0000906504-01-500026.txt : 20011009
0000906504-01-500026.hdr.sgml : 20011009
ACCESSION NUMBER: 0000906504-01-500026
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011107
FILED AS OF DATE: 20010928
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BONTEX INC
CENTRAL INDEX KEY: 0000041052
STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670]
IRS NUMBER: 221427551
STATE OF INCORPORATION: VA
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-05200
FILM NUMBER: 1747779
BUSINESS ADDRESS:
STREET 1: ONE BONTEX DR
CITY: BUENA VISTA
STATE: VA
ZIP: 24416-0500
BUSINESS PHONE: 5402612181
MAIL ADDRESS:
STREET 1: PO BOX 751
CITY: BUENA VISTA
STATE: VA
ZIP: 24416
FORMER COMPANY:
FORMER CONFORMED NAME: GEORGIA BONDED FIBERS INC
DATE OF NAME CHANGE: 19920703
DEF 14A
1
proxydoc.txt
PROXY STATEMENT FOR BONTEX, INC.
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant (x) Filed by a Party other than the Registrant ( ) Check
the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Section 240.14a-11(c) or Section
240.14a-12
Bontex, Inc.
(Name of Registrant as Specified in its Charter)
Charles W.J. Kostelni, Corporate Secretary
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
N/A
Payment of Filing Fee (Check the appropriate box):
(x) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
( ) Fee paid previously with preliminary materials
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[BONTEX LOGO] BONTEX [R]
2001
Notice of Annual Stockholders Meeting
and
Proxy Statement
Wednesday, November 7, 2001
at 10:30 a.m. local time
Lexington, Virginia
[Bontex Logo] BONTEX [R]
September 28, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Stockholders Meeting to be held
at 10:30 a.m., Eastern Daylight- Saving Time, on Wednesday, November 7, 2001, at
the Best Western Inn at Hunt Ridge, Lexington, Virginia 24450. The accompanying
Notice of Annual Meeting and Proxy Statement contains detailed information as to
the formal business to be transacted at the meeting.
The Board urges you to vote "FOR" all proposals on the enclosed proxy card.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, please complete, sign, and date the proxy card
attached and return it in the enclosed postage-paid envelope. Please note,
however, that if your shares are held of record by a broker, bank, or other
nominees and you wish to vote at the meeting, you must obtain from the record
holder a proxy issued in your name.
Thank you for your interest.
Sincerely,
James C. Kostelni
Chairman of the Board and
Chief Executive Officer
NOTICE OF ANNUAL STOCKHOLDERS MEETING
September 28, 2001
BONTEX, INC.
Notice is hereby given that the Annual Meeting of Stockholders of
Bontex, Inc. will be held at the Best Western Inn at Hunt Ridge, Willow Springs
Drive, Lexington, Virginia 24450, on November 7, 2001 at 10:30 a.m., Eastern
Daylight-Saving Time, for the following purposes:
1. To elect two Class B directors to serve until the annual meeting
of stockholders in 2004,
2. The transaction of such other business as may properly come
before the meeting or any adjournments thereof.
Only stockholders of record at the close of business on September 10,
2001, are entitled to vote at this meeting.
You are urged to fill in, date and sign the accompanying proxy and to
mail the same as promptly as possible. If you sign and return your proxy without
specifying your choices, it will be understood that you wish to have your shares
voted in accordance with the directors' recommendations. Should you decide to
attend the meeting and vote in person, you may withdraw your proxy.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete statement regarding the matters proposed to be acted
upon at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Charles W. J. Kostelni
Corporate Secretary
BONTEX, INC.
A VIRGINIA CORPORATION
PROXY STATEMENT
2001 ANNUAL MEETING OF STOCKHOLDERS
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by and on behalf of the Board of Directors of Bontex, Inc. (the "Company") of
proxies in the accompanying form to be used at the Annual Meeting of the
Stockholders of the Company to be held on November 7, 2001, at 10:30 a.m.,
Eastern Daylight-Saving Time, at the Best Western Inn at Hunt Ridge, Willow
Springs Drive, Lexington, Virginia 24450, and at any adjournments thereof. The
approximate date on which this Proxy Statement and the accompanying form of
proxy are first being sent or given to stockholders is October 8, 2001.
A copy of the Company's Annual Report to Stockholders, including
consolidated financial statements for the fiscal year ended June 30, 2001,
reported upon by KPMG LLP, is being mailed concurrently with this Proxy
Statement, but should not be considered proxy solicitation material.
Any person signing and mailing the enclosed form of proxy may revoke
the proxy at any time prior to the actual voting thereof by attending the Annual
Meeting and voting in person, by submitting a signed proxy bearing a later date,
or by giving prior written notice of revocation of the proxy to the Corporate
Secretary of the Company, One Bontex Drive, Buena Vista, Virginia 24416-1500.
All properly executed proxies delivered pursuant to this solicitation will be
voted at the Annual Meeting in the manner specified therein. If no specification
is made, the proxy will be voted FOR Proposal No. 1, and in accordance with
their best judgment on any other matters that may come before the annual
meeting.
VOTING SECURITIES
The close of business on September 10, 2001, has been fixed as the
record date for the determination of stockholders of the Company entitled to
notice of and to vote at the Annual Meeting of Stockholders. There were
1,572,824 shares of Company common stock outstanding as of the foregoing record
date, and each such share is entitled to one vote.
The holders of shares entitled to cast a majority of the votes at the
Annual Meeting constitute a quorum. If a share is represented for any purpose at
the Annual Meeting, it is deemed to be present for purposes of establishing a
quorum. Abstentions and broker non-votes (i.e., shares registered in the names
of brokers or other "street name" nominees for which proxies are voted for some
but not all matters) will be included in determining the number of shares
represented at the Annual Meeting. Directors will be elected by a plurality of
the votes cast in person or by proxy at the Annual Meeting. Approval of all
other matters requires the affirmative vote, at a meeting at which a quorum is
present, of a majority of the votes cast by the shares that are present in
person or by proxy and entitled to vote. Votes that are withheld and broker
non-votes will not be included in determining the number of votes cast.
The Company will appoint one or more inspectors of election to act at
the Annual Meeting and to make a written report thereof. Prior to the meeting,
the inspectors will sign an oath to perform their duties in an impartial manner
and according to the best of their abilities. The inspectors will ascertain the
number of shares outstanding and the voting power of each, determine the shares
represented at the meeting and the validity of proxies and ballots, count all
votes and ballots, and perform certain other duties as required by law.
1
As a matter of policy, proxies, ballots and voting tabulations that
identify individual stockholders are kept private by the Company. Such documents
are available for examination only by the inspectors of election and certain
personnel associated with processing proxy cards and tabulating votes. The vote
of any stockholder is not disclosed except as may be necessary to meet legal
requirements.
STOCK HOLDINGS OF CERTAIN OWNERS AND MANAGEMENT
The following table sets forth as of August 25, 2001, certain
information regarding the only known beneficial holders of more than five
percent of the outstanding common stock of the Company and the beneficial
ownership of the common stock of the Company by each director and nominee, by
each named executive officer and by all directors and executive officers as a
group. Where the persons listed have the right to acquire additional shares of
the Company's common stock through the exercise of options within 60 days, such
additional shares are deemed to be outstanding shares owned by such persons, but
are not deemed to be outstanding for the purpose of computing the percentage
ownership interests of any other person. Unless otherwise noted in the footnotes
to the table, the named persons have sole voting and investment power with
respect to all outstanding shares of common stock shown as beneficially owned by
them.
Shares Beneficially
Name of Beneficial Owner Owned Percent of Class
First Union National Bank 843,082(1) 50.04
303 Broad Street
Red Bank, New Jersey 07701
Mrs. Dolores Kostelni 696,207(2) 41.32
Route 4, Box 251
Turtle Brooke Lane
Lexington, Virginia 24450
Mrs. Patricia S. Tischio 675,607(3)(9) 40.10
901 Foxboro Drive
Norwalk, Connecticut 06851
Estate of Marie G. Surmonte 675,507(4) 40.09
c/o First Union National Bank
303 Broad Street
Red Bank, New Jersey 07701
Hugo N. Surmonte Residuary Trust 95,400(5) 5.66
c/o First Union National Bank
303 Broad Street
Red Bank, New Jersey 07701
William J. Binnie 4,584(6) *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
2
Shares Beneficially
Name of Beneficial Owner Owned Percent of Class
Michael J. Breton 1,900 *
Bontex, S.A.
Rue Slar
4801 Stembert, Belgium
William B. D'Surney 1,050 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Charles W. J. Kostelni 33,149(10) 1.98
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
James C. Kostelni 140,160(7)(9) 8.32
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Jeffrey C. Kostelni 43,841(8) 2.60
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Frank B. Mayorshi 600 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Larry E. Morris 9,070(11) *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Joseph F. Raffetto 5,582 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Robert J. Weeks 10,121 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
All Directors and 925,764 54.95
Executive Officers
as a Group (12 persons)
3
(1) Includes 95,400 shares held as co-trustee for the Hugo N. Surmonte
Residuary Trust, 72,175 shares held as trustee of the Hugo N. Surmonte
Marital Trust, and 675,507 shares held as a co-executor of the Estate of
Marie G. Surmonte. The Bank has shared voting and dispositive power with
respect to these shares.
(2) Includes 20,700 shares owned by Mrs. Kostelni with sole voting and
dispositive power and an aggregate of 675,507 shares of which Mrs. Kostelni
has shared voting and dispositive power as a co-executor of the Estate of
Marie G. Surmonte. Excludes 57,590 shares owned by Mrs. Kostelni's spouse,
Mr. James C. Kostelni, and 2,653 shares owned by Mrs. Kostelni's adult son,
James H. Kostelni.
(3) Includes 100 shares owned by Mrs. Tischio with sole voting and dispositive
power, an aggregate of 675,507 shares of which Mrs. Tischio has shared
voting and dispositive power as a co-executor of the Estate of Marie G.
Surmonte, and excludes 2,750 shares owned by Mrs. Tischio's adult daughter,
as to which Mrs. Tischio disclaims beneficial ownership.
(4) Dolores Kostelni, Patricia S. Tischio and First Union National Bank are
co-executors of the Estate and have shared voting and dispositive power
with respect to these shares.
(5) Dolores Kostelni and Patricia S. Tischio are beneficiaries of the Trust.
Mrs. Kostelni and Mrs. Tischio and the Bank have shared voting and
dispositive power with respect to these shares.
(6) Includes 726 shares held by Mr. Binnie's spouse as Trustee for their sons.
(7) Includes 20,700 shares owned by Mr. James C. Kostelni's spouse, Dolores
Kostelni. Does not include 2,653 owned by Mr. James C. Kostelni's adult
son, James H. Kostelni, as to which Mr. James C. Kostelni disclaims
beneficial ownership, and 675,507 shares held in the Estate of Marie G.
Surmonte, of which Mr. James C. Kostelni's spouse, Dolores Kostelni, is a
co-executor with shared voting and dispositive power. Includes 57,220
shares that are unissued, but are subject to stock options.
(8) Includes 1,000 shares owned by Mr. Jeffrey C. Kostelni's spouse. Includes
22,015 shares that are unissued, but are subject to stock options.
(9) Mr. James C. Kostelni's spouse, Dolores Kostelni, and Mrs. Patricia S.
Tischio are co-executors and share voting and dispositive power with First
Union National Bank of 675,507 shares held by the Estate of Mrs. Marie G.
Surmonte.
(10) Includes 22,015 shares that are unissued, but are subject to stock options.
(11) Includes 5,070 shares that are unissued, but are subject to stock options.
* Represents less than 1% of the outstanding shares of Company common stock.
ELECTION OF DIRECTORS
PROPOSAL NO. 1
The Company's Board of Directors is divided into three classes (A, B
and C) with staggered three-year terms. The current term of office of the Class
B directors expires at the 2001 Annual Meeting of Stockholders. The terms of the
Class C and Class A directors will expire in 2002 and 2003, respectively.
There are currently two Class B directors, Jeffrey C. Kostelni and
Joseph F. Raffetto, each of whom has been nominated for re-election by the
Board of Directors
The Bylaws of the Company provide that the Company is authorized to
have three Class B directors. The Company is considering identifying an
additional person to serve as a Class B director. At such time as such person is
identified and consents to serve as director, it is anticipated that he or she
will be appointed to fill the existing vacancy on the Board of Directors. The
proxies cannot be voted for a greater number of persons than the number of
nominees named.
It is the intention of the persons named as proxies, unless instructed
otherwise, to vote for the election of each of the two nominees set forth below.
Each nominee has agreed to serve if elected. If any nominee
4
shall unexpectedly be unable to serve, the shares represented by all valid
proxies will be voted for the remaining nominees and such other person or
persons as may be designated by the Board. At this time, the Board knows of no
reason why any nominee might be unable to serve. Class B nominees will serve for
a three-year term until the 2004 Annual Meeting and until their successors are
elected and qualified.
The present principal occupation or employment and employment during
the past five years and all positions or offices, if any, held with the Company
are set forth opposite the name of each director and nominee. The two nominees,
Jeffrey C. Kostelni and Joseph F. Raffetto, are members of the present Board of
Directors.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
CLASS B DIRECTOR.
NOMINEES
CLASS B DIRECTORS
(Serving Until 2004 Annual Meeting)
Year in Which First
Name and Age Elected as Director Principal Occupation
Jeffrey C. Kostelni, Age 35 1995 Senior Vice President (since 1999), Chief
Financial Officer and Treasurer (since 1994) of
the Company and General Sales Manager of
Bontex S.A., a subsidiary of the Company in
Belgium (1995-1999). Mr. Kostelni has a
Bachelor of Science Degree in Accountancy and
is a Certified Public Accountant.
Joseph F. Raffetto, Age 92 1984 Private investor since 1994; prior thereto,
physician.
DIRECTORS CONTINUING IN OFFICE
CLASS A DIRECTORS
(Serving Until 2003 Annual Meeting)
Year in Which First
Name and Age Elected as Director Principal Occupation
James C. Kostelni, Age 66 1965 Chairman of the Board, President, and Chief
Executive Officer of the Company (since 1994),
President and Chief Operating Officer (since
1971). Mr. Kostelni has a Bachelor of Science
Degree in Business Administration.
Robert J. Weeks, Age 67 1983 Private investor since 1993; prior thereto, Vice-
President, Dun & Bradstreet Corp. Bethlehem,
Pennsylvania. Mr. Weeks has a Bachelor of
Science Degree in Business Administration.
5
Hadelin Mothet, Age 57 2000 Financial Director and Assistant General
Manager (since 1985) of Bontex, S.A.. Mr.
Mothet has a Bachelor of Science Degree in
Accountancy.
William B. D'Surney, Age 72 1995 Private investor since 1994; prior thereto, Senior
Vice-President, Alexander & Alexander,
Richmond, Virginia. Mr. D'Surney has a
Bachelor of Science Degree in Business
Administration.
CLASS C DIRECTORS
(Serving Until 2002 Annual Meeting)
Year in Which First
Name and Age Elected as Director Principal Occupation
William J. Binnie, Age 76 1977 Retired engineering consultant since 1996; prior
thereto, President, W.J. Binnie & Associates,
Whispering Pines, North Carolina. Mr. Binnie
has a Bachelor of Science Degree in Civil
Engineering.
Charles W. J. Kostelni, Age 37 1998 Senior Vice President (since 1999), General
Manager (U.S. Operations only) (since 1998),
Corporate Secretary (since 1997), Corporate
Controller (since 1996) of the Company and
General Sales Manager of Bontex, S.A., a
subsidiary of the Company in Belgium (since
1999). Prior thereto, Assistant Controller (1994-
1996) of the Company. Mr. Kostelni has a
Bachelor of Science Degree in Accountancy and
is a Certified Public Accountant.
Frank B. Mayorshi, Age 65 1993 Private investor since 1991; prior thereto Partner,
KPMG LLP, Roanoke, Virginia. Mr. Mayorshi
has a Bachelor of Science Degree in Business
Administration
No director or nominee is a director of any other company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934. Mr. Charles W. J. Kostelni and Mr. Jeffrey C. Kostelni are the sons of Mr.
James C. Kostelni.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during fiscal 2001. All
directors, with the exception of Patricia S. Tischio, who resigned on July 23,
2001, attended at least 75% of the total number of meetings of the Board and the
committees of the Board on which they served.
A director's fee of $1,500 per meeting attended is paid to all
non-employee directors. In addition, non- employee directors who are members of
the Executive, Audit, Compliance and/or Compensation Committees receive a fee of
$500 per committee meeting attended. All directors are reimbursed for their
actual travel expenses for attending Board and committee meetings.
6
The Board of Directors annually elects five standing committees: the
Executive Committee, the Audit Committee, the Compensation Committee, the
Compliance Committee and the Nominating Committee.
The Executive Committee of the Board of Directors, which is composed of
Messrs. James C. Kostelni (Chairman), Weeks, Mayorshi and Binnie, is empowered
to exercise all authority of the Board of Directors, except with respect to
matters reserved for the Board by Virginia law. This committee met four times
during fiscal 2001.
The Audit Committee of the Board of Directors, which consists of
Messrs. Mayorshi (Chairman), Binnie and Weeks, oversees the financial reporting
process and the Company's internal controls. This committee met four times
during fiscal 2001.
The Compensation Committee of the Board of Directors, which consists of
Messrs. Weeks (Chairman), Binnie and Mayorshi, meets as necessary to consider
and make recommendations to the Board of Directors concerning compensation of
executive officers and employees of the Company. This committee met four times
during fiscal 2001.
The Compliance Committee of the Board of Directors, which consists of
Messrs. D'Surney (Chairman), Raffetto and Binnie, oversees the Company's
compliance with environmental and safety regulations. This Committee met four
times during fiscal 2001.
The Nominating Committee of the Board of Directors, which consists of
Messrs. James C. Kostelni (Chairman), Mayorshi and Weeks, considers and
recommends to the Board, candidates for election as directors of the Company.
The Nominating Committee will not consider nominees recommended by stockholders.
This committee met one time during fiscal 2001.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company is
composed of three independent directors and operates under a written charter
adopted by the Board of Directors, which is attached hereto as Exhibit A.
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent accountants, KPMG LLP,
are responsible for performing an independent audit of the Company's financial
statements in accordance with auditing standards generally accepted in the
United States of America and the issuance of a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that the Company's financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America,
and the Audit Committee has reviewed and discussed the audited financial
statements with management and the independent accountants. The Audit Committee
discussed with the independent accountants matters required to be discussed by
Statement on Auditing Standards No. 61, "Communication with Audit Committees,"
which includes, among other things:
o methods used to account for significant unusual transactions;
o the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative
guidance or consensus;
7
o the process used by management in formulating particularly
sensitive accounting estimates and the basis for the auditors'
conclusions regarding the reasonableness of these estimates; and
o disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and
the disclosures in the financial statements.
The independent accountants also provided to the Audit Committee the
written disclosures required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," and the Audit Committee
discussed with the independent accountants that firm's independence from the
Company and its management.
Based on the Audit Committee's discussion with management and the
independent accountants and the Audit Committee's review of the representation
of management regarding the audited financial statements and of the report of
the independent accountants to the Audit Committee, the Audit Committee
recommended to the Board of Directors, and the Board has approved, that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2001, for filing with the Securities and
Exchange Commission.
Report submitted by the Audit Committee of the Board of Directors of the Company
Frank B. Mayorshi, Chairman
William J. Binnie
Robert J. Weeks
AUDIT FEES
The following table sets forth the amount of audit fees, financial
information systems design and implementation fees, and all other fees billed or
expected to be billed by KPMG LLP, the Company's principal accountant, for the
year ended June 30, 2001:
Audit Fees (1) $ 88,000
All Other Fees (2) $ 28,000
---------------
Total Fees $ 116,000
===============
(1) Includes annual financial statement audit and limited quarterly review
services.
(2) Primarily represents income tax services other than those directly related
to the audit of the income tax accrual.
The Audit Committee of the Board of Directors of the Company has
considered whether the provision of financial information systems design and
implementation and other non-audit services is compatible with maintaining KPMG
LLP's independence.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the individual
compensation earned by the Chief Executive Officer and the three other most
highly compensated executives for services in all capacities to the Company and
its subsidiaries for the fiscal years ended June 30, 2001, 2000 and 1999.
Long-Term
Annual Compensation Compensation
Awards
Other Annual Securities All Other
Name and Principal Compensation Underlying Compensation
Position Year Salary ($) Bonus ($)(1) ($)(2) Options (#) ($)(3)
-------- ---- ---------- ------------ ------- ----------- ------
James C. Kostelni 2001 250,000 - 146,461 - 84,507
Chairman of the 2000 250,000 - 110,876 24,250 7,962
Board of Directors, 1999 250,000 - 112,402 72,000 6,810
President and Chief
Executive Officer
Michael J. Breton 2001 80,895 - 14,087 - 64,797
Corporate Director 2000 125,518 - 14,910 - 33,559
of International 1999 144,350 - 15,606 - 42,527
Operations, Bontex,
S.A.
Richard Simpson 2001 92,000 - - - 127,756
Director of Sales for 2000 92,000 - - - 69,175
Asia/Pacific 1999 70,000 - - - -
Tarcisio Pasquali 2001 127,098 - 15,827 - -
General Manager, 2000 140,299 - 15,497 - -
Bontex S.r.l. 1999 163,441 - 17,297 - -
(1) The last performance-based bonuses awarded by the Compensation Committee
and paid were in 1998 for 1997 performance. Certain compensation for Mr.
Pasquali includes other fees paid separately by the Company.
(2) Except as otherwise indicated in the table, the named executives did not
receive perquisites or other personal benefits in excess of the lesser of
$50,000 or 10% of the total of his salary and bonus reported in the table.
Amounts disclosed in this column for Mr. James Kostelni during 2001, 2000
and 1999 include $105,544 paid by the Company for certain life insurance
policies for which the Company is the beneficiary. All other amounts
represent automobile allowances, certain life insurance premiums or long-
term disability insurance premium payments.
(3) Amounts disclosed in this column for 2001 include: (i) payment by the
Company's defined benefit plan to Mr. James Kostelni in the amount of
$84,507; (ii) Company contributions on behalf of the named executive
officers under the Bontex Inc. Retirement Plan as follows: Mr. James
Kostelni $0, Mr. Breton $0, Mr. Richard Simpson $0, and Mr. Pasquali $0;
(iii) Bontex S.A.'s contribution under the Bontex, S.A. Pension and
Insurance Plans on behalf of Mr. Breton, $64,797 in 2001 and $33,559 in
2000. (The increase in Mr. Breton's pension costs over prior years is due
to a change in the pension plan policy based on Mr. Breton's age. The
change is a one time adjustment and is being offset by a permanent salary
reduction implemented in the fourth quarter of fiscal year 1999, of which
the full effect will be seen in subsequent years); (iv) Company
9
contributions on behalf of the named executive officers under the Bontex,
Inc. Executive Benefit Deferred Compensation Agreement as follows: Mr.
James Kostelni $0, Mr. Breton $0, and Mr. Pasquali $0; and (v) payments by
the Company relating to Mr. Simpson's expatriate agreement during overseas
assignment for, among other things, living allowance and school costs for
his children.
RETIREMENT PLANS
BONTEX, INC. RETIREMENT INCOME PLAN
The Company has in effect a contributory defined benefit retirement
plan ("Plan"). Estimated annual benefits payable at normal retirement age 65
under the Plan to persons in specified remuneration and years of service
classifications are set forth below. The following table contains no benefits
attributable to supplemental benefit plans as there are no such plans.
Years of Service
Final Average ---------------------------------------------------------------------------------------
Earnings 15 20 25 30 35
----------------- ------------ ------------- ------------- ------------ ------------
$ 125,000 $ 32,730 $ 43,640 $ 54,550 $ 65,460 $ 65,460
150,000 40,230 53,640 67,050 80,460 80,460
175,000 46,230 61,640 77,050 92,460 92,460
200,000 46,230 61,640 77,050 92,460 92,460
225,000 46,230 61,640 77,050 92,460 92,460
250,000 46,230 61,640 77,050 92,460 92,460
300,000 46,230 61,640 77,050 92,460 92,460
400,000 46,230 61,640 77,050 92,460 92,460
450,000 46,230 61,640 77,050 92,460 92,460
500,000 46,230 61,640 77,050 92,460 92,460
The benefits in the table are computed as a straight-life annuity
payable annually and are derived from both employer and employee contributions.
The benefits are not subject to any deduction for Social Security or other
offset amounts.
The compensation covered by the Plan includes all amounts received for
personal services rendered in the course of employment for the Company to the
extent those amounts are includable in gross income respectively, except for
distributions from deferred compensation plans or other amounts that receive
special tax treatment. Compensation for purposes of the Plan may not exceed
statutory limits. The limit for the 2001 and 2000 plan years was $170,000, which
may be increased by the Internal Revenue Service in the future to reflect cost
of living increases. The benefit formula equals the sum of (A) 1.5% of Final
Average Earnings up to Social Security Covered Compensation, and (B) 2.0% of
Final Average Earnings in excess of Social Security Covered Compensation,
multiplied by credited years of service up to a maximum of 30 years.
Social Security Covered Compensation means the average of the taxable
wage bases for the 35 calendar years ending with the last day of the calendar
year in which a participant attains his Social Security retirement age. Final
Average Earnings is generally the average earnings for the five highest
consecutive years of compensation during the ten years immediately preceding
retirement.
10
It is estimated that at age 65, for Plan purposes, Jeffrey C. Kostelni,
Charles W. J. Kostelni and Larry E. Morris will have 38, 34, and 28 years of
credited service, respectively. Mr. Michael J. Breton does not participate in
the Plan. Mr. James C. Kostelni has reached age 65 and currently has 41 years of
credited service.
BONTEX, S.A. PENSION PLANS
The Company's subsidiary, Bontex, S.A., maintains a pension plan
("Pension Plan") for certain of its employees. Mr. Breton is the only Pension
Plan participant included in the Compensation Table. The Pension Plan generally
provides a monthly retirement benefit beginning at normal retirement age 65
until the participant's death based on years of service and the average of the
last five years' annual salary. Provisions are also made for monthly payments to
a surviving spouse and children. Estimated annual benefits payable upon
retirement under the Pension Plan to persons in specified remuneration and years
of service classifications are set forth below. No benefits from a supplemental
benefit plan are included as no such plan exists.
Years of Service
Final Average ---------------------------------------------------------------------------------------
Earnings 15 20 25 30 35
----------------- ------------ ------------- ------------- ------------ ------------
$ 125,000 $ 15,591 $ 20,789 $ 25,987 $ 31,184 $ 36,381
150,000 19,822 26,429 33,036 39,643 46,251
175,000 24,052 32,068 40,086 48,103 56,120
200,000 28,281 37,708 47,135 56,163 65,990
225,000 32,511 43,347 54,186 65,023 75,860
250,000 36,741 48,988 61,235 73,482 85,729
300,000 45,201 52,431 75,335 90,401 105,469
400,000 62,119 82,827 103,533 124,241 144,947
450,000 70,580 94,107 117,634 141,159 164,687
500,000 79,040 105,386 131,733 158,079 184,426
It is estimated that at age 65, Mr. Breton will have 18 years of
credited service. Although compensation for Pension Plan purposes is the average
of the most recent five years' annual salary, only $85,618 of the amount shown
for Mr. Breton in the Compensation Table qualifies as compensation under the
Pension Plan for 2001. The Pension Plan defines the benefit in terms of Belgian
francs, and the above amounts were calculated using the exchange rate in effect
on June 30, 2000, which for purposes of this disclosure, do not materially
differ from rates in effect at June 30, 2001. The benefits listed in the Pension
Plan table are computed as a straight-life annuity payable annually and are not
subject to any deduction for Social Security or other offset amounts.
Bontex, S.A. has also subscribed a pension plan for certain of its
employees. The pension plan provides a lump sum at the normal retirement age of
65, based on a "defined contribution" varying in function of age and salary. The
employee may choose to receive an annuity as opposed to a lump sum at age 65.
The retirement lump sum equals to the accrued value of the following
contributions at age 65 :
Age Retirement Benefit
Less than 40 3% of the annual gross salary
40 to 49 5% of the annual gross salary
50 to 55 7% of the annual gross salary
55 and older 10% of the annual gross salary
The plan is a defined contribution scheme, which will provide a lump
sum benefit equal to the accrued value of the contributions at age 65.
Contributions amount to approximately $2,000 per year. Mr. Beton is insured
under this pension plan, and the benefits of Mr. Breton have also been
maximized, respecting maximum levels of coverage currently in force by tax
legislation in Belgium.
11
BONTEX, INC. EXECUTIVE BENEFIT DEFERRED COMPENSATION AGREEMENT
The Company adopted a tax deferred compensation benefit plan for
certain executives during fiscal year 1997. The plan allows the employee to
defer up to four percent of his compensation with a Company match of up to one
percent of compensation. The Company's contribution funds life insurance
policies on each executive, with the Company as owner and beneficiary.
RETIREMENT COMPENSATION AGREEMENTS
SUPPLEMENTAL EXECUTIVE COMPENSATION AGREEMENT
On May 26, 1994, the Company and Mr. James C. Kostelni (hereafter in
this section, Mr. Kostelni) entered into a Supplemental Executive Compensation
Agreement which is intended to supplement Mr. Kostelni's retirement benefits to
make up for any loss of benefits under the Plan resulting from the application
of certain limitations imposed by amendments to Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended, under the Revenue Reconciliation Act
of 1993. Under the Supplemental Executive Compensation Agreement, the Company
has agreed, during Mr. Kostelni's life, to purchase for Mr. Kostelni, upon
execution of the Agreement and thereafter on May 1 of each year through May 1,
2000 an annuity contract which provides for the payment of at least $458.33 per
month to Mr. Kostelni, such payments to begin upon Mr. Kostelni's reaching age
sixty-five and to end upon Mr. Kostelni's death or the ten-year anniversary date
of the first annuity payment, whichever is later. In order to replace the
survivorship benefits which Mr. Kostelni's spouse, but for the tax changes,
would receive upon his death, the Company also has agreed to pay to Mr.
Kostelni, upon execution of the Agreement and thereafter on May 1 of each year
through May 1, 1997, a cash payment in the amount of $26,000. It is intended
that such cash payment will be used by Mr. Kostelni to purchase life insurance
which will then provide the survivor benefit. Additionally, the Supplemental
Executive Compensation Agreement also provides that the Company shall, upon
execution of the Agreement and thereafter on May 1 of each year through May 1,
2000, make a cash "gross-up" payment equal to the amount of any federal, state
and local income taxes paid by Mr. Kostelni on the benefits received under the
Agreement. With Mr. Kostelni's consent, the Company did not purchase the annuity
contract as provided in the Agreement during fiscal years 1999, 2000 or 2001.
Under the Supplemental Executive Compensation Agreement, the Company
shall, upon a change in control, (i) purchase and transfer to Mr. Kostelni all
remaining annuities to be purchased pursuant to the Agreement; (ii) pay to Mr.
Kostelni all bonus amounts still owing pursuant to the Agreement; and (iii) pay
to Mr. Kostelni the applicable "gross-up" payment computed in accordance with
the Agreement. If Mr. Kostelni dies during the term of the Supplemental
Executive Compensation Agreement, or if Mr. Kostelni's employment with the
Company is terminated, either voluntarily or pursuant to the terms of the
Executive Compensation Agreement (discussed below), the Agreement shall
terminate, and Mr. Kostelni shall be entitled to no further payments or benefits
under the Agreement, except those which have accrued as of the date of his death
or termination.
A change in control under the Supplemental Executive Compensation
Agreement shall be deemed to have occurred in the event that (i) any person or
group becomes a beneficial owner of 20% or more of the combined voting power of
the Company's voting securities; (ii) the members of the Company's Board of
Directors on the date of the Agreement cease for any reason to constitute at
least a majority of the Board; (iii) all or substantially all of the assets of
the Company are sold, transferred or conveyed by any means, including, but not
limited to, direct purchase or merger, if the transferee is not controlled by
the Company; or (iv) the Company is merged or consolidated with another entity
and as a result of such merger or consolidation less than 75% of the outstanding
voting securities of the surviving or resulting entity shall be owned in the
12
aggregate by the former stockholders of the Company. No change of control shall
be deemed to have occurred for purposes of the Agreement by virtue of the
acquisition, directly or indirectly, of 20% or more of the combined voting power
of the Company's voting securities by Mr. Kostelni or a group including Mr.
Kostelni, by a subsidiary or certain other affiliates of the Company, or by the
heirs, successors or assigns of Hugo N. Surmonte.
EMPLOYMENT AGREEMENT
On January 22, 1997, the Company and Mr. James C. Kostelni (hereafter
in this section, Mr. Kostelni) entered into an Executive Compensation Agreement
providing for the employment of Mr. Kostelni as President and Chief Executive
Officer of the Company until May 15, 2005. This Agreement supersedes in its
entirety the Executive Compensation Agreement dated June 29,1989, by and between
the Company (as successor to Georgia Bonded Fibers, Inc.) and Mr. Kostelni.
Under the Agreement, Mr. Kostelni is to receive a minimum annual salary of
$222,000, which shall be adjusted annually by the Compensation Committee of the
Board of Directors, along with certain benefits, including such bonuses as are
approved by the Board of Directors, an automobile allowance and all fringe
benefits offered to Company employees.
The Agreement may be terminated by the Company only for cause,
provided, however, that the Company may not terminate the Agreement on (i) the
sale by the Company of substantially all of its assets to a single purchaser or
to a group of associated purchasers; (ii) the sale, exchange or other
disposition, in one transaction, of more than 50% of the outstanding shares of
Company common stock; (iii) a decision by the Company to terminate its business
and liquidate its assets; or (iv) the merger or consolidation of the Company in
a transaction in which the stockholders of the Company receive less than 50% of
the outstanding voting shares of the new or continuing corporation. Under the
Agreement, "cause" is deemed to include only Mr. Kostelni's (i) conviction of a
felony; (ii) material breach of the Agreement which remains uncured sixty days
after notice by the Company of such breach; or (iii) dishonesty directly related
to the performance of his duties.
The Agreement also may be terminated by the Company if Mr. Kostelni
becomes disabled for a period of more than twelve consecutive months, and shall
be terminated if Mr. Kostelni dies during the term of the Agreement. In the
event of termination of the Agreement as a result of Mr. Kostelni's death or
disability, the Company shall, within forty-five days after such termination,
pay to Mr. Kostelni or his estate, as the case may be, an amount equal to
six-months compensation or the balance due under the Agreement, whichever is
less. Additionally, in the event of Mr. Kostelni's death during the term of the
Agreement, the Company shall, within sixty days after the date of death, pay a
survivor's benefit of $5,000 to his widow or other survivor.
The Agreement also granted Mr. Kostelni a stock option to purchase
80,000 shares of the Company's common stock, at an exercise price of $4.50 per
share, which was the fair market value of the stock on the date of grant
(January 22, 1997). The option was exercisable from the date of grant and had a
minimum term of ten years. On July 1, 1998, Mr. Kostelni voluntarily agreed to
cancel the unexercised option in order to expedite the Company's application to
transfer its common stock listing to The Nasdaq SmallCap Market. At the Annual
Meeting held on October 22, 1998 and adjourned to January 28, 1999, the
stockholders approved the issuance of a new option to Mr. Kostelni, exercisable
effective January 28, 1999, to purchase 72,000 shares of the Company's common
stock, at an exercise price of $4.50 per share. At the Annual Meeting of
stockholders held on October 22, 1999, the Company's stockholders approved the
Bontex Inc. Key Employee Stock Option Plan. As a condition to any grant of
options under such plan, Mr. Kostelni agreed on January 27, 2000, to cancel
39,030 previously granted stock options to purchase shares of the Company's
common stock at an exercise price of $4.50 per share. On that same date the
Company granted to Mr. Kostelni 24,250 options to purchase shares of the
Company's common stock at a price of $2.00 per share. The options are
exercisable beginning six months after the grant date and expired on January 27,
2001.
13
Since January 1998, the Company has paid certain premiums for various
insurance policies, including a universal life insurance and a reverse split
dollar insurance policy, upon the life of Mr. James C. Kostelni, for which the
Company is the beneficiary.
RELATED PARTY TRANSACTIONS
On February 16, 1999, the Company entered into a five-year contract
with Maxcomm, Inc. ("Maxcomm"), a Virginia corporation, wholly owned by Mr. J.
H. Kostelni, the son of Mr. James C. Kostelni, the President, CEO and a director
of the Company. Pursuant to the contract, Maxcomm will continue to develop a
marketing relationship with certain identified target companies for the purpose
of developing and refining products for global distribution by Bontex in the
footwear, luggage and allied industries. In consideration, Bontex will pay
Maxcomm a monthly commission calculated based on 6% of all collected net sales
made by Bontex with respect to the distribution of products to the identified
target companies. Bontex additionally agreed to reimburse Maxcomm $75,000 for
the costs and expenses it incurred in its ongoing marketing efforts on Bontex's
behalf.
On April 30, 2000, the Company entered into an employment agreement
(the "Agreement") with Patricia Surmonte Tischio, a principal stockholder and a
former director of the Company who resigned on July 23, 2001. Pursuant to the
Agreement, the Company will pay Ms. Tischio as a part-time employee $2,750 per
month during the period February 1, 2000 through August 31, 2000 and $1,750 per
month during the period September 1, 2000 through October 31, 2004. The
Agreement states that Ms. Tischio will work no more than 15 hours per week.
Under the Agreement, the Company also delivered title to a 1992 Ford Taurus to
Ms. Tischio and provides her with term life insurance coverage in a decreasing
amount equal to her remaining employment payments due under the Agreement. The
Agreement is also a complete settlement and release of all claims by Ms. Tischio
against Bontex through the date of the Agreement. The Agreement provides that
until November 1, 2004, Ms. Tischio may not work for a competitor of Bontex.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of Bontex, Inc. is responsible for
recommending to the Board of Directors the compensation policies applicable to
all employees, including the Company's executive officers. The Company's
compensation policies are based on the fundamental premise that the achievements
of the Company result from the coordinated efforts of all employees working
toward common objectives. The Compensation Committee consists of Robert J.
Weeks, Chairman, Frank B. Mayorshi and William J. Binnie, who are each
independent directors of the Company.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company seeks to attract, motivate and retain the best possible
executive and other employee talent by providing competitive, performance-based
compensation programs that tie compensation to the Company's business objectives
and performance. The overall objective of this strategy is to align the
financial interests of the executive and other employees with those of the
stockholders by linking a substantial component of its executives' compensation
directly to Company performance.
The Committee recommends to the Board of Directors the compensation
policies that govern both the compensation opportunities available, as well as
the actual amounts paid, to Company officers. These policies are designed to
provide competitive levels of compensation that link incentive awards to the
Company's annual operating plan.
14
The Company's incentive bonus plans for executives and other employees
are designed to recognize individual and group performance. Target compensation
levels are intended to be competitive with those at other progressive companies.
ELEMENTS OF THE FISCAL 2001 EXECUTIVE COMPENSATION PROGRAM.
The Committee believes the interests of the stockholders will be best
served if the executive compensation program links a substantial component of
the cash compensation earned by executives to increases in stockholder value.
The current program therefore includes the following two principal components:
base salary and annual cash bonuses. There were no cash bonuses for fiscal 2001.
BASE SALARY
Base salaries for all executive officers, including the Chief Executive
Officer, are established by reference to defined salary ranges which have been
assigned to each position based upon salary opportunities provided by the
Company's competitors. Increases to individual base salaries are awarded based
on the officer's responsibilities, an evaluation of past and current
performance, seniority and experience, the Company's overall operating results,
position in range, the overall level of salary adjustments among the Company's
peers and current and projected economic conditions. Base salary is also a
reflection of the value of the job in the Company's operations.
CHIEF EXECUTIVE OFFICER (CEO) COMPENSATION
The 2001 compensation paid to Mr. James C. Kostelni, the Company's
Chief Executive Officer, was recommended by the Compensation Committee based on
its review of independently produced CEO compensation surveys and consideration
of compensation paid by companies of similar size with global responsibilities
in comparable industries. The Compensation Committee recommended the CEO's
compensation to the Board of Directors after considering that Mr. James C.
Kostelni's on-going efforts to develop the Company's specifications sales
business, his progress in restructuring the Company and reducing costs, his
overall past and present performance and contributions to the Company, and the
relationship of the CEO's compensation to that of other key executives.
Report Submitted by the Compensation Committee of
the Board of Directors of the Company.
Robert J. Weeks, Chairman
Frank B. Mayorshi
William J. Binnie
15
STOCK PERFORMANCE
The following graph compares the yearly percentage change and the
cumulative total stockholder returns on the Company's common stock with the
cumulative return on the NASDAQ Market Index and the MG Paper Products Peer
Group Index for the five-year period commencing on June 30, 1996 and ending on
June 30, 2001. These comparisons assume the investment of $100 of the Company's
common stock and in each of the indices on June 30, 1996 and the reinvestment of
dividends.
Comparison of 5-Year Cumulative Total Return
Among Bontex, Inc.
NASDAQ Market Index and MG Paper Products Group Index
(PERFORMANCE GRAPH APPEARS HERE.)
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, MG PAPER PRODUCTS INDUSTRY INDEX AND BROAD MARKET
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN OF COMPANY,
MG PAPER PRODUCTS INDUSTRY INDEX AND BROAD MARKET
1996 1997 1998 1999 2000 2001
--------- --------- -------- --------- --------- ---------
BONTEX, INC. $ 100.00 $ 134.48 $ 79.31 $ 48.28 $ 51.72 $ 74.46
MG PAPER PRODUCTS INDEX 100.00 126.98 122.63 140.20 118.20 126.85
NASDAQ MARKET INDEX 100.00 120.40 159.68 223.71 336.71 186.46
The peer group comprises the largest companies domestically traded on
the NASDAQ market that operate in the Company's industry, paper products. None
of these companies compete directly with Bontex, Inc. The returns of each
company have been weighted according to their respective stock market
capitalization for purposes of arriving at a peer group average.
16
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the copies of the forms furnished to the
Company and written representations of the Company's directors and executive
officers, the Company believes that all filing requirements applicable to its
officers, directors and ten-percent beneficial owners were complied with during
fiscal 2001.
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") the Company is required to identify any person who,
at any time during fiscal year 2001, was a director of the Company, an executive
officer of the Company or its subsidiaries, or a beneficial owner of more than
10% of the Company's common stock or any other person who was subject to Section
16(a) of the Exchange Act with respect to the Company that during fiscal 2001
and failed to file on a timely basis with the Securities and Exchange Commission
any report required by Section 16(a) of the Exchange Act, (which reports are on
Form 3 (an initial report of beneficial ownership of common stock) and on Form 4
and Form 5 (relating to changes in beneficial ownership of common stock)). Based
solely on a review of such Forms 3, 4 and 5, and amendments thereto, furnished
to the Company by the reporting persons known to it, as required by Exchange Act
Rule 16a-3(e), no reporting person that was required during fiscal 2001 to
comply with Section 16(a) of the Exchange Act failed to comply with such
requirements.
INDEPENDENT AUDITORS
The firm of KPMG LLP audited the Company's consolidated financial
statements as of and for the year ended June 30, 2001 and has been reappointed
by the Board of Directors as independent auditors for the year ended June 30,
2002. A representative of KPMG LLP is expected to attend the meeting with the
opportunity to make a statement and/or respond to appropriate questions from
stockholders at the meeting.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy
statement for the 2002 Annual Meeting, stockholder proposals must be received by
the Corporate Secretary of Bontex, Inc., One Bontex Drive, Buena Vista, Virginia
24416-1500, no later than May 24, 2002. Stockholder proposals intended to be
presented at the 2002 Annual Meeting by means other than inclusion in the
Company's proxy statement must be received by the Corporate Secretary no later
than August 16, 2002.
OTHER MATTERS
The Board knows of no matters which may properly come before the Annual
Meeting other than the matters referred to in this Proxy Statement. If, however,
any matters properly come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy in accordance with their best
judgment thereon.
BY THE ORDER OF THE BOARD OF DIRECTORS
Charles W. J. Kostelni
Corporate Secretary
September 28, 2001
The Company's Annual Report on Form 10-K, excluding exhibits, is
available without charge to any stockholder of record requesting the same.
Written requests should be addressed to the attention of the Corporate
Controller, Bontex, Inc., One Bontex Drive, Buena Vista, Virginia 24416-1500.
17
Exhibit A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
BONTEX, INC.
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the Board
in fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
o Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting and legal
compliance.
o Monitor the independence and performance of the Company's independent
auditors and internal accounting personnel.
o Provide an avenue of communication among the independent auditors, the
Company's management, the internal accounting personnel and the Board
of Directors.
o Monitor adherence to, and continuous improvement to the Company's
policies, procedures and practices.
o Review areas of potential significant financial risk to the Company.
o Monitor compliance with legal and regulatory requirements.
The Audit Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities and it has direct access to the independent
auditors as well as to anyone in the Company. The Audit Committee has the
ability to retain, at the Company's expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the Nasdaq SmallCap
Market. The Audit Committee shall be composed of three or more directors as
determined by the Board, each of whom shall be independent nonexecutive
directors, free from any relationship that would interfere with the exercise of
his or her independent judgment. All members of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements, and at least one member of the Committee shall
have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board on recommendation of the
Nominating Committee. If an Audit Committee Chair is not designated or present,
the members of the Audit Committee may designate a Chair by their majority vote.
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. The Audit Committee Chair shall prepare and/or approve an
agenda in advance of each meeting. The Committee will strive to meet privately
in executive session at least annually with management, the Company's controller
(or his/her equivalent), the independent auditors and as a committee to discuss
any matters that the Committee or each of these groups believe should be
discussed. In addition, the Committee, or at least its Chair, should communicate
with management and the independent auditors quarterly to review the Company's
financial statements and significant findings based upon the auditors limited
review procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices and judgments.
A-1
3. In consultation with the management, the independent auditors and the
internal accounting personnel, as applicable, consider the integrity of
the Company's financial reporting processes and controls. Discuss
significant financial risk exposures and the steps management has taken
to monitor, control and report such exposures. Review significant
findings prepared by the independent auditors together with
management's responses.
4. Review the Company's quarterly financial results prior to the release
of earnings and/or the company's quarterly financial statements prior
to filing or distribution. Discuss any significant changes to the
Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with SAS 61 (see
item 9). The Chair of the Committee may represent the entire Audit
Committee for purposes of this review, or the quarterly review may be
accomplished by conference call or meeting with the entire audit
committee.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review
the independence, and performance of the auditors and annually
recommend to the Board of Directors the appointment of the independent
auditors or approve any discharge of auditors when circumstances
warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors. Review and approve requests for significant
management consulting engagements to be performed by the independent
auditors' firm and be advised of any other significant study undertaken
at the request of management that is beyond the scope of the audit
engagement letter.
7. On an annual basis, the Committee should review and discuss with the
independent auditors any significant relationships they have with the
Company that could impair the auditors' independence.
8. Review the independent auditors' audit plan.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
Internal Accounting Personnel and Legal Compliance
11. Review the budget, changes in budget, activities, organizational
structure, and qualifications of internal accounting personnel, as
needed.
12. Review the appointment, performance and replacement of the Company's
Chief Financial Officer.
13. Review significant reports prepared by the Company's internal
accounting personnel together with management's response and
follow-up to these reports.
14. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the Company's
financial statements, the Company's compliance with applicable laws and
regulations, inquiries received from regulators or governmental
agencies.
Other Audit Committee Responsibilities
15. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the
Company's annual proxy statement.
16. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
17. Periodically report to the Board of Directors on significant results
of the foregoing activities.
A-2
BONTEX, INC.
REVOCABLE PROXY
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR ANNUAL
MEETING NOVEMBER 7, 2001
The undersigned hereby constitutes and appoints Charles W.J. Kostelni
and William B. D'Surney, or either of them, his true and lawful agents and
proxies, with full power of substitution in each, to represent the undersigned
and to vote as designated below, all the shares of Common Stock held of record
by the undersigned on September 10, 2001, at the Annual Meeting of Stockholders
of Bontex, Inc. to be held at the Best Western Inn at Hunt Ridge, Willow Springs
Drive, Lexington, Virginia 24450, on Wednesday, November 7, 2001 at 10:30 A.M.,
Eastern Daylight Saving Time and at any adjournments thereof.
The undersigned acknowledges receipt of the Proxy Statement dated September 28,
2001.
This proxy must be signed Date
exactly as name appears hereon. -------------------------------
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Stockholder sign above Co-holder (if any) sign above
With- For All
For hold Except
1. ELECTION OF DIRECTORS [ ] [ ] [ ]
Nominees: Two Class B directors for a three year term, Jeffrey C. Kostelni and Joseph F. Raffetto.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
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2. In their discretion, upon other matters as may properly come before the meeting.
Please check box if you plan to attend the November 7, 2001 annual stockholders
meeting. [ ]
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposal 1. This proxy is revocable at any time prior to the
exercise hereof.
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Detach above card, sign, date and mail in postage paid envelope provided.
BONTEX, INC.
When shares are held by joint tenants, both should sign. Executors,
administrators, trustees, etc. should give full title as such. If executed on
behalf of a corporation, please sign full corporate name by duly authorized
officer.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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