<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BIORELIANCE 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
BIORELIANCE CORPORATION
14920 BROSCHART ROAD
ROCKVILLE, MD 20850
APRIL 11, 2000
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------
To the Stockholders of BIORELIANCE CORPORATION:
The 2000 Annual Meeting of Stockholders of BioReliance Corporation (the
"Corporation") will be held at 14920 Broschart Road, Rockville, Maryland 20850
on Wednesday, May 17, 2000 at 10:00 a.m. local time for the following purposes:
1. To elect two Class III directors to serve three-year terms,
expiring in 2003.
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent auditors for the Corporation for the fiscal year
ending December 31, 2000.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Holders of common stock of the Corporation whose names appear of record
on the books of the Corporation at the close of business on March 31, 2000 are
entitled to notice of and to vote at the meeting or at any adjournment thereof.
A list of such stockholders will be available for inspection by stockholders at
the Corporation's principal office for a period of ten days prior to the meeting
date.
By Order of the Board of Directors
/s/ CAPERS W. MCDONALD
Capers W. McDonald
President and Chief Executive Officer
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE. A POSTAGE-PAID-
RETURN-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
- --------------------------------------------------------------------------------
<PAGE> 3
BIORELIANCE CORPORATION
14920 BROSCHART ROAD
ROCKVILLE, MD 20850
------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 2000
------------
GENERAL INFORMATION
The Board of Directors of BioReliance Corporation ("BioReliance" or the
"Corporation") is sending you this Proxy Statement in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders to be held
on May 17, 2000 at 14920 Broschart Road, Rockville, Maryland 20850 for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders,
and at all adjournments thereof (the "Annual Meeting"). This Proxy Statement is
first being mailed to the Corporation's stockholders on or about April 11, 2000.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, holders of record of the Corporation's outstanding
shares of common stock, par value $0.01 per share, will be asked to consider and
vote upon the following matters:
(i) To elect two Class III directors to serve three-year terms,
expiring in 2003 ("Proposal I").
(ii) To ratify the appointment of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as the independent auditors for the
fiscal year ending December 31, 2000 ("Proposal II").
(iii) To transact such other business as may properly come before
the Annual Meeting.
The Board unanimously recommends that stockholders vote FOR each of the
proposals described in this Proxy Statement. As of the date of this Proxy
Statement, the Board knows of no other business to come before the Annual
Meeting.
<PAGE> 4
RECORD DATE; QUORUM; VOTE REQUIRED
The Board has fixed the close of business on March 31, 2000 as the record
date for determination of the stockholders entitled to notice of, and to vote
at, the Annual Meeting (the "Record Date"). As of the Record Date, there were
7,969,631 shares of common stock outstanding. The presence, either in person or
by properly executed proxy, of the holders of a majority of the outstanding
shares of common stock as of the Record Date is necessary to constitute a quorum
at the Annual Meeting. Each share of common stock outstanding on the Record Date
entitles the record holder thereof to one vote on each matter that may properly
come before the Annual Meeting. The two nominees for election as directors
receiving the vote of the greatest number of shares of common stock represented
in person or by properly executed proxy shall be elected to the Board of
Directors as set forth in Proposal I. The affirmative vote of a majority of the
shares of common stock represented in person or by properly executed proxy is
required to ratify the appointment of PricewaterhouseCoopers as set forth in
Proposal II.
Abstentions will be counted for purposes of determining the presence or
absence of a quorum and the total number of votes cast with respect to a
proposal. Shares held of record by a broker or its nominee ("Broker Shares")
that are voted on any matter are included in determining the absence or presence
of a quorum. Broker shares that are not voted with respect to any matter will
not be included in determining the total number of votes cast with respect to
such matter. Accordingly, with respect to any matter other than the election of
directors (which is determined by a plurality), abstentions will have the effect
of a vote "against" the matter and non-votes of Broker Shares will have the
effect of reducing the number of affirmative votes required to achieve the
majority vote.
PROXIES
All shares of common stock that are represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such proxies will
be voted FOR approval of the election of the Board's two nominees as directors
of the Corporation, FOR the approval of the appointment of the independent
auditors, and in the discretion of the proxy holder as to any other matter which
may properly come before the Annual Meeting. Although the Corporation has no
reason to believe that any of the nominees will be unwilling or unable to serve
as directors, if any of the nominees is not available for election, properly
executed proxies will be voted for the election of such substitute nominees as
may be designated by the Board of Directors.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Corporation, at or before the Annual Meeting, a written notice
of revocation bearing a date later than the proxy, (ii) duly executing a
subsequent proxy relating to the same shares of common stock and delivering it
to the Corporation at or before the Annual Meeting, or (iii) attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not in and of itself constitute a revocation of a proxy).
The Corporation will bear the cost of the solicitation. In addition to
solicitation by mail, the Corporation will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of common stock and will reimburse them for their reasonable expenses in
so doing. Certain directors, officers and other employees of the Corporation,
not specially employed for this purpose, may solicit proxies, without additional
remuneration therefor, by personal interview, mail, telephone, facsimile or
other electronic means.
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<PAGE> 5
The Corporation's Annual Report to Stockholders containing the
Corporation's financial statements for the fiscal year ended December 31, 1999
is being mailed with this Proxy Statement. The Annual Report does not constitute
a part of the proxy soliciting material.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 1, 2000
with respect to the beneficial ownership of common stock by (i) each person
known to the Corporation to be the beneficial owner of more than 5% of its
outstanding shares of common stock, (ii) each director of the Corporation, (iii)
each executive officer named in the Summary Compensation Table included in this
Proxy Statement, and (iv) all directors and executive officers of the
Corporation as a group.
<TABLE>
<CAPTION>
Common Stock
---------------------------------------------------------------
Name and Address Amount and Nature of Beneficial Percent of
---------------- ------------------------------- ----------
of Beneficial Owner(1) Ownership(2) Class
---------------------- ------------ -----
<S> <C> <C>
Sidney R. Knafel(3)
126 East 56th St.
New York, NY 10022.......................................... 2,928,132 36.7%
Brown Capital Management, Inc.
809 Cathedral St.
Baltimore, MD 21201 (4)..................................... 1,208,200 15.2%
State of Wisconsin Investment Board
P.O. Box 7842
Madison, WI 53707(5)....................................... 470,700 5.9%
The Douglas R. Knafel 1978 Trust
126 East 56th St.
New York, NY 10022.......................................... 459,974 5.8%
The Andrew G. Knafel 1978 Trust
126 East 56th St.
New York, NY 10022.......................................... 459,974 5.8%
Royce & Associates, Inc.
1414 Avenue of the Americas
New York, NY 10019 (6)..................................... 411,500 5.2%
Capers W. McDonald............................................. 298,797 3.7%
Sherry L. Rhodes............................................... 12,200 *
William J. Gedale.............................................. 13,000 *
Victoria Hamilton.............................................. 94,111 1.2%
Gordon J. Louttit.............................................. 16,000 *
Leonard Scherlis, M.D.(7)...................................... 64,111 *
Michael E. Wiebe, Ph.D......................................... 7,700 *
James N. Harris................................................ --- *
All directors and executive officers as a group
(10 persons)(3)(7)............................................. 3,454,427 43.4%
</TABLE>
- ----------
* Less than 1%.
(1) Unless otherwise set forth in the table, the address for the listed
beneficial owners and directors and executive officers is 14920
Broschart Road, Rockville, MD 20850.
- 3 -
<PAGE> 6
(2) Pursuant to the rules of the Securities and Exchange Commission,
shares of the Corporation's common stock that a person has the right
to acquire within 60 days of March 1, 2000 pursuant to the exercise
of stock options are deemed to be outstanding for the purpose of
computing the percentage ownership of such person but are not deemed
outstanding for the purpose of computing the percentage ownership of
any other person. Accordingly, the totals for the following persons
include the following shares represented by options exercisable
within 60 days of March 1, 2000: Mr. Knafel, 14,666 shares; Mr.
McDonald, 214,578 shares; Ms. Rhodes, 12,200 shares; Mr. Gedale
13,000 shares; Ms. Hamilton, 14,666 shares; Mr. Louttit, 15,000
shares; Dr. Scherlis, 14,666 shares; Dr. Wiebe 7,700; and all
directors and executive officers as a group, 311,864 shares.
(3) Includes 59,010 shares owned by Mr. Knafel's wife's estate, 70,000
shares owned by a corporation of which Mr. Knafel is a director and
officer, and 1,482,047 shares owned by trusts for the benefit of Mr.
Knafel's children, as to all of which shares Mr. Knafel disclaims
beneficial ownership. Excludes 280,810 shares owned by an adult child
of Sidney R. Knafel, as to which shares Mr. Knafel also disclaims
beneficial ownership.
(4) As reported on Schedule 13G Amendment 1, dated February 10, 2000.
(5) As reported on Schedule 13G Amendment 1, dated January 26, 2000.
(6) As reported on Schedule 13G Amendment 1, dated February 9, 2000.
Includes 7,200 shares owned by Royce Management Company.
(7) Excludes 13,050 shares owned by Dr. Scherlis' children and 1,482,047
shares held by trusts of which a son of Dr. Scherlis is trustee, as
to which shares Dr. Scherlis disclaims beneficial ownership.
PROPOSAL I
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Board of Directors consists of three classes of directors, with two
directors in each of Class I, Class II and Class III. Directors hold office for
staggered terms of three years or until their successors have been duly elected
and qualified. Directors in one of the three classes will be elected each year
at the Annual Meeting of Stockholders to succeed the directors whose terms are
ending. The Class III directors, Sidney R. Knafel and Capers W. McDonald, whose
terms expire at the Annual Meeting, have been nominated to stand for re-election
to the board for terms expiring at the Annual Meeting of Stockholders in 2003 or
until their successors have been duly elected and qualified. The directors in
Class I and Class II are serving terms ending at the Annual Meeting of
Stockholders in 2001 and 2002, respectively.
You may not vote for more than two nominees. The Board knows of no reason
why any nominee will be unavailable or unable to serve. If any nominee should
for any reason become unavailable for election, the proxy holders will vote for
such other nominee as may be proposed by the Board.
Certain information about the two nominees and other directors continuing
in office is set forth below, including any position(s) they hold with the
Corporation.
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<PAGE> 7
NOMINEES FOR ELECTION AS CLASS III DIRECTORS
<TABLE>
<CAPTION>
POSITIONS OR OFFICES SERVED AS DIRECTOR
NAME WITH THE CORPORATION CONTINUOUSLY SINCE AGE
---- -------------------- ------------------ ---
<S> <C> <C> <C>
Sidney R. Knafel.................. Chairman of the Board 1982 69
Capers W. McDonald................ President and Chief Executive Officer 1992 48
</TABLE>
Sidney R. Knafel has served as Chairman of the Board of the Corporation
since 1982 and is the Corporation's principal stockholder. Since 1982, he has
also been the managing partner of SRK Management Corporation, an investment and
venture capital concern. Mr. Knafel is Chairman of Insight Communications
Company, Inc., and also serves as a director of CoreComm Incorporated, General
American Investors Corporation, Inc., IGENE Biotechnology, Inc., NTL
Incorporated, Source Media, Inc., and other private companies. Mr. Knafel holds
an A.B. and M.B.A. from Harvard University and is a Certified Financial Analyst.
Mr. Knafel is the brother-in-law of Dr. Scherlis, a Director of the Corporation.
Capers W. McDonald joined the Corporation as President and Chief
Executive Officer in June 1992 and has been a Director of the Corporation since
August 1992. From 1989 to 1992, Mr. McDonald served as President of Spectroscopy
Imaging Systems Corporation, a joint-venture of Siemens Medical Systems, Inc.
and Varian Associates, Inc. in California. Before 1989, he held senior
management positions with Hewlett-Packard Corporation in the Analytical Products
Group and with HP Genenchem. Mr. McDonald is Vice Chair for Biotechnology of the
High Technology Council of Maryland and is Chair of the Bioscience Cluster of
the Potomac Conference, a regional development group. He is a co-founder and
immediate past Chair of the Maryland Bioscience Alliance, a cooperative business
association of approximately 100 bioscience companies from throughout the state,
and is a member of the Board of Visitors to the University of Maryland
Biotechnology Institute. He received a S.M. in Mechanical Engineering from
Massachusetts Institute of Technology and a M.B.A. from Harvard Business School.
CLASS I DIRECTORS
<TABLE>
<CAPTION>
POSITIONS OR OFFICES SERVED AS DIRECTOR
NAME WITH THE CORPORATION CONTINUOUSLY SINCE AGE
---- -------------------- ------------------ ---
<S> <C> <C> <C>
William J. Gedale................ None 1991 57
Gordon J. Louttit................. None 1980 52
</TABLE>
William J. Gedale has been a Director of the Corporation since 1991. He
is also the President and Chief Executive Officer of Mount Everest Advisors LLC,
an investment counseling firm, where he has served since 1996. From April 1998
to October 1998, Mr. Gedale also served as the President of Sheer Asset
Management Inc., an investment advisory company. From 1995 to 1996, he was a
Managing Director of John W. Bristol and Co., an investment counseling firm.
From 1989 to 1995, Mr. Gedale served as President and Chief Executive Officer of
General American Investors Corporation, Inc., a
- 5 -
<PAGE> 8
closed-end investment fund. Mr. Gedale is a trustee of Neurosciences Research
Foundation, a director of the New York Hospital Departmental Associates, and a
member of the New York Society of Security Analysts. He holds a M.B.A. from New
York University and a J.D. from Fordham University.
Gordon J. Louttit has been a Director of the Corporation since 1980.
Since 1995, he has also served as Senior Vice President, General Counsel and
Secretary of The Aerospace Corporation, a non-profit organization that provides
technical support to government aerospace programs. From 1985 to 1995, he served
as Vice President, Assistant General Counsel and Secretary of Whittaker
Corporation, an electronics and aerospace manufacturer that is the former parent
company and a stockholder of the Corporation. As part of his duties, Mr. Louttit
was also responsible for budgeting of his direct department. Mr. Louttit holds a
J.D. from UCLA Law School and has attended courses in finance and accounting for
management professionals and attorneys.
CLASS II DIRECTORS
<TABLE>
<CAPTION>
POSITIONS OR OFFICES SERVED AS DIRECTOR
NAME WITH THE CORPORATION CONTINUOUSLY SINCE AGE
---- -------------------- ------------------ ---
<S> <C> <C> <C>
Victoria Hamilton.................. None 1982 46
Leonard Scherlis, M.D.............. None 1982 79
</TABLE>
Victoria Hamilton has been a Director of the Corporation since 1982.
Since January 1999, she has been an independent advisor to a number of public
and private companies and a principal of The Washington Advisory Group and is
currently acting Chief Operating Officer of Source Media, Inc. Ms. Hamilton
served as Executive Vice President and Chief Operating Officer ("COO") of
General American Investors Corporation, Inc. from August 1995 through December
1998, and as Vice President of General American Investors Corporation, Inc. from
February 1992 through August 1995. In her duties as COO of General American
Investors Corporation, Inc., Ms. Hamilton participated in financial oversight of
the organization. Ms. Hamilton also served as a director of General American
Investors Corporation, Inc. from March 1996 through December 1998 and is
currently a director of Caswell Massey Ltd., a private company, headquartered in
Edison, New Jersey. From 1982 to 1992, Ms. Hamilton was an Associate of SRK
Management Corporation, an investment and venture capital firm. She holds an
A.B. and M.B.A. from Harvard University.
Leonard Scherlis, M.D. has been a Director of the Corporation since 1982. Dr.
Scherlis, Professor Emeritus of Medicine at the University of Maryland Medical
School, has served as a research professor in the School's Department of
Epidemiology and Preventive Medicine since 1987. He also is a member of the
boards of the Maryland Medical Research Institute and the Clinical Trials and
Surveys Corporation. He received a B.A. and M.D. from The Johns Hopkins
University. Dr. Scherlis is the brother-in-law of Mr. Knafel, who serves as
Chairman of the Board of the Corporation and is the Corporation's principal
stockholder.
- 6 -
<PAGE> 9
VOTE REQUIRED
The two nominees for election as directors at the Annual Meeting who
receive the greatest number of votes cast for the election of directors at that
meeting shall be elected directors, assuming there is a quorum present. The
aggregate number of votes entitled to be cast by all stockholders present in
person or represented by proxy at the meeting, whether those stockholders vote
"for," "against," or abstain from voting, will be counted for purposes of
determining the number of shares present for purposes of establishing a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
ELECTION AS DIRECTORS.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names and ages of the Corporation's executive
officers (as defined by regulations of the Securities and Exchange Commission),
the positions and offices they hold with the Corporation, their terms as
officers and their business experience. Executive officers are elected by the
Board of Directors and serve at the discretion of the Board.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Capers W. McDonald........................... 48 President, Chief Executive Officer, Director and Acting Chief
Financial Officer and Treasurer
Raymond F. Cosgrove, Ph.D.................... 52 Vice President, European Testing and Development
Michael E. Wiebe, Ph.D....................... 57 Vice President, Regulatory Affairs and Quality Assurance; Vice
President, Research and Development; and Chief Scientific Officer
James N. Harris.............................. 38 Vice President, Marketing and Client Services
</TABLE>
Capers W. McDonald - refer to "Nominees for Election as Class III Directors" on
page 5 of this proxy.
Raymond F. Cosgrove, Ph.D. joined the Corporation in February 1993 as Managing
Director of BioReliance Ltd. He has served as Vice President, European Testing
and Development since 1994 and as Director, BioReliance Holding GmbH since 1996.
From 1989 to 1993, he was Director of Business Development of Shandon
Scientific, Ltd., a manufacturer and distributor of clinical laboratory
equipment and diagnostic reagents. Dr. Cosgrove holds a Ph.D. in Microbiology
from London University.
Michael E. Wiebe, Ph.D. joined the Corporation in August 1998 as Vice President,
Research and Development and Chief Scientific Officer. In June 1999, Dr. Wiebe
additionally assumed the responsibility of Vice President, Regulatory Affairs
and Qualify Assurance. From 1984 to 1998, Dr. Wiebe held senior management
positions at Genentech, Inc., including Senior Director, Quality Control from
1996 to 1998, Director, Quality Control from 1990 to 1996 and Associate
Director, Medicinal and Analytical Chemistry and Senior Scientist prior to 1990.
From 1973 until 1985, he was an Assistant Professor of Microbiology and then an
Associate Professor of Microbiology at Cornell University Medical College. Dr.
Wiebe was associated with the New York Blood Center from 1980 to 1984 and became
Director, Leukocyte Products R&D in 1983. Dr. Wiebe earned a Ph.D. in
Microbiology from the University of Kansas and served as a NIH post-doctoral
research fellow in molecular virology at Duke University Medical School.
- 7 -
<PAGE> 10
James N. Harris joined the Corporation in May 1999 as Vice President, Sales and
Marketing. In December 1999, Mr. Harris additionally assumed the responsibility
for Client Services. From 1996 to 1999, he held positions as Vice President of
Sales, and Vice President of Marketing for the Laboratory Systems Division of
Roche Diagnostics Corporation ("RDC"). From 1993 to 1996, he was Director of
Marketing and Technical Service at Instrumentation Laboratory, Inc. ("IL").
Before 1993, Mr. Harris held senior sales and marketing positions with the Dade
Division of Baxter Healthcare, Inc. and with Becton Dickinson Company.
BOARD OF DIRECTORS AND COMMITTEES
The Board held seven meetings during the year ended December 31, 1999.
Each director attended at least 75% of the meetings of the Board and at least
75% of the meetings of committees on which he or she serves.
The standing committees of the Board include the Audit Committee and the
Compensation Committee. The Audit Committee and the Compensation Committees each
consist entirely of non-employee directors. The Board has not appointed a
nominating committee.
The Audit Committee reviews the adequacy of systems and procedures for
preparing the financial statements and the suitability of internal financial
controls. The Audit Committee also reviews and approves the scope and
performance of the independent auditors' work. Mr. Knafel, Mr. Louttit and Ms.
Hamilton serve as members of the Audit Committee, and Mr. Louttit serves as
Chairman of the Audit Committee. The Audit Committee met four times during the
fiscal year ended December 31, 1999.
The Compensation Committee administers the Amended and Restated
BioReliance 1997 Incentive Plan and reviews and sets compensation of the
executive officers of the Corporation. Mr. Gedale, Mr. Knafel and Dr. Scherlis
serve as members of the Compensation Committee, and Mr. Gedale serves as
Chairman of the Compensation Committee. The Compensation Committee met five
times during the fiscal year ended December 31, 1999.
COMPENSATION OF DIRECTORS
Automatic Option Grants. During 1999, each non-employee director received
an annual automatic grant to purchase 1,000 shares of common stock at an
exercise price of $8.00 per share, the fair market value of the common stock on
the date of grant. The chairperson of each board committee received an
additional annual automatic grant to purchase 500 shares of common stock at the
same exercise price. On May 13, 1999, the Corporation's stockholders approved an
amended incentive plan that increases the automatic annual option grants to
non-employee directors from 1,000 to 5,000.
Discretionary Option Grants. In addition to these automatic option
grants, non-employee directors are eligible to receive discretionary grants of
stock options as compensation for their services. On March 1, 1999, each of
Messrs. Knafel, Gedale and Louttit, Dr. Scherlis and Ms. Hamilton received
additional discretionary options to purchase 5,000 shares of common stock at an
exercise price of $6.38, the fair market value of the common stock on the date
of grant.
Expenses. Directors are reimbursed for travel costs and other
out-of-pocket expenses incurred in attending each directors' meeting and
committee meeting.
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<PAGE> 11
COMPENSATION OF MEMBERS OF SCIENTIFIC ADVISORY BOARD
In addition to its Board of Directors, the Corporation has a Scientific
Advisory Board that provides guidance to management on research and development
activities. The Board of Directors appoints the members of the Scientific
Advisory Board. The members of the Scientific Advisory Board are:
Dr. Richard J. Albertini;
Dr. Bernard Francis Xavier Gannon;
Dr. Gerard J. McGarrity;
Dr. Jeffrey M. Ostrove;
Dr. John E. Shively; and
Dr. Michael E. Wiebe.
Dr. Wiebe also serves as the Chief Scientific Officer of the Corporation.
Each non-employee member of the Scientific Advisory Board receives:
- An annual fee of $2,000;
- A stipend and expenses for each meeting attended;
- An automatic grant of 1,000 non-qualified stock options
upon appointment to the Scientific Advisory Board; and
- An annual automatic option grant of 500 non-qualified
stock options on the first business day on or after January
1st of each year.
- 9 -
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table presents certain information concerning compensation
paid or accrued for services rendered to the Corporation in all capacities
during the years ended December 31, 1997, December 31, 1998 and December 31,
1999 for the Chief Executive Officer and the other most highly compensated
executive officers of the Corporation (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------
OTHER
ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) COMPENSATION($)(3)
- --------------------------- ---- ------------ ----------- ------------------
<S> <C> <C> <C> <C>
Capers W. McDonald.............................. 1999 303,944 20,000 4,800
President, Chief Executive Officer and Director 1998 290,700 --- 4,800
1997 269,077 100,000 4,750
James N. Harris................................. 1999 125,783 30,000(2)(5) ---
Vice President, Marketing and Client Services 1998 --- --- ---
1997 --- --- ---
Michael E. Wiebe, Ph.D.......................... 1999 184,614 28,000(2)(6) 4,800
Vice President, Regulatory Affairs and Quality 1998 70,581 --- ---
Assurance; Vice President, Research and 1997 --- --- ---
Development; and Chief Scientific Officer
Patrick J. Spratt (7)........................... 1999 183,306 15,000 4,800
Vice President, Finance and Chief Financial 1998 10,673 --- ---
Officer 1997 --- --- ---
Sherry L. Rhodes (8)............................ 1999 182,318 15,000 3,752
Vice President, Administration and 1998 175,032 --- 4,800
General Counsel 1997 --- --- ---
</TABLE>
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------
SHARES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION OPTIONS (#) ($)(4)
- --------------------------- ----------- ------
<S> <C> <C>
Capers W. McDonald.............................. 18,300 ---
President, Chief Executive Officer and Director 20,000 ---
--- ---
James N. Harris................................. 30,000 72,979
Vice President, Marketing and Client Services --- ---
--- ---
Michael E. Wiebe, Ph.D.......................... 26,700 14,133
Vice President, Regulatory Affairs and Quality 30,000 ---
Assurance; Vice President, Research and --- ---
Development; and Chief Scientific Officer
Patrick J. Spratt (7)........................... 25,000 ---
Vice President, Finance and Chief Financial 30,000 ---
Officer --- ---
Sherry L. Rhodes (8)............................ 19,400 ---
Vice President, Administration and 40,000 ---
General Counsel --- ---
</TABLE>
- ----------
(1) Includes amounts deferred pursuant to the Corporation's 401(k) Plan.
(2) 1999 bonuses were paid pursuant to Incentive Compensation - Cash
Bonuses described on page 14.
(3) Consists of the Corporation's contributions under its 401(k) Plan.
(4) Consists of the Corporation's payment of relocation costs.
(5) Includes a $10,000 hiring bonus paid to Mr. Harris when he joined the
Corporation in May, 1999.
(6) Includes an $8,000 hiring bonus paid to Dr. Wiebe when he joined the
Corporation.
(7) Mr. Spratt resigned effective January 5, 2000.
(8) Ms. Rhodes resigned effective March 3, 2000.
- 10 -
<PAGE> 13
OPTION GRANTS
The following table sets forth certain information regarding options
granted by the Corporation to the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF STOCK
SHARES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE ------------------------
GRANTED(#) FISCAL YEAR ($/SHARE) EXPIRATION DATE 5% ($) 10% ($)
---------- ----------- --------- --------------- ------ -------
NAME
- ----
<S> <C> <C> <C> <C> <C> <C>
Capers W. McDonald....... 12,000 (1) 2.82% 6.38 3/01/2006 31,083 72,517
6,300 (2) 1.48% 6.38 3/01/2004 11,065 24,488
James N. Harris.......... 30,000 (1) 7.05% 6.94 5/13/2006 84,734 197,466
Michael E. Wiebe, Ph.D... 1,700 (2) 0.40% 6.38 3/01/2004 2,994 6,616
25,000 (3) 5.87% 12.00 8/04/2009 327 178,221
Patrick J. Spratt ...... 25,000 (3) 5.87% 12.00 8/04/2009 327 178,221
Sherry L. Rhodes......... 4,400 (2) 1.03% 6.38 3/01/2004 7,750 17,125
15,000 (3) 3.52% 12.00 8/04/2009 196 106,933
</TABLE>
- --------------
(1) These options have a term of seven years and vest in 20% increments
over five years beginning on the date of grant.
(2) These options have a term of five years and vest 100% on the date of
grant.
(3) These options have a term of ten years and vest in 20% increments over
five years beginning on the date of grant.
OPTION EXERCISES
The following table provides information with respect to options
exercised by the Named Executive Officers during 1999 and the number and value
of unexercised options held by the Named Executive Officers as of December 31,
1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END (#) AT FISCAL YEAR-END ($)(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Capers W. McDonald....... 67,453 284,652 212,178 28,000 $857,175 ---
James N. Harris.......... --- --- --- 30,000 --- ---
Michael E. Wiebe, Ph.D... --- --- 7,700 49,000 --- ---
Patrick J. Spratt........ --- --- 6,000 49,000 --- ---
Sherry L. Rhodes......... --- --- 12,400 47,000 --- ---
</TABLE>
- ----------
(1) For the purposes of this calculation, value is based upon the
difference between the exercise price and $5.72 per share, the
closing price of the Corporation's common stock on December 31, 1999
as reported by Nasdaq Stock Market.
401(k) PLAN
The Corporation maintains a retirement plan (the "401(k) Plan") intended
to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code (the
"Code"). The 401(k) Plan is a defined contribution plan that covers employees of
the Corporation at least 21 years of age who have been employed by the
Corporation for at least 90 days. Employees may contribute up to 15% of their
annual wages (subject to an annual limit prescribed by the Code) as pretax,
salary-deferred contributions. The Corporation may, in
- 11 -
<PAGE> 14
its discretion, match employee contributions up to a maximum of 6% of annual
wages. The Corporation's contribution to the 401(k) Plan for the year ended
December 31, 1999 was $256,732.06.
AUDIT COMMITTEE REPORT
The Audit Committee reports as follows with respect to the audit of the
Corporation's 1999 audited financial statements.
- The Committee has reviewed and discussed the Corporation's 1999
audited financial statements with the Corporation's management;
- The Committee has discussed with the independent auditors
(PricewaterhouseCoopers LLP) the matters required to be discussed
by SAS 61 which includes, among other items, matters related to
the conduct of the audit of the Corporation's financial
statements;
- The Committee has received written disclosures and the letter from
the independent auditors required by ISB Standard No. 1 (which
relates to the auditor's independence from the Corporation and its
related entities) and has discussed with the auditors the
auditors' independence from the Corporation; and
- Based on review and discussions of the Corporation's 1999 audited
financial statements with management and discussions with the
independent auditors, the Audit Committee recommended to the Board
of Directors that the Corporation's 1999 audited financial
statements be included in the Corporation's Annual Report on Form
10-K.
AUDIT COMMITTEE CHARTER
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached to this Proxy Statement as Exhibit A. The
Board of Directors reviews and approves changes to the Audit Committee charter
annually.
INDEPENDENCE OF AUDIT COMMITTEE MEMBERS
Mr. Louttit, Mr. Knafel and Ms. Hamilton, all of whom are members of the
Audit Committee, are independent as recently defined by the applicable Nasdaq
standards.
AUDIT COMMITTEE
GORDON J. LOUTTIT (Chairman)
SIDNEY R. KNAFEL
VICTORIA HAMILTON
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors determines the
compensation paid to each of the Corporation's executive officers and
administers the Amended and Restated BioReliance 1997 Incentive Plan.
- 12 -
<PAGE> 15
EXECUTIVE COMPENSATION POLICY
The primary objectives of the Corporation's executive compensation policy
are:
- to attract, motivate and retain talented executives by providing
compensation that is competitive with the compensation paid to
executives at comparable companies in the contract service
organizations "CSO" industry and related service industries;
- to maintain compensation levels that are consistent with the
Corporation's financial objectives and operating performance;
- to reinforce strategic financial and operating performance
objectives through the use of annual incentive programs; and
- to align the interests of executive officers and stockholders
through bonuses based on the Company's performance and by
providing equity compensation.
The Compensation Committee reviews this policy annually and determines
whether, in its judgment, the compensation levels of the Corporation's executive
officers meet these stated objectives and serve the best interests of the
Corporation and its stockholders. The Compensation Committee also reviews the
Corporation's compensation policy in relation to the Corporation's financial
performance, annual budgeted financial goals and its position in the industry.
COMPENSATION OF EXECUTIVE OFFICERS
The Corporation's compensation program currently consists of base salary
and incentive compensation (in the form of cash bonuses and/or stock options).
In reviewing and setting executive compensation, the Compensation Committee
reviews the annual compensation packages of its executive officers in light of
the Corporation's executive compensation policy for that year. In addition to
corporate performance, the Committee considers the level of experience and
responsibilities of each executive officer as well as the personal contributions
a particular individual may make to the success of the Corporation. Factors such
as leadership skills, analytical skills and organizational development are
important qualitative factors. No relative weight is assigned to these
qualitative factors, which the Committee applies subjectively.
BASE SALARY. The Corporation strives to offer competitive base salaries
in comparison to the local market, CSO industry, and other related service
industry practices. In determining whether an increase in base salary for
executive officers was appropriate for fiscal 1999, the Compensation Committee
considered the salary ranges of industry competitors, each executive officer's
experience generally and with the Corporation specifically, and each executive's
contributions to the Corporation. For fiscal 1999, Dr. John McEntire, Dr.
Michael Wiebe and Sherry Rhodes each received a 6% salary increase. Dr. Raymond
Cosgrove received a 7% salary increase.
During 1999, one of the Corporation's executive officers resigned, and
two others resigned in January 2000 and March 2000, respectively. The
Corporation hired one new executive officer, James Harris, as its Vice
President, Marketing and Client Services, in May 1999. In setting a base salary
for Mr. Harris, the Committee took into account the salary ranges of industry
competitors, his prior experience and expected contribution to the Corporation,
and the relative importance of his position in terms of achieving corporate
objectives.
- 13 -
<PAGE> 16
INCENTIVE COMPENSATION. The Compensation Committee believes that
incentive compensation for executive officers should be primarily linked to the
Corporation's operating performance. Incentive compensation may consist of cash
bonuses and/or equity compensation.
Cash Bonuses. Executive officers may receive cash bonuses based on
(1) the Corporation's actual performance during the fiscal year
compared to the financial targets approved by the Board of Directors
through the annual plan and budget, as well as subsequent internal
projections and (2) their individual contribution toward achieving
these performance goals. Each executive officer received a bonus for
fiscal year 1999.
Equity Compensation. Executive officers are eligible to receive stock
options or other equity-based awards under the Amended and Restated
BioReliance 1997 Incentive Plan. It is the Compensation Committee's
policy to award stock options to each executive officer when he or
she joins the Corporation. Thereafter, the Compensation Committee, at
its discretion, makes periodic grants to reward the performance of
executive officers and to provide incentives for future performance.
Although executive officers may receive stock options or other equity
awards based on the Corporation's financial performance, as well as
on his or her individual performance, there is no established formula
or criteria for grants under the Amended and Restated BioReliance
1997 Incentive Plan, and options or other awards may be granted on a
subjective basis at intervals determined by the Compensation
Committee. Options are generally granted for a term of seven years
and, with some exceptions, vest in 20% increments over five years.
During 1999, the Compensation Committee granted incentive stock options
to purchase 30,000 shares of common stock at an exercise price of $6.94 to Mr.
Harris upon his joining the Corporation. These options have a term of seven
years and vest in 20% increments over five years.
As of August 1, 1999, the Compensation Committee approved special grants
of non-qualified stock options to purchase shares of common stock to its
executive officers in the following amounts: Dr. Cosgrove, 2,500; Dr. McEntire,
2,000; Ms. Rhodes, 15,000; Mr. Spratt, 25,000 and Dr. Wiebe, 25,000. These
options had exercise prices of $12.00 per share, a five year vesting period and
a ten year term. The Compensation Committee granted these stock options to
motivate executive officers to work toward improving the Corporation's financial
results. These options were granted at exercise prices in excess of the fair
market value of the Corporation's common stock on the date of grant. Thus, the
value of the stockholders' investment in the Corporation must appreciate before
an executive officer receives any financial benefit from these option grants.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee believes that the compensation of the Chief Executive
Officer is consistent with the above policies concerning executive compensation
and appropriately reflects the Corporation's financial objectives and operating
performance.
Base Salary. The Compensation Committee increased Mr. McDonald's base
salary from $286,000 in 1998 to $300,000 in 1999. The Compensation Committee
determined, on a subjective basis, that this base salary was appropriate,
considering market conditions and competitive compensation levels. In addition,
Mr. McDonald's 1999 compensation package was subject to the same specific
qualitative performance criteria as other executive officers of the Corporation.
Cash Bonus. Mr. McDonald received a cash bonus for fiscal 1999 of
$20,000, which was determined based on the Corporation's sequential improvement
in performance during fiscal 1999.
- 14 -
<PAGE> 17
Equity Compensation. As of March 1, 1999, the Compensation Committee
awarded Mr. McDonald incentive stock options to purchase 12,000 shares of the
Corporation's common stock. These incentive stock options have a term of seven
years and vest in 20% increments over five years beginning on the date of grant.
As of March 1, 1999, the Compensation Committee also awarded Mr. McDonald a
special grant of fully vested non-qualified stock options to purchase 6,300
shares of the Corporation's common stock. These options have a term of five
years.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Under Section 162(m) of the Internal Revenue Code, a public company may
not deduct more than $1 million in compensation paid to one of its senior
executive officers, unless the excess amount is performance-based compensation
satisfying certain rules. The Corporation's stock option plans are designed to
qualify under the performance-based compensation requirements of this provision.
Due to current salary levels and anticipated bonus targets, the Committee
believes that it is unlikely that application of Section 162(m) will prevent the
Corporation from claiming a deduction for the amount of compensation paid to
senior executive officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1999, the Corporation loaned $100,000 to James Harris, its Vice
President of Sales and Marketing. The promissory note evidencing the loan bears
interest at a rate of 5.5% per annum and has a term of five years. The
Corporation has agreed to forgive the loan in four equal portions of $25,000 per
year, plus accrued interest, beginning on the first anniversary date of the
loan, as long as Mr. Harris continues to be employed by the Corporation. In the
event Mr. Harris voluntarily terminates his employment, or is terminated by the
Company for cause, during the term of the loan, he will be required to repay any
unforgiven portions of the loan to the Corporation on a pro rata basis annually.
Mr. Harris is responsible for any income tax liability resulting from the loan.
The loan may be prepaid in whole or in part at any time without premium or
penalty.
COMPENSATION COMMITTEE
WILLIAM J. GEDALE (Chairman)
SIDNEY R. KNAFEL
LEONARD SCHERLIS, M.D.
- 15 -
<PAGE> 18
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the cumulative
total stockholder return on the Corporation's common stock based on the market
price of the common stock against the cumulative total return on the Nasdaq
Composite Index, the Nasdaq Health Services Index and the Corporation's former
peer group (the "Former Peer Group") for the period commencing on July 29, 1997,
the first day of public trading after the Corporation's initial public offering,
and ending December 31, 1999. The comparison of total return on investment
(change in year-end stock price plus reinvested dividends) for the applicable
period assumes that $100 was invested on July 29, 1997 in each of BioReliance
Corporation (at the closing price for the day), the Nasdaq Composite Index and
the Nasdaq Health Services Index.
The Corporation has changed its peer group to the Nasdaq Health Services
Index because it believes that the companies in the Former Peer Group no longer
provide a meaningful comparison for investors in light of acquisitions and
changes in business segment emphasis involving these companies. The Nasdaq
Health Services Index is a relevant and readily available third-party index that
is used by several of the companies comprising the Former Peer Group and other
companies in the Corporation's industry.
The Former Peer Group is comprised of Applied Analytical Industries;
Chesapeake Biological Laboratories, Inc.; Clintrials Research, Inc.;
Collaborative Clinical Research, Inc.; Genzyme Transgenics Corp.; Parexel
International Corp.; Pharmaceutical Product Development, Inc.; Premier Research
Worldwide, Ltd.; and Qiagen NV.
- 16 -
<PAGE> 19
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
BIORELIANCE CORPORATION, THE NASDAQ HEALTH SERVICES INDEX,
THE NASDAQ COMPOSITE INDEX AND FORMER PEER GROUP
[CHART]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------
7/29/97 12/31/97 12/31/98 12/31/99
------- -------- -------- --------
<S> <C> <C> <C> <C>
BIORELIANCE CORPORATION BREL 100.00 124.32 43.24 30.91
NASDAQ HEALTH SERVICES INDEX 100.00 97.21 82.37 66.79
NASDAQ COMPOSITE INDEX 100.00 100.47 141.55 257.31
FORMER PEER GROUP 100.00 82.71 87.77 112.68
</TABLE>
- 17 -
<PAGE> 20
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under U.S. securities laws, directors and certain executive officers and
persons holding more than 10% of BioReliance's common stock must report their
initial ownership of the common stock and any changes in that ownership to the
Securities and Exchange Commission. The Securities and Exchange Commission has
designated specific due dates for these reports, and BioReliance must identify
in this Proxy Statement those person who did not file these reports when due.
Based solely on its review of copies of the reports filed with the Securities
and Exchange Commission, the Corporation believes all person subject to
reporting filed the required reports on time in 1999.
STOCKHOLDER PROPOSALS
In order for proposals of stockholders to be considered for inclusion in
the proxy statement for the 2001 Annual Meeting of Stockholders of the
Corporation, which is now scheduled to be held on May 16, 2001, such proposals
must be received by the Corporate Secretary of the Corporation by December 11,
2000.
The Corporation's bylaws require stockholders to provide advance written
notice of director nominations and other proposals to be considered at a meeting
of the stockholders. Under the bylaws, in order for director nominations or
other proposals to be considered at the 2001 Annual Meeting of Stockholders,
they must be delivered the Corporate Secretary of the Corporation not less than
60 nor more than 90 days before the date of the preceding year's annual meeting,
or by March 17, 2001 but no sooner than February 15, 2001. The written notice
required for director nominations and other proposals must contain certain
information about the stockholder making the nomination or proposal, as well as
information about the director nominee or proposal, as the case may be.
- 18 -
<PAGE> 21
PROPOSAL II
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers to serve as
the Corporation's independent auditors for the current year. A proposal to
ratify the appointment of PricewaterhouseCoopers will be presented at the Annual
Meeting. A representative of PricewaterhouseCoopers will be present at the
Annual Meeting and will have the opportunity to make a statement and respond to
any questions that might arise. The affirmative vote of a majority of the shares
of common stock present, in person or by proxy, and entitled to vote at the
Annual Meeting is necessary to ratify the appointment of PricewaterhouseCoopers.
The Board of Directors recommends a vote FOR the ratification of the appointment
of PricewaterhouseCoopers as the Corporation's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL II.
MISCELLANEOUS
The person giving a proxy has the power to revoke it at any time before
it is exercised. All shares represented by proxies received in time to be
counted at the Annual Meeting will be voted.
Management knows of no business to be brought before the Annual Meeting
of Stockholders other than as set out above. If other matters properly come
before the meeting, it is the intention of the persons named in the solicited
proxy to vote such proxy thereon in accordance with their judgment.
Even if you plan to attend the meeting in person, please sign, date and
return the enclosed proxy promptly. If you attend the meeting, the proxy will be
voided at your request and you can vote in person. A postage-paid
return-addressed envelope is enclosed for your convenience. Your cooperation in
giving this your immediate attention will be appreciated.
By Order of the Board of Directors
/s/ CAPERS W. MCDONALD
Capers W. McDonald
President and Chief Executive Officer
- 19 -
<PAGE> 22
EXHIBIT A
BIORELIANCE CORPORATION
AUDIT COMMITTEE CHARTER
MISSION STATEMENT
The Audit Committee will assist the Board of Directors in fulfilling its
oversight responsibilities by reviewing the financial reporting process, the
system of internal control, the audit process and the company's process for
monitoring compliance with laws and regulations. The Committee will provide an
open avenue of communication with the Board of Directors, management and the
external auditors. To achieve these objectives the Committee will obtain an
understanding of the Company's business, operations, risks, and any other issues
that may affect the financial reporting process. Except as restricted by law,
the Company's Articles of Incorporation or its By-Laws, the Audit Committee
shall have and may exercise all authority that is vested in the Board of
Directors with respect to the Company's financial reporting, risk management,
internal controls and auditing.
ORGANIZATION
- - The Committee will consist of at least three outside members of the Board
of Directors appointed by the Chairman of the Board. The General Counsel
will serve as Secretary of the Committee.
- - The Committee will meet at least quarterly with management of the Finance
and Accounting department. The independent auditors, the CEO, or others
may be invited to attend at the discretion of the Committee.
ROLES AND RESPONSIBILITIES
INTERNAL CONTROLS
- - Evaluate whether management is setting the appropriate tone at the top by
communicating the importance of internal controls and ensuring that all
individuals possess an understanding of their roles and responsibilities.
- - Understand the status of recommendations made by the external auditors
and the implementation of those recommendations, as appropriate.
- - Ensure that the independent auditors inform the Committee of fraud,
illegal acts, deficiencies in internal controls and any other matters
they deem appropriate.
1
<PAGE> 23
EXHIBIT A
FINANCIAL REPORTING
- - Review significant accounting and reporting issues and the impact of new
pronouncements on the financial statements.
- - Review issues involving management's judgement such as in the valuation
of assets and liabilities.
- - Review the annual and quarterly financial statements for completeness and
consistency with particular attention to complex and unusual items.
- - Review other information in the annual report such as the MD&A for
adequacy and consistency.
- - Meet with management and the external auditors to review the financial
statements, results of the audit and any internal control
recommendations.
COMPLIANCE WITH LAWS AND REGULATION
- - Review the effectiveness of the system for monitoring compliance with
laws and regulations and the results of any investigation and follow-up
on any fraudulent acts or accounting irregularities.
- - Review the findings on any examinations by regulatory agencies, including
the Food and Drug Administration and the Securities and Exchange
Commission.
- - Obtain satisfaction that all regulatory compliance matters have been
considered in the preparation of the financial statements.
INTERNAL AUDIT
- - Review the objectives, activities and effectiveness of the internal audit
function (whether performed by in-house employees or out-sourced).
EXTERNAL AUDIT
- - Inquire as to the auditors' independent qualitative judgments about the
appropriateness, not just the acceptability, of the accounting principles
and the clarity of the financial disclosure practices used or proposed to
be adopted by the Company.
- - Inquire as to whether the auditors view management's choices of
accounting principles as conservative, moderate, or aggressive from the
perspective of income, asset, and liability recognition, and whether
those principles reflect the majority or minority practice.
2
<PAGE> 24
EXHIBIT A
- - Oversee the external audit coverage including engagement letters,
estimated fees, and review of any non-audit services performed by the
auditors.
- - Review the proposed audit scope and approach prior to commencement of
work by the auditors to ensure completeness of coverage and effective use
of resources.
- - Review the performance of the auditors and recommend their appointment on
an annual basis.
- - Review any serious difficulties or disputes with management encountered
during the audit, as well as any other matters required to be
communicated to the Audit Committee under generally accepted auditing
standards.
OTHER RESPONSIBILITIES
- - Meet with external auditors, internal auditors, and management in
separate executive sessions, as needed to discuss any matters that the
committee or these groups believe should be discussed privately.
- - Review with legal counsel any legal or regulatory matters that could have
a significant impact on the Company's financial statements.
- - Perform other oversight functions as requested by the full Board.
- - The committee shall have the power to conduct or authorize investigations
into any matters within its scope of responsibilities and shall be
empowered to retain legal counsel, accountants, or others to assist in
the conduct of any investigation.
REPORTING RESPONSIBILITIES
- - The Committee will regularly update the Board of Directors as to its
activities and make recommendation for action, as it deems appropriate.
3
<PAGE> 25
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BIORELIANCE CORPORATION
MAY 17, 2000
\/ Please Detach and Mail in the Envelope Provided \/
<TABLE>
<S> <C>
_
A [X] PLEASE MARK YOUR | |
VOTES AS IN THIS |
EXAMPLE. |____
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of two [ ] [ ] NOMINEES: Sidney R. Knafel 2. To ratify the appointment of [ ] [ ] [ ]
Class III Capers W. McDonald PricewaterhouseCoopers LLP as
Directors to the independent auditors for
serve three-year terms, expiring in 2003. the fiscal year ending
December 31, 2000.
For all nominees except as noted below.
3. To transact such other business as may properly come
before the meeting.
---------------------------------------------------
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Signature___________________________________ Date:______________ Signature___________________________________ Date:______________
NOTE: Please date and sign exactly as your name appears herein. Corporate or partnership proxies should be signed in full corporate
or partnership name by an authorized person. Persons signing in a fiduciary capacity should indicate their full title in such
capacity.
</TABLE>
<PAGE> 26
BIORELIANCE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James N. Harris and James R. Stock, and
each of them, his or her true and lawful agents and proxies, with full power of
substitution, to vote all of the shares of Common Stock, par value $.01, of
BioReliance Corporation, which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be held on May 17,
2000, at 10:00 A.M., local time, to be held at 14920 Broschart Road, Rockville,
Maryland 20850, and at an adjournment thereof, on all matters coming before the
meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
