SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
Bio-Reference Laboratories, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] 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.:
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4) Date Filed:
________________________________________________________________________________
BIO-REFERENCE LABORATORIES, INC.
481 EDWARD H. ROSS DRIVE
ELMWOOD PARK, NEW JERSEY 07407
201-791-2600
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 21, 2005
---------------
The annual meeting of the 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 Thursday,
July 21, 2005 at 9:00 A.M. local time, for the purpose of considering and acting
on the following matters:
1. Election of 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. 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, June 15, 2005 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: June 17, 2005
PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
POSTAGE-PAID 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
TO BE HELD ON JULY 21, 2005
---------------
This Proxy Statement of Bio-Reference Laboratories, Inc., a New Jersey
corporation (the "Company") is first being mailed to Stockholders on or about
June 17, 2005 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 Thursday, July 21, 2005 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 for the meeting and a copy of the
Company's 2004 Annual Report 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 addressed to the Company's
Chief Information Officer and 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 Proposal One. The Board has
fixed the close of business on Wednesday, June 15, 2005 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 therefore) 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.
At the record date, the Company had 12,722,767 shares of its Common Stock,
$.01 par value (the "Common Stock") issued and 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 is necessary to constitute a
quorum at the meeting. Broker nonvotes (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares on a particular
matter as to which the broker or nominee does not have discretionary authority)
will be counted for purposes of determining a quorum for the transaction of
business at the Annual Meeting but will not be considered as votes for purposes
of determining the outcome of a vote. Election of directors (Proposal One)
requires the affirmative vote of a majority of the votes cast on the Proposal by
the holders of Common Stock present in person or by proxy at the meeting.
The following table sets forth information as of June 15, 2005 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 of outstanding options and warrants owned by such holder at said
date which are exercisable within 60 days of such date.
NAME AND ADDRESS OF
BENEFICIAL OWNER
- ------------------- SHARES OF
DIRECTORS AND COMMON STOCK PERCENTAGE
EXECUTIVE OFFICERS* BENEFICIALLY OWNED (1) OWNERSHIP
- ------------------- ---------------------- ----------
Marc D. Grodman(2) ................... 1,657,846 13%
Howard Dubinett(3) ................... 481,001 4%
Sam Singer(4) ........................ 299,567 2%
Joseph Benincasa ..................... -0- --
Harry Elias .......................... 1,000 --
Gary Lederman(5) ..................... 27,200 --
John Roglieri(6) ..................... 52,000 --
Executive Officers ................... 2,518,614 20%
and Directors as a group
(seven persons)(2)(3)(4)(5)(6)
OTHER GREATER THAN 5%
BENEFICIAL OWNER
- ---------------------
Babson Capital Management LLC(7) ..... 1,513,894 12%
One Memorial Drive
Cambridge, MA 02142-1300
- ----------
* The address of each 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 1,429,779 shares owned directly and 4,000 shares issuable upon
exercise of options. Also includes 176,067 shares owned directly by Dr.
Grodman's wife, Pam Grodman, and 48,000 shares owned by their minor
children. Dr. Grodman disclaims beneficial ownership of these 224,067
shares.
(3) Includes 477,001 shares owned directly and 4,000 shares issuable upon
exercise of options. In lieu of an outright sale, on March 30, 2004, Mr.
Dubinett entered into a pre-paid variable forward sales contract ("Forward
Contract") with Bear Stearns Bank plc ("Bear Stearns"). Pursuant to the
Forward Contract, Mr. Dubinett pledged 100,000 of his shares of Common
Stock to secure his obligation to deliver a maximum 100,000 shares of
Common Stock to Bear Stearns on March 30, 2006 (the "Settlement Date"). Mr.
Dubinett received a prepayment from Bear Stearns for his pledge of the
100,000 shares. On the Settlement Date, Mr. Dubinett will be obligated to
deliver a variable number of shares to Bear Stearns based on the price of
the Common Stock on the Settlement Date, up to a maximum 100,000 shares.
Until the Settlement Date, Mr. Dubinett is deemed the beneficial owner of
the pledged shares.
(4) Includes 290,667 shares owned directly, 4,000 shares issuable upon exercise
of options and 4,900 shares owned by children who share Mr. Singer's
household. Mr. Singer disclaims beneficial ownership of these 4,900 shares.
(5) Includes 15,200 shares owned directly and 12,000 shares issuable upon
exercise of options.
(6) Includes 40,000 shares owned directly and 12,000 shares issuable upon
exercise of options.
(7) Babson Capital LLC ("Babson") in its capacity as an investment advisor may
be deemed the beneficial owner of these 1,513,894 shares which are owned by
investment advisory clients. In its Schedule 13G Amendment No. 1 dated May
10, 2005 filed with the Securities and Exchange Commission, Babson stated
that to the best of its knowledge, these 1,513,894 shares were acquired in
the ordinary course of business; were not acquired for the purpose of and
do not have the effect of changing or influencing the control of the
Company; and were not acquired in connection with or as a participant in
any transaction having such purpose or effect.
2
The Company's executive officers and directors and members of their
immediate families owning and having the right to vote an aggregate 2,482,614
shares (20%) of the Company's outstanding Common Stock have stated their
intention to vote their shares FOR the nominees proposed for election as
directors (Proposal One).
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 seven. 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. Elias) and
three Class III directors (Mr. Benincasa, Mr. Lederman and Dr. Roglieri), whose
terms expire upon the election and qualification of their successors at
successive Annual Meetings to be held in 2005 (the Class II directors), 2006
(the Class III directors) and 2007 (the Class I directors). At each Annual
Meeting of Stockholders, the directors comprising one of the classes are elected
for a full term of three years.
Mr. Singer and Mr. Elias (current Class II 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
Mr. Singer and Mr. Elias who are the nominees of the Board of Directors for
election and authority to vote for their election as Class II 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 the Board of Directors may recommend.
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. ........... 53 Chairman of the Board, President,
Chief Executive Officer and
Director
Howard Dubinett ................. 53 Executive Vice President, Chief
Operating Officer and Director
Sam Singer ...................... 61 Vice President, Chief Financial
Officer, Chief Accounting Officer
and Director
Joseph Benincasa (a)(c) ......... 55 Director
Harry Elias (a)(c) .............. 75 Director
Gary Lederman, Esq. (b)(c) ...... 71 Director
John Roglieri, M.D. (a)(d) ...... 65 Director
- ----------
(a) Member of the Audit Committee
(b) Chairman of the Audit Committee
(c) Member of the Compensation Committee
(d) Chairman of the Compensation Committee
BACKGROUND
The following is a brief account of the business experience of each
director including each nominee for director of the Company.
3
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's 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, 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 University and an M.B.A. from Rutgers University. Mr. Singer devotes all
of his working time to the business of the Company.
Joseph Benincasa became a Director of the Company in June 2005. Mr.
Benincasa currently serves as the Executive Director of The Actors' Fund of
America, a position he has held since 1989. The Actors' Fund, with more than $70
million in assets, is the leading national, non-profit human services
organization providing comprehensive social and health care services,
employment, training and housing support to the entertainment profession. It is
headquartered in New York City with regional offices in Chicago and Los Angeles.
Mr. Benincasa sits on the Board of Directors of The Greater New York Blood
Program where he previously served as Director of Public Education and Public
Relations. He is also a director of St. Peter's University Medical Center and
also sits on the boards of directors of Broadway Cares/Equity Fights AIDS;
National Theatre Workshop of the Handicapped; Career Transition for Dancers;
Times Square Alliance; New York Society of Association Executives and the
Somerset Patriots, a minor league baseball team. Mr. Benincasa holds a B.A. from
St. Joseph's University and an M. Ed. from Rutgers University. He also attended
the Fordham University Graduate School of Business.
Harry Elias became a Director of the Company in March 2004. Mr. Elias
commenced his employment in sales and marketing with JVC Company of America
("JVC") in 1967, subsequently being appointed as JVC's Senior Vice President of
Sales and Marketing in 1983 and as Executive Vice President of Sales and
Marketing in 1990. In 1995, Mr. Elias was named as JVC's Chief Operating
Officer, a position he occupied until April 2003 when he resigned his positions
upon his appointment as JVC's "Honorable Chairman." JVC, a distributor of audio
and video products headquartered in Wayne, New Jersey is the wholly owned United
States subsidiary of Victor Company of Japan, a manufacturer of audio and video
products headquartered in Japan. In January 2005, after retiring from JVC, Mr.
Elias was appointed Chairman of the Board of and commenced to serve as a
consultant to AKAI USA, the sole distributor in the United States of electronic
products produced by AKAI, a Chinese manufacturer.
Gary Lederman, Esq. became a Director of the Company in May 1997. He
received his B.A. degree from Brooklyn College in 1954 and his J.D. degree 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.
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
4
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
was chief medical officer of Physician WebLink, a national physician practice
management company, from 1999 to 2000. Since 2001, he has been Medical Director
for New York Life Insurance Company in Manhattan. He is a member of advisory
boards to several pharmaceutical companies, a member of the Editorial Advisory
Board of the journals Managed Care and Seminars in Medical Practice, and is a
subject of biographical record in Who's Who in America.
There are no family relationships between or among any directors or
executive officers of Bio-Reference Laboratories. The Company's Certificate of
Incorporation provides for a staggered Board of Directors pursuant to which the
Board is divided into three classes of directors and the members of only one
class are elected each year to serve a three-year term.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE TWO CLASS II DIRECTOR NOMINEES
NAMED ABOVE.
THE BOARD AND ITS COMMITTEES
BOARD MEETINGS
The Board of Directors held six meetings during fiscal 2004. All of the
Company's current Directors attended at least 75 percent of the fiscal 2004
meetings of the Board of Directors and of the committee meetings which they were
eligible to attend. The Board of Directors has determined that the four
non-employee Directors each meet the definition of "independent" as required by
the applicable listing standards of the Nasdaq Stock Market, Inc. ("Nasdaq Stock
Market").
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established three standing committees: an Audit
Committee, a Compensation Committee and a Nominating Committee.
AUDIT COMMITTEE
The Audit Committee is comprised of the four non-employee members of the
Board of Directors, Gary Lederman (Chairman), Joseph Benincasa, Harry Elias and
John Roglieri. The Board of Directors deems each such individual as
"independent" as defined by the rules of the Nasdaq Stock Market. The Audit
Committee met four times during fiscal year 2004. 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 Board
of Directors has determined that Gary Lederman is qualified to serve as the
Company's "audit committee financial expert" as defined in Item 401 (h) of
Regulation S-K promulgated by the Securities and Exchange Commission ("SEC").
The Compensation Committee is comprised of the four non-employee members of
the Board of Directors, John Roglieri (Chairman), Joseph Benincasa, Harry Elias
and Gary Lederman. The Compensation Committee met twice during fiscal year 2004.
The Compensation Committee reviews salaries, cash bonuses and compensation plans
for the Company's executive officers and eligible employees and makes
recommendations concerning same to the Board of Directors.
5
The Company does not have an Executive Committee. Officers are elected by
and hold office at the discretion of the Board of Directors.
The Nominating Committee is comprised of the four non-employee members of
the Board of Directors, Joseph Benincasa, Harry Elias, Gary Lederman and John
Roglieri all of whom may be deemed "independent" as defined under the rules of
the Nasdaq Stock Market. Pursuant to its charter, the Nominating Committee's
role is to establish criteria for the selection of directors; to identify
individuals qualified to be directors; to evaluate director candidates proposed
by stockholders; to recommend individuals to fill vacancies on the Board and to
recommend nominees for director at each annual stockholder meeting. The
Nominating Committee was established on August 9, 2004 and its charter is
available on the Company's website at WWW.BIOREFERENCE.COM.
The Nominating Committee identifies potential director candidates by
referral from management, members of the Board of Directors and their various
business contacts. The Nominating Committee will also consider nominees for
director proposed by a stockholder as provided as follows. Information with
respect to the proposed nominee must be provided by the stockholder addressed to
the Company's secretary at the Company's principal offices in Elmwood Park, New
Jersey not less than 60 days nor more than 90 days prior to the anniversary date
of the prior year's annual meeting. The information should include the name of
the nominee and such information with respect to the nominee as would be
required under the rules and regulations of the SEC to be included in the
Company's Proxy Statement if the proposed nominee were to be included therein.
In addition, the stockholder's notice should also include the number of shares
of Common Stock the stockholder owns, a description of all arrangements and
understandings between the stockholder and the proposed nominee, a
representation that the stockholder intends to appear in person or by proxy at
the meeting to nominate the person named in its notice, a representation as to
whether the stockholder intends to deliver a proxy statement to or solicit
proxies from stockholders of the Company and information with respect to the
stockholder as would be required under the rules and regulations of the SEC to
be included in the Company's Proxy Statement.
The Nominating Committee will evaluate candidates based upon factors such
as independence, knowledge, judgment, integrity, character, leadership skills,
education, experience, financial literacy, standing in the community and ability
to complement the Board's existing strengths. There are no differences in the
manner in which the Committee will evaluate nominees for director based on
whether or not the nominee is recommended by a stockholder.
CODE OF ETHICS
The Company has adopted a Code of Ethics that applies to its executive
officers and to key financial and accounting personnel. The Company will, upon a
stockholder's written request to Investor Relations, c/o the Company, furnish a
paper copy of the Code of Ethics.
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
Based solely on 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 2004, its officers, directors and
beneficial owners of more than 10% of its equity securities timely complied with
all applicable Section 16(a) filing requirements, except with respect to the
open market purchase of 1,000 shares on July 13, 2004 by Harry Elias.
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, 2004 to its Chief
Executive Officer and its other executive officers who were serving as executive
officers of the Company on October 31, 2004. 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.
6
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ -------------------------------------------
OTHER
YEAR ANNUAL RESTRICTED ALL OTHER
NAME AND ENDED COMPEN- STOCK OPTIONS LTIP COMPEN-
PRINCIPAL POSITION OCTOBER 31, SALARY BONUS SATION AWARDS (SARs) PAYOUTS SATION (a)
- -------------------- ----------- ------ ----- ------- ---------- ------- ------- -----------
Marc D. Grodman M.D. 2004 $554,625 $125,000 $-0- $-0- -0- $-0- $-0-
President and Chief 2003 $499,750 $154,750 $-0- $-0- -0- $-0- $-0-
Executive Officer 2002 $470,000 $125,000 $-0- $-0- 4,000 $-0- $-0-
Howard Dubinett 2004 $272,000 $ 60,000 $-0- $-0- -0- $-0- $-0-
Executive Vice 2003 $240,700 $ 21,800 $-0- $-0- -0- $-0- $-0-
President and Chief 2002 $191,700 $ 60,000 $-0- $-0- 4,000 $-0- $-0-
Operating Officer
Sam Singer
Vice President and 2004 $259,004 $ 60,000 $-0- $-0- -0- $-0- $-0-
Chief Financial and 2003 $240,000 $ 9,600 $-0- $-0- -0- $-0- $-0-
Accounting Officer 2002 $180,300 $ 60,000 $-0- $-0- 4,000 $-0- $-0-
- ----------
(a) See "Split-Dollar Life Insurance" herein concerning the Company's payment
of life insurance premiums pursuant to "split-dollar" life insurance
programs for its three executive officers.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Dr. Grodman serves as President and Chief Executive Officer pursuant to a
seven-year employment agreement which expires on October 31, 2011. Dr. Grodman
has the right to elect to cancel the employment agreement effective at the end
of any calendar month commencing October 31, 2008 on not less than 90 days prior
written notice, subject to a six month non-competition restriction. The
employment agreement is automatically renewable for additional two year periods
subject to the right of either party to elect not to renew at least six months
prior thereto. The employment agreement provides Dr. Grodman with minimum annual
base compensation of $750,000 subject to annual percentage increases to the
extent of annual percentage increases in the Consumer Price Index. The
Compensation Committee can but is not required to increase Dr. Grodman's
compensation at the end of any fiscal year based upon his and the Company's
performance. The employment agreement also provides Dr. Grodman with business
use of an automobile leased by the Company and participation in any fringe
benefit and bonus plans available to the Company's employees to the extent
determined by the Compensation Committee. The employment agreement contains
provisions governing in the event of Dr. Grodman's partial or total disability
and provides for termination for cause or in the event of Dr. Grodman's death.
Dr. Grodman has the right to terminate the employment agreement in the event of
a material change in his duties and responsibilities, the relocation of the
Company's principal executive offices from Elmwood Park, New Jersey to a
location more than fifty miles distant or a material breach of the employment
agreement by the Company (including a reduction in Dr. Grodman's benefits under
the agreement). In the event of a Change in Control of the Company, Dr. Grodman
can elect to terminate the agreement. In that event, he will be entitled to be
paid a lump sum Severance Payment equal to 2.99 times the average of his annual
compensation paid by the Company for the five calendar years preceding the
earlier of the calendar year in which the Change of Control occurred or the
calendar year of the Date of Termination. See "Split-Dollar Life Insurance" as
to the Endorsement Split-Dollar Life Insurance Agreement between the Company and
Dr. Grodman.
Mr. Dubinett serves as Executive Vice President and Chief Operating Officer
pursuant to an employment agreement which was extended in fiscal 2004 for two
additional years beyond its October 31, 2004 termination date. Mr. Dubinett's
minimum annual compensation under the extended agreement is equal to his annual
compensation in fiscal 2002 and is subject to increases based on increases in
the Consumer Price Index as well as to increases (including bonuses) at the
discretion of the Compensation Committee. The agreement provides (i) typical
health insurance coverage; (ii) the leasing of an automobile for his use; (iii)
participation in fringe benefit,
7
bonus, pension, profit sharing, and similar plans maintained for the Company's
employees; (iv) disability benefits; (v) certain termination benefits; and (vi)
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. The Company has the option to extend the
extension period of the employment agreement on the same terms and conditions
through October 31, 2007. See "Split Dollar Life Insurance" as to the
Endorsement Split Dollar Life Insurance Agreement between the Company and Mr.
Dubinett.
Mr. Singer serves as Vice President and Chief Financial Officer pursuant to
an employment agreement which was extended in fiscal 2004 for two additional
years beyond its October 31, 2004 termination date. Mr. Singer's minimum annual
compensation under the extended agreement is equal to his annual compensation in
fiscal 2002 and is subject to increases based on increases in the Consumer Price
Index as well as to increases (including bonuses) at the discretion of the
Compensation Committee. The agreement provides (i) typical health insurance
coverage; (ii) the leasing of an automobile for his use; (iii) participation in
fringe benefit, bonus, pension, profit sharing, and similar plans maintained for
the Company's employees; (iv) disability benefits; (v) certain termination
benefits; and (vi) 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. The Company has the option to
extend the employment agreement on the same terms and conditions through October
31, 2007. See "Split-Dollar Life Insurance" as to the Endorsement Split-Dollar
Life Insurance Agreement between the Company and Mr. Singer.
SPLIT-DOLLAR LIFE INSURANCE
Pursuant to the terms of their 1997 employment agreements, the Company had
established split-dollar life insurance programs for each of its three Executive
Officers. As a result of the passage of the Sarbanes Oxley Act of 2002 (signed
into law on July 30, 2002), these three programs were modified. Pursuant to the
modification, each of the three Executive Officers assigned ownership of his
policies to the Company and new policies were issued to replace the prior
policies with annual premiums under the new policies ($70,000 under Dr.
Grodman's policy and $25,000 each under Messrs. Dubinett's and Singer's
policies) being equal to the premiums paid under the replaced policies. The
Company has now executed new "Endorsement Split-Dollar Life Insurance
Agreements" with each of its three Executive Officers. Pursuant to the new
agreements, the Company has agreed to continue to pay the annual premium on the
policy on each officer's life during the period of his full-time employment by
the Company. The Company is the sole owner of the policy and of its net cash
surrender value, and in the event of the officer's death while serving as a
full-time employee of the Company, the Company will be entitled to receive that
amount of the death proceeds equal to its interest in the policy (the aggregate
amount of premiums paid by the Company with respect to the policy less the
amount of any loans, if any, from the Insurer to the Company against the cash
value or policy proceeds, and less the aggregate amount of any premiums paid by
the officer to the Company in reimbursement of premiums paid by the Company) and
the balance of the death proceeds will be paid to the officer's designated
beneficiaries. The premiums paid by the Company on the current policies and the
prior policies aggregated approximately $1,044,000 at October 31, 2004. At that
date, the net cash surrender value of the three current policies aggregated
approximately $1,044,000.
STOCK OPTIONS
EMPLOYEE STOCK OPTION PLANS
THE 1989 PLAN
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 provided for the grant of options to purchase up to
666,667 shares of Bio-Reference 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 Internal
Revenue Code of 1986 ("the Code"), or options which do not so qualify ("NQOs").
8
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
NQOs could be less than such fair market value. The aggregate fair market value
of shares subject to options granted to a participant which are designated as
ISOs which first become exercisable in any calendar year could not exceed
$100,000. All options under the 1989 Plan were required to be granted before the
Plan's July 1999 Termination Date so that no further options can be granted
under the 1989 Plan.
At October 31, 2003, there were outstanding ISOs issued under the 1989 Plan
held by five employees and exercisable to purchase an aggregate 257,668 shares
at an exercise price of $.71875 per share. During fiscal 2004, two employees
exercised ISOs under the 1989 Plan and purchased an aggregate 205,000 shares. As
a result, at October 31, 2004, there were outstanding ISOs under the 1989 Plan
exercisable to purchase an aggregate 52,668 shares at an exercise price of
$.71875 per share.
THE 2000 PLAN
On August 25, 2000, the Board of Directors adopted the 2000 Employee
Incentive Stock Option Plan (the "2000 Plan") reserving an aggregate 800,000
shares of Bio-Reference Common Stock for issuance upon exercise of ISOs which
may be granted under the 2000 Plan. Stockholders ratified the adoption of the
2000 Plan at the December 14, 2000 Annual Meeting of Stockholders. At October
31, 2003, there were outstanding ISOs issued under the 2000 Plan exercisable to
purchase an aggregate 705,000 shares at exercise prices ranging from $1.688 to
$9.66 per share. During fiscal 2004, ISOs were granted under the 2000 Plan to
ten employees exercisable to purchase an aggregate 50,000 shares at exercise
prices ranging from $13.70 to $15.34 per share, and 46 employees exercised ISOs
issued under the 2000 Plan and purchased an aggregate 215,088 shares at exercise
prices ranging from $1.125 to $8.40 per share. As a result, at October 31, 2004,
there were outstanding ISOs under the 2000 Plan exercisable to purchase an
aggregate 539,912 shares at exercise prices ranging from $1.688 to $15.34 per
share.
The 2000 Plan authorizes the grant of options which qualify for ISO
treatment under Section 422 of 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 2000 Plan to employees of the Company and its subsidiaries (including
officers and directors who are also employees).
The 2000 Plan will be 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 2000 Plan
and to establish and amend rules and regulations relating thereto.
The 2000 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 2000 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 2000 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 2000
Plan during any calendar year cannot exceed $100,000. Options granted under the
2000 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 2000 Plan
provided that such loan or obligation cannot exceed fifty percent (50%) of the
exercise price of such option.
9
THE 2003 PLAN
On June 3, 2003, the Board of Directors adopted the 2003 Employee Incentive
Stock Option Plan (the "2003 Plan") reserving an aggregate 800,000 shares of
Bio-Reference Common Stock for issuance upon exercise of ISOs which may be
granted under the 2003 Plan. Stockholders ratified the adoption of the 2003 Plan
at the July 31, 2003 Annual Meeting of Stockholders. At October 31, 2003, no
ISOs had been granted pursuant to the 2003 Plan. During fiscal 2004, ISOs were
granted under the 2003 Plan to 40 employees exercisable to purchase an aggregate
104,000 shares at exercise prices ranging from $12.22 to $21.46 per share and
one employee exercised her ISOs and purchased 2,000 shares. As a result, at
October 31, 2004, there were outstanding ISOs under the 2003 Plan exercisable to
purchase an aggregate 102,000 shares at exercise prices ranging from $12.22 to
$21.46 per share.
The 2003 Plan authorizes the grant of options which qualify for ISO
treatment under Section 422 of the Code to purchase up to a minimum aggregate
800,000 shares of the Company's Common Stock. Options may only be granted under
the 2003 Plan to employees of the Company and its subsidiaries (including those
officers and directors who are also employees).
The 2003 Plan will be 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 prices (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 2003 Plan
and to establish and amend rules and regulations relating thereto.
The 2003 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 2003 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 2003 Plan, options must be granted before the June 2, 2013 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 all of the
Company's Stock Option Plans during any calendar year cannot exceed $100,000.
Options granted under the 2003 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 2003 Plan provided that such loan or obligation cannot exceed
fifty percent (50%) of the exercise price of such option.
NON-QUALIFIED OPTIONS (NQOS) AND WARRANTS
At October 31, 2003, there were outstanding NQOs and Warrants owned by
employees, directors, consultants including members of the Scientific Advisory
Board and a software provider exercisable to purchase an aggregate 533,750
shares of Bio-Reference Common Stock at exercise prices ranging from $1.00 to
$7.94 per share. During fiscal 2004, NQOs exercisable to purchase 15,000 shares
at an exercise price of $13.70 per share were granted to a member of the
Scientific Advisory Board; NQOs exercisable to purchase 12,000 shares were
canceled and NQOs exercisable to purchase 210,750 shares were exercised by 17
individuals. As a result, at October 31, 2004, there were outstanding NQOs and
Warrants owned by employees, directors, consultants including members of the
Scientific Advisory Board and a software provider exercisable to purchase an
aggregate 326,000 shares at exercise prices ranging from $1.19 to $13.70 per
share.
See Note 11 of Notes to the Consolidated Financial Statements contained in
the 2004 Annual Report accompanying this Proxy Statement.
10
OPTION GRANTS IN LAST FISCAL YEAR
No options to purchase shares of Bio-Reference Common Stock were granted to
any of the three Named Executive Officers in fiscal 2004.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
SHARES OF
SHARES OF COMMON STOCK VALUE OF UNEXERCISED
COMMON STOCK UNDERLYING UNEXERCISED IN-THE-MONEY
UPON OPTION EXERCISE OPTIONS AT 2004 OPTIONS AT 2004
NAME IN FISCAL 2004 VALUE REALIZED FISCAL YEAR-END (b) FISCAL YEAR-END (c)
- ------- --------------------- -------------- ------------------ ------------------
Marc D. Grodman ........... -- -- 4,000 $ 29,080
Howard Dubinett ........... 200,000 $2,578,250 (a) 13,334 178,025
-- -- 4,000 29,080
Sam Singer ................ -- -- 4,000 29,080
- ----------
(a) Based upon the difference between the last sale price for the Common Stock
on NASDAQ on March 22, 2004 (the date of exercise) and the exercise price.
(b) All of these options are currently exercisable.
(c) Based upon the difference between the last sales price for the Common Stock
on NASDAQ on Friday, October 29, 2004 and the exercise price.
DIRECTORS' COMPENSATION
Directors who are not Company employees were each paid a $6,250 per quarter
director's fee during the first half of fiscal year 2004 which increased to
$10,000 per quarter for the second half of fiscal 2004.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 20, 1993, in order to facilitate the Company's 1993 public
offering, Dr. Grodman canceled his pro-rata option 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. The pro-rata option permitted the
Grodman Group to purchase a proportionate number of shares of Common Stock or
securities convertible into shares of Common Stock sold or issued by the Company
so as to continue to maintain an approximately 19.6% beneficial ownership in the
Common Stock on a fully diluted basis. In consideration for the cancellation,
the Company issued 604,078 shares of a new class of senior preferred stock, $.10
par value per share ("Senior Preferred Stock") to the Grodman Group. 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 ten years after issuance, was convertible into one share of Common
Stock 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 Stock was
retired in exchange for a new class of Series A Senior Preferred Stock issued to
the Grodman Group. The new Series A Senior Preferred Stock was 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 had the same voting rights (one vote per
share), dividend rights and liquidation rights as each share of Common Stock. On
July 23, 2004, Dr. and Mrs. Grodman paid the $453,059 aggregate conversion price
and converted their 604,078 shares of Series A Senior Preferred Stock into
604,078 shares of Common Stock.
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are John Roglieri
(Chairman), Joseph Benincasa, Harry Elias and Gary Lederman. None of such
individuals has ever been an officer or an employee of the Company.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
Through fiscal 2001, the Board of Directors, including the Company's three
executive officers, were responsible for reviewing the compensation paid to the
Company's executive officers, provided that none of the Company's executive
officers could vote with respect to his own compensation package. In fiscal
2002, the Company established a Compensation Committee consisting of three
non-employee directors, Morton L. Topfer (Chairman), Gary Lederman and John
Roglieri. Mr. Topfer resigned as a director and as a member of the Compensation
Committee in February 2004. In March 2004, Dr. Roglieri became the Chairman of
the Compensation Committee and Mr. Elias was elected as a member of the
Committee. Mr. Benincasa was elected as a member of the Committee in June 2005.
In May 1997, the Company executed an employment agreement with Dr. Grodman
which expired on October 31, 2004. Effective November 1, 2004, the Company
executed a new seven year employment agreement with Dr. Grodman, the terms of
which are described above. See "Information Regarding Executive Compensation -
Employment Agreements with Executive Officers."
In May 1997, the Company also executed employment agreements with Messrs.
Dubinett and Singer (each expiring on October 31, 2002). During fiscal 2002, the
Compensation Committee authorized extensions of both Messrs. Dubinett and
Singer's contracts for two additional years, with the Company having the option
to extend each agreement for two consecutive one-year periods in addition. In
consideration for Messrs. Dubinett and Singer executing the extension
agreements, the Company agreed that the base compensation during each extension
year would not be less than the total cash compensation paid to such individual
in fiscal 2002. The Company's option to extend Mr. Dubinett and Mr. Singer's
employment agreements has been further extended for a third one-year period
through fiscal 2007.
REPORT
In determining the bonuses to be awarded to the Company's three executive
officers with respect to fiscal 2004, the Compensation Committee 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 Compensation Committee determined that the
base salaries and bonuses paid with respect to fiscal 2004, and the terms of the
extension agreements with Messrs. Dubinett and Singer, were reasonable in
relationship to the services performed, the responsibilities assumed and the
results obtained, and were in the best interests of the Company. In connection
with Dr. Grodman's compensation, the Compensation Committee considered the
Company's substantial increase in net revenues and operating income in fiscal
2004 compared with the corresponding period in fiscal 2003. Furthermore, the
compensation paid to Messrs. Grodman, Dubinett and Singer for fiscal 2004
comports with the Compensation Committee's perception of base compensation
levels of principal executives employed by other companies, both public and
private.
During the summer of calendar year 2004 with the knowledge that Dr.
Grodman's seven year employment agreement was due to expire in October 2004, the
Compensation Committee commenced negotiations with Dr. Grodman for the terms of
a new employment agreement. In the course of its negotiations, the Committee
took into account among other factors as a barometer of Dr. Grodman's
performance as the Company's chief executive officer, the substantial increase
since 1997 in the Company's net revenues, operating income and the market price
of the Common Stock. Another factor taken into account by the Committee was the
compensation being paid to the chief executive officers of a peer group of nine
other publicly owned clinical testing laboratories. The terms of Dr. Grodman's
"split-dollar" insurance arrangement with the Company and the fact that the
proposed new
12
employment agreement did not provide Dr. Grodman with additional equity
compensation was also taken into account. After discussion, each of the three
members of the Compensation Committee at the time (Dr. Roglieri, Mr. Elias and
Mr. Lederman) concluded that the terms of the proposed new employment agreement
were fair to and in the best interests of the Company and its stockholders and
that the proposed compensation thereunder was not excessive.
COMPENSATION COMMITTEE
John Roglieri, Chairman
Harry Elias, Member
Gary Lederman, Member
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. It is the responsibility of the Company's
independent auditors to perform an independent audit of and express an opinion
on the Company's financial statements. The Audit Committee's responsibility is
one of review and oversight. In fulfilling its oversight responsibilities:
(1) The Audit Committee of the Board of Directors has reviewed and
discussed with the Company's management the audited financial
statements.
(2) The Audit Committee has discussed with Moore Stephens, P.C. ("Moore
Stephens"), the Company's independent auditors, the matters required
to be discussed by Statement on Auditing Standards No. 61,
"Codification of Statements on Auditing Standards, AU ss. 380," as
modified or supplemented.
(3) The Audit Committee has also received the written disclosures and the
letter from Moore Stephens required by the Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as modified or
supplemented, and has discussed with Moore Stephens, P.C. the
independence of that firm as the Company's auditors.
(4) Based on the Audit Committee's review and discussions referred to
above, the Audit Committee recommended to the Board of Directors that
the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended October 31,
2004, for filing with the Securities and Exchange Commission.
Each of the Audit Committee members is independent, as defined in the Rules
of the Nasdaq Stock Market.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting, auditing, or auditor independence. However, the Board of Directors
has determined that Gary Lederman is qualified to serve as the "audit committee
financial expert" of the Company as defined in Item 401(h) of Regulation S-K
promulgated by the SEC. Members of the Committee rely without independent
verification on the information provided to them and on the representations made
by management and the independent auditors.
AUDIT COMMITTEE
Gary Lederman, Chairman
Harry Elias, Member
John Roglieri, Member
13
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the yearly cumulative total
return on the Company's Common Stock for the five fiscal years ended October 31,
2004 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 eight
publicly owned medical laboratories.
COMPARISON OF FIVE YEAR TOTAL RETURN
FOR BIO-REFERENCE LABORATORIES, INC.,
S&P 500 COMPOSITE AND
MEDICAL LABORATORY PEER GROUP
[The following table represents a chart in the printed piece.]
BIO
REFERENCE S&P 500 PEER
LABS INDEX GROUP
--------- ------- -----
Oct. 99 100 100 100
Oct. 00 206.45 106.09 334.46
Oct. 01 516.13 79.67 357.67
Oct. 02 745.39 67.64 278.37
Oct. 03 1712.52 81.7 328.19
Oct. 04 1452.39 89.4 409.35
The Medical Laboratory peer group consists of the following companies: Enzo
Biochem Inc, Impath Inc, LabOne, Inc, Laboratory CP of Amer Holdgs, MDS Inc.,
Pharmchem, Inc., Quest Diagnostics Inc; and Specialty Laboratories Inc.
AUDITORS
The firm of Moore Stephens, 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, 2005. Moore Stephens 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 July 21, 2005
Annual Meeting of Stockholders.
AUDIT FEES
Moore Stephens billed the Company $125,595 for professional services
rendered in connection with the audit of the Company's annual financial
statements for the fiscal year ended October 31, 2004 and the review of the
financial statements included in its quarterly reports on Form 10-Q for such
fiscal year compared to $124,485 in billings for such services for the fiscal
year ended October 31, 2003. In addition, Moore Stephens billed the
14
Company $7,600 in fiscal 2004 for its audit of the Company's 401(k) Plan for
calendar year 2003 as compared to $9,360 of such fees in fiscal 2003 with
respect to calendar year 2002.
AUDIT-RELATED FEES
Moore Stephens did not render any services related to the performance of
the audit or review of the Company's financial statements for fiscal 2004 or
2003 other than the services reported under "Audit Fees" above.
TAX FEES
Moore Stephens billed the Company approximately $39,000 for tax services
for fiscal 2004 and approximately $29,000 for tax services for fiscal 2003. The
fees were billed for tax return preparation.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee pre-approved each material non-audit engagement for
services performed by the Company's independent auditor in fiscal 2004. Prior to
pre-approving any such non-audit engagement or service, it is the Committee's
practice to first gather information regarding the requested engagement or
service in order to enable the Committee to assess the impact of the engagement
or service on the auditor's independence.
The Audit Committee has considered whether the provision of tax return
preparation and other professional services to the Company by Moore Stephens is
compatible with such firm maintaining its independence and has concluded that
such firm is independent with respect to the Company in its role as the
Company's principal accountant and auditor.
STOCKHOLDER PROPOSALS FOR 2005 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 2005 Annual Meeting of Stockholders (expected to be held in
June or July 2006), 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
May 21, 2006.
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.
According to SEC rules, the information presented in this Proxy Statement
under the captions "Compensation Committee Report on Compensation," "Audit
Committee Report" and "Stock Price Performance" will not be deemed to be
"soliciting material" or deemed filed with the SEC under the Securities Act of
1933 or the Securities Exchange Act of 1934, and nothing contained in any
previous filings made by the Company under such Acts shall be interpreted as
incorporating by reference the information presented under said specified
captions.
By Order of the Board of Directors
Marc D. Grodman
PRESIDENT
Elmwood Park, New Jersey
June 4, 2004
15
ANNUAL MEETING OF STOCKHOLDERS OF
BIO-REFERENCE LABORATORIES, INC.
JULY 21, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
o Please detach along perforated line and mail in the envelope provided. o
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
- --------------------------------------------------------------------------------
1. To elect two Class II directors, each to serve for a term of three years
and until his successor is elected and qualified (Proposal One).
NOMINEES:
|_| FOR ALL NOMINEES / / Sam Singer
/ / Harry Elias
|_| WITHHOLD AUTHORITY
FOR ALL NOMINEES
|_| FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: o
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. In their discretion, on all other matters as
shall properly come before the meeting |_| |_| |_|
The Board of Directors recommends a vote FOR all of the foregoing. UNLESS
OTHERWISE SPECIFIED AS ABOVE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS (PROPOSAL ONE). 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.
PLEASE MARK, SIGN, 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 and the Company's Annual Report for the year ended
October 31, 2004 is acknowledged.
- --------------------------------------------------------------------------------
To change the address on your account, please check the box at right
and indicate your new address in the address space above. Please note |_|
that changes to the registered name(s) on the account may not be
submitted via this method.
- --------------------------------------------------------------------------------
Signature of Stockholder _____________________________________ Date: ___________
Signature of Stockholder _____________________________________ Date: ___________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
BIO-REFERENCE LABORATORIES, INC.
REVOCABLE PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - JULY 21, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a Stockholder of BIO-REFERENCE LABORATORIES, INC. (the
"Company") hereby appoints Marc D. Grodman and Sam Singer 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 Thursday, July 21, 2005 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:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)