BIO-REFERENCE LABORATORIES, INC.
481 EDWARD H. ROSS DRIVE
ELMWOOD PARK, NEW JERSEY 07407
201-791-2600
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 15, 2000
---------------
The annual meeting of stockholders of Bio-Reference Laboratories, Inc. (the
"Company") will be held at The Sheraton Crossroads Hotel, Crossroads Corporate
Center, Route 17 North, Mahwah, New Jersey 07495-0001, on Friday, December 15,
2000 at 9:00 A.M. local time, for the following purposes:
1. To elect two directors to the Company's Board of Directors, each to
serve for a term of three years and until his successor is duly elected
and qualified (Proposal One).
2. Ratification of Adoption of the 2000 Employee Incentive Stock Option
Plan (Proposal Two).
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
Pursuant to the provisions of the By-Laws, the Board of Directors has fixed
the close of business on Wednesday, November 15, 2000 as the record date for
determining the stockholders of the Company entitled to notice of, and to vote
at the meeting or any adjournment thereof.
Stockholders who do not expect to be present in person at the meeting are
urged to date and sign the enclosed proxy and promptly mail it in the
accompanying postage-paid envelope.
By Order of the Board of Directors
Marc D. Grodman
PRESIDENT
Dated: November 20, 2000
PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING BUT WILL,
HOWEVER, HELP TO ASSURE A QUORUM AND AVOID ADDED PROXY SOLICITATION COSTS.
BIO-REFERENCE LABORATORIES, INC.
481 EDWARD H. ROSS DRIVE
ELMWOOD PARK, NEW JERSEY 07407
201-791-2600
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 15, 2000
---------------
This Proxy Statement of Bio-Reference Laboratories, Inc., a New Jersey
corporation (the "Company") is first being mailed to Stockholders on or about
November 20, 2000 in connection with the solicitation of proxies by the
Company's Board of Directors to be used at the Annual Meeting of Stockholders of
the Company to be held on Friday, December 15, 2000 at 9:00 A.M. (local time) at
The Sheraton Crossroads Hotel, Crossroads Corporate Center, Route 17 North,
Mahwah, New Jersey 07495-0001. Accompanying this Proxy Statement is a Notice of
Annual Meeting of Stockholders, a form of Proxy; a copy of the Company's 1999
Annual Report and a copy of the Company's Quarterly Report on Form 10-Q for the
quarter ended July 31, 2000 as filed with the Securities and Exchange
Commission, each containing financial statements and related data.
All proxies which are properly filled in, signed and returned to the
Company prior to or at the Meeting will be voted in accordance with the
instructions thereon. A proxy may be revoked by any stockholder giving the same
prior to the exercise thereof by: (a) written notice delivered to the Company's
principal offices prior to the commencement of the Meeting, (b) providing a
signed proxy bearing a later date, or (c) appearing in person and voting at the
Meeting. The Company intends to vote executed but unmarked proxies in favor of
Proposals One and Two. Broker non-votes will be counted for purposes of
determining a quorum but otherwise will be considered not represented with
regard to voting on any matter with respect to which there is a broker non-vote.
The Board has fixed the close of business on November 15, 2000 as the record
date for the determination of stockholders who are entitled to notice of, and to
vote at the meeting or any adjournment thereof.
The expenses of preparing, assembling, printing and mailing the form of
proxy and the material used in solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by use of the mails, the
Company may utilize the services of some of its officers and regular employees
(who will receive no additional compensation therefor) to solicit proxies
personally, and by telephone. The Company has requested banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy material to
their principals and to request authority for the execution of proxies and will
reimburse such persons for their services in doing so. The cost of such
additional solicitation incurred otherwise than by use of the mails is estimated
not to exceed $10,000.
VOTE REQUIRED, PRINCIPAL STOCKHOLDERS AND STOCKHOLDINGS OF MANAGEMENT
At the record date, the Company had 8,505,632 shares of its Common Stock,
$.01 par value (the "Common Stock") and 604,078 shares of its Series A - Senior
Preferred Stock ("Series A Preferred Stock") outstanding, the holders of which
are each entitled to one vote per share. The presence in person or by proxy of
at least a majority of the outstanding Common Stock and Series A Preferred Stock
voting together as one class is necessary to constitute a quorum at the meeting.
Election of directors (Proposal One) and ratification of the adoption of the
2000 Employee Incentive Stock Option Plan (Proposal Two), each requires the
affirmative vote of a majority of the votes cast on the Proposal by the holders
of Common Stock and Series A Preferred Stock voting together as one class
present in person or by proxy at the meeting.
The following table sets forth information as of November 15, 2000 with
respect to the ownership of Common Stock by (i) each person known by the Company
to be the beneficial owner of more than 5% of its outstanding Common Stock, (ii)
each director of the Company, (iii) each executive officer of the Company, and
(iv) all directors and executive officers as a group. The percentages have been
calculated on the basis of treating as outstanding for a particular holder, all
shares of Common Stock outstanding on said date owned by such holder and all
shares of Common Stock issuable to such holder in the event of exercise or
conversion of outstanding options, warrants and convertible securities including
Series A Preferred Stock owned by such holder at said date which are exercisable
or convertible within 60 days of such date.
SHARES OF
NAME AND ADDRESS OF COMMON STOCK PERCENTAGE
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OWNERSHIP
- ------------------- --------------------- ----------
Directors and Executive Officers*
Marc D. Grodman(2) ...................... 1,673,845 17.8%
Howard Dubinett (3) ..................... 477,001 5.5%
Sam Singer(4) ........................... 377,667 4.4%
Frank DeVito(5) ......................... 10,202 --
John Roglieri(6) ........................ 31,667 --
Gary Lederman (7) ....................... 25,200 --
Executive Officers and Directors as a
group (six persons)(2)(3)(4)(5)(6)(7) . 2,595,582 26.4%
- ----------------
* The address of all of the Company's directors and executive officers is c/o
the Company, 481 Edward H. Ross Drive, Elmwood Park, New Jersey 07407.
(1) Except as otherwise noted, each holder named in the table has sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned.
(2) Includes 608,100 shares owned directly by Dr. Grodman, 549,678 shares
issuable upon conversion of Series A Preferred Stock and 300,000 shares
issuable upon exercise of options. Also includes 121,667 shares owned
directly and 54,400 shares issuable upon conversion of Series A Preferred
Stock held by Dr. Grodman's wife, Pam Grodman, and a Company controlled by
her and 40,000 shares owned by their minor children. Dr. Grodman disclaims
beneficial ownership of these 216,067 shares.
(3) Includes 263,667 shares owned directly, and 213,334 shares issuable upon
exercise of options.
(4) Includes 211,000 shares owned directly, and 166,667 shares issuable upon
exercise of options.
(5) Includes 202 shares owned directly and 10,000 shares issuable upon exercise
of warrants.
(6) Includes 1,667 shares owned directly and 30,000 shares issuable upon
exercise of warrants.
(7) Includes 25,200 shares owned directly.
The Company's executive officers and directors and members of their
immediate families owning and having the right to vote an aggregate 1,875,581
shares (20,6%) of the Company's outstanding Common Stock and Series A Preferred
Stock on a combined basis have stated their intention to vote their shares FOR
the nominees for election as directors (Proposal One) and FOR the ratification
of the adoption of the 2000 Employee Incentive Stock Option Plan (Proposal Two).
2
ACTION TO BE TAKEN AT THE MEETING
ELECTION OF DIRECTORS
(PROPOSAL ONE)
The number of directors on the Company's Board of Directors is currently
fixed at six. The Company's Certificate of Incorporation divides the Board of
Directors into three classes. The members of each class of directors serve for
staggered three-year terms. The Board is comprised of two Class I directors (Dr.
Grodman and Mr. Dubinett), two Class II directors (Mr. Singer and Mr. DeVito)
and two Class III directors (Dr. Roglieri and Mr. Lederman), whose terms expire
upon the election and qualification of their successors at successive Annual
Meetings held in 1998, 1999 and 2000 respectively. At each Annual Meeting of
Stockholders, directors are elected for a full term of three years.
Dr. Roglieri and Mr. Lederman (current Class III directors) are being
proposed for re-election at this Annual Meeting of Stockholders, each to serve
for a three-year term and until his successor is elected and qualifies. The
shares represented by proxies will be voted in favor of the election as
directors of Dr. Roglieri and Mr. Lederman who are the nominees of the Board of
Directors for election and authority to vote for their election as Class III
directors shall be deemed granted unless specifically withheld. Management has
no reason to believe that either or both of such nominees for the office of
director will not be available for election as a director. However, should
either or both of them become unwilling or unable to accept nomination for
election, it is intended that the individuals named in the enclosed proxy may
vote for the election of such other person or persons as Management may
recommend. The Company does not have a nominating committee. During the twelve
month period ended October 31, 1999, the Company's Board of Directors held a
total of three meetings.
The following table sets forth certain information with respect to each of
the directors and executive officers of the Company.
NAME AGE POSITION
---- --- --------
Marc D. Grodman, M.D. ........ 49 Chairman of the Board, President,
Chief Executive Officer and Director
Howard Dubinett .............. 49 Executive Vice President, Chief Operating
Officer and Director
Sam Singer ................... 57 Vice President, Chief Financial Officer,
Chief Accounting Officer and Director
Frank DeVito (b) ............. 78 Director
John Roglieri, M.D. (b) ...... 61 Director
Gary Lederman, Esq. (a) ...... 66 Director
- -------------------
(a) Chairman of the Audit Committee.
(b) Member of the Audit Committee.
The Audit Committee confers with the Company's auditors and reviews,
evaluates and advises the Board of Directors concerning the adequacy of the
Company's accounting systems, its financial reporting practices, the maintenance
of its books and records and its internal controls. In addition, the Audit
Committee reviews the scope of the audit of the Company's financial statements
and the results thereof.
The Company does not have an Executive Committee. Officers are elected by
and hold office at the discretion of the Board of Directors.
3
The following is a brief account of the business experience of each
director including each nominee for director of the Company.
Marc D. Grodman, M.D. founded the Company in December 1981 and has been
its Chairman of the Board, President, Chief Executive Officer and a Director
since its formation. Dr. Grodman is an Assistant Professor of Clinical Medicine
at Columbia University College of Physicians and Surgeons and Assistant
Attending Physician at Presbyterian Hospital, New York City. From 1980 to 1983,
Dr. Grodman attended the Kennedy School of Government at Harvard University and
was a Primary Care Clinical Fellow at Massachusetts General Hospital. From 1982
to 1984, he was a medical consultant to the Metal Trades Department of the
AFL-CIO. Dr. Grodman received a B.A. degree from the University of Pennsylvania
in 1973 and an M.D. degree from Columbia University College of Physicians and
Surgeons in 1977. Except for his part time duties as Assistant Professor of
Clinical Medicine and Assistant Attending Physician at Columbia University and
Presbyterian Hospital and his rendering of medical services on a part time basis
to the Uniformed Firefighters Association of New York City, Dr. Grodman devotes
all of his working time to the business of the Company.
Howard Dubinett has been the Executive Vice-President and Chief Operating
Officer of the Company since its formation in 1981. He became a Director of the
Company in April 1986. Mr. Dubinett attended Rutgers University. Mr. Dubinett
devotes all of his working time to the business of the Company.
Sam Singer has been the Company's Vice President and Chief Financial
Officer since October 1987 and a Director since November 1989. He is responsible
for all of the Company's financial activities. Mr. Singer was the Controller for
Sycomm Systems Corporation, a data processing and management consulting company,
from 1981 to 1987, prior to joining the Company. He received a B.A. degree from
Strayer College and an M.B.A. from Rutgers University. Mr. Singer devotes all of
his working time to the business of the Company.
Frank DeVito became a Director of the Company in April 1986. Mr. DeVito,
who is now retired, served as Vice President of the New Jersey State AFL-CIO and
from 1960 until December 1985 was President of AFL-CIO United Food and
Commercial Workers, Local 1245. Mr. DeVito is also the former president of
Benefit Plan Services of New Jersey, a medical insurance consulting company.
From 1981 through December 1985 Mr. DeVito was also President of United Food and
Commercial Workers District Council of Metropolitan New York and Northern New
Jersey, which was comprised of 35 local unions with approximately 150,000
members.
John Roglieri, M.D. became a Director of the Company in September 1995. He
is an Assistant Professor of Clinical Medicine at Columbia University's College
of Physicians and Surgeons and an Assistant Attending Physician at Presbyterian
Hospital, New York City. Dr. Roglieri received a B.S. degree in Chemical
Engineering and a B.A. degree in Applied Sciences from Lehigh University in
1960, an M.D. degree from Harvard Medical School in 1966, and a Master's degree
from Columbia University School of Business in 1978. From 1969 until 1971, he
was a Senior Assistant Surgeon in the U.S. Public Health Service in Washington.
From 1971 until 1973 he was a Clinical and Research Fellow at Massachusetts
General Hospital. From 1973 until 1975, he was Director of the Robert Wood
Johnson Clinical Scholars program at Columbia University. In 1975 he was
appointed Vice-President Ambulatory Services at Presbyterian Hospital, a
position which he held until 1980. Since 1980, he has maintained a private
practice of internal medicine at Columbia-Presbyterian Medical Center. From 1988
until 1992, he was also Director of the Employee Health Service at Presbyterian
Hospital. From 1992 through 1999, Dr. Roglieri was the Corporate Medical
Director of NYLCare, a managed care subsidiary of New York Life. Dr. Roglieri is
currently the chief medical officer of Physician WebLink, a New York
metropolitan area physician practice management company. He is a member of
advisory boards to several pharmaceutical companies, a member of the Editorial
Advisory Board of the journal Managed Care and a biographee of Who's Who in
America.
Gary Lederman, Esq. became a director of the Company in May 1997. He
received his B.A. from Brooklyn College in 1954 and his J.D. from NYU Law School
in 1957. He was manager of Locals 370, 491 and 662 of the U.F.C.W. International
Union from 1961 to 1985. He is retired from the unions and has been a lecturer
at Queensboro Community College in the field of insurance. He currently serves
on an institutional review board for RTL, a pharmaceutical drug testing
laboratory.
There are no family relationships between or among any directors or
executive officers of the Company.
4
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and any amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) under the Securities Exchange
Act of 1934, or representations that no Forms 5 were required, the Company
believes that with respect to fiscal 1999, its officers, directors and
beneficial owners of more than 10% of its equity securities timely complied with
all applicable Section 16(a) filing requirements thereunder.
INFORMATION REGARDING EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid
or accrued by the Company during the year ended October 31, 1999 to its Chief
Executive Officer and its other executive officers who were serving as executive
officers of the Company on October 31, 1999. All of the Company's group life,
health, hospitalization or medical reimbursement plans, if any, do not
discriminate in scope, terms or operation in favor of the executive officers or
directors of the Company and are generally available to all salaried employees.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- -----------------------------------------------
YEAR OTHER RESTRICTED
NAME AND ENDED ANNUAL STOCK OPTIONS LTIP ALL OTHER
PRINCIPAL POSITION 10/31 SALARY BONUS COMPENSATION AWARDS(1) SARS PAYOUTS COMPENSATION
- ------------------------ ------ -------- -------- ----------- ----------- -------- ------- -------------
<C
Marc D. Grodman M.D. 1999 $306,557 $125,000 $-0- -0- -0- $-0- $-0-
President and Chief 1998 $305,653 $125,000 $-0- -0- -0- $-0- $-0-
Executive Officer 1997 $265,697 $ 90,000 $-0- 300,000shs 300,000shs(2) $-0- $-0-
Howard Dubinett 1999 $160,004 $ 60,000 $-0- -0- $-0- $-0-
Executive Vice 1998 $157,622 $ 57,750 $-0- -0- $-0- $-0-
President and Chief 1997 $148,417 $ 43,000 $-0- 240,000shs 213,334shs $-0- $-0-
Operating Officer
Sam Singer 1999 $158,002 $ 60,000 $-0- -0- -0- $-0- $-0-
Vice President and 1998 $156,333 $ 57,750 $-0- -0- -0- $-0- $-0-
Chief Financial and 1997 $147,455 $ 43,000 $-0- 200,000shs 116,667shs $-0- $-0-
Accounting Officer
- -------------
(1) In connection with their acceptance of the terms of new employment
agreements, the Company's Board of Directors on May 13, 1997 authorized the
issuance to Dr. Grodman, Mr. Dubinett and Mr. Singer of 300,000, 240,000 and
200,000 shares of Common Stock respectively. The shares were forfeitable in
part in various amounts if the employee's employment was terminated "for
cause" or at his option "without good reason" prior to May 1, 2000. See
"Employment Agreements with Executive Officers" herein.
(2) Does not include 604,078 shares of Common Stock issuable upon conversion of
604,078 shares of Series A Preferred Stock owned by Dr. Grodman, his wife
and a corporation controlled by her (collectively the "Grodman Group"). On
May 13, 1997 pursuant to a recapitalization, the previously outstanding
Senior Preferred Stock owned by the Grodman Group convertible into an
aggregate 604,078 shares of Common Stock on or before April 20, 2003 at a
conversion price of $1.50 per share was retired in exchange for a new class
of Series A Preferred Stock convertible into an aggregate 604,078 shares of
Common Stock on or before May 1, 2007 at a conversion price of $.75 per
share.
5
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
On May 13, 1997, Dr. Grodman agreed to the terms of a new employment
agreement pursuant to which he would serve as president and chief executive
officer devoting at least 90% of his working time to the business of the
Company. The agreement provides (i) for a seven-year term commencing November 1,
1997; (ii) a minimum annual Base Compensation consisting of salary and bonus in
the aggregate amount of $395,000 subject to increases based on increases in the
Consumer Price Index as well as increases at the discretion of the board of
directors; (iii) typical health insurance coverage and an initial $2,000,000
face amount of "split dollar" life insurance insuring Dr. Grodman's life and
payable to his estate (excluding benefits required to be paid to the Company
pursuant to the split dollar plan) which amount was increased to $4,000,000
during fiscal year 1999; (iv) the leasing of an automobile for his use; (v)
participation in fringe benefit, bonus, pension, profit sharing, and similar
plans maintained for the Company's employees; (vi) disability benefits; (vii)
certain termination benefits; and (viii) in the event of termination due to a
change in control of the Company, a severance payment equal to 2.99 times Dr.
Grodman's average annual compensation during the preceding five years.
In consideration for Dr. Grodman's acceptance of the terms of the
employment agreement, the Board of Directors authorized the issuance to Dr.
Grodman of (a) 300,000 shares of the Company's Common Stock, partially subject
to forfeiture, (b) five-year incentive stock options ("ISOs") exercisable to
purchase 100,000 shares of Common Stock at $.790625 per share, and (c) ten-year
non-qualified stock options ("NQOs") exercisable to purchase 200,000 shares of
Common Stock at $.71875 per share. The ISOs are only exercisable while Dr.
Grodman is employed by the Company. The NQOs expire if Dr. Grodman's employment
agreement is terminated by the Company "For Cause" or at his option, "Without
Good Reason."
The 300,000 shares of Common Stock issued to Dr. Grodman were forfeitable
in part on the following basis if his employment agreement was terminated by the
Company "For Cause" or at Dr. Grodman's option "Without Good Reason."
IF TERMINATION "FOR CAUSE"
OR "WITHOUT GOOD REASON"
OCCURS DURING THE FOLLOWING NUMBER OF SHARES
PERIODS FORFEITED
---------------------------- -----------------
May 1, 1997 through April 30, 1998 ........... 225,000 shs.
May 1, 1998 through April 30, 1999 ........... 150,000 shs.
May 1, 1999 through April 30, 2000 ........... 75,000 shs.
Dr. Grodman continues to be employed by the Company at the date of this
Proxy Statement so that the forfeiture provisions are no longer applicable.
Also on May 13, 1997, Mr. Dubinett agreed to the terms of a new employment
agreement pursuant to which he would serve as executive vice president and chief
operating officer of the Company. The agreement provides (i) for a five and
one-half year term commencing May 1, 1997; (ii) a minimum annual Base
Compensation commencing November 1, 1997 consisting of salary and bonus in the
aggregate amount of $220,000 subject to increases based on increases in the
Consumer Price Index as well as increases at the discretion of the board of
directors; (iii) typical health insurance coverage and $500,000 face amount of
"split dollar" life insurance insuring Mr. Dubinett's life and payable to his
estate (excluding benefits required to be paid to the Company pursuant to the
split dollar plan) which amount was increased to $1,000,000 during fiscal year
1999; (iv) the leasing of an automobile for his use; (v) participation in fringe
benefit, bonus, pension, profit sharing, and similar plans maintained for the
Company's employees; (vi) disability benefits; (vii) certain termination
benefits; and (viii) in the event of termination due to a change in control of
the Company, a severance payment equal to 2.99 times Mr. Dubinett's average
annual compensation during the preceding five years.
In consideration for Mr. Dubinett's acceptance of the terms of the
employment agreement, the Board of Directors authorized the issuance to Mr.
Dubinett of (a) 240,000 shares of the Company's Common Stock, partially subject
to forfeiture and (b) ten-year ISOs exercisable to purchase 60,000 shares of
Common Stock at $.71875 per share. The ISOs are only exercisable while Mr.
Dubinett is employed by the Company.
6
The 240,000 shares of Common Stock issued to Mr. Dubinett were forfeitable
in part on the following basis if his employment agreement was terminated by the
Company "For Cause" or at Mr. Dubinett's option "Without Good Reason."
IF TERMINATION "FOR CAUSE"
OR "WITHOUT GOOD REASON"
OCCURS DURING THE FOLLOWING NUMBER OF SHARES
PERIODS FORFEITED
---------------------------- ----------------
May 1, 1997 through April 30, 1998 ............. 180,000 shs.
May 1, 1998 through April 30, 1999 ............. 120,000 shs.
May 1, 1999 through April 30, 2000 ............. 60,000 shs.
Mr. Dubinett continues to be employed by the Company at the date of this
Proxy Statement so that the forfeiture provisions are no longer applicable.
Also on May 13, 1997, Mr. Singer agreed to the terms of a new employment
agreement pursuant to which he would serve as vice president and chief financial
officer of the Company. The agreement provides (i) for a five and one-half year
term commencing May 1, 1997; (ii) a minimum annual Base Compensation commencing
November 1, 1997 consisting of salary and bonus in the aggregate amount of
$220,000 subject to increases based on increases in the Consumer Price Index as
well as increases at the discretion of the board of directors; (iii) typical
health insurance coverage and $400,000 face amount of "split dollar" life
insurance insuring Mr. Singer's life and payable to his estate (excluding
benefits required to be paid to the Company pursuant to the split dollar plan)
which amount was increased to $800,000 during fiscal year 1999; (iv) the leasing
of an automobile for his use; (v) participation in fringe benefit, bonus,
pension, profit sharing, and similar plans maintained for the Company's
employees; (vi) disability benefits; (vii) certain termination benefits; and
(viii) in the event of termination due to a change in control of the Company, a
severance payment equal to 2.99 times Mr. Singer's average annual compensation
during the preceding five years.
In consideration for Mr. Singer's acceptance of the terms of the employment
agreement, the Board of Directors authorized the issuance to Mr. Singer of (a)
200,000 shares of the Company's Common Stock, partially subject to forfeiture
and (b) ten-year ISOs exercisable to purchase 50,000 shares of Common Stock at
$.71875 per share. The ISOs are only exercisable while Mr. Singer is employed by
the Company.
The 200,000 shares of Common Stock issued to Mr. Singer were forfeitable in
part on the following basis if his employment agreement was terminated by the
Company "For Cause" or at Mr. Singer's option "Without Good Reason."
IF TERMINATION "FOR CAUSE"
OR "WITHOUT GOOD REASON"
OCCURS DURING THE FOLLOWING NUMBER OF SHARES
PERIODS FORFEITED
-------------------------------- -----------------
May 1, 1997 through April 30, 1998 ............. 150,000 shs.
May 1, 1998 through April 30, 1999 ............. 100,000 shs.
May 1, 1999 through April 30, 2000 ............. 50,000 shs.
Mr. Singer continues to be employed by the Company at the date of this
Proxy Statement so that the forfeiture provisions are no longer applicable.
7
STOCK OPTIONS
In July 1989, the Company's Board of Directors adopted the 1989 Employees
Stock Option Plan (the "1989 Plan") which was approved by shareholders in
November 1989. The 1989 Plan, which expired during fiscal 1999, provided for the
grant of options to purchase up to 666,667 shares of Common Stock. Under the
terms of the 1989 Plan, options granted thereunder could be designated as
options which qualify for incentive stock option treatment ("ISOs") under
Section 422 of the Code, or options which do not so qualify ("NQOs").
The 1989 Plan was administered by the Board of Directors. The Board had
the discretion to determine the eligible employees to whom, and the times and
the price at which, options would be granted; whether such options would be ISOs
or Non-ISOs; the periods during which options would be exercisable; and the
number of shares subject to each option. The Board had full authority to
interpret the 1989 Plan and to establish and amend rules and regulations
relating thereto.
Under the 1989 Plan, the exercise price of an option designated as an ISO
could not be less than the fair market value of the Common Stock on the date the
option was granted. However, in the event an option designated as an ISO was
granted to a 10% shareholder (as defined in the 1989 Plan) such exercise price
was required to be at least 110% of such fair market value. Exercise prices of
Non-ISO options could be less than such fair market value. The aggregate fair
market value of shares of Common Stock with respect to which options designated
as ISOs were exercisable for the first time by a grantee under the 1989 Plan
during any calendar year could not exceed $100,000.
As described above, on May 13, 1997, the Board of Directors granted
five-year ISOs under the Plan to Dr. Grodman, exercisable to purchase 100,000
shares of the Company's Common Stock at an exercise price of $.790625 per share
(equal to 110% of the last sale price for the Common Stock on NASDAQ on May 12,
1997). The board also granted ten-year ISOs under the Plan to Mr. Dubinett and
Mr. Singer exercisable to purchase 60,000 shares and 50,000 shares of Common
Stock respectively at an exercise price of $.71875 per share (equal to the last
sale price for the Common Stock on NASDAQ on May 12, 1997). In addition, the
Board granted ten-year NQOs to Dr. Grodman, exercisable to purchase 200,000
shares of Common Stock at an exercise price of $.71875 per share.
At the same May 13, 1997 directors' meeting, in order to improve employee
morale, the Board canceled all other outstanding ISOs exercisable to purchase an
aggregate 448,710 shares of Common Stock at exercise prices ranging from $1.3434
to $3.00 per share, and granted new ten-year ISOs under the Plan to 23 employees
exercisable to purchase an aggregate 448,710 shares of Common Stock at an
exercise price of $.71875 per share. Included in this grant were ISOs issued to
Mr. Dubinett and Mr. Singer exercisable to purchase 153,334 shares and 116,667
shares respectively. (These ISOs replaced ISOs previously granted to said two
individuals to purchase 153,334 shares and 116,667 shares respectively at
exercise prices ranging from $1.3125 to $1.50 per share.)
Also on May 13, 1997, the Board of Directors granted five-year NQOs to 31
employees, exercisable to purchase an aggregate 136,100 shares of Common Stock
at $.71875 per share but only while the optionee was employed by the Company.
On May 13, 1997, the Board also issued five-year warrants to each of its
three outside directors, exercisable to purchase 10,000 shares (30,000 in the
aggregate) of Common Stock at an exercise price of $.71875 per share, but only
while serving as a director. At the same time, the Board reduced the exercise
price on warrants held by one outside director, John Roglieri, exercisable to
purchase 23,334 shares ranging from $3.00 per share to $3.75 per share to
$.71875 per share and issued five-year warrants to another outside director,
Gary Lederman, exercisable to purchase 5,200 shares at $.71875 per share.
On June 30, 1999, the Board ratified the grant of five-year NQOs to three
employees, exercisable to purchase an aggregate 150,000 shares of Common Stock
at prices ranging from $.594 to $.719 per share but only while the optionee was
employed by the Company. The option exercise prices were based on the market
prices for the Common Stock on the respective dates when employment commenced
for each of the three employees.
8
No stock options were granted during fiscal 1999 to any executive officer.
On August 25, 2000, the Board ratified the grant of NQOs exercisable to
purchase an aggregate 170,000 shares of Common Stock at prices ranging from
$1.19 to $1.656 per share. The NQOs are exercisable over terms ranging from two
years to five years and were granted in accordance with an employment agreement
executed in November 1998 and four financial consulting and consulting service
agreements executed between February and August 2000. The option exercise prices
were equal to the market prices for the Common Stock on the respective trading
days immediately preceding the effective date of each such agreement.
The following table sets forth certain information concerning unexercised
options for each of the executive officers named in the "Summary Compensation
Table." No options were exercised by any of such individuals in fiscal 1999.
1999 FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED OPTIONS
AT 1999 FISCAL YEAR-END
VALUE OF
UNEXERCISED
IN-THE-MONEY
NAME EXERCISABLE UNEXERCISABLE OPTIONS AT 10/31/99
- ----- ----------- ------------- -------------------
Marc D. Grodman 200,000 -0- $ 50,000
100,000 -0- $ 17,813
Howard Dubinet 213,334 -0- $ 53,333
Sam Singer 166,667 -0- $ 41,667
See Proposal Two herein as to the proposed ratification of the adoption of
the Company's 2000 Employee Incentive Stock Option Plan for information
concerning the grant of options thereunder subject to stockholder ratification
of such adoption.
DIRECTORS' COMPENSATION
Each director who is not an employee of the Company is paid a $1,000 per
quarter director's fee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1989, the Company discontinued the operation of its Med-Mobile
Division. At such time, Dr. Grodman, as the Associated Physician, was indebted
to the Company in the amount of $235,354 in connection with the operation of
this division. Pursuant to an October 1, 1989 Settlement Agreement, Dr. Grodman
issued a $235,354 promissory note to the Company bearing interest at 10% per
annum and payable at the rate of $50,000 per annum in payment of this
indebtedness. On April 30, 1992, the Board of Directors amended this agreement
in consideration for Dr. Grodman's personal guarantee of the Company's
$2,500,000 financing arrangement with Towers Financial Corporation, suspending
all rental and interest charges for periods subsequent to November 1, 1991. As
of October 31, 1999, $138,518 in outstanding principal, interest and van rentals
was due from Dr. Grodman.
On April 20, 1993, in order to facilitate the Company's 1993 proposed
public offering, Dr. Grodman canceled his pro rata option contained in his
employment agreement and all other outstanding options and warrants to purchase
shares of Common Stock held by Dr. Grodman, his wife and an affiliated entity
(the "Grodman Group") exercisable to purchase an aggregate 604,078 shares of
Common Stock at prices ranging from $1.4438 to $1.50 or an average price of
$1.47 per share, in consideration for the issuance to the Grodman Group of
604,078 shares of a new class of senior preferred stock, $.10 par value per
share ("Senior Preferred Stock"). Each share of Senior Preferred Stock had the
same voting rights (one vote per share), dividend rights and liquidation rights
as each share of Common Stock and for a period of 10 years after issuance, was
convertible into one share of Common Stock
9
upon payment of a conversion price of $1.50 per share. The 604,078 shares of
Senior Preferred Stock were issued to the Grodman Group on August 23, 1993.
On May 13, 1997 pursuant to a recapitalization, the Senior Preferred was
retired in exchange for a new class of Senior Preferred Stock (the "Series A
Preferred Stock") issued to the Grodman Group. The new Series A Preferred Stock
is convertible into an aggregate 604,078 shares of Common Stock on or before May
1, 2007 at a conversion price of $.75 per share and has the same voting rights
(one vote per share), dividend rights and liquidation rights as each share of
Common Stock.
COMPENSATION COMMITTEE (BOARD OF DIRECTORS) INTERLOCKS
The Company does not have a compensation committee. Compensation decisions
regarding the executive officers of the Company are made by the members of the
Board of Directors acting as a whole including the three executive officers, Dr.
Grodman, Mr. Dubinett and Mr. Singer. No member of the Board votes with respect
to his own compensation.
BOARD OF DIRECTORS' REPORT ON COMPENSATION
The Board of Directors, including the Company's three executive officers,
are responsible for reviewing the compensation paid to the Company's executive
officers, provided that none of the Company's executive officers votes with
respect to his own compensation package.
In determining the compensation packages granted to the Company's three
executive officers in fiscal 1997 and the bonuses awarded them with respect to
fiscal 1999, the Board of Directors took into account the backgrounds,
employment histories, achievements and prior compensation of Dr. Grodman, Mr.
Dubinett and Mr. Singer, the benefits to be obtained by the Company from their
employment in light of the current state of the medical testing laboratory
industry, the Company's current status and its anticipated future development.
The Board took into account information relating to compensation of principal
officers of public and non-public corporations, both in the health field and in
general. As a result, the Board determined that the base compensation provided
by the employment packages for the three employees was generally in line with
packages for comparable positions with comparable companies and that the upside
potential in the packages was principally provided by the Restricted Stock
issued, subject to forfeiture, and the Stock Options granted to each individual
with benefits thereunder accruing to the individual only to the extent he
remains employed by the Company with respect to the Restricted Stock and only to
the extent the market price for the Common Stock increases over the exercise
price of the options, with respect to the options. The Board also determined
that the bonuses paid with respect to fiscal 1999 were reasonable in
relationship to the services performed, the responsibilities assumed and the
results obtained.
Board of Directors
Marc D. Grodman
Howard Dubinett
Sam Singer
Frank DeVito
John Roglieri
Gary Lederman
10
RATIFICATION OF ADOPTION OF THE 2000 EMPLOYEE INCENTIVE
STOCK OPTION PLAN
(PROPOSAL TWO)
On August 25, 2000, the Board of Directors adopted the 2000 Employee
Incentive Stock Option Plan (the "Plan") reserving an aggregate 800,000 shares
of Common Stock for issuance upon exercise of incentive stock options ("ISOs")
which may be granted under the Plan. On the same date, the Board granted ISOs
pursuant to the Plan to five key employees exercisable to purchase an aggregate
235,000 shares of the Common Stock reserved for issuance under the Plan at an
exercise price of $1.4375 per share (the mean between the closing bid and ask
prices for the Common Stock in the over-the-counter market on August 24, 2000).
The ISOs are subject to stockholder ratification of the adoption of the Plan
which ratification is being sought at this December 15, 2000 Annual Meeting of
Stockholders.
DESCRIPTION OF THE PLAN
The Plan authorizes the grant of options which qualify for ISO treatment
under Section 422 of the Internal Revenue Code, as amended (the "Code") to
purchase up to a maximum aggregate 800,000 shares of the Company's Common Stock.
Options may only be granted under the Plan to employees of the Company and its
subsidiaries (including officers and directors who are also employees).
The Plan is administered by the Board of Directors or by a Stock Option
Committee designated by the Board of Directors. The Board or the Stock Option
Committee, as the case may be, has the discretion to determine the eligible
employees to whom, and the price (not less than the fair market value on the
date of grant) at which options will be granted; the periods during which each
option is exercisable; and the number of shares subject to each option. The
Board or the Stock Option Committee has the authority to interpret the Plan and
to establish and amend rules and regulations relating thereto.
The Plan provides that the exercise price of an option granted thereunder
shall not be less than the fair market value of the Common Stock on the date the
option is granted. However, in the event an option is granted under the Plan to
a holder of 10% or more of the Company's outstanding Common Stock, the exercise
price must be at least 110% of such fair market value. Under the Plan, options
must be granted before the August 24, 2010 Termination Date. No option may have
a term longer than ten years (limited to five years in the case of an option
granted to a 10% or greater stockholder of the Company). The aggregate fair
market value of the Company's Common Stock with respect to which options are
exercisable for the first time by a grantee under the Plan during any calendar
year cannot exceed $100,000. Options granted under the Plan are non-transferable
and must be exercised by an optionee, if at all, while employed by the Company
or a subsidiary or within three months after termination of such optionee's
employment due to retirement, or within one year of such termination if due to
disability or death. The Board or the Stock Option Committee, as the case may
be, may, in its sole discretion, cause the Company to lend money to or guaranty
any obligation of an employee for the purpose of enabling such employee to
exercise an option granted under the Plan provided that such loan or obligation
cannot exceed fifty percent (50%) of the exercise price of such option.
OPTIONS GRANTED UNDER THE PLAN
To date, the sole options granted under the Plan were the ISOs granted on
August 25, 2000 to five key employees exercisable to purchase an aggregate
235,000 shares of Common Stock at an exercise of $1.4375 per share. All of these
ISOs are subject to stockholder ratification of the adoption of the Plan. Four
of these employees were granted a portion of these ISOs exercisable over a ten
year period to purchase an aggregate 35,000 shares of Common Stock. The fifth
employee was granted the remaining ISOs exercisable to purchase an aggregate
200,000 shares of Common Stock but vesting at the rate of 50,000 shares annually
after January 31 of each year, commencing January 31, 2002, provided in each
case that the Company realizes certain stipulated net revenues from laboratory
operations in the immediately preceding fiscal year.
11
TAX INFORMATION
Assuming stockholder approval of the Plan and qualification of the option
as an ISO, the optionee will not recognize any taxable income at the time of
grant nor at the time of exercise of the option. Upon an optionee's resale of
shares purchased upon exercise of an option, any difference between the sale
price and the exercise price not subject to a disqualifying disposition, will be
treated as capital gain or loss and will generally qualify for long-term capital
gain or loss treatment if the shares have been held for more than one year.
The Company will generally not be entitled to a tax deduction with respect
to an ISO granted under the Plan.
The foregoing does not purport to be a complete summary of the federal
income tax considerations that may be relevant to holders of options or upon the
Company. It also does not reflect provisions of the income tax laws of any
municipality, state or foreign country in which an optionee may reside, nor does
it reflect the tax consequences of an optionee's death.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
OF THE ADOPTION OF THE 2000 EMPLOYEE INCENTIVE STOCK OPTION PLAN.
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the yearly cumulative total
shareholder return on the Company's Common Stock for the five fiscal years ended
October 31, 1999 based on the market price of the Common Stock, with the
cumulative total return of companies in the S&P 500 Composite and with a peer
group of twelve publicly owned medical laboratories.
COMPARISON OF FIVE YEAR TOTAL RETURN
FOR BIO-REFERENCE LABORATORIES, INC.,
S&P 500 COMPOSITE AND
MEDICAL LABORATORY PEER GROUP
[Table below represents line chart in printed piece]
Years
Ending Dollars
------- ----------------------
Oct. 94 100 100 100
Oct. 95 84.78 126.44 69.5
Oct. 96 26.09 156.9 40.96
Oct. 97 27.72 207.29 34.57
Oct. 98 19.57 252.88 27.49
Oct. 99 16.85 317.79 32.92
12
The Medical Laboratory peer group consists of the following companies:
Ameripath, Inc., Dianon Systems Inc, Impath Inc, LabOne, Inc, Laboratory CP of
Amer Holdgs, MDS Inc., Medtox Scientific Inc, Pharmchem Inc., Quest Diagnostics
Inc, US Diagnostics, Inc., Uniholding Corp. and Urocor Inc.
AUDITORS
The firm of Moore Stephens, P.C., certified public accountants, has been
selected by the Board of Directors to audit the accounts of the Company and its
subsidiaries for the fiscal year ending October 31, 2000. Moore Stephens, P.C.
and its predecessor firm have served as the Company's auditors since 1988.
Representatives of such firm are not expected to be present at the December 15,
2000 Annual Meeting of Stockholders.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Under current rules of the Securities and Exchange Commission,
stockholders wishing to submit proposals for inclusion in the Proxy Statement of
the Board of Directors for the 2000 Annual Meeting of Stockholders (expected to
be held during the first half of calendar 2001), must submit such proposals so
as to be received by the Company at 481 Edward H. Ross Drive, Elmwood Park, New
Jersey 07407 on or before February 28, 2001.
OTHER MATTERS
Management does not know of any other matters which are likely to be
brought before the Meeting. However, in the event that any other matters
properly come before the Meeting, the persons named in the enclosed proxy will
vote said proxy in accordance with their judgment in said matters.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or part of
such materials can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C., 20549 at prescribed rates. Such material may also be accessed
electronically by means of the Commission's Web Site (http;//wwwsec.gov).
By Order of the Board of Directors
Marc D. Grodman
PRESIDENT
Elmwood Park, New Jersey
November 20, 2000
13
BIO-REFERENCE LABORATORIES, INC.
REVOCABLE PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 15, 2000
The undersigned, a stockholder of BIO-REFERENCE LABORATORIES, INC.(the
"Company") hereby appoints Marc D. Grodman and Howard Dubinett or either of
them, as proxy or proxies of the undersigned, with full power of substitution,
to vote, in the name, place and stead of the undersigned, with all of the powers
which the undersigned would possess if personally present, on behalf of the
undersigned, all the shares which the undersigned is entitled to vote at the
Annual Meeting of the Stockholders of BIO-REFERENCE LABORATORIES, INC. to be
held at 9:00 A.M. (local time) on Friday, December 15, 2000, at The Sheraton
Crossroads Hotel, Crossroads Corporate Center, Route 17 North, Mahwah, New
Jersey 07495-0001 and at any and all adjournments thereof. The undersigned
directs that this Proxy be voted as follows:
1) To elect two Class III directors, each to serve for a term of three
years and until his successor is elected and qualified (Proposal One).
[ ] FOR all nominees listed below (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: JOHN ROGLIERI, GARY LEDERMAN
(Instructions: To withhold authority for an individual nominee,
write that nominee's name on the line provided.)
- --------------------------------------------------------------------------------
2) To ratify adoption of the 2000 Employee Incentive Stock Option plan
(Proposal Two).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3) In their discretion, on all other matters as shall properly come before
the meeting
AUTHORITY GRANTED [ ] AUTHORITY WITHHELD [ ]
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE FOREGOING.
UNLESS OTHERWISE SPECIFIED AS ABOVE PROVIDED, THIS PROXY WILL BE VOTED "FOR" THE
ELECTION OF DIRECTORS (PROPOSAL ONE) AND "FOR" RATIFICATION OF THE ADOPTION OF
THE 2000 EMPLOYEE INCENTIVE STOCK OPTION PLAN AS SET FORTH IN THE PROXY
STATEMENT. IN ADDITION, DISCRETIONARY AUTHORITY IS CONFERRED AS TO ALL OTHER
MATTERS THAT MAY COME BEFORE THE MEETING UNLESS SUCH AUTHORITY IS SPECIFICALLY
WITHHELD. STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXY
AND VOTE IN PERSON IF THEY SO DESIRE.
Dated:__________________________, 2000
--------------------------------------
--------------------------------------
(Signature of Stockholder)
Please date and sign exactly as name
appears on this Proxy. If shares are
registered in more than one name, the
signatures of all such persons are
required. A corporation should sign in
its full corporate name by a duly
authorized officer, stating his title.
Trustees, guardians, executors and
administrators should sign in their
official capacity, giving their full
title as such. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN
YOUR PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF RETURNED IN THE ENCLOSED
ENVELOPE AND MAILED IN THE UNITED
STATES. RECEIPT OF THE NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS, THE
ACCOMPANYING PROXY STATEMENT OF THE
BOARD OF DIRECTORS, THE COMPANY'S
ANNUAL REPORT FOR THE YEAR ENDED
OCTOBER 31, 1999 AND THE COMPANY'S
QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED JULY 31, 2000, IS
ACKNOWLEDGED.
PLEASE SIGN AND RETURN THIS PROXY PROMPTLY
No postage is Required if Returned in the Enclosed Envelope and
Mailed in the United States