on January 1, 2020. Pursuant to our Executive Stock Purchase
Plan, Mr. Grauch was issued a total of 21,672 shares of Common Stock in lieu of receiving a portion of his salary.
|
|
(7)
|
The
amounts shown in the “All Other Compensation” column for Mr. Grauch include personal use of a company car (except
as noted below), our matching contribution to our 401(k) defined contribution plan for the benefit of Mr. Grauch and the dollar
value of life insurance premiums paid by us with respect to life insurance for the benefit of Mr. Grauch. For 2019, $9,000 of
the amount shown in the “Salary” column represents payment for personal use of a company car, and such amount is not
included in the “All Other Compensation.
|
|
(8)
|
Mr.
Alterio joined the Company on July 23, 2018 as Vice President-Engineering, Chief Technology Officer.
|
|
(9)
|
The
amounts shown in the “All Other Compensation” column for Mr. Alterio include personal use of a company car (except
as noted below), our matching contribution to our 401(k) defined contribution plan for the benefit of Mr. Alterio and the dollar
value of life insurance premiums paid by us with respect to life insurance for the benefit of Mr. Alterio. For 2019, $9,000 of
the amount shown in the “Salary” column represents payment for personal use of a company car, and such amount is not
included in the “All Other Compensation.
|
|
(10)
|
The
amounts shown in the “All Other Compensation” column for Mr. Horvath include personal use of a company car (except
as noted below), our matching contribution to our 401(k) defined contribution plan for the benefit of Mr. Horvath and the dollar
value of life insurance premiums paid by us with respect to life insurance for the benefit of Mr. Horvath. For 2019, $9,000 of
the amount shown in the “Salary” column represents payment for personal use of a company car, and such amount is not
included in the “All Other Compensation.
|
Compensation
Arrangements
Other
than our current standard employee severance policy applicable to all salaried employees, which entitles them, upon involuntary
termination without cause, to one week of pay for each year of service up to a maximum of six weeks of pay, we have no employment,
severance or change-of-control agreements with any of our named executive officers, each of whom is employed by us on an at-will
basis. Our named executive officers serve at the will of the Board, which enables us to terminate their employment with discretion
as to the terms of any severance arrangement beyond our current standard policy.
We
maintain group term life insurance for our employees, including our named executive officers, for which each participating employee
designates his or her own beneficiary. In March, 2011, our Board of Directors, upon the recommendation of the Compensation Committee,
approved the purchase of a supplemental life insurance policy on the life of Mr. Pallé. The supplemental life insurance
is a ten-year level term policy with a death benefit of $400,000 payable to the beneficiary designated by Mr. Pallé.
Executive
Officer Bonus Plan
As
described above under “Summary of Compensation Objectives and 2019 Compensation,” we provide our executives with an
annual opportunity to earn cash incentive awards through the Executive Officer Bonus Plan. The performance goals are expressed
in terms of (a) one or more corporate or divisional earnings-based measures (which may be based on net income, operating income,
cash flows, or any combination thereof) and/or (b) one or more corporate or divisional sales-based measures. Each such goal may
be expressed on an absolute and/or relative basis, may employ comparisons with our past performance (including one or more divisions)
and/or the current or past performance of other companies, and in the case of earnings-based measures, may employ comparisons
to capital, stockholders’ equity and shares outstanding. Performance goals need not be uniform among participants, but they
have been in recent years.
After
our financial results for a fiscal year have been determined, the Compensation Committee will certify the level of performance
goal attainment and the potential bonus payment for each participant. The Compensation Committee has full authority to decrease
the amount that would otherwise be payable to any participant for a fiscal year.
For
the 2019 fiscal year, all of the named executive officers were participants under the Executive Officer Bonus Plan. The participants
were entitled to share in a Bonus Pool (“Bonus Pool”) based upon a subjectively determined allocation, which
took into account the relative compensation levels of the executives as well as other subjective factors related to overall job
performance in 2019, such as the ease with which the executive could be replaced, whether further opportunities for advancement
within the Company existed for the executive, teamwork skills, perceived efforts, interpersonal relationships and overall job
performance. The Bonus Pool for 2019 was equal to the lesser of (i) the sum of the base salary of all participants in the aggregate,
or (ii) the sum of (a) 10% of the first $1 million of our pre-tax income, excluding any gain or loss associated with the sale
of the Old Bridge Facility affecting the determination of the Company’s net income before income taxes (“Adjusted
Net Income”), plus (b) 15% of the next $1 million of our Adjusted Net Income, plus (c) 20% of the next $1 million of
our Adjusted Net Income, plus (d) 25% of the next $1 million of our Adjusted Net Income, plus (e) 20% of the next $1 million of
our Adjusted Net Income, plus (f) 10% of our Adjusted Net Income in excess of $5 million, all as set forth on our audited financial
statements (in all cases calculated before taking into account any accrual for such Bonus Pool). Further, no bonus would be paid
to any participant unless the Bonus Pool (calculated in the manner described above) equaled or exceeded $90,000. Based upon our
reported Adjusted Net Income for 2019, no bonuses were paid to our named executive officers relating to such year.
Employee
Benefit Plans
In
May 2005, our stockholders approved the adoption of the Blonder Tongue Laboratories, Inc. 2005 Employee Equity Incentive Plan
(the “Original 2005 Employee Plan”). Our stockholders approved an amendment and restatement in its entirety
of the Original 2005 Employee Plan in May 2014 (as amended and restated, the “A&R 2005 Employee Plan”)
which, among things (i) increased the number of shares of Common Stock available for issuance under the A&R 2005 Employee
Plan, (ii) extended the term of the A&R 2005 Employee Plan to February 7, 2024, (iii) made awards under the A&R 2005 Employee
Plan subject to clawback provisions under applicable law or under policies that may be adopted by us from time to time, and (iv)
prohibited repricing of stock options absent advance stockholder approval. In addition, at our annual meeting in 2018, stockholders
approved an amendment to the A&R 2005 Employee Plan to increase the number of shares available for grants and awards under
the 2016 Employee Plan by 100,000.
The
A&R 2005 Employee Plan is administered by the Compensation Committee of the Board. Under the A&R 2005 Employee Plan, our
executive officers and other key employees, as determined by the Compensation Committee, are eligible to receive equity-based
awards from time to time as determined by the Compensation Committee. Under the A&R 2005 Employee Plan, our executive officers
and other key employees may be awarded stock options to purchase a number of shares of Common Stock (“Stock Options”),
stock appreciation rights to receive the excess, if any, of the fair market value of a specified number of shares of Common Stock
at the time of exercise over the grant price (“SARS”), stock awards at no cost to the executive officer or
key employee (“Stock Awards”), which may be either restricted stock or unrestricted stock, or performance based
awards to receive a number of shares of Common Stock if certain performance goals are met (“Performance Awards”).
Each grant of a Stock Option, SAR, Stock Award or Performance Award will be subject to a written Award Agreement which shall specify
the terms and conditions of the grant as determined by the Compensation Committee, provided, however, that the exercise price
for any Stock Options or SARS granted shall not be less than the fair market value of the underlying Common Stock on the date
of grant. The A&R 2005 Employee Plan expires on February 7, 2024.
At
our 2016 Annual Meeting, our stockholders approved the adoption of the Blonder Tongue Laboratories, Inc. 2016 Employee Equity
Incentive Plan (the “2016 Employee Plan”), which supplements the A&R 2005 Employee Plan.
The
2016 Employee Plan is administered by the Compensation Committee of the Board. Under the 2016 Employee Plan, our executive officers
and other key employees, as determined by the Compensation Committee, are eligible to receive equity-based awards from time to
time as determined by the Compensation Committee. The 2016 Employee Plan authorizes the award of up to a maximum of 1,000,000
shares. Any shares subject to an award issued under the 2016 Employee Plan which is terminated, canceled, expired or forfeited
for any reason will again be available for the grant of an award. Under the 2016 Employee Plan, our executive officers and other
key employees may be awarded Stock Options, SARS, Stock Awards, which may be either restricted stock or unrestricted stock, and
Performance Awards. Each grant of a Stock Option, SAR, Stock Award or Performance Award will be subject to a written Award Agreement
which shall specify the terms and conditions of the grant as determined by the Compensation Committee, provided, however, that
the exercise price for any Stock Options or SARS granted shall not be less than the fair market value of the underlying Common
Stock on the date of grant. Awards under the 2016 Employee Plan are subject to clawback provisions under applicable law or under
policies that may be adopted by us from time to time, and Stock Options awarded under the 2016 Employee Plan cannot be re-priced
absent advance stockholder approval. The 2016 Employee Plan expires on February 4, 2026. At our annual meeting in 2017, stockholders
approved an amendment to the 2016 Employee Plan, to increase the annual individual award limits relating to stock options and
stock appreciation rights from 100,000 to 250,000 shares of Common Stock. At our annual meeting in 2018, stockholders approved
an amendment to the 2016 Employee Plan to increase the number of shares available for grants and awards under the 2016 Employee
Plan by 2,000,000.
In
2019, Mr. Pallé was awarded options to purchase 30,000 shares of our Common Stock, Mr. Skolnik was awarded options to purchase
20,000 shares of our Common Stock, and Mr. Horvath was awarded options to purchase 20,000 shares of our Common Stock. In each
case, such options vest over three years in equal annual installments on each anniversary of the award date.
Retirement
Benefits
Each
of the named executive officers is eligible to participate in our 401(k) Savings and Investment Retirement Plan, which covers
all full time employees and is qualified under Section 401(k) of the Internal Revenue Code. Under this plan, we match 50% of each
participating employee’s salary deferral up to a maximum match of 3% of eligible compensation.
Outstanding
Equity Awards Table
The
following table discloses for each named executive officer all shares of our Common Stock underlying unexercised options as of
December 31, 2019.
Outstanding Equity Awards At December 31, 2019
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1)(2)
|
|
|
Option
Exercise Price
($)
|
|
|
Option
Expiration Date
|
|
|
Number
of Shares or Units of Stock
That Have Not
Vested
(#)
|
|
|
Market
Value of Shares or Units of
Stock That Have Not Yet Vested
($)
|
|
Robert J. Pallé.
|
|
|
50,000
|
|
|
|
–
|
|
|
|
1.925
|
|
|
|
3/23/2021
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
50,000
|
|
|
|
–
|
|
|
|
1.050
|
|
|
|
5/17/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
–
|
|
|
|
1.000
|
|
|
|
5/17/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
–
|
|
|
|
0.940
|
|
|
|
5/23/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
–
|
|
|
|
0.395
|
|
|
|
12/10/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
–
|
|
|
|
0.620
|
|
|
|
8/17/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
41,334
|
|
|
|
21,166
|
|
|
|
0.550
|
|
|
|
4/4/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
0.550
|
|
|
|
4/4/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
0.560
|
|
|
|
5/23/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
|
|
|
66,667
|
|
|
|
0.870
|
|
|
|
5/15/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
30,000
|
|
|
|
1.095
|
|
|
|
4/3/2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Skolnik
|
|
|
25,000
|
|
|
|
–
|
|
|
|
1.925
|
|
|
|
3/23/2021
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
1.050
|
|
|
|
5/17/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
1.000
|
|
|
|
5/17/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
0.940
|
|
|
|
5/23/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
0.550
|
|
|
|
4/4/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
14,167
|
|
|
|
28,333
|
|
|
|
0.870
|
|
|
|
5/15/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
20,000
|
|
|
|
1.095
|
|
|
|
4/3/2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Grauch
|
|
|
70,000
|
(3)
|
|
|
280,000
|
(3)(4)
|
|
|
0.880
|
|
|
|
10/29/2028
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
30,000
|
|
|
|
120,000
|
(4)
|
|
|
0.880
|
|
|
|
10/29/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald Alterio
|
|
|
50,000
|
(5)
|
|
|
100,000
|
(6)
|
|
|
1.190
|
|
|
|
8/16/2028
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
–
|
|
|
|
50,000
|
(6)
|
|
|
1.390
|
|
|
|
8/31/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allen Horvath
|
|
|
10,000
|
|
|
|
–
|
|
|
|
1.925
|
|
|
|
3/23/2021
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
15,000
|
|
|
|
–
|
|
|
|
1.050
|
|
|
|
5/17/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
1.000
|
|
|
|
5/17/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
0.940
|
|
|
|
5/23/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
0.550
|
|
|
|
4/4/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
14,167
|
|
|
|
28,333
|
|
|
|
0.870
|
|
|
|
5/15/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
1.095
|
|
|
|
4/3/2029
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unless
otherwise noted, all option awards were made under the A&R 2005 Employee Plan, as amended or the 2016 Employee Plan.
|
|
(2)
|
Unless
otherwise noted, all options vest in three equal installments on the first, second and third anniversaries of the date of grant.
|
|
(3)
|
Options
were granted as an inducement award and not under the A&R 2005 Employee Plan, as amended or the 2016 Employee Plan.
|
|
(4)
|
The
vesting schedule for these options is (i) options with respect to 100,000 shares vest on each of the first two anniversaries of
Mr. Grauch’s date of employment and (ii) options with respect to 150,000 shares vest on each of the third and fourth anniversaries
of Mr. Grauch’s date of employment.
|
|
(5)
|
These
options vest four years following the date of grant.
|
|
(6)
|
Options
were granted as an inducement award and not under the A&R 2005 Employee Plan, as amended or the 2016 Employee Plan.
|
PROPOSAL
2 – APPROVAL OF AN AMENDMENT TO OUR 2016 DIRECTOR EQUITY
INCENTIVE PLAN TO INCREASE THE AGGREGATE NUMBER OF SHARES
OF COMMON STOCK AVAILABLE FOR GRANTS AND AWARDS BY 500,000
Background
of the Proposal
At
the Annual Meeting, stockholders will be presented with a proposal to approve the adoption of an amendment (the “Amendment”)
to our 2016 Director Equity Incentive Plan (“2016 Director Plan”) to increase the aggregate number of shares
of common stock available for grants and awards under the 2016 Director Plan by 500,000. When it was adopted by the Board and
approved by our stockholders in 2016, the 2016 Director Plan authorized 400,000 shares of our Common Stock for grant under the
plan. If the Amendment is approved, a total of 900,000 shares of Common Stock will be available for grant. As of April 30, 2020,
a total of 547,438 shares have been granted under the 2016 Director Plan; however, the issuance of 147,428 shares, which were
granted to directors on April 17, 2020, and any additional shares that may be granted under the 2016
Director Plan are contingent upon stockholder approval of this Proposal 2.
The
2016 Director Plan authorizes the Board to grant equity-based awards to our non-employee Directors. The purpose of the 2016 Director
Plan is to promote our success and enhance our value by linking the personal interests of our non-employee Directors to those
of our stockholders and by providing such individuals with an incentive for outstanding performance in order to generate superior
returns to stockholders. The 2016 Director Plan is designed to give the Board flexibility in structuring awards that will achieve
these objectives. The Board believes that an increase in the number of shares available for grant is necessary, as the number
of shares currently available is insufficient given our incentive strategy.
Summary
Description of the 2016 Director Plan
The
following is a summary of the material provisions of the 2016 Director Plan. Paragraph 1 below describes the amendment to the
2016 Director Plan that you will be voting on in this Proposal 2. Only the Amendment is the subject of the stockholder vote. If
stockholders approve this Proposal 2, Section 5.1 of the 2016 Director Plan will be amended to increase the maximum number of
shares available for issuance thereunder to 900,000 and the remainder of the 2016 Director Plan will continue in full force and
effect. If stockholders do not approve this Proposal 2, the 2016 Director Plan will continue in effect with the maximum number
of shares available for issuance thereunder remaining at 400,000. The full text of the proposed amendment to the 2016 Director
Plan is included in Appendix A to this Proxy Statement. The full text of the 2016
Director Plan (not including the proposed amendment) is included as Exhibit 4.4 to our Registration Statement on Form S-8 filed
with the SEC on August 25, 2016 and we urge you to read that Exhibit, as the summary below does not purport to be a complete description
of all of the provisions of the 2016 Director Plan and is qualified in its entirety by reference to the text of that document.
Other than the amendment described in Paragraph 1 below and Appendix A, all other provisions of the 2016 Director Plan remain
unchanged.
1. Number
of Shares. The aggregate number of shares currently authorized for grant under the 2016 Director Plan is 400,000. The Amendment,
if approved by stockholders, would increase the number of shares authorized for grant to 900,000.
2. Administration.
The 2016 Director Plan is administered by the Board.
3. Eligibility;
Participation. All of our Directors who are not currently, nor have been within the past six months, employed by us or any
subsidiary of ours are eligible to become participants in the 2016 Director Plan. The Board selects from time to time, from among
all eligible individuals, the persons who shall be granted an award under the 2016 Director Plan.
4. Term
of 2016 Director Plan. The 2016 Director Plan became effective as of February 4, 2016 and will terminate on February 4, 2026.
Our Board has the right to terminate the 2016 Director Plan prior to such date without prejudice in any material way to the holders
of any awards then outstanding.
5. 2016
Director Plan Awards. The 2016 Director Plan authorizes the Board to grant a variety of incentive awards to participants,
as described below. Each award will be evidenced by a written Award Agreement, which specifies the terms and conditions of the
particular award, as determined by the Board in its discretion, subject to the limitations set forth in the 2016 Director Plan.
a. Stock
Options. The Board may award stock options (“Options”) to purchase a specified number of shares of Common
Stock. The exercise price of an Option will be determined by the Board of Directors and may be no less than the fair market value
of the underlying shares on the date of grant. Moreover, any outstanding Options cannot be re-priced, absent prior approval of
the stockholders. Only Options that are NQOs may be awarded to participants under the 2016 Director Plan. The Board will determine
the term of the Option, the vesting periods and the permissible methods of payment of the exercise price (e.g., cash, shares of
Common Stock, cashless exercise, etc.), and this will be reflected in the Award Agreement.
b. Stock
Appreciation Rights. A stock appreciation right (“SAR”) gives the participant the right to receive the
excess (if any) of the fair market value of a specified number of shares of Common Stock at the time of exercise over the grant
price of the SAR (which shall not be less than the fair market value of the shares on the date of grant). The terms, methods of
exercise, methods of settlement (e.g., cash, shares of Common Stock, or a combination thereof), and any other terms and conditions
of any SAR will be determined by the Board at the time of the grant of the award and is reflected in the Award Agreement.
c. Stock
Awards. The Board may award shares of our Common Stock to a participant at no cost to the participant. The award may take
the form of an immediate transfer of shares which are subject to forfeiture if conditions specified by the Board are not met (“Restricted
Stock”). Alternatively, the award may take the form of an immediate transfer of shares which are not subject to a risk
of forfeiture or a deferred transfer of shares if and when the conditions specified by the Board are met (“Unrestricted
Stock”). The criteria for avoiding forfeiture of Restricted Stock, or receiving a deferred transfer of Unrestricted
Stock, may be the completion of a period of continuous service on the Board, or satisfaction of specified performance goals, or
a combination thereof.
6. Interpretation.
The Board has the power to set, alter or change the rules, guidelines and regulations for the administration of the 2016 Director
Plan, and to interpret the 2016 Director Plan, any awards under the 2016 Director Plan, and any and all guidelines, rules and
regulations adopted pursuant to the 2016 Director Plan. Any determinations made by the Board will be conclusive and binding on
all 2016 Director Plan participants and their beneficiaries.
7. Amendments.
The Board may, from time to time, in its discretion, amend or supplement any provision of the 2016 Director Plan, in whole or
in part; provided however, no amendment may be made to modify the requirements for eligibility for participation, to increase
the number of shares of our Common Stock with respect to which awards may be granted under the 2016 Director Plan to permit re-pricing
of Options or extend the term of the 2016 Director Plan unless approved by our stockholders. No amendment to the 2016 Director
Plan may adversely affect the rights of participants in any material way with respect to outstanding awards without the consent
of the affected participants.
8. Anti-Dilution.
The number of shares with respect to which awards may be granted under the 2016 Director Plan, the number of shares of our Common
Stock subject to any outstanding award, and the nature of the securities which may be issued under the 2016 Director Plan, in
each case shall be adjusted as a result of stock splits, stock dividends, or other subdivisions or combinations of our Common
Stock, or reorganizations, mergers, consolidations, dividends or reclassifications affecting us. In particular, in the event of
our merger, liquidation or dissolution, or a sale of all or substantially all of our assets, the Compensation Committee has discretion
to cancel or exchange outstanding awards for cash or other securities as described in more detail in Article 11 of the 2016 Director
Plan.
9. Limits
on Transfer. No right or interest of a participant in any award may be pledged, encumbered, or hypothecated to or in favor
of any party other than the Company, or shall be subject to any lien, obligation, or liability of such participant to any other
party other than the Company. No award is assignable or transferable by a participant other than by will or the laws of descent
and distribution, except that the Board, in its discretion, may permit a participant to make a gratuitous transfer of an award
to his or her spouse, lineal descendants, lineal ascendants, or a duly established trust for the benefit of one or more of these
individuals.
10. Clawback.
The 2016 Director Plan provides that any award under the 2016 Director Plan is subject to our ability to recoup or recover (i.e.,
clawback) any such award, Common Stock or other consideration previously granted pursuant to (i) any compensation recovery or
recoupment policy to be adopted by us from time to time in the future, or (ii) any other applicable law, regulation or stock exchange
rule.
Federal
Tax Consequences of 2016 Director Plan
The
following is a summary of the principal federal tax consequences of the 2016 Director Plan under the Code, based on laws and regulations
in effect on the date of this Proxy Statement, which laws and regulations are subject to change, and does not purport to be a
complete description of the federal tax aspects of the 2016 Director Plan.
A
participant does not realize taxable income upon the award of an Option. The participant will realize ordinary compensation income
at the time of exercise equal to the excess of the fair market value of the Common Stock at the time of exercise over the exercise
price, and we will be entitled to a tax deduction for the same amount.
A
participant does not realize taxable income upon the award of a SAR. The participant will realize ordinary compensation income
upon the receipt of the cash or Common Stock resulting from the exercise of a SAR, and we will be entitled to a tax deduction
for the same amount.
In
general, a participant does not realize taxable income upon the award of Restricted Stock; the value of the Restricted Stock will
be taxable to the participant as ordinary compensation income if and when the forfeiture restrictions lapse. However, a participant
may make an election under Section 83(b) of the Code (“83(b) Election”) to be taxed on the value of the Restricted
Stock at the time of the award. If a participant makes an 83(b) Election, he or she will not be taxed on the Restricted
Stock if and when the forfeiture restrictions lapse. A participant would make an 83(b) Election by filing a written statement
with the IRS no later than 30 days after the date of the award of the Restricted Stock. A copy of that statement also must be
given to us, and another copy must be attached to the participant’s income tax return for the year of the award.
A
participant will realize ordinary compensation income upon the receipt of Unrestricted Stock equal to the value of the Unrestricted
Stock at that time.
We
will be entitled to a tax deduction attributable to Restricted Stock or Unrestricted Stock equal to the amount taxable to the
participant, and at the time it is taxable to the participant. We will have the authority and the right to deduct or withhold,
or require a participant to remit to us, an amount sufficient to satisfy federal, state, and local taxes required by law to be
withheld with respect to any taxable event arising as a result of the 2016 Director Plan. A participant may elect to have us withhold
from the Common Stock that would otherwise be received upon the exercise of any Option, a number of shares having a fair market
value equal to the minimum statutory amount necessary to satisfy our applicable federal, state, local and foreign tax withholding
obligations.
All
awards under the 2016 Director Plan that are subject to Section 409A of the Code shall be structured to comply with Section 409A.
Section 409A provides limitations on nonqualified deferred compensation. Section 409A contains rules affecting elections to defer
compensation and the actual payment of the deferred compensation. For purposes of Section 409A, “deferred compensation”
is defined in a very broad manner, and could include certain types of awards under the 2016 Director Plan, such as SARs, Restricted
Stock and Unrestricted Stock. Award recipients could be subject to adverse federal income tax consequences to the extent that
their awards do not comply with Section 409A.
Awards
Under the 2016 Director Plan
As
of April 30, 2020, all of our current non-employee Directors as a group have been awarded (i) an aggregate of 110,000 shares of
Unrestricted and Restricted Stock and (ii) Options to purchase a total of 278,630 shares of our Common Stock at exercise prices
ranging from $0.55 to $1.20 per share under the 2016 Director Plan. The vesting and exercisability of those Option awards is subject
to continued service as a Director of Blonder. As disclosed above under “Directors’ Compensation,” in 2019,
pursuant to the 2016 Director Plan, each of our non-employee Directors was awarded Options to purchase 20,000 shares of our Common
Stock. The term of the Options is ten years from the grant date of the Option. This disclosure of shares subject to awards granted
under the 2016 Director Plan excludes awards that have been cancelled or forfeited. Because additional awards under the 2016 Director
Plan are at the discretion of the Board, the future benefits to be received by or allocated to any of the eligible participants,
either individually or as a group, cannot be determined at this time.
Equity
Compensation Plans
The
following table provides certain summary information as of December 31, 2019 concerning our compensation plans (including individual
compensation arrangements) under which shares of our Common Stock may be issued.
Plan Category
|
|
Number Of Securities To Be Issued Upon Exercise Of Outstanding Options, Warrants And Rights
(#)
|
|
|
Weighted-Average Exercise Price Of Outstanding Options, Warrants And Rights
($)
|
|
|
Awards of Restricted And Unrestricted Shares
(#)
|
|
|
Number Of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected In The First Column)
(#)
|
|
Equity Compensation Plans Approved By Security Holders
|
|
|
3,403,928
|
(1)
|
|
$
|
0.894
|
|
|
|
1,251,383
|
|
|
|
954,270
|
(2)
|
Equity Compensation Plans Not Approved By Security Holders
|
|
|
500,000
|
|
|
$
|
0.974
|
|
|
|
–
|
|
|
|
–
|
|
Total
|
|
|
3,903,928
|
|
|
|
|
|
|
|
1,251,383
|
|
|
|
954,270
|
|
|
(1)
|
Includes
shares of our Common Stock which may be issued upon the exercise of options or rights granted under (i) the 2005 Employee Plan,
(ii) the 2016 Employee Plan, (iii) the 2005 Director Plan and (iv) the 2016 Director Plan (assuming stockholder approval of the
proposal to increase the aggregate number of shares of common stock available for grants and awards under the 2016 Director Plan
by 500,000).
|
|
(2)
|
Includes
63,913 and 878,154 shares of our Common Stock available for issuance as stock option grants, stock appreciation rights, restricted
or unrestricted stock awards or performance based stock awards under the 2005 Employee Plan and the 2016 Employee Plan, respectively. Includes
833 and 11,370 shares of our Common Stock available for issuance as stock option grants, stock appreciation rights, or restricted
or unrestricted stock awards under the 2005 Director Plan and 2016 Director Plan, respectively.
|
Recommendation
of the Board of Directors
Our
Board recommends that stockholders vote FOR approval of the amendment to the 2016 Director Equity Incentive Plan to increase the
aggregate number of shares of common stock available for grants and awards by 500,000.
Proxies
received by the Board will be voted FOR approval of the amendment to the 2016 Director Equity Incentive Plan to increase the aggregate
number of shares of common stock available for grants and awards by 500,000 unless stockholders specify in their proxies a contrary
choice.
PROPOSAL
3 – APPROVAL OF THE ISSUANCE OF SHARES OF OUR COMMON STOCK
UPON CONVERSION OF CERTAIN CONVERTIBLE INDEBTEDNESS PURSUANT TO
THE REQUIREMENTS OF THE NYSE AMERICAN “PRIVATE PLACEMENT” RULE
Background
of the Proposal; Reasons for Seeking Stockholder Approval
At
the Annual Meeting, stockholders will be presented with a proposal to approve the issuance of shares of our Common Stock if and
when the holders of certain outstanding indebtedness of the Company seek to convert the indebtedness into shares of Common Stock.
The provisions of that indebtedness permit the holders to convert the indebtedness into shares of Common Stock under certain circumstances
and on certain terms and also may be issued shares of our Common Stock in lieu of cash payments of interest on the indebtedness
under certain circumstances, as described below. The terms of the indebtedness are included in the Senior Subordinated Convertible
Loan and Security Agreement dated April 8, 2020 (as amended to date, the “Subordinated Loan Agreement”), and
certain of the key terms of the Subordinated Loan Agreement are summarized below. We have filed a copy of the Subordinated Loan
Agreement as an exhibit to our Current Report on Form 8-K, which was filed on April 9, 2020 (“Form 8-K”). We
encourage you to read the Subordinated Loan Agreement in its entirety.
On
April 8, 2020, we entered into the Subordinated Loan Agreement with Livewire Ventures, LLC (wholly-owned by Mr. Grauch, our President
and Chief Executive Officer), MidAtlantic IRA, LLC FBO Steven L. Shea IRA, Carol M. Pallé and Robert J. Pallé, Anthony
J. Bruno and Stephen K. Necessary, as lenders (collectively, the “Initial Lenders”) and Robert J. Pallé,
as Agent for the Initial Lenders. Each of the Initial Lenders under the Subordinated Loan Agreement is a director or executive
officer, or an affiliate of a director or executive officer, of the Company.
Pursuant
to the Subordinated Loan Agreement, the Initial Lenders agreed to provide us with a term loan facility (the “Subordinated
Loan Facility”). In connection with the execution of the Subordinated Loan Agreement, the Initial Lenders committed,
in the aggregate, to provide $800,000 in loans and advanced $600,000 under the Subordinated Loan Facility at the time of closing,
with the remaining $200,000 of the original commitment to be advanced at a later date. The terms of the Subordinated Loan Agreement
permit additional loans of up to $700,000 to be made under the Subordinated Loan Facility up to a maximum aggregate amount of
$1,500,000, subject to the agreement of the Company and those Lenders holding at least 75% of the aggregate of all outstanding
loans under the Subordinated Loan Agreement. Neither the Initial Lenders nor any other persons are obligated to provide loans
in excess of the original $800,000 commitment. Interest on loans under the Subordinated Loan Facility will accrue at 12% per annum,
compounded monthly, and is payable monthly in-kind by the automatic increase of the principal amount of the loans on each monthly
interest payment date, by the amount of the accrued interest payable at that time (“PIK Interest”). At our
option (but subject to limitations that may be imposed by the Company’s senior secured lender), we may pay interest in cash
on any interest payment date in lieu of PIK Interest. The Subordinated Loan Agreement has a three-year term, and the accreted
principal balance of the loans made under the Subordinated Loan Facility (by virtue of the PIK Interest) plus any other accrued
unpaid interest, is due and payable in full at maturity.
As
of April 24, 2020, we entered into the First Amendment to Senior Subordinated Convertible Loan and Security Agreement (the “Amendment”)
with the Initial Lenders and Porter Partners, L.P., Ronald V. Alterio and Bruce Evans and Kathryn Evans, JTWROS (the “Additional
Lenders,” and, together with the Initial Lenders, the “Lenders”). The Amendment provides for the
funding of an additional $200,000 under the Subordinated Loan Facility by the Additional Lenders, all of which has been advanced
to the Company.
The
Lenders have the option of converting the principal balance of the loan held by each of them, in whole (unless otherwise agreed
by us), into shares of our Common Stock at a conversion price (i) with respect to the amounts advanced by the Initial Lenders,
of $0.593 per share (determined based on the volume-weighted average trading price of our common stock on the NYSE American during
the five trading days preceding April 8, 2020) and (ii), with respect to the amounts advanced by the Additional Lenders, of $0.55
per share. The conversion price will not increase or decrease based on changes in the market price of our Common Stock during
the term of the Subordinated Loan Agreement. The conversion price will only be subject to adjustment if there are certain changes
to our capitalization by reason of stock dividends, stock splits, recapitalizations, reclassifications, combinations or exchanges
of shares, separations, reorganizations, liquidations, or the like. In order to comply with the Private Placement Rule, the Subordinated
Loan Agreement caps the amount of shares of Common Stock the Lenders collectively may receive upon exercise of their conversion
rights at 19.99% of our issued and outstanding Common Stock unless and until our stockholders approve this proposal.
We
are submitting this proposal for stockholder approval in order to comply with certain provisions of the NYSE American’s
rules applicable to us and to satisfy contractual obligations we have to the holders of the indebtedness under the Subordinated
Loan Agreement. Our Common Stock is listed on the NYSE American, which makes us subject to a variety of rules and requirements
set forth in the NYSE American Company Guide (the “Company Guide”). Section 713(a) of the Company Guide requires
listed companies to obtain stockholder approval in connection with an issuance or potential issuance of shares equal to 20% or
more of the outstanding common stock of a listed company for less than the greater of book or market value of the issuing company’s
stock (the “Private Placement Rule”). Based on (i) the conversion terms of the indebtedness, as summarized
above and as further set forth in the Subordinated Loan Agreement, (ii) the conversion price and (ii) our assumptions, for purposes
of determining compliance with the Private Placement Rule, that (A) holders of the indebtedness will convert all of the outstanding
indebtedness into shares of Common Stock and (B) we will pay interest due on the entire amount of the indebtedness in shares of
our Common Stock rather than in cash, we believe that the number of shares of Common Stock issuable upon the full conversion of
the indebtedness and receipt of shares issued as PIK Interest would equal 20% or more of our issued and outstanding shares. Because
of the method used to determine the conversion price of the indebtedness, including the method that may be used in the event that
we receive additional proceeds under the Subordinated Loan Agreement, the conversion price may be deemed to be a price less than
market value of our Common Stock. As a result, we are seeking stockholder approval for purposes of complying with our obligations
under Section 713(a).
As
of April 30, 2020, the Lenders beneficially owned, in the aggregate, [●] shares of Common Stock, representing approximately
[●]% of the issued and outstanding shares of Common Stock as of that date, excluding shares that may be acquired upon conversion
of indebtedness under the Subordinated Loan Agreement. As of April 30, 2020, the Lenders had provided loans to us in an aggregate
principal amount of $1,000,000 and PIK interest of $[●] had accrued on the principal amount loaned to us as of April 15,
2020]. If the Lenders were to immediately convert the principal amount outstanding as of April 30, 2020 (including the PIK interest)
into shares of our Common Stock at the conversion price, they would receive an additional [●] shares of Common Stock.
As
of April 30, 2020, the Lenders also held options to purchase up to an additional [1,121,131] shares of Common Stock that are exercisable
within 60 days of April 30, 2020. If the Lenders were to immediately convert the principal amount outstanding as of April 30,
2020 (including the PIK interest) and also immediately exercise their options to purchase all [1,121,131] shares of Common Stock
with respect to options that are exercisable within 60 days of April 30, 2020, the total shareholdings of all Lenders, including
(i) shares acquired through the immediate conversion of the aggregate principal amount and receipt of PIK Interest (if any) and
(ii) the immediate exercise of these options, would be [●] shares, represent approximately [●]% of the issued and outstanding
shares of Common Stock.
If
the $1,000,000 aggregate loan principal remains outstanding until the end of the three-year term of the Subordinated Loan Agreement,
all of the outstanding indebtedness is then converted into shares of Common Stock and all of our interest payment obligations
have been met through PIK Interest, the aggregate number of shares the Lenders would receive at April 8, 2023 would be [●],
representing approximately [●]% of the issued and outstanding shares of Common Stock (calculated as of April 8, 2020). If
the Lenders were also to exercise their options to purchase [●] shares of Common Stock, with respect to options that are
exercisable within 60 days of April 30, 2020 and hold those shares through April 8, 2023, the total shareholdings of all Lenders,
including shares acquired through (i) conversion of the aggregate principal amount, (ii) receipt of PIK Interest and (iii) the
exercise of such options, would be [●] shares, represent approximately [●]% of the issued and outstanding shares of
Common Stock (calculated as of April 8, 2020). Further issuances of shares pursuant to future grants of options, issuances of
shares of stock (restricted or unrestricted) and/or restricted stock units between the date of the Subordinated Loan Agreement
and its termination could increase the ownership of the Lenders, both individually and in the aggregate.
For
purposes of the Private Placement Rule, approval of this proposal will constitute approval of the issuance of the maximum number
of shares that we are obligated to issue to all of the Lenders under the Subordinated Loan Agreement pursuant to the conversion
rights of the Lenders, including any Lenders providing additional advances under the Subordinated Loan Agreement. Under the terms
of the Subordinated Loan Agreement, we have agreed to submit this proposal for stockholder approval at the Annual Meeting.
We
are submitting this proposal in addition to Proposal 4, which seeks stockholder approval of issuance of shares of our Common
Stock pursuant to the Subordinated Loan Agreement under the NYSE American’s “Change of Control” rule.
Certain
Consequences if the Proposal is Approved
If
this proposal is approved by our stockholders, the Lenders will be able, at their option, to convert the indebtedness into shares
of Common Stock on the terms described above for an aggregate number of shares that may be received by the Lenders upon conversion
and their receipt of PIK Interest as described above. The ownership percentage amounts indicated are based on the number of shares
of Common Stock outstanding as of April 8, 2020, the initial date of the Subordinated Loan Agreement. Changes in the number of
shares of Common Stock (through additional issuances of shares of Common Stock or securities convertible into or exchangeable
for shares of Common Stock, stock buybacks and other events, if any) between April 8, 2020 and the time at which indebtedness
is converted and/or PIK Interest has been paid may change the percentages, as well as any changes in ownership by Lenders resulting
from the award of additional compensation in the form of equity (options, restricted stock or otherwise).
The
effects of conversion will be to substantially dilute the ownership of existing stockholders and give the Lenders significant
additional influence over us, particularly with respect to matters requiring a vote of stockholders, including the election of
directors, changes to our certificate of incorporation and mergers or similar combination transactions. If the maximum number
of shares issuable to the Lenders are issued to them on conversion of the indebtedness at April 8, 2023 and all payments of interest
throughout the full term of the indebtedness are made as PIK Interest, our executive officers and directors as a group would own,
in the aggregate, [●] shares, representing approximately [●]% of the issued and outstanding shares of Common Stock (based
on the number of shares of Common Stock issued and outstanding as of April 8, 2020).
Certain
Consequences if the Proposal is Not Approved
If
this proposal is not approved by the stockholders, the Lenders will not be prohibited from converting the indebtedness into shares
of Common Stock and/or receiving PIK Interest, but will be limited in the aggregate amount of shares of Common Stock they may
receive upon conversion and in PIK Interest. The Loan Agreement provides that if stockholder approval is not obtained, the Lenders
will only be able to receive an aggregate amount of shares of Common Stock on conversion and as PIK Interest in an amount that
would not cause the issuance of an amount of shares that would represent 20% or more of the issued and outstanding Common Stock.
Recommendation
of the Board of Directors
Our
Board of Directors recommends that stockholders vote FOR approval of the issuance of the maximum number of shares of our Common
Stock that may be issuable in connection with conversion by the Lenders of and receipt of PIK Interest under the Loan Agreement.
Members of our Board of Directors that are Affiliated Lenders abstained from voting to approve the Loan Agreement and related
transactions and, as such, this recommendation is being made by the members of the Board of Directors that do not have a personal
interest in the outcome of this matter.
Proxies
received by the Board of Directors will be voted FOR approval of the issuance of the maximum number of shares of our Common Stock
issuable in connection with conversion and receipt of PIK Interest by the Lenders under the Loan Agreement, unless stockholders
specify in their proxies a contrary choice.
PROPOSAL
4 – APPROVAL OF THE ISSUANCE OF SHARES OF OUR COMMON STOCK
UPON CONVERSION OF CERTAIN CONVERTIBLE INDEBTEDNESS PURSUANT TO
THE REQUIREMENTS OF THE NYSE AMERICAN “CHANGE OF CONTROL” RULE
Background
of the Proposal; Reasons for Seeking Stockholder Approval
At
the Annual Meeting, stockholders will be presented with a proposal to approve the issuance of shares of our Common Stock if
and when the holders of certain outstanding indebtedness of the Company seek to convert the indebtedness into shares of
Common Stock pursuant to the Subordinated Loan Agreement, the terms of which are described above in Proposal 3. The
provisions of that indebtedness permit the Lenders under the Subordinated Note Agreement to convert the indebtedness into
shares of Common Stock under certain circumstances and on certain terms and also may be issued shares as PIK Interest. We are
submitting this Proposal 4 in addition to Proposal 3, which seeks stockholder approval under the NYSE American’s
Private Placement Rule.
We
are submitting this proposal for stockholder approval in order to comply with certain provisions of the NYSE American’s
rules applicable to us and to satisfy contractual obligations we have to the holders of the indebtedness under the
Subordinated Loan Agreement. As discussed with respect to Proposal 3, because our Common Stock is listed on the NYSE
American, we are subject to a variety of rules and requirements set forth in the Company Guide. Section 713(b) of the Company
Guide requires listed companies to obtain stockholder approval in connection with an issuance or potential issuance of shares
that could result in a change of control of a NYSE American-listed company (the “Change of Control Rule”).
We believe that the conversion of the indebtedness, if it were to take place, would result in the issuance of a sufficient
number of shares of Common Stock that, when combined with the current shareholdings of certain of the holders of the
indebtedness under the Subordinated Loan Agreement, could be deemed to be a “change of control” for purposes of
the Change of Control Rule. As a result, we are seeking stockholder approval for purposes of complying with our obligations
under Section 713(b).
As
of April 15, 2020, Robert J. Pallé and Carol M. Pallé (the “Significant Stockholders”) beneficially
owned, in the aggregate, 2,738,473 shares of Common Stock, representing approximately 28.04% of the issued and outstanding shares
of Common Stock as of that date, excluding any shares of Common Stock that may be issuable to them upon exercise of their conversion
rights under the Subordinated Loan Agreement. In addition, as of such date, the Significant Stockholders held options to purchase
up to an additional 762,501 shares of Common Stock that are exercisable within 60 days of April 15, 2020. As of April 15, 2020,
the Significant Stockholders had provided loans to us in an aggregate principal amount of $300,000 and PIK interest of $690 had
accrued on the outstanding principal amount. If the Significant Stockholders were to immediately convert the current principal
balance of the indebtedness held by them (including the PIK interest) into shares of Common Stock at the conversion price, and
assuming no conversion of the indebtedness by any other Lender, the Significant Stockholders would receive 507,066 additional
shares of Common Stock, and the total shareholdings of the Significant Stockholders would represent approximately 31.60% of the
issued and outstanding shares of Common Stock, calculated as of April 15, 2020. If the Significant Stockholders were also to immediately
exercise their options to purchase 762,501 shares of Common Stock, under options that are exercisable within 60 days of April
15, 2020, and again assuming no conversion of the indebtedness by any other Lender, their total shareholdings would represent
approximately 36.32% of the issued and outstanding shares of Common Stock, calculated as of April 15, 2020.
If
the $300,000 aggregate principal held by the Significant Stockholders as of April 15, 2020 remains outstanding until the end of
the three-year term of the Subordinated Loan Agreement, all of the outstanding indebtedness held by the Significant Stockholders
is then converted into shares of Common Stock and all of our interest payment obligations have been met through PIK Interest,
and assuming no conversion of the indebtedness by any other Lender, the total shareholdings of the Significant Stockholders would
represent approximately 33.00% of the issued and outstanding shares of Common Stock, calculated as of April 15, 2020. In addition,
if the Significant Stockholders were also to exercise their options to purchase 762,501 shares of Common Stock, under options
that are exercisable within 60 days of April 15, 2020, and again assuming no conversion of the indebtedness by any other Lender,
the total shareholdings of the Significant Stockholders would represent approximately 37.55% of the issued and outstanding shares
of Common Stock, calculated as of April 15, 2020.
Although
the Change of Control Rule does not specify a percentage threshold for determining when a change of control has occurred or might
occur, we believe that the potential increase in the ownership of the Significant Stockholders would likely be considered to be
a “change of control” for purposes of the Change of Control Rule. These conversion rights are subject to stockholder
approval as required by NYSE American rules, and we have agreed in the Loan Agreement to submit this proposal for stockholder
approval at this Annual Meeting.
Certain
Consequences if the Proposal is Approved
If
this proposal is approved by the stockholders, the Significant Stockholders will be able, at their option, to convert up to
the entire amount of the indebtedness they hold under the Loan Agreement into shares of our Common Stock and also receive
shares of our Common Stock as PIK Interest. This also assumes that Proposal 3 has been approved by stockholders, such that
the limitations on conversion under the Private Placement Rule would not limit the conversion rights of the Significant
Stockholders. The number of shares into which the Significant Stockholders could convert the indebtedness held by them
(including the PIK interest) and their potential percentage ownership of our Common Stock is described in further detail
above.
The
effects of conversion will be to substantially dilute the ownership of existing stockholders and give the Significant Shareholders
significant additional influence over us, particularly with respect to matters requiring a vote of stockholders, including the
election of directors, changes to our certificate of incorporation and mergers or similar combination transactions.
Certain
Consequences if the Proposal is Not Approved
If
this proposal is not approved by the stockholders, the Significant Stockholders will be limited in their right to convert to the
extent that any such conversion would be deemed to result in a “change of control” for purposes of Section 713(b)
of the Company Guide. The Loan Agreement provides that if stockholder approval is not obtained, the Significant Stockholders will
only be able to receive an aggregate amount of shares of Common Stock on conversion and as PIK Interest in an amount that would
not cause the issuance of an amount of shares that would constitute a “change of control” for purposes of Section
713(b) of the Company Guide.
Recommendation
of the Board of Directors
Our
Board of Directors recommends that stockholders vote FOR approval of the issuance of the maximum number of shares of our Common
Stock that may be issuable to the Significant Stockholders in connection with conversion by them of outstanding indebtedness and
receipt of PIK Interest under the Subordinated Loan Agreement. Mr. Pallé abstained from voting to approve the Subordinated
Loan Agreement and related transactions and, as such, this recommendation is being made by the members of the Board of Directors
that do not have a personal interest in the outcome of this matter.
Proxies
received by the Board of Directors will be voted FOR approval of the issuance of the maximum number of shares of our Common Stock
that may be issuable to the Significant Stockholders in connection with conversion by them of outstanding indebtedness and receipt
of PIK Interest under the Subordinated Loan Agreement, unless stockholders specify in their proxies a contrary choice.
PROPOSAL
5 – RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our
Audit Committee has selected Marcum LLP to serve as our independent registered public accounting firm for the fiscal year ending
December 31, 2020. Marcum LLP has been our independent registered public accounting firm since October 24, 2005. We have been
advised by Marcum LLP that neither it nor any member thereof has any financial interest, direct or indirect, in us or any of our
subsidiaries, in any capacity. One or more representatives of Marcum LLP is expected to be present at this year’s Annual
Meeting of Stockholders and will have the opportunity to make a statement if he or she desires to do so and to answer appropriate
questions from stockholders.
Although
the submission of the appointment of Marcum LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2020 to a vote of our stockholders is not required by our Bylaws, the Board is submitting it to stockholders to ascertain
their views. If our stockholders do not ratify the appointment, we will not be bound to seek another independent registered public
accounting firm for 2020, but the selection of another independent registered public accounting firm will be considered in future
years.
Audit
and Other Fees Paid to Independent Registered Public Accounting Firm
The
following table presents fees billed by Marcum LLP for professional services rendered for the years ended December 31, 2019 and
December 31, 2018.
Services Rendered
|
|
2019
|
|
|
2018
|
|
Audit Fees
|
|
$
|
238,055
|
|
|
$
|
233,247
|
|
Audit-Related Fees
|
|
|
33,400
|
|
|
|
33,000
|
|
Tax Fees
|
|
|
29,000
|
|
|
|
26,000
|
|
All Other Fees
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
300,455
|
|
|
$
|
292,247
|
|
Audit
Fees
The
audit fees for fiscal years 2019 and 2018 were billed or expected to be billed for professional services rendered by Marcum LLP
for the audit of our annual financial statements, the audit of our internal controls over financial reporting, the reviews of
the financial statements included in our Quarterly Reports on Form 10-Q, and assistance with earnings announcements furnished
by us in our Current Reports on Form 8-K.
Audit-Related
Fees
The
audit-related fees for fiscal years 2019 and 2018 consisted principally of audits of our pension and 401(k) plans.
Tax
Fees
Tax
fees for fiscal years 2019 and 2018 consisted principally of preparing our U.S. federal and state income tax returns.
Our
Audit Committee has reviewed the non-audit services currently provided by our independent registered public accounting firm during
2019 and 2018 and has considered whether the provision of such services is compatible with maintaining the independence of such
independent registered public accounting firm in performing its audit services. Based on such review and consideration, the Audit
Committee has determined that the provision of such non-audit services is compatible with maintaining the independence of the
independent registered public accounting firm.
Pre-Approval
Policy for Services by Independent Registered Public Accounting Firm
Our
Audit Committee has implemented pre-approval policies and procedures for the engagement of our independent registered public accounting
firm for both audit and permissible non-audit services. Under these policies and procedures, all services provided by the independent
registered public accounting firm must either (i) be approved by our Audit Committee prior to the commencement of the services,
(ii) relate to assisting us with tax audits and appeals before a taxing authority or be services associated with periodic reports
or registration statements filed by us with the SEC, all of which services are pre-approved by our Audit Committee, or (iii) be
a de minimis non-audit service (as described in Rule 2-01(c)(7)(i)(C) of the SEC’s Regulation S-X) that does not have to
be pre-approved as long as management promptly notifies our Audit Committee of such service and our Audit Committee approves it
prior to the service being completed. Within these parameters, our Audit Committee annually approves the scope and fees payable
for the year end audit, statutory audits and employee benefit plans audits to be performed by the independent registered public
accounting firm for the next fiscal year. Our Audit Committee also may delegate pre-approval authority for permissible non-audit
services to the Audit Committee’s Chairman. Any approvals of non-audit services made by our Audit Committee’s Chairman
are then reported by him at the next Audit Committee meeting. All of the services provided by our independent registered public
accounting firm during fiscal year 2019 and fiscal year 2018 were approved in accordance with our pre-approval policies and procedures.
None of the services were approved pursuant to Rule 2-01(c)(7)(i)(C) of the SEC’s Regulation S-X.
Recommendation
of the Board of Directors
Our
Board recommends that stockholders vote FOR the ratification of the appointment of Marcum LLP as our independent registered public
accounting firm for the 2020 fiscal year.
Proxies
received by the Board will be voted FOR the ratification of the appointment of Marcum LLP as our independent registered public
accounting firm for the 2020 fiscal year unless stockholders specify in their proxies a contrary choice.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On
April 8, 2020, we entered into the Subordinated Loan Agreement with the Initial Lenders, comprising Livewire Ventures, LLC, MidAtlantic
IRA, LLC FBO Steven L. Shea IRA, Carol M. Pallé and Robert J. Pallé, Anthony J. Bruno and Stephen K. Necessary and
the Agent. As of April 24, 2020, we entered into the Amendment to the Subordinated Loan Agreement with the Initial Lenders, the
Agent and the Additional Lenders, comprising Porter Partners, L.P., Ronald V. Alterio and Bruce Evans and Kathryn Evans, JTWROS.
Livewire
Ventures, LLC is wholly-owned by Mr. Grauch, our President and Chief Executive Officer, MidAtlantic IRA, LLC FBO Steven L. Shea
IRA is affiliated with Mr. Shea, the Chairman of our Board, Mr. Pallé is one of our directors and our former Chief Executive
Officer, Messrs. Bruno and Necessary are directors, and Mr. Alterio is our Senior Vice President-Engineering, Chief Technology
Officer.
Pursuant
to the Subordinated Loan Agreement, the Initial Lenders agreed to provide us with a Subordinated Loan Facility. In connection
with the execution of the Subordinated Loan Agreement, the Initial Lenders committed, in the aggregate, to provide $800,000 in
loans. In connection with the execution of the Subordinated Loan Agreement, the Initial Lenders advanced $600,000 under the Subordinated
Loan Facility, with the remaining $200,000 of the original commitment to be advanced at a later date. The terms of the Subordinated
Loan Agreement permit additional loans of up to $700,000 to be made under the Subordinated Loan Facility up to a maximum aggregate
amount of $1,500,000, subject to the agreement of the Company and those Lenders holding at least 75% of the aggregate of all outstanding
loans under the Subordinated Loan Agreement. Neither the Initial Lenders nor any other persons are obligated to provide loans
in excess of the original $800,000 commitment. Interest on loans under the Subordinated Loan Facility will accrue at 12% per annum,
compounded monthly, and is payable monthly in-kind by the automatic increase of the principal amount of the loans on each monthly
interest payment date, by the amount of the accrued interest payable at that time (“PIK Interest”). At our
option (but subject to limitations that may be imposed by the Company’s senior secured lender), we may pay interest in cash
on any interest payment date in lieu of the PIK Interest. The Subordinated Loan Agreement has a three-year term, and the accreted
principal balance of the loans made under the Subordinated Loan Facility (by virtue of the PIK Interest) plus any other accrued
unpaid interest, is due and payable in full at maturity. The Amendment provides for the funding of an additional $200,000 under
the Subordinated Loan Facility by the Additional Lenders, all of which has been advanced to the Company.
The
Lenders have the option of converting the principal balance of the loan held by each of them, in whole (unless otherwise agreed
by us), into shares of our Common Stock at a conversion price (i) with respect to the amounts advanced by the Initial Lenders,
of $0.593 per share (determined based on the volume-weighted average trading price of our common stock on the NYSE American during
the five trading days preceding April 8, 2020) and (ii), with respect to the amounts advanced by the Additional Lenders, of $0.55
per share. The conversion right is restricted to an aggregate amount of shares of common stock that would not result in our non-compliance
with NYSE American rules requiring stockholder approval of issuances or potential issuances of shares in excess of the percentage
limits specified therein or in an amount that may be deemed to constitute a change of control under such rules. These restrictions
will terminate if the requisite stockholder approval is obtained, and Proposal 3 and Proposal 4, discussed elsewhere in this Proxy
Statement describe the stockholder approval required. The Subordinated Loan Agreement and transactions contemplated thereby were
approved by the members of the Board who are not parties to, and have no personal interest in, the Subordinated Loan Agreement
and related transactions.
One
of our Directors, Gary P. Scharmett, is a partner at the law firm of Stradley Ronon Stevens & Young, LLP, which serves as
our outside counsel. For the 2019 and 2018 fiscal years, we were billed fees for legal services by this firm in the aggregate
amount of $483,398 and $752,300, respectively. Mr. Scharmett’s interest in these fees arises from his minority ownership
interest as a partner at this firm. In the Company’s opinion, the terms of such services were substantially equivalent to
those which would have been obtained from unaffiliated parties.
The
Company has a Code of Ethics (the “Ethics Code”) that applies to all of our directors, officers and employees,
including our principal executive officer, principal financial officer and principal accounting officer. The Ethics Code is available
on our website at www.blondertongue.com. We intend to satisfy the disclosure requirements of Form 8-K with respect to any waivers
of or amendments to the Ethics Code with respect to certain officers by posting such disclosures on our website at www.blondertongue.com.
We may, however, elect to disclose any such amendment or waiver in a Current Report on Form 8-K filed with the SEC in addition
to or in lieu of the website disclosure. The information on, or that can be accessed through our website is not, and shall not
be deemed to be, a part of this Proxy Statement or incorporated into any other filings that we make with the SEC.
Delinquent
SECTION 16(a) reports
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our Directors and executive officers, and persons who are the
beneficial owners of more than ten percent of our Common Stock (collectively, “Reporting Persons”), to file
with the SEC, initial reports of ownership and reports of changes in ownership of Common Stock.
Based
solely on a review of the Section 16(a) reports filed with the SEC and written representations from the Reporting Persons to us,
the Company believes that each person who was a Reporting Person during 2019 timely filed the reports required by Section 16(a)
of the Exchange Act during 2019, except: (i) Ronald V. Alterio filed a late Form 4 on May 31, 2019 reporting a purchase of 5,000
shares of Common Stock, (ii) Edward R. Grauch filed a late Form 4 on July 11, 2019 reporting the acquisition of 326 shares of
Common Stock under the Company’s Executive Stock Purchase Plan, (iii) Stephen K. Necessary filed a late Form 4 on May 22,
2019 reporting the acquisition of 6,477 shares of Common Stock and a late Form 4 on June 25, 2019 reporting the acquisition of
6,477 shares of Common Stock, in each instance under the Company’s Amended and Restated Director Stock Purchase Plan, (iv)
Jeffrey Smith filed a late Form 4 on December 12, 2019 reporting separate sales of 754 shares, 408 shares, 400 shares and 6,722
shares and (v) James H. Williams filed a late Form 4 on April 18, 2019 reporting the acquisition of 125,193 shares of Common Stock
pursuant to the conversion of convertible indebtedness.
STOCKHOLDER
PROPOSALS
Stockholder
Proposals for Inclusion in the 2021 Proxy Statement
Any
stockholder who, in accordance with Exchange Act Rule 14a-8, wishes to present a proposal for inclusion in the proxy
materials to be distributed in connection with our 2020 annual meeting of stockholders must submit the proposal so that it is
received by our Chief Financial Officer at our principal executive office, One Jake Brown Road, Old Bridge, New Jersey 08857,
on or before January 12, 2021 and must comply in all other respects with applicable SEC rules, including Securities Exchange
Act Rule 14a-8. If the date of the 2021 annual meeting is changed by more than 30 days from the date of the 2020 annual
meeting, then the deadline for receipt of the proposal would be a reasonable time before we begin to print and send our proxy
materials.
Director
Nominations for the 2021 Annual Meeting
Our
Bylaws require advanced notice of any stockholder proposal for nomination of candidates for election as a Director. To be properly
made, any stockholder proposal for nomination of candidates for election as a Director must meet the timing, procedural and substantive
requirements provided in our Bylaws. Any proposal must be delivered to our Corporate Secretary at our principal executive office,
One Jake Brown Road, Old Bridge, New Jersey 08857. To be timely, a stockholder's notice must be delivered to, or mailed and received
at, the principal executive offices of the corporation not less than 60 days prior to the scheduled annual meeting, regardless
of any postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if less than 70 days'
notice or prior public disclosure of the date of the scheduled annual meeting is given or made, notice by the stockholder, to
be timely, must be so delivered or received not later than the close of business on the tenth day following the earlier of the
day on which such notice of the date of the scheduled annual meeting was mailed or the day on which such public disclosure was
made. The notice must also provide the information specified in our Bylaws, and we may require that any nominee furnish such other
information as may reasonably be required for the Company to determine the eligibility of such proposed nominee to serve as Director.
Other
Proposals for 2020 Annual Meeting
Our
Bylaws also require advanced notice of any stockholder proposal for business to be proposed for action at our annual meetings
other than nomination of candidates for elections as a Director. Notice of any such stockholder proposal must be received by our
Corporate Secretary at our principal executive office, One Jake Brown Road, Old Bridge, New Jersey 08857 not less than 60 days
before the date on which we first sent our proxy materials for our annual meeting of stockholders for the previous year; provided,
however, that if during the prior year we did not hold an annual meeting, or if the date of the meeting has changed more than
30 days from the prior year, then notice must be delivered to, or mailed and received, not less than 60 days before the date on
which we publicly announced as the date we expect to first send proxy materials for the annual meeting of stockholders for the
current year. In addition to meeting the submission deadline, the stockholder must also have complied with all applicable procedural
and substantive requirements set forth in our Bylaws.
ANNUAL
REPORT ON FORM 10-K
A
COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 ACCOMPANIES THIS PROXY STATEMENT. WE WILL FURNISH
TO EACH PERSON WHOSE PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST, ANY EXHIBIT DESCRIBED IN THE LIST OF EXHIBITS INCLUDED IN
THE FORM 10-K, UPON THE PAYMENT, IN ADVANCE, OF REASONABLE FEES RELATED TO OUR FURNISHING SUCH EXHIBIT(S). REQUESTS FOR COPIES
OF SUCH EXHIBIT(S) SHOULD BE DIRECTED TO OUR CHIEF FINANCIAL OFFICER AT OUR PRINCIPAL ADDRESS AS SHOWN ON THE COVER PAGE OF THIS
PROXY STATEMENT.
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By Order of the Board of Directors
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Eric Skolnik
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Secretary
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Date:
May 11, 2020
Old
Bridge, New Jersey
APPENDIX
A
AMENDMENT
No. 1
to
BLONDER
TONGUE LABORATORIES, INC.
2016
DIRECTOR EQUITY INCENTIVE PLAN
This
Amendment No. 1 (“Amendment”) to Blonder Tongue Laboratories, Inc. 2016 Director Equity Incentive Plan (the “Plan”)
has been adopted and approved by the Board of Directors on January 23, 2020, with the effectiveness of the Amendment subject to
the approval by the stockholders at the next Annual Meeting of Stockholders by the affirmative vote of the holders of a majority
of the shares of common stock having voting power present in person or by proxy at such Annual Meeting.
By
this Amendment, the original text of Section 5.1 (NUMBER OF SHARES) of Article 5 (SHARES SUBJECT TO THE PLAN) of the Plan is hereby
removed and replaced in its entirety by the following:
“5.1
NUMBER OF SHARES. Nine Hundred Thousand (900,000) shares of Stock shall be available for Awards on and after the Effective Date;
provided, however, each Award shall be conditioned upon the approval of the Plan by the stockholders of the Company. The number
of shares set forth in this Section 5.1 shall be subject to adjustment as provided in Section 11.1.”
All
other provisions of the Plan shall remain unchanged and in full force and effect.
+++++++++++++++++++++++++++++++++++
BLONDER
TONGUE LABORATORIES, INC.
One
Jake Brown Road
Old
Bridge, NJ 08857
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE
11, 2020
THIS
PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Eric Skolnik and Edward R. Grauch, and either of them (with full power to act alone), as
Proxies of the undersigned, each with the power to appoint his substitute, and hereby authorizes them to vote, as designated
on this Proxy Card, all shares of Common Stock of Blonder Tongue Laboratories, Inc. held of record by the undersigned on the
record date of April 15, 2020, at the Annual Meeting of Stockholders to be held on June 11, 2020 and at any postponements or
adjournments thereof, all as in accordance with the Notice of Annual Meeting of Stockholders and Proxy Statement furnished
with this Proxy.
(Continued
and to be signed on the reverse side)
ANNUAL
MEETING OF STOCKHOLDERS OF
BLONDER
TONGUE LABORATORIES, INC.
June 11,
2020
Important Notice Regarding the Availability
of Proxy Materials
for the Stockholder Meeting to be Held on June 11,
2020
The
Proxy Statement and Annual Report to Stockholders are available at:
http://www.astproxyportal.com/ast/07796
Please
sign, date and mail
your
Proxy Card in the
envelope
provided as soon
as
possible.
â
Please detach along perforated line and mail in the envelope provided. â
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL NOMINEES”
FOR THE ELECTION OF DIRECTORS AND “FOR” PROPOSALS 2, 3, 4 AND 5. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE: ☒
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1.
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Election of three Class I Directors to hold
office until the 2023 Annual Meeting of Stockholders.
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FOR
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AGAINST
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ABSTAIN
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☐ FOR ALL NOMINEES
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NOMINEES:
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2.
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Approval of an amendment to the 2016 Director Equity Incentive Plan to increase the number of available
shares by 500,000.
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☐
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☐
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☐
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☐ WITHHOLD AUTHORITY
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¡ Anthony J. Bruno
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3.
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Approval of the issuance of common stock upon conversion of
certain convertible indebtedness pursuant to NYSE American “Private Placement” Rule.
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☐
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☐
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☐
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FOR ALL NOMINEES
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¡ Stephen K. Necessary
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4.
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Approval
of the issuance of common stock upon conversion of certain convertible indebtedness,
pursuant to NYSE American “Change of Control” Rule.
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☐
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☐
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☐
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☐ FOR ALL EXCEPT
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¡ Steven L. Shea
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(See Instruction below)
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5.
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Proposal
to ratify the appointment of Marcum LLP as the independent registered public accounting firm for the fiscal year ending December
31, 2020.
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☐
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☐
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☐
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INSTRUCTION:
To withhold authority to vote for any individual nominee(s) mark “FOR ALL EXCEPT” and fill in the circle
next to each nominee you wish to withhold as shown here: l
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This Proxy when properly
executed will be voted in the manner directed by the stockholder. If no direction is made on this Proxy Card, this Proxy will
be voted FOR the election of all nominees to serve as Class I Directors and FOR Proposals 2, 3, 4 and 5.
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In their discretion, the Proxies are authorized to vote upon such other matters as may properly come before the meeting and at any postponements or adjournments thereof.
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To change the address
on your account, please check the box at right and indicate your new address in the address space above. Please
note that changes to the registered name(s) on the account may not be submitted using this method. ☐
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note: 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.
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