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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 [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
DIAGNOSTIC PRODUCTS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[DIAGNOSTIC PRODUCTS CORPORATION LOGO]
5700 WEST 96TH STREET
LOS ANGELES, CA 90045
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 2001
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Diagnostic Products Corporation will
be held at the Company's offices at 5700 West 96th Street, Los Angeles,
California, on May 8, 2001, at 2:30 p.m. local time, for the following purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Shareholders and until their respective successors are elected and
qualified. The nominees for election to the Board of Directors are:
Sidney A. Aroesty, Frederick Frank, Maxwell H. Salter, Dr. James D.
Watson, Ira Ziering and Michael Ziering.
2. To approve the amendment of the Company's 1997 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
under the plan by 1,000,000 shares and to limit the maximum number of
shares with respect to which options may be granted to any person in any
fiscal year.
3. To transact such other business and to consider and take action upon any
and all matters that may properly come before the Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business, March 16, 2001, as
the record date for the determination of the shareholders entitled to notice of
and to vote at the Meeting.
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING PERSONALLY ARE REQUESTED
BY MANAGEMENT TO MARK, SIGN AND RETURN THE ENCLOSED PROXY IMMEDIATELY.
By Order of the Board of Directors
MARILYN ZIERING
Secretary
March 29, 2001
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[DIAGNOSTIC PRODUCTS CORPORATION LOGO]
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 2001
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Diagnostic Products Corporation (the "Company") in connection with the Annual
Meeting of Shareholders to be held at the Company's executive offices located at
5700 West 96th Street, Los Angeles, California, on May 8, 2001, at 2:30 p.m.
local time, and any adjournments thereof. It is expected that this Proxy
Statement and accompanying proxy will first be mailed to shareholders on or
about March 29, 2001.
The expenses for soliciting proxies for the Annual Meeting will be paid by
the Company. Proxies may be solicited by means of personal calls upon, or
telephonic or telegraphic communications with, shareholders or their personal
representatives by directors, officers and employees of the Company who will not
be specially compensated for such services.
VOTING PROCEDURES
Only shareholders of record of the Company's Common Stock at the close of
business on March 16, 2001, the record date fixed by the Board of Directors, are
entitled to notice of and to vote at the Meeting. On that date, there were
13,941,574 shares of Common Stock outstanding and entitled to vote at the
Meeting, each of which is entitled to one vote. A majority of the shares
entitled to vote, represented in person or by proxy, constitutes a quorum at the
Meeting. Abstentions and broker non-votes are counted as present for purposes of
determining the existence of a quorum.
All shares represented by the accompanying proxy, if the proxy is properly
executed and returned, will be voted as specified by the shareholder. If no vote
is indicated, the proxy will be voted FOR the Board of Directors' nominees for
director and FOR the other proposals. A shareholder may revoke his proxy at any
time before it has been voted by notifying the Company in writing, by submitting
a substitute proxy having a later date or by voting in person at the Meeting.
If, prior to the election of directors, any shareholder has given notice
that he intends to cumulate his votes, then, for the election of directors only,
each shareholder may cumulate votes for any nominee, if the nominee's name was
placed in nomination prior to the voting. In cumulative voting, each shareholder
is entitled in the election of directors to one vote for each voting share held
by him multiplied by the number of directors to be elected and may cast all such
votes for a single nominee for director or may distribute them among any two or
more nominees as he sees fit. See "Election of Directors."
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PROPOSAL 1
ELECTION OF DIRECTORS
The shareholders are being asked to elect six directors to serve until the
next Annual Meeting of Shareholders and until their successors are duly elected
and qualified. The proxies will be voted in favor of the Board of Directors'
nominees, all of whom are currently serving as directors, unless otherwise
specifically instructed. Although the Board of Directors does not anticipate
that any nominee will be unavailable for election, in the event of such
occurrence the proxies will be voted for such substitute, if any, as the Board
of Directors may designate.
The six nominees receiving the highest number of affirmative votes of the
shares entitled to be voted will be elected directors; votes withheld and broker
non-votes have no legal effect. If voting for directors is conducted by
cumulative voting, the persons named on the enclosed proxy will have
discretionary authority to distribute votes among the nominees in such
proportions as they may see fit, unless otherwise specifically instructed. In
any case, the proxies may be voted for less than the entire number of nominees
if any situation arises which, in the opinion of the proxy holders, makes such
action necessary or desirable.
The following information is supplied with respect to the nominees:
PRINCIPAL DIRECTOR
NAME AGE OCCUPATION SINCE
- ---------------------------- --- ------------------------------------------- --------
Sidney A. Aroesty 54 Senior Vice President and Chief Operating 1981
Officer
Frederick Frank 68 Vice Chairman, Lehman Brothers Inc. 1996
Maxwell H. Salter 81 Chairman of the Board and Chief 1982
Executive Officer, Benos
James D. Watson, Ph.D. 72 President, Cold Spring Harbor Laboratory 1987
Ira Ziering 42 Vice President, International 2000
Michael Ziering 44 Chairman and Chief Executive Officer 1994
Mr. Aroesty was elected Chief Operating Officer in February 2000. He has
held various positions at the Company since 1978, including Senior Vice
President, Operations from 1997 to 2000, consultant from 1994 to 1997, and
executive officer from 1978 to 1994.
Mr. Frank is Vice Chairman of Lehman Brothers Inc., an investment banking
firm which he joined as a partner in 1969. He is a Chartered Financial Analyst,
a member of The New York Society of Security Analysts and a past president of
the Chemical Processing Industry Analysts. Mr. Frank serves as a director of
Pharmaceutical Product Development Corporation, Digital Arts & Sciences, Inc.,
eSoft, Incorporated and Landec Corporation. He is Chairman of the National
Genetics Foundation, a Member of the Salk Institute National Council, a Director
of the Salk Institute, the President of the Board of Trustees of the Hotchkiss
School, a Member of the Yale School of Organization and Management Advisory
Board, and a Member of the Board of Governors of the National Center for Genome
Resources.
Mr. Salter is Chairman of the Board and Chief Executive Officer of Benos, a
chain of family clothing stores in which Mr. Salter has been a principal since
1946.
Dr. Watson has been President of Cold Spring Harbor Laboratory of New York,
a genetics and biotechnology research center, since 1994. He served as the
Director of Cold Spring Harbor Laboratory from
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1968 to 1994. Dr. Watson received the Nobel prize in 1962 for his part in the
discovery of the double helix structure of the DNA molecule. Dr. Watson is also
a director of Pall Corporation.
Mr. Ira Ziering joined the Company in 1996 as Manager of International
Business. He served as President of the Company's subsidiary, DPC France, from
1997 to 1999, when he was elected Vice President, International. Mr. Ziering is
a graduate of Boston University Law School and Harvard Divinity School. Prior to
joining the Company he practiced civil law in Los Angeles, California.
Mr. Michael Ziering was elected Chief Executive Officer in 1999. He joined
the Company in 1986 as legal counsel, and served as Vice
President-Administration from 1988 until 1994 and as President and Chief
Operating Officer from 1994 to 1999.
Michael Ziering and Ira Ziering are brothers and the sons of Marilyn
Ziering, an executive officer and more than 10% shareholder of the Company. See
"Ownership of Common Stock" for information concerning the beneficial ownership
of the Company's Common Stock by nominees for director.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held three meetings in 2000. The Board of Directors
has appointed standing Executive, Audit, Compensation and Stock Option
Committees. The Executive Committee, whose members are Michael Ziering, Sidney
A. Aroesty and Maxwell H. Salter, may exercise the full authority of the Board,
subject to certain statutory limitations. For information concerning the Audit
Committee, see "Report of the Audit Committee." For information concerning the
Compensation and Stock Option Committees, see "Report of the Compensation and
Stock Option Committees on Executive Compensation." The Board of Directors has
not designated a nominating committee. Frederick Frank, a member of the Audit
and Compensation Committees, attended fewer than 75% of the aggregate of the
total number of meetings of the Board of Directors and committees on which he
served during 2000.
COMPENSATION OF DIRECTORS
In 2000, non-employee directors of the Company received director's fees of
$24,000 in the case of each of Frederick Frank and James D. Watson and $12,000
in the case of Maxwell H. Salter. Non-employee directors were also reimbursed
their out-of-pocket expenses for attending Board and Committee meetings.
PROPOSAL 2
APPROVAL OF AMENDMENT OF THE 1997 STOCK OPTION PLAN
The shareholders are being asked to approve the amendment of the Company's
1997 Stock Option Plan to increase the number of shares of Common Stock that may
be issued under the Plan from 1,000,000 shares to 2,000,000 shares, and to limit
the maximum number of shares with respect to which options may be granted to any
person in any fiscal year. The 1,000,000 share increase represents approximately
7% of the outstanding shares of Common Stock.
The Board of Directors has approved the amendment of the Plan subject to
shareholder approval. The proposed amendment is intended to ensure that the
Company will be able to continue to grant stock options to attract and retain
the best available personnel, to provide incentives to employees, directors and
consultants, and to promote the success of the Company's business. The amendment
will also enable the Company to
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comply with the performance-based compensation exception to the deduction limit
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Plan was adopted by the Board on February 14, 1997 and approved by the
shareholders on May 5, 1997. On September 8, 1999, the Board amended the Plan to
provide that all options will become immediately exercisable in the event of a
"change in control," as described below under "Sale, Merger, Change in Control."
The following summary of the principal provisions of the Plan is subject to
the full text thereof. A copy of the Plan may be obtained from the Company by
any shareholder upon written request.
GENERAL NATURE AND PURPOSE OF THE PLAN
Options granted under the Plan may be either incentive stock options under
Section 422 of the Code, or non-qualified stock options. The underlying
objective of the Plan is to further the interests of the Company by
strengthening the desire of employees and consultants to continue their
employment with the Company and by inducing individuals to become employees,
directors and consultants of the Company through the grant of stock options, and
to enable such persons to acquire an equity interest in the Company.
SECURITIES SUBJECT TO THE PLAN
If this proposal is approved, an aggregate of 2,000,000 shares of the
Company's Common Stock will be reserved for issuance under the Plan. The closing
price of the Common Stock on March 14, 2001 was $53.98 per share. As of December
31, 2000, 45,600 shares had been issued under the Plan and 814,600 shares were
subject to outstanding options. Accordingly, if this proposal is approved, there
will be 1,139,800 shares available under the Plan for future option grants.
At December 31, 2000, the Company also had 410,290 options outstanding
under the 1990 Stock Option Plan, which was approved by the shareholders in
1991. A total of 1,000,000 shares are authorized for issuance under this plan,
of which 479,204 shares have been issued. No additional options will be granted
under this plan.
In the event of any change in the number of outstanding shares of the
Common Stock by reason of reorganization, merger, recapitalization,
reclassification, stock dividend, stock split, exchange or combination of shares
or other similar transactions, appropriate and proportionate adjustment will be
made in the number of shares to which outstanding options relate and the
exercise price per share.
ADMINISTRATION
The Plan may be administered either by a Stock Option Committee consisting
of at least two directors appointed by the Board of Directors or by the Board of
Directors. Currently the Plan is administered by a Committee consisting of
Maxwell H. Salter, James D. Watson and Michael Ziering. A sub-committee
consisting of Messrs. Salter and Watson has sole authority with respect to
option grants to officers who are subject to Section 16 of the Securities
Exchange Act of 1934. The Board of Directors retained authority with respect to
the grant of options to non-employee directors.
The Committee has full authority, subject to the provisions of the Plan, to
grant options, to designate the optionees and terms of the options, to establish
rules and regulations which the Committee deems appropriate for the proper
administration of the Plan, and to interpret and make determinations under the
Plan. Members of the Committee serve at the discretion of the Board.
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ELIGIBILITY
Non-qualified options may be granted to persons who are employees,
directors, consultants or advisors of the Company or any subsidiary or parent
company of the Company. Incentive options may be granted only to employees of
the Company or any subsidiary or parent of the Company. At December 31, 2000,
the Company had 1,767 employees and three non-employee directors who were
eligible to receive options under the Plan. At December 31, 2000, all executive
officers as a group (8 persons) held options to purchase an aggregate of 349,780
shares, non-employee directors as a group (3 persons) held options to purchase
an aggregate of 70,000 shares, and all employees as a group (other than
executive officers) held options to purchase an aggregate of 805,110 shares of
Common Stock. For information concerning stock option grants to certain
executive officers of the Company in the past three fiscal years, see "Executive
Compensation."
TERMS AND CONDITIONS OF OPTIONS
Subject to the terms of the Plan, the Committee determines the term,
vesting schedule and exercise price of each option. Options must terminate no
event later than ten years after the grant date (five years with respect to
incentive options granted to an optionee who owns, or would be considered to own
by reason of Section 424(d) of the Code, more than 10% of the outstanding Common
Stock of the Company or any subsidiary on the grant date). The exercise price of
an incentive option may not be less than 100% of the fair market value of the
Common Stock on the grant date (110% of the fair market value in the case of
incentive options granted to a person who on the grant date owns or is
considered to own more than 10% of the outstanding Common Stock).
If the amendment is approved, the maximum number of shares with respect to
which options may be granted to any person in any fiscal year will be 200,000
shares. In connection with a person's commencement of full-time employment, he
or she may be granted options for up to an additional 200,000 shares. These
limits will be adjusted in connection with changes in the Company's
capitalization or a corporate transaction. The Plan did not previously limit the
number of options that could be granted to individuals.
If the aggregate fair market value (determined at the time each incentive
option is granted) of Common Stock for which all incentive options held by an
optionee (whether granted under the Plan or any other plan of the Company) are
exercisable for the first time during any calendar year exceeds $100,000, the
amount of such excess will be treated as a non-qualified option.
The exercise price of an option is payable in cash or, with the approval of
the Committee, in shares of the Company's Common Stock that have been owned by
the optionee for at least six months, by full recourse promissory note secured
by the shares purchased, by cancellation of indebtedness of the Company to the
optionee, by waiver of compensation due or accrued for services rendered, or
through a same day sale arranged through a broker.
Incentive options granted under the Plan are not transferable or assignable
other than by will or by the laws of descent and distribution. The Committee may
permit non-qualified options to be transferred pursuant to a domestic relations
order or to members of the optionee's immediate family, charitable institutions,
or trusts or other entities whose beneficiaries or beneficial owners are members
of the optionees' immediate family and/or charitable institutions, pursuant to
such conditions and procedures as the Committee may establish.
If an optionee ceases to be employed or retained by the Company for any
reason other than death or permanent disability, his options will expire on the
earlier of three months from the date of such termination or
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expiration of the term of the option. During the period between the optionee's
termination and expiration of the option, his options may only be exercised to
the extent that they were exercisable on the date of such termination. Upon the
death or permanent disability of an optionee while an employee, director,
consultant or advisor, his options will expire on the earlier of one year from
the date of death or permanent disability or expiration of the term of the
option, but can be exercised only to the extent that they could have been
exercised on the date of death or permanent disability. The foregoing provisions
regarding termination of options upon termination of employment, permanent
disability or death may be varied by the Committee with respect to non-qualified
options.
The terms and conditions of the options are set forth in an agreement which
is entered into between the Company and the optionee at the time an option is
granted.
SALE, MERGER, CHANGE IN CONTROL
In the event of the liquidation or dissolution of the Company, or upon any
reorganization, merger or consolidation in which the Company is not the
survivor, or upon the sale (by merger or otherwise) of substantially all of the
assets of the Company or of more than 80% of the then outstanding stock of the
Company to another corporation or entity, the Plan and each outstanding option
will terminate unless the surviving or acquiring company agrees to assume, or
substitute equivalent awards for, all outstanding options. In such event, the
Committee may, in its sole discretion, accelerate the vesting of outstanding
options or give the optionees advance notice of such event.
If a change in control of the Company occurs, all outstanding options will
become exercisable in full. A change in control generally includes (i) the
acquisition by a third party (by purchase, tender offer or merger) of 50% or
more of the Company's outstanding voting stock, (ii) a change in a majority of
the Board of Directors within a two year period, and (iii) the liquidation of
the Company or the sale of all or substantially all of its assets.
DURATION AND MODIFICATION OF THE PLAN AND OPTIONS
The Plan will remain in effect until all shares covered by options granted
under the Plan have been purchased or all rights to acquire the shares have
lapsed. No options may be granted under the Plan after February 13, 2007,
although the Board of Directors may terminate the granting of options under the
Plan at an earlier date or may amend or otherwise modify the Plan. Except for
adjustments made necessary by changes in the Company's Common Stock, the Board
of Directors may not, without shareholder approval, increase the total number of
shares to be offered under the Plan or materially modify the eligible class of
optionees.
The Committee may modify or amend the terms of outstanding options,
including changes in the vesting or exercise price of options, with the consent
of the optionee.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain significant U.S. federal
income tax consequences of the Plan based on currently applicable provisions of
the Code and the regulations promulgated thereon.
Grant of Stock Options. The grant of an option is not a taxable event to
the optionee.
Exercise of Non-Qualified Stock Options. An optionee will recognize
ordinary income for federal income tax purposes on the date a non-qualified
option is exercised. The amount of income recognized is equal to the
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excess of the fair market value of the shares acquired on the date of exercise
over the exercise price of such shares.
The optionee's tax basis in the shares acquired upon the exercise of a
non-qualified option is equal to the fair market value of the shares on the
exercise date. The optionee will recognize capital gain or loss upon a sale or
exchange of the option shares to the extent of any difference between the amount
realized and the optionee's tax basis in the shares.
Exercise of Incentive Stock Options. An optionee will not recognize income
upon the exercise of an incentive option. However, the "spread" between the fair
market value of the shares at the time of exercise and the exercise price is
includible in the calculation of alternative minimum taxable income for purposes
of the alternative minimum tax.
If the optionee does not dispose of the shares received upon exercise of
the option within both the two-year period after the incentive option was
granted and the one-year period after the exercise of the incentive option (the
"ISO holding periods"), the optionee will recognize capital gain or loss when he
disposes of the shares. Such gain or loss will be measured by the difference
between the exercise price and the amount received for the shares at the time of
disposition.
If the shares acquired upon exercise of an incentive option are disposed of
before the end of the ISO holding periods, the disposition is a "disqualifying
disposition" which results in the optionee recognizing ordinary income in an
amount generally equal to the lesser of (i) the excess of the fair market value
of the shares on the option exercise date over the exercise price or (ii) the
excess of the amount received upon disposition of the shares over the exercise
price. Any excess of the amount received upon disposition of the shares over the
value of the shares on the exercise date will be taxed to the optionee as
capital gain.
Exercise of Stock Options Using Stock. The delivery of shares of Company
Common Stock already owned by the optionee in payment of the exercise price of a
non-qualified option will not result in taxable gain to the optionee, even if
the shares delivered have appreciated in value from the time they were acquired.
Instead, a portion of the shares received upon exercise (equal in number to the
number of shares delivered) will have the same tax basis as, and will be deemed
to have been acquired on the date of acquisition of, the shares delivered by the
optionee. The optionee will recognize ordinary income equal to the fair market
value of the shares received in excess of the number delivered. These additional
shares will have a tax basis equal to their fair market value on the exercise
date, and will be deemed to have been acquired on such date.
The delivery of shares in payment of the exercise price of an incentive
option generally will not result in the recognition of gain by the optionee with
respect to the appreciated value of the delivered shares. However, if the shares
delivered were acquired upon exercise of an incentive option and have not been
held for the ISO holding periods, the delivery will constitute a disqualifying
disposition of such shares. In any event, no income will be recognized at the
time an incentive option is exercised with respect to the difference between the
fair market value of the shares received and the aggregate exercise price.
Under proposed Treasury Regulations, the number of shares acquired pursuant
to the exercise of an incentive option equal to the number of shares surrendered
will have a basis and a capital gains holding period equal to those of the
shares surrendered. Shares acquired pursuant to the exercise of an incentive
option in excess of the number tendered in payment of the exercise price will
have a zero tax basis with a capital gains holding period beginning on the
exercise date. If any shares acquired pursuant to a stock-for-stock exercise of
an incentive option are sold or exchanged before satisfying the ISO holding
periods, in determining the amount of ordinary income recognized, the zero basis
shares will be deemed disposed of first.
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Excise Tax on Change in Control Payments. The Plan provides that in the
event of a change in control, all outstanding options will vest and become
immediately exercisable. Under Code Section 280G, an optionee who is a
"disqualified individual" (a specified officer, shareholder or highly
compensated individual of the Company) is subject to a 20% excise tax on any
"excess parachute payments." Any payments that are contingent on a change in
control that equal or exceed three times the disqualified individual's "base
amount" (generally, such person's average annual taxable compensation from the
Company in the preceding five years) are considered "parachute payments." The
portion of the parachute payments that exceeds the disqualified individual's
"base amount" is considered an "excess" parachute payment.
Company Deductions. The Company (or its subsidiary) generally is entitled
to a deduction for federal income tax purposes at the same time and in the same
amount that the optionee recognizes ordinary income, to the extent that such
income is considered reasonable compensation under the Code. Neither the Company
nor any subsidiary is entitled to a deduction with respect to payments that
constitute excess parachute payments pursuant to Section 280G of the Code and
that do not qualify as reasonable compensation pursuant to that section. To the
extent that an excess parachute payment is not deductible and is paid to an
executive officer whose compensation is subject to the deduction limitation of
Code Section 162(m) discussed below, the $1,000,000 deduction limit will be
reduced by such amount, but not below zero.
Code Section 162(m) precludes a public corporation from taking a deduction
for compensation in excess of $1,000,000 per year paid to each of its chief
executive officer or any of its other four highest paid officers. Compensation
which qualifies as performance-based compensation under the Code and Treasury
regulations is not subject to the $1,000,000 deduction limit. Compensation which
may be attributed to the exercise of options granted under the Plan prior to the
approval of the proposed amendment may not qualify as performance-based
compensation. Assuming the proposed amendment of the Plan is approved, the
Company intends that compensation realized upon the exercise of options granted
under the amended Plan will qualify as "performance-based" under Code Section
162(m).
The Plan is not subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and is not qualified under Section 401(a) of the
Code.
VOTE REQUIRED
Under California corporate law, the affirmative vote of a majority of the
shares represented and voting at the Meeting, which shares voting affirmatively
also constitute at least a majority of the required quorum, is necessary for the
approval of the amendment of the Plan. Abstentions and broker non-votes are not
counted in determining the shares voted, but have the effect of a vote against
the proposal if the shares voting in favor do not constitute at least a majority
of the required quorum.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE AMENDMENT TO THE PLAN.
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EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
NAME AGE POSITION
- ---------------------- --- -----------------------------------------------
Michael Ziering 44 Chairman of the Board and Chief Executive
Officer
Sidney A. Aroesty 54 Senior Vice President and Chief Operating
Officer
Said El Shami 58 Senior Vice President, Research and
Development and Chief Scientific Officer
James L. Brill 49 Vice President, Finance
Kathy J. Maugh 56 Vice President, Technical Operations
Nicholaas Arnold 49 Vice President, Sales and Marketing
Ira Ziering 42 Vice President, International
Robert DiTullio 47 Vice President, Regulatory Affairs and Quality
Systems
Marilyn Ziering 69 Vice President, Marketing Communications
and Secretary
For information concerning the business experience of Michael Ziering,
Sidney A. Aroesty and Ira Ziering, see "Election of Directors."
Mr. El Shami joined the Company in 1978 as Assistant Director of Research,
was elected Director of Research in 1980 and was elected Vice President,
Research in 1982. Mr. El Shami was elected Senior Vice President, Research and
Development in 1992 and Chief Scientific Officer in 1995.
Mr. Brill joined the Company in 1999 as Vice President, Finance and Chief
Financial Officer. Prior to joining the Company, Mr. Brill was Chief Financial
Officer of Jaffra Cosmetics International from 1998 to 1999; Vice President,
Finance and Administration and Chief Financial Officer of Vertel Corporation
from 1996 to 1998; and Senior Vice President, Finance, Chief Financial Officer
and a director of Merisel, Inc. from 1988 to 1996.
Ms. Maugh joined the Company in 1986 as a Product Manager. In 1988 she
became a Technical Manager for the Company's product support group. She was
promoted to Director of Product Support in 1990, served as Vice President,
Operations from 1992 through 2000, and was appointed Vice President, Technical
Operations in 2001.
Mr. Arnold was elected Vice President, Sales and Marketing in 1998. Mr.
Arnold joined the Company's Dutch distributor in 1982 as a sales manager and he
was appointed General Manager of the Company's affiliated distributors in The
Netherlands and Belgium in 1989. He previously managed the Chemistry Laboratory
for RIA testing at the Leyenburg Hospital in The Netherlands. Mr. Arnold has a
degree in biochemistry from the Van't Hoff Institute, Rotterdam, The
Netherlands.
Mr. DiTullio was elected Vice President, Regulatory Affairs and Quality
Systems, in February 2001. Mr. DiTullio joined the Company as Director of
Quality and Regulatory Affairs when the Company acquired Cirrus Diagnostics in
1992, and he was promoted to Vice President, Quality and Regulatory Affairs of
DPC Cirrus in 1999. Mr. DiTullio was previously Director of Quality Assurance
with Pharmacia for eight years and he has a total of 27 years experience in the
in vitro diagnostics industry.
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Mrs. Ziering joined the Company in 1973 as Secretary and served as Vice
President, Marketing from 1979 until 1993 when she was elected Vice President,
Marketing Communications. She served as a director of the Company from 1974
until 1998. Mrs. Ziering holds a masters degree from Syracuse University.
Officers of the Company serve at the discretion of the Board of Directors.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides compensation information with respect to the
Chief Executive Officer and certain other persons who were executive officers
during 2000 (the "Named Officers") for services in all capacities during fiscal
years 2000, 1999 and 1998.
ANNUAL LONG-TERM
COMPENSATION($) COMPENSATION
----------------------------------- ---------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS(#) COMPENSATION($)(2)
- --------------------------- ---- -------- ------ --------------- --------------- ------------------
Michael Ziering 2000 400,000 60,000 -- 40,000 25,500
Chief Executive Officer 1999 240,000 0 -- 0 16,000
1998 220,000 0 -- 20,000 16,000
Sidney A. Aroesty 2000 255,000 40,000 -- 20,000 22,600
Chief Operating Officer 1999 215,000 0 30,500 0 16,000
1998 200,000 0 26,800 10,000 16,000
Said El Shami 2000 300,000 30,000 -- 0 23,500
Senior Vice President, 1999 282,000 0 -- 0 16,000
Research and Development 1998 266,000 0 -- 20,000 16,000
James L. Brill 2000 210,000 30,000 -- 0 21,700
Vice President, Finance 1999 91,040 0 -- 40,000 0
Nicholaas Arnold 2000 182,000 30,000 -- 0 19,445
Vice President, Sales and 1999 180,000 0 22,300 0 32,600
Marketing 1998 189,000 0 19,300 20,000 40,000
Sigi Ziering 2000 377,671 0 -- 0 277,787
Chairman of the Board 1999 385,000 0 -- 0 16,000
(until 11/12/00) 1998 385,000 0 -- 0 16,000
- ---------------
(1) The amounts for Mr. Aroesty represent $20,800 in 1999 and $19,800 in 1998
for apartment rental expenses and $9,700 in 1999 and $7,000 in 1998 as the
approximate value of automobile-related compensation. The amounts for Mr.
Arnold represent $19,200 in 1999 and $14,400 in 1998 for apartment rental
expenses and $3,100 in 1999 and $4,900 in 1998 as the approximate value of
automobile-related compensation. While the other Named Officers enjoy
certain perquisites, the amounts did not exceed 10% of each such person's
salary plus bonus and, accordingly, such amounts have been omitted from the
table as permitted by SEC rules.
(2) The amount in 2000 for Sigi Ziering includes a lump sum cash payment to
Marilyn Ziering of $252,734 in lieu of 120 monthly payments of $3,000
payable to Dr. Ziering's surviving relatives pursuant to a retirement
benefits agreement. The other amounts represent Company contributions to
the 401(k),
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pension and profit sharing plans and, as to Mr. Arnold, also include
employer contributions to pension and disability plans in The Netherlands
in excess of statutory requirements.
FISCAL YEAR 2000 OPTION GRANTS
Shown below is information regarding options granted to Named Officers in
2000.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE PER EXPIRATION ----------------------
NAME GRANTED(#) IN FISCAL YEAR SHARE($)(1) DATE 5%($) 10%($)
- ---------------------------- ---------- -------------- ----------- ---------- -------- ----------
Michael Ziering 40,000 20% 22.50 2/13/10 566,000 1,434,368
Sidney A. Aroesty 20,000 10% 22.50 2/13/10 283,000 717,184
Said El Shami 0 -- -- -- -- --
James L. Brill 0 -- -- -- -- --
Nicholaas Arnold 0 -- -- -- -- --
Sigi Ziering 0 -- -- -- -- --
- ---------------
(1) Market value on the date of grant.
(2) These values were determined in accordance with rules suggested by the SEC
and are not intended to forecast the prices at which the Company's Common
Stock could trade in the future. The actual realized value will depend on
the amount by which the sales price of the shares exceeds the exercise
price.
2000 OPTION EXERCISES AND YEAR-END OPTION VALUES
Shown below is information regarding option exercises during 2000 and
holdings of unexercised stock options at December 31, 2000 by the Named
Officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT DECEMBER 31, 2000(#) DECEMBER 31, 2000($)(1)
ACQUIRED ON VALUE ------------------------------ ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- ----------- ----------- ------------- ----------- -------------
Michael Ziering 0 -- 38,000 92,000 1,013,225 2,647,750
Sidney A. Aroesty 0 -- 6,500 38,500 173,688 1,140,688
Said El Shami 0 -- 26,400 25,600 878,352 743,408
James L. Brill 0 -- 4,000 36,000 114,748 1,032,732
Nicholaas Arnold 3,900 89,700 9,000 21,000 204,877 510,133
Sigi Ziering 0 -- 0 0 0 0
- ---------------
(1) Represents the difference between the aggregate market value on December 31,
2000 ($54.625 per share) and the aggregate exercise price.
Options generally vest at the rate of 10% to 25% per year beginning one
year after the date of grant and have ten-year terms. The options are subject to
termination before the expiration date in the event of termination of employment
and certain corporate events. All outstanding options will become immediately
exercisable in the event of a change-in-control. The Stock Option Committee has
the authority to modify the terms of outstanding options, including the exercise
price and vesting schedule. Non-qualified options granted under the 1997 Stock
Option Plan may, if so provided in the option agreement, be transferred pursuant
to a domestic relations order or to members of the optionee's immediate family,
charitable institutions or certain related trusts or other entities.
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REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
ON EXECUTIVE COMPENSATION
The Company's executive compensation policies are administered by the
Compensation Committee and the Stock Option Committee. The Compensation
Committee reviews and determines the compensation of the Company's officers and
evaluates management performance, management succession and related matters. The
Stock Option Committee is responsible for decisions concerning stock option
grants to executive officers of the Company. During fiscal year 2000, the
Compensation Committee met once and took action by written consent once. The
Stock Option Committee took action by written consent numerous times. On
December 1, 2000, the Board appointed a Sub-Committee of the Stock Option
Committee to have authority with respect to the grant of stock options to
executive officers.
The compensation policy of the Company is to provide competitive levels of
compensation that are influenced by corporate performance, that reward
individual achievements, and that enable the Company to attract and retain
qualified executives. Compensation consists primarily of annual salary and
long-term incentive compensation in the form of stock options. Bonuses are
usually awarded when, in the Compensation Committee's judgment, the Company or a
particular executive had meritorious performance during the year. The principal
responsibility of the Compensation Committee is to determine the salary and
bonus components of executive compensation, while the Stock Option Committee
determines the stock option component.
In early December 1999, the Compensation Committee approved an increase in
the year 2000 salary of Michael Ziering, who was at the time serving as
President and Chief Operating Officer, from $240,000 to $300,000, to reflect the
increased demands and responsibilities of his position, and to adjust his level
of compensation in light of the salary levels of other executive officers. When
Michael Ziering subsequently assumed the position of Chief Executive Officer in
mid-December 1999, his salary was not adjusted. However, in May 2000, the
Compensation Committee re-evaluated Mr. Ziering's salary and approved an
increase to $400,000 retroactive to January 1, 2000, which the Committee
considered to be justified in light of his promotion and the Company's size and
earnings. In December 2000, the Committee approved the award of bonuses to
executive officers ranging from $20,000 to $60,000, including a $60,000 bonus to
the Chief Executive Officer, in recognition of their contribution to the
Company's superior financial performance during 2000.
The 2000 salaries of the Company's other executive officers were
principally based on the recommendations of the then Chief Executive Officer,
Sigi Ziering, and reflected his assessment of the nature of each officer's
position, contribution to the Company's overall performance, experience and
tenure with the Company. The Committee evaluated such recommendations in light
of the Company's overall financial performance in 1999 and the level of
Company-wide employee compensation increases for 2000. The Company does not base
annual salaries on the achievement of objective performance-related criteria.
The objective of the Stock Option Committee in granting stock options is to
provide long-term incentives through the opportunity to participate in the
long-term increase in the market value of the Common Stock. Stock options
typically have a term of ten years and become exercisable after one year in
cumulative installments which have ranged from 10% to 25% for executive
officers. Stock options are not awarded annually, but rather are awarded in
recognition of outstanding performance, based on the Committee's and
management's subjective evaluations, and as an incentive to attract new
executives. When the Stock Option Committee decides to grant options, it also
takes into account the amount and values of outstanding options and the amount
of Common Stock held by the executive. The Stock Option Committee in office
during most of 2000, comprised of Maxwell H. Salter and Sigi Ziering, awarded
stock options to each of Michael Ziering
12
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and Sydney A. Aroesty in recognition of their promotions to Chief Executive
Officer and Chief Operating Officer, respectively.
Section 162(m) of the Internal Revenue Code provides that publicly held
companies may not deduct in any taxable year compensation paid to any of the
individuals named in the Summary Compensation Table in excess of $1,000,000 that
is not "performance-based." Options previously granted under the Company's stock
option plans may not meet the requirements of performance-based compensation.
Assuming the proposed amendment to the 1997 Stock Option Plan is approved by the
shareholders, the Company intends that compensation realized upon exercise of
stock options granted after such approval will qualify as performance-based
compensation.
The Compensation Committee
Maxwell H. Salter
Frederick Frank
The Stock Option Sub-Committee
Maxwell H. Salter
James D. Watson
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION AND RELATED TRANSACTIONS
During 2000, the members of the Compensation Committee were Frederick Frank
and Maxwell H. Salter, both of whom are non-employee directors of the Company,
and Louis Colen, a shareholder of the Company. Frederick Frank, a director of
the Company, is Vice Chairman of Lehman Brothers, Inc., an investment banking
firm which has performed services for the Company in the past and which may,
from time to time, provide services to the Company in the future.
During 2000, the members of the Stock Option Committee were Maxwell H.
Salter, a non-employee director of the Company, and Sigi Ziering, Chairman of
the Board until November 2000. Dr. Ziering was the husband of Marilyn Ziering
and the father of Michael Ziering and Ira Ziering, all of whom are executive
officers of the Company. Information concerning the compensation paid to Dr.
Ziering in 2000 is set forth in the Summary Compensation Table under "Executive
Compensation." As Vice President, Marketing Communications, Marilyn Ziering was
paid an annual salary of $135,000 in 2000. Ira Ziering, Vice President,
International, was paid an annual salary of $150,000 and a bonus of $30,000 in
2000.
Since 1981, the Company has leased its principal Los Angeles offices from a
partnership comprised of Dr. Sigi Ziering, Marilyn Ziering, Michael Ziering, Ira
Ziering, and other children of Dr. and Mrs. Ziering who are shareholders of the
Company. During 2000, the Company paid $966,000 in rent to the Ziering
partnership. The lease expires on December 31, 2002.
13
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DPC STOCK PRICE PERFORMANCE
Set forth below is a line graph which compares the cumulative total
shareholder return, assuming dividend reinvestment, on the Company's Common
Stock for the five years ended December 31, 2000, with the S&P Composite-500
Stock Index and the S&P Small Cap Medical Products Index.
DIAGNOSTIC PRODUCTS HEALTH CARE (MEDICAL
CORPORATION S&P 500 INDEX PRODS & SUPP)-SMALL
------------------- ------------- --------------------
1995 100.00 100.00 100.00
1996 69.27 122.96 102.02
1997 75.53 163.98 119.28
1998 86.19 210.85 127.57
1999 69.16 255.21 157.64
2000 156.45 231.98 218.25
The amounts in the foregoing table assume that the value of an investment
in Diagnostic Products Corporation and each index was $100 on December 31, 1995.
The annual amounts are based on monthly compounding with dividends reinvested.
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OWNERSHIP OF COMMON STOCK
The following table sets forth information as of March 9, 2001 with respect
to Common Stock of the Company owned by each person who is known by the Company
to own beneficially 5% or more of the outstanding Common Stock, by each director
and Named Officer of the Company, and by all current directors and executive
officers as a group.
NUMBER
OF PERCENTAGE
NAME* SHARES(1) OWNERSHIP
----- --------- ----------
Marilyn Ziering 2,425,257(2) 17.4%
5700 West 96th Street
Los Angeles, California 90045
Maxwell H. Salter 307,800 2.2
Sidney A. Aroesty 48,000(3) **
Dr. James D. Watson 54,234(4) **
Michael Ziering 309,782(5) 2.2
Frederick Frank 49,999(6) **
Said El Shami 28,099(7) **
Nicholaas Arnold 9,000(8) **
James L. Brill 5,400(9) **
Ira Ziering 183,575(10) 1.3
All directors and executive officers
as a group (12 persons) 3,431,447(11) 24.3
Brown Capital Management, Inc. 1,497,000(12) 10.7
1201 N. Calvert Street
Baltimore, Maryland 21202
Louis Colen 769,462 5.5
2727 Krim Drive
Los Angeles, California 90064
- ------------
* Includes addresses of 5% or more shareholders.
** Less than 1%.
(1) Includes shares allocated to each executive officer's individual account
but held directly by the Company's 401(k) plan.
(2) Includes 18,400 shares owned by Mrs. Ziering's mother-in-law, as to which
beneficial ownership is disclaimed.
(3) Includes 8,500 shares subject to options which are exercisable within 60
days.
(4) Includes 19,999 shares subject to options which are exercisable within 60
days.
(5) Includes 42,000 shares subject to options which are exercisable within 60
days, and 825 shares held by Mr. Ziering's wife, as to which beneficial
ownership is disclaimed.
(6) Includes 49,999 shares subject to options which are exercisable within 60
days.
(7) Includes 26,400 shares subject to options which are exercisable within 60
days.
(8) Includes 9,000 shares subject to options which are exercisable within 60
days.
(9) Includes 4,000 shares subject to options which are exercisable within 60
days.
(10) Includes 13,000 shares subject to options which are exercisable within 60
days.
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(11) See Notes above. Also includes 231 shares outstanding and 10,070 shares
subject to options which are exercisable within 60 days held by executive
officers not named in the foregoing table.
(12) Holdings at December 31, 2000 as reported in a Schedule 13G filed with the
Securities and Exchange Commission on February 15, 2001. According to such
Schedule 13G, the shares are owned by various investment advisory clients
of Brown Capital Management, Inc., which is deemed to be a beneficial owner
of the shares under SEC rules due to its discretionary power to make
investment decisions over such shares for its clients and its ability to
vote the shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require the Company to
disclose late filings of reports of stock ownership by directors, executive
officers and more than 10% shareholders. Based solely on written representations
of its directors and executive officers and a review of copies of the reports
they have filed with the Securities and Exchange Commission, the Company is
aware of the following late filings: James D. Watson filed a late Form 4
regarding two transactions in 1999 and Sidney A. Aroesty and Nicholaas Arnold
each filed a late Form 4 regarding two transactions in 2000.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors consists of three directors,
all of whom are "independent" as defined in the listing standards of the New
York Stock Exchange. The Committee met four times during 2000. The Committee
assists the Board in fulfilling its responsibility for oversight of the quality
and integrity of the accounting, auditing and reporting practices of the Company
and such other duties as directed by the Board. The full responsibilities of the
Committee are set forth in its charter, which is reviewed and updated annually
by the Committee and approved by the Board. A copy of the charter is included as
Appendix A to this Proxy Statement.
In fulfilling its responsibilities with respect to the preparation of the
Company's audited financial statements for fiscal year 2000, the Committee:
- Discussed and considered the independence of the Company's independent
auditors, including a review, as necessary, of all relationships and
services which might bear on the objectivity of the auditor;
- Received written affirmation that the auditor is independent in
accordance with the requirements of Independence Standards Board Standard
No. 1, "Independence Discussions with Audit Committees";
- Discussed with management and the auditor the audit scope and process,
and received and reviewed all reports in respect thereof;
- Involved the outside auditor in the Committee's review and discussion of
the Company's annual and quarterly financial statements and related
reports with management;
- Discussed with the independent auditor all matters required to be
reviewed by auditing standards generally accepted in the United States,
including the matters required to be discussed by Statement of Auditing
Standards No. 61, as amended, "Communications with Audit Committees"
("SAS 61"); and
- Provided to the independent auditor full access to the Committee and the
Board to report on any and all appropriate matters.
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Based on the review and discussions outlined above, the Committee
recommended to the Board of Directors that the audited financial statements for
fiscal year 2000 be included in the Company's Annual Report on Form 10-K.
Submitted by: Frederick Frank
Maxwell H. Salter
James D. Watson
THE COMPANY'S AUDITORS AND AUDIT FEES
It is the current intention of the Company's Board of Directors to select
and retain Deloitte & Touche LLP as independent auditors of the Company for the
current year. Deloitte & Touche LLP conducted the audit for the year ended
December 31, 2000. A representative of Deloitte & Touche LLP will be present at
the Meeting and will have an opportunity to make statements if he so desires and
will be available to respond to appropriate questions.
The aggregate fees billed to the Company for the fiscal year ended December
31, 2000 by the Company's principal accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates were
as follows:
Audit fees..................................... $355,500
Financial information systems design and
implementation fees.......................... $156,700(1)
All other fees................................. $428,100(1)(2)
- ---------------
(1) The Audit Committee considered whether the provision of these services is
compatible with maintaining such firm's independence.
(2) Includes fees for tax return preparation, tax consulting and systems
strategy and process reengineering.
17
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FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2000 as filed with the Securities and Exchange Commission
accompanies this Proxy Statement.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
In order for a shareholder proposal to be included in the Board of
Directors' proxy statement and proxy for the Annual Meeting of Shareholders to
be held in 2002, such proposal must be received no later than the close of
business on November 30, 2001, at 5700 West 96th Street, Los Angeles, California
90045, Attention: Corporate Secretary, and such proposal must otherwise comply
with Rule 14a-8 under the Securities Exchange Act of 1934.
If a shareholder submits a proposal at the Company's Annual Meeting of
Shareholders to be held in 2002 other than in accordance with Rule 14a-8 and
that shareholder does not provide notice of his proposal to the Company by
February 14, 2002, the holders of any proxy solicited by the Company's Board of
Directors for use at that meeting will have discretionary authority to vote with
respect to that proposal without a description of the proposal in the Company's
proxy statement for that meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matter which will be brought before the Annual Meeting.
However, if any other matter properly comes before the Meeting, or any
adjournment thereof, the person or persons voting the proxies have authority to
vote on such matters in accordance with their judgment and discretion.
By Order of the Board of Directors
MARILYN ZIERING
Secretary
Los Angeles, California
March 29, 2001
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APPENDIX A
DIAGNOSTIC PRODUCTS CORPORATION
AUDIT COMMITTEE CHARTER
The audit committee is a committee of the Company's board of directors. Its
primary function is to assist the board in fulfilling its oversight
responsibilities by reviewing the financial information which will be provided
to shareholders and others, the systems of internal controls which management
and the board of directors have established and the audit process.
In meeting its responsibilities, the audit committee is expected to:
1. Provide an open avenue of communication between the independent
accountants and the board of directors.
2. Review and assess the adequacy of the committee's charter annually
and recommend changes to the board of directors.
3. Review the performance of the independent accountants and make
recommendations to the board of directors regarding the appointment or
termination of the independent accountants. The independent accountants
shall be accountable to the board of directors and the audit committee. The
board of directors, after due consideration of the audit committee's
recommendations, shall have the authority and responsibility to select,
evaluate and, where appropriate, replace the independent accountants.
4. Take appropriate action to oversee the independence of the
independent accountants, including:
- Ensuring its receipt, at least annually, of a formal written
statement from the independent accountants which delineates all
relationships between such accountants and the Company;
- Reviewing and discussing any disclosed relationships or services
that may impact the objectivity and independence of the independent
accountants; and
- Recommending appropriate action to the board of directors in
response to the independent accountants' report to satisfy itself of
such accountants' independence.
5. Review and approve all fees to be paid to the independent
accountants.
6. Inquire of management and the independent accountants about
significant risks or exposures and assess the steps management has taken to
minimize such risks.
7. Consider, in consultation with the independent accountants, the
audit scope and plan, including the matters required to be discussed by SAS
61.
8. Review with the independent accountants the adequacy of the
Company's internal controls and any related significant findings and
recommendations together with management's responses thereto.
9. Review with management and the independent accountants at the
completion of the annual examination:
- The Company's annual financial statements;
- The independent accountants' audit of the financial statements and
report thereto; and
A-1
22
- Any serious difficulties or disputes with management encountered
during the course of the audit.
10. Consider and review with management any significant findings
during the year, management's responses thereto and the need for internal
auditing.
11. After undertaking the review and consultations set forth in
paragraphs 4, 7 and 9 above, recommend to the board of directors whether
the audited financial statements should be included in the Company's annual
report on Form 10-K.
12. Review the Company's filings with the SEC and other published
documents containing the Company's financial statements.
13. Review with management and the independent accountants the
Company's interim financial reports before they are filed with the SEC.
14. Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate assets.
15. Review legal and regulatory matters that may have a material
impact on the financial statements, related Company compliance policies and
programs and reports received from regulators.
16. Report committee actions to the board of directors with such
recommendations as the committee may deem appropriate.
17. Prepare a report for inclusion in the annual proxy statement that
describes the committee's composition and responsibilities and how they
were discharged.
18. Meet at least four times per year or more frequently as
circumstances require.
19. Perform such other functions as assigned by law, the Company's
charter or bylaws, or the board of directors.
The audit committee shall consist of at least three members of the board of
directors who shall be designated by the full board of directors and who shall
serve at the pleasure of the board. All members of the committee shall be
"independent" with the meaning of Section 303.01 of the New York Stock Exchange
Listed Company Manual and shall be financially literate. At least one member
shall have accounting or related financial management expertise.
A-2
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DIAGNOSTIC PRODUCTS CORPORATION
1997 STOCK OPTION PLAN
(As amended and restated May 8, 2001)
1. PURPOSE
The purpose of the Diagnostic Products Corporation 1997 Stock Option
Plan (the "Plan") is to further the interests of Diagnostic Products Corporation
(the "Company") and its Subsidiaries by strengthening the desire of Employees to
continue their relationship with the Company and its Subsidiaries and by
inducing individuals to become Employees of the Company and its Subsidiaries
through stock options to be granted hereunder. Options granted under the Plan
are either options intending to qualify as "incentive stock options" within the
meaning of Section 422 of the Code or non-qualified stock options.
2. DEFINITIONS
Whenever used herein the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a Committee of at least two directors
appointed by the Board, or if no such committee has been appointed reference to
"Committee" shall be deemed to refer to the Board.
(d) "Common Stock" shall mean the Company's Common Stock, no par value
per share, as described in the Company's Articles of Incorporation, as amended
from time to time.
(e) "Company" shall mean Diagnostic Products Corporation, a California
corporation.
(f) "Employee" shall mean in connection with Non-Qualified Options, any
officer, employee, consultant or advisor of the Company or any Subsidiary or
Parent Corporation of the Company, and any director of the Company who is not an
employee of the Company or any Subsidiary or Parent Corporation of the Company,
it being understood that the Committee may in its discretion also grant Options
to induce individuals to become and remain as Employees and that such persons,
for purposes of receiving Non-Qualified Options
24
hereunder, shall be deemed "Employees." In connection with Incentive Options
under this Plan, the term Employee shall mean any individual who is employed,
within the meaning of Section 3401 of the Code, by the Company or any Subsidiary
or Parent Corporation of the Company.
(g) "Fair Market Value Per Share" of the Company's Common Stock shall
mean if the Company's Common Stock is publicly traded the mean between the
highest and lowest quoted selling prices of the Common Stock on the date of the
grant of the Option or, if not available, the mean between the bona fide bid and
asked prices of the Common Stock on the date of the grant of the Option. In any
situation not covered above or if there were no sales on the date of the grant
of an Option, the Fair Market Value Per Share shall be determined by the
Committee in good faith based on uniform principles consistently applied.
(h) "Incentive Option" shall mean an Option granted under the Plan which
is designated as and qualifies as an incentive stock option within the meaning
of Section 422 of the Code.
(i) "Non-Qualified Option" shall mean an Option granted under the Plan
which is designated as a non-qualified stock option or which does not qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(j) "Option" shall mean an Incentive Option or a Non-Qualified Option.
Each Option shall be evidenced by a written agreement executed by the Company
which shall set forth the terms and conditions of such Option.
(k) "Optionee" shall mean any Employee who has been granted an Option
under the Plan.
(l) "Parent Corporation" shall have the meaning set forth in Section
424(e) of the Code.
(m) "Permanent Disability" shall mean termination of employment with the
Company or any Subsidiary or Parent Corporation of the Company with the consent
of the Company or such Subsidiary by reason of permanent and total disability
within the meaning of Section 22(e)(3) of the Code.
(n) "Plan" shall mean the Diagnostic Products Corporation 1997 Stock
Option Plan, as from time to time amended.
(o) "Subsidiary", in the case of Incentive Options, shall have the
meaning set forth in Section 424(f) of the Code (generally, 50% or more owned
subsidiaries), and in the case of Non-Qualified Options, shall have the meaning
of "subsidiary" in Rule 405 of Regulation C under the Securities Act of 1933, as
amended (generally, a controlled affiliate).
2
25
3. ADMINISTRATION
(a) The Plan shall be administered either by the Board or, in the
discretion of the Board, by a Committee; provided, however, that if a Committee
has been appointed by the Board, the Board may take any action permitted to be
taken by the Committee with respect to grants or other actions affecting Options
for executive officers or directors of the Company. The Board may from time to
time appoint members of the Committee in substitution for or in addition to
members previously appointed and may fill vacancies.
(b) Any action of the Committee with respect to the administration of
the Plan shall be taken by majority vote or by unanimous written consent of its
members.
(c) Subject to the provisions of the Plan, the Committee shall have the
authority to construe and interpret the Plan, to define the terms used herein,
to determine the Optionees, the time or times an Option may be exercised and the
number of shares which may be exercised at any one time, to prescribe, amend and
rescind rules and regulations relating to the Plan, to approve and determine the
duration of leaves of absence which may be granted to participants without
constituting a termination of their employment for purposes of the Plan, and to
make all other determinations necessary or advisable for the administration of
the Plan. The Committee's authority shall include, without limitation, the
right, in its discretion, to accelerate the exercisability of Options or reprice
or exchange Options with the consent of the Optionee. All determinations and
interpretations made by the Committee shall be conclusive and binding on all
Employees and on their guardians, legal representatives and beneficiaries.
(d) The Company will indemnify and hold harmless the members of the
Board and the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act, or omission to act, in
connection with the performance of such persons' duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as
may result from the gross negligence, bad faith, willful misconduct and/or
criminal acts of such persons.
4. NUMBER OF SHARES SUBJECT TO PLAN
The stock to be offered under the Plan shall consist of up to 2,000,000
shares of the Company's Common Stock. If any Option granted hereunder shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for purposes of this
Plan.
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5. ELIGIBILITY AND PARTICIPATION
(a) The Committee shall determine the Employees to whom Options shall be
granted, the time or times at which such Options shall be granted and, subject
to subparagraph (c) hereof, the number of shares to be subject to each Option.
An Employee who has been granted an Option may, if he is otherwise eligible, be
granted an additional Option or Options if the Committee shall so determine. An
Employee may be granted Incentive Options or Non-Qualified Options or both under
the Plan.
(b) In no event shall the aggregate fair market value (determined as of
the time an Incentive Option is granted) of shares subject to Incentive Options
held by an Optionee (granted under the Plan or under any other plan of the
Company) that first become exercisable in any calendar year exceed $100,000. The
portion of any purported Incentive Option which exceeds such limitation shall be
deemed to be a Non-Qualified Option.
(c) The maximum number of shares of Common Stock with respect to which
Options may be granted to any Employee in any fiscal year of the Company shall
be two hundred thousand (200,000) shares. In connection with an Employee's
commencement of full-time employment with the Company, or any Subsidiary or
Parent Corporation of the Company, an Employee may be granted Options for up to
an additional two hundred thousand (200,000) shares, which shall not count
against the limit set forth in the previous sentence. The foregoing share
limitations shall be adjusted proportionately in connection with any change in
the Company's capitalization or corporate structure pursuant to Section 16(a)
hereof.
6. PURCHASE PRICE
The purchase price of each share covered by an Option shall be
determined by the Committee on the date of grant; provided, however, that the
purchase price of each share covered by each Incentive Option shall not be less
than 100% of the Fair Market Value Per Share of the Common Stock of the Company
on the date the Incentive Option is granted; and provided, further, that if at
the time an Incentive Option is granted the Optionee owns or would be considered
to own by reason of Section 424(d) of the Code more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
or Parent Corporation of the Company, the purchase price of the shares covered
by such Incentive Option shall not be less than 110% of the Fair Market Value
Per Share of the Common Stock on the date the Incentive Option is granted.
7. DURATION OF OPTIONS
The expiration date of an Option shall not exceed 10 years from the date
on which the Option was granted, and shall be subject to earlier termination as
provided herein; provided, however, that
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if at the time an Incentive Option is granted the Optionee owns or would be
considered to own by reason of Section 424(d) of the Code more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary or Parent Corporation of the Company, such Incentive Option shall
expire not more than 5 years from the date the Incentive Option is granted.
8. EXERCISE OF OPTIONS
An Option shall be exercisable in installments or otherwise upon such
terms as the Committee shall in its discretion determine. An Optionee may
purchase less than the total number of shares for which the Option is
exercisable, provided that the exercise of an Option shall not include any
fractional shares. As a condition to the exercise, in whole or in part, of any
Option, the Committee may in its sole discretion require the Optionee to pay, in
addition to the purchase price of the shares covered by the Option, an amount
equal to any federal, state and local taxes that the Committee has determined
are required to be paid in connection with the exercise of such Option in order
to enable the Company to claim a deduction or otherwise. Furthermore, if any
Optionee disposes of any shares of stock acquired by exercise of an Incentive
Option prior to the expiration of either of the holding periods specified in
Section 422(a)(1) of the Code, the Optionee shall pay to the Company, or the
Company shall have the right to withhold from any payments to be made to the
Optionee, an amount equal to any federal, state and local taxes that the
Committee has determined are required to be paid in connection with the exercise
of such Option in order to enable the Company to claim a deduction or otherwise.
9. METHOD OF EXERCISE
(a) To the extent that the right to purchase shares has accrued, Options
may be exercised from time to time by giving written notice to the Company
stating the number of shares with respect to which the Option is being
exercised, accompanied by payment in full of the purchase price for the number
of shares being purchased and, if applicable, any federal, state or local taxes
required to be paid in accordance with the provisions of Section 8 hereof.
(b) Payment of the purchase price for any shares pursuant to the
exercise of an Option may be made in cash or by check or, in connection with
subparagraphs (i) through (iv) where expressly approved by the Committee in
advance, in its discretion, and where permitted by law:
(i) by cancellation of indebtedness of the Company to the
Optionee;
(ii) by surrender of shares of Common Stock that have been owned
by the Optionee for at least six months;
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(iii) by tender of a full recourse promissory note, which note
shall be secured by the shares being purchased, contain such terms as
may be approved by the Committee and bear interest at a rate sufficient
to avoid imputation of income under Sections 483 and 1274 of the Code;
(iv) by waiver of compensation due or accrued to the Optionee for
services rendered;
(v) provided that a public market for the Company's Common Stock
exists:
(1) through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD Dealer") whereby the Optionee
irrevocably elects to exercise the Option and to sell a portion
of the shares so purchased to pay for the purchase price, and
whereby the NASD Dealer irrevocably commits to forward the
purchase price directly to the Company; or
(2) through a "margin" commitment from the Optionee and a
NASD Dealer whereby the Optionee irrevocably elects to exercise
the Option and to pledge the shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the purchase price, and whereby the NASD
Dealer irrevocably commits to forward the purchase price directly
to the Company; or
(vi) by any combination of the foregoing.
If payment is made with shares of Common Stock, the Optionee, or other
person entitled to exercise the Option, shall deliver to the Company
certificates representing the number of shares of Common Stock in payment for
the shares being purchased, duly endorsed for transfer to the Company and, if
requested by the Committee, a representation and warranty in writing that he has
good and marketable title to the shares represented by the certificate(s), free
and clear of all liens and encumbrances. The value of the shares of Common Stock
tendered in payment for the shares being purchased shall be their Fair Market
Value Per Share on the date of the Optionee's exercise.
(c) Notwithstanding the foregoing, the Company shall have the right to
postpone the time of delivery of the shares for such period as may be required
for it to comply, with reasonable diligence, with any applicable listing
requirements of any national securities exchange or any federal, state or local
law. If an Optionee, or other person entitled to exercise an Option, fails to
accept delivery of or fails to pay for all or any portion of the shares
requested in the notice of exercise, upon tender of delivery
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thereof, the Committee shall have the right to terminate his Option with respect
to such shares.
10. NON-TRANSFERABILITY OF OPTIONS
(a) Except as otherwise expressly provided in Section 10(b) and in the
agreement which evidences the Option, as the same may be amended, no Option
granted under the Plan shall be assignable or transferable by the Optionee,
either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution, and shall be exercisable during his lifetime only by
the Optionee.
(b) The Committee may permit Non-Qualified Options to be transferred
pursuant to a domestic relations order or to members of the Optionee's immediate
family, charitable institutions, or trusts or other entities whose beneficiaries
or beneficial owners are members of the Optionee's immediate family and/or
charitable institutions, pursuant to such conditions and procedures as the
Committee may establish. Any permitted transfer shall be subject to the
condition that the Committee receive evidence satisfactory to it that the
transfer is being made pursuant to a domestic relations order, or for estate
and/or tax planning purposes on a gratuitous or donative basis and without
consideration (other than nominal consideration). Notwithstanding the foregoing,
Incentive Options shall be subject to any and all transfer restrictions under
the Code.
11. CONTINUANCE OF EMPLOYMENT
Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any Optionee any rights with respect to the continuation of
his status as an Employee of the Company or any Subsidiary or Parent Corporation
of the Company or interfere in any way with the right of the Company or any
Subsidiary or Parent Corporation of the Company at any time to terminate such
relationship or to increase or decrease the compensation of the Optionee from
the rate in existence at the time of the grant of an Option.
12. TERMINATION OF EMPLOYEE STATUS OTHER THAN BY DEATH OR PERMANENT
DISABILITY
Except as expressly approved by the Committee with respect to any
Non-Qualified Option granted hereunder and set forth in the agreement evidencing
such Option, if an Optionee ceases to be an Employee for any reason other than
his death or Permanent Disability, any Options granted to him under the Plan
shall terminate not later than three months from the date on which such Optionee
ceases to be an Employee unless such Optionee has been rehired by the Company
and is an Employee on such date. Until the termination of the Option, the
Optionee may exercise any Option
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granted to him but only to the extent such Option was exercisable on the date he
ceased to be an Employee and provided that such Option has not expired or
otherwise terminated as provided herein. A leave of absence approved in writing
by the Committee shall not be deemed a termination for purposes of this Section,
but no Option may be exercised during any such leave of absence, except during
the first 90 days thereof. The fact that the Optionee may receive payment from
the Company or any Subsidiary of the Company after termination of Employee
status for vacation pay, for services rendered prior to termination, for salary
in lieu of notice, or for other benefits shall not affect the termination date.
13. DEATH OR PERMANENT DISABILITY OF OPTIONEE
Except as expressly approved by the Committee with respect to any
Non-Qualified Option granted hereunder and set forth in the agreement evidencing
such Option, if an Optionee shall die at a time when he is an Employee or if the
Optionee shall cease to be an Employee by reason of Permanent Disability, any
Options granted to him under this Plan shall terminate not later than one year
after the date of his death or termination of Employee status due to Permanent
Disability unless by its terms it shall expire before such date or otherwise
terminate as provided herein, and shall only be exercisable to the extent that
it would have been exercisable on the date of his death or termination due to
Permanent Disability. In the case of death, the Option may be exercised by the
person or persons to whom the Optionee's rights under the Option shall pass by
will or by the laws of descent and distribution.
14. STOCK PURCHASE NOT FOR DISTRIBUTION
Each Optionee shall, by accepting the grant of an Option under the Plan,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all shares of stock purchased upon exercise of
the Option will be received and held without a view to distribution except as
may be permitted by the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder. After each notice of exercise of any portion
of an Option, if requested by the Committee, the person entitled to exercise the
Option must agree in writing that the shares of stock are being acquired in good
faith without a view to distribution.
15. PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any Option granted under the Plan shall
have any of the rights or privileges of a shareholder of the Company with
respect to any shares of Common Stock issuable upon exercise of such Option
until such person has become the holder of record of such shares. No adjustment
shall be made for dividends or distributions of rights in respect of such shares
if
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the record date is prior to the date on which such person becomes the holder of
record, except as provided in Section 16 hereof.
16. ADJUSTMENTS/CHANGE IN CONTROL
(a) If the number of outstanding shares of Common Stock of the Company
are increased or decreased, or if such shares are exchanged for a different
number or kind of shares or securities of the Company through reorganization,
merger, recapitalization, reclassification, stock dividend, stock split,
combination of shares, or other similar transaction, the aggregate number of
shares of Common Stock subject to the Plan as provided in Section 4 hereof and
the shares of Common Stock subject to issued and outstanding Options under the
Plan shall be appropriately and proportionately adjusted by the Committee. Any
such adjustment in the outstanding Options shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the Option but
with an appropriate adjustment in the price for each share or other unit of any
security covered by the Option.
(b) Notwithstanding the provisions of subsections (a) or (c) of this
Section, the Plan and each outstanding Option shall terminate on the effective
date of the dissolution or liquidation of the Company or any reorganization,
merger or consolidation with one or more corporations or entities as a result of
which the Company is not the surviving corporation, or any sale of all or
substantially all the assets of the Company, or the sale (by merger or
otherwise) of more than 80% of the then outstanding Common Stock, unless the
surviving or acquiring corporation or other entity agrees to assume, or
substitute equivalent awards for, all outstanding Options; provided that the
Committee may, in its sole discretion, accelerate the vesting of any outstanding
Option or give notice of such event to Optionees prior to the effective date of
such event.
(c) Upon a "Change in Control" (as hereinafter defined), all outstanding
Options shall, subject to the provisions hereof, vest and become immediately
100% exercisable; provided, however, that this subsection (c) shall be null and
void and there shall be no acceleration of the vesting of Options in the event
of a Change in Control if the operation of this subsection (c) would preclude
the Company from being able to utilize the pooling-of-interests method of
accounting in any transaction. A "Change in Control" shall be deemed to have
occurred if:
(i) any "person" as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company, any trustee or other fiduciary holding securities under any
Company employee benefit plan, or any entity owned, directly or indirectly, by
Company shareholders in substantially the same proportions as their ownership of
the Company's voting securities), is or becomes the
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"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time), directly
or indirectly, of the Company's securities representing 50% or more of the
combined voting power of the Company's then outstanding securities;
(ii) a tender offer (for which a filing has been made with the
Securities and Exchange Commission which purports to comply with the
requirements of Section 14(d) of the Exchange Act and the rules thereunder) is
made for the stock of the Company, upon the first to occur of (A) any time
during the offer when the person (as defined in clause (i) above) making the
offer owns or has accepted for payment securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities or (B) three business days before the offer is to terminate unless
the offer is withdrawn first, if the person making the offer could own, by the
terms of the offer plus any voting securities owned by such person, securities
representing 50% or more of the combined voting power of the Company's
outstanding securities when the offer terminates;
(iii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directions, and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (i),
(ii), (iv) or (v) of this subsection (c)) whose election by the Board of
Directors or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the two-year period or whose election
or nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors;
(iv) the Company's shareholders approve a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
that would result in the Company's voting securities outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of
the combined voting power of voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(v) the Company's shareholders approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
If any of the events enumerated in clauses (i) through (v) above occur,
the Board shall determine the effective date of the Change in Control resulting
therefrom, for purposes of the
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Plan. The exercise of any portion of an Option which would not have been
exercisable but for the occurrence of a Change in Control under clause (iv) or
(v) above shall be conditioned on the consummation of the transaction described
in clause (iv) or (v) which caused the Change in Control to occur. If such
transaction is abandoned, any and all conditional exercises of Options in
accordance with this subsection (c) shall be deemed annulled and of no force or
effect and to the extent any Option shall have vested solely by operation of
this subsection (c), such vesting shall be deemed annulled and of no force or
effect and the vesting provisions of such Option as in effect prior to the
Change in Control shall be reinstated.
(d) Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. No fractional shares of stock shall be
issued under the Plan or in connection with any such adjustment.
17. AMENDMENT AND TERMINATION OF PLAN
(a) The Board of Directors of the Company may from time to time, with
respect to any shares at the time not subject to Options, suspend or terminate
the Plan or amend or revise the terms of the Plan; provided that any amendment
of the Plan shall be approved by the shareholders of the Company if the
amendment would (i) increase the number of shares of Common Stock which may be
issued under the Plan, except as permitted under the provisions of Section 16
hereof, or (ii) materially modify the requirements as to eligibility for
participation in the Plan.
(b) No amendment, suspension or termination of the Plan shall, without
the consent of the Optionee, alter or impair any rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
(c) The terms and conditions of any Option granted to an Optionee under
the Plan may be modified or amended only by a written agreement executed by the
Optionee and the Company.
18. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon adoption by the Board of Directors
of the Company and approval by the Company's shareholders; provided, however,
that prior to approval of the Plan by the Company's shareholders, but after
adoption by the Board of Directors, Options may be granted under the Plan
subject to obtaining the shareholders' approval of the adoption of the Plan.
Notwithstanding the foregoing, shareholders' approval must occur no later than
12 months after the date of adoption of the Plan by the Board of Directors.
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19. TERM OF PLAN
No Option shall be granted pursuant to the Plan after 10 years from the
earlier of the date of adoption of the Plan by the Board of Directors of the
Company or the date of approval of the Plan by the Company's shareholders.
The Plan was adopted by the Board on February 14, 1997. The Plan was
approved by the shareholders on May 5, 1997 and amended by the Board of
Directors on September 8, 1999. Sections 4 and 5(c) were amended and added,
respectively, and approved by the shareholders, on May 8, 2001.
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PROXY
DIAGNOSTIC PRODUCTS CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS MAY 8, 2001
The undersigned hereby appoints MICHAEL ZIERING and SIDNEY A. AROESTY and each
of them, the attorneys and proxies of the undersigned with full power of
substitution to appear and to vote all of the common shares of DIAGNOSTIC
PRODUCTS CORPORATION held of record by the undersigned on March 16, 2001, at
the Annual Meeting of Shareholders of said Company to be held on May 8, 2001,
or any adjournment thereof, as designated herein.
(CONTINUED AND TO BE MARKED, DATED AND SIGNED ON THE OTHER SIDE)
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36
PLEASE MARK
YOUR VOTES AS [X]
INDICATED IN
THIS EXAMPLE.
1. ELECTION OF DIRECTORS
FOR ALL WITHHOLD
NOMINEES LISTED AUTHORITY
BELOW (EXCEPT to vote for
AS MARKED all nominees
TO THE Listed
CONTRARY below
BELOW [ ]
[ ]
Nominees: Sidney A. Aroesty, Frederick Frank, Maxwell H. Salter, Dr. James
D. Watson, Ira Ziering, Michael Ziering
To withheld authority to vote for any individual nominee, write that
nominee's name on the space provided below.
____________________________________________________________________________
2. APPROVAL OF AMENDMENT OF THE 1997 STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DIAGNOSTIC
PRODUCTS CORPORATION. IF NO VOTE IS INDICATED, THIS PROXY WILL BE VOTED WITH
AUTHORITY FOR THE ELECTION OF THE DIRECTORS NAMED ABOVE AND FOR PROPOSAL NO. 2.
YOU ARE URGED TO DATE, SIGN AND PROMPTLY
RETURN THIS PROXY IN THE ENVELOPE
PROVIDED. IT IS IMPORTANT FOR YOU TO BE
REPRESENTED AT THIS MEETING. THE
EXECUTION OF YOUR PROXY WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ARE
PRESENT AT THE MEETING.
Signature(s) _______________________________________________ Date ______________
IMPORTANT: Please sign as name appears herein. When signing as an attorney,
executor, administrator, trustee or guardian, give full title as such. If the
signatory is a corporation, sign the full corporate name by duly authorized
officer, or if a partnership, sign in partnership name by authorized person.
Joint owners should each sign.
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* FOLD AND DETACH HERE *