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 ss. 240.14a-11(c) or ss. 240.14
U. S. Laboratories Inc.
-----------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
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>
U.S. Laboratories Inc.
7895 Convoy Court
Suite 18
San Diego, California 92111
Notice of 2000 Annual Meeting of Stockholders
to be held June 3, 2000
Dear Fellow Stockholder:
We invite you to attend our 2000 annual meeting of stockholders on
Saturday, June 3, 2000 at 10:30 a.m. at the Oyster Point Inn, 146 Bodman Place,
Red Bank, New Jersey, 07701. Everyone who held shares of our common stock on
April 14, 2000 will be entitled to vote at the annual meeting on the following
matters:
1. the election of all our directors;
2. an approval of our 1999 stock incentive plan; and
3. any other business that may properly come before the annual
meeting.
We have enclosed a proxy card and our 1999 annual report along with
this proxy statement. Your vote is important no matter how many shares you own.
The approximate date on which this proxy statement and the accompanying form of
proxy are first being sent to stockholders is April 28, 2000. Even if you plan
to attend the annual meeting, please complete, date and sign the proxy card and
mail it as soon as you can in the envelope provided. If you attend the annual
meeting, you may revoke your proxy and vote your shares in person.
Thank you for your continued support. We look forward to seeing you at
the annual meeting.
Sincerely,
U.S. Laboratories Inc.
Dickerson Wright
Chief Executive Officer
San Diego, California
April 28, 2000
<PAGE>
Frequently Asked Questions
Q: Why did I receive this proxy statement?
Our Board has sent you this proxy statement to ask for your vote, as a
stockholder, on certain matters to be voted on at our upcoming annual
stockholders' meeting.
Q: What am I voting on?
You will vote on the re-election of our directors and approval of our stock
incentive plan.
Q: Do I need to attend the annual meeting in order to vote?
No. You can vote either in person at the annual meeting or by completing
and mailing the enclosed proxy card.
Q: Who is entitled to vote?
You are entitled to vote if you owned shares as of the close of business on
April 14, 2000, which is called the record date. You will be entitled to
one vote per share for each share of our common stock you owned on the
record date.
Q: What percentage of U.S. Labs' votes do directors and officers own?
Approximately 76% of our shares, as of the record date, are controlled by
our directors and officers.
Q: Who are the largest stockholders?
Dickerson Wright and Gary Elzweig are our largest stockholders.
Q: What are the voting procedures?
The vote required for approval of the stock incentive plan is the
affirmative vote of a majority of the votes represented and voted at the
meeting. The vote required for election of directors is a plurality of the
votes cast.
Q: Who will count the votes?
Our transfer agent and registrar will count the votes by proxy, and the
votes by ballot will be counted by MaryJo O'Brien, who will act as
inspector of elections at the annual meeting.
Q: How many shares of U.S. Lab's stock are entitled to vote?
A total of 3,361,065 shares of common stock will be entitled to vote at the
annual meeting.
Q: What constitutes a quorum?
A quorum refers to the number of shares that must be in attendance at a
meeting to lawfully conduct business. A majority of the shares of U.S.
Labs' common stock entitled to be cast will represent a quorum. As a
result, shares representing at least 1,680,533 votes must be present at the
annual meeting before we can take the actions called for at the meeting. A
quorum is assured because our officers and directors own more than
1,680,533 shares.
Q: What happens if I sign and return my proxy card but do not mark my vote?
If you return a signed proxy card without indicating whether you wish to
vote for or against the proposals, Dickerson Wright and Joseph Wasilewski,
as proxies, will vote your shares to elect the Board's nominees for
directors and to approve the proposed amendment to the plan.
<PAGE>
Election of Directors
Director Nominees
At the annual meeting, our stockholders will elect all the current
directors to hold office until our annual meeting held in 2001. Dickerson Wright
and Joseph Wasilewski, as proxies, intend to vote for the election of all of our
Board's nominees. If one of our nominees becomes unable to serve as a director
before the annual meeting, they will also vote for the replacement recommended
by the Board.
Under Delaware law, stockholders elect directors by a plurality of the
votes cast. This means that the nominees receiving the largest number of votes,
even if less than a majority, will be elected as directors. Any shares that do
not vote, whether by abstention, broker non-vote or otherwise, will not affect
the election of directors.
Our Board of directors recommends a vote for all the current
directors.
Directors and Executive Officers
Our directors and executive officers and their ages and positions held
with us are as follows:
Name Age Positions
---- --- ---------
Dickerson Wright 53 Chief Executive Officer, President and
Chairman of the Board of Directors
Gary H. Elzweig 44 Executive Vice President and Director
Donald C. Alford 55 Executive Vice President, Secretary and
Director
Mark Baron 44 Executive Vice President and Director
Martin B. Lowenthal 43 Executive Vice President and Director
Joseph M. Wasilewski 50 Chief Financial Officer and Director
Thomas H. Chapman 69 Director
James L. McCumber 52 Director and Member of Audit and
Compensation Committees
Robert E. Petersen 53 Director and Member of Audit and
Compensation Committees
Each of our directors is elected at the annual meeting of stockholders
and serves until the next annual meeting and until his successor is elected and
qualified, or until his earlier death, resignation or removal. The underwriters
have the right to observe Board meetings for
-1-
<PAGE>
a period of five years following the our initial public offering. We intend to
maintain at least two independent directors on our Board.
Dickerson Wright, P.E., is our founder and has served as our chairman
of the Board of Directors and president since our incorporation in October 1993.
Mr. Wright is a registered professional engineer with a history of building and
managing engineering service companies and over 25 years experience in the
independent testing and inspection industry. Prior to founding our company, he
was the co-owner and executive vice president of American Engineering
Laboratories and a senior executive with Professional Service Industries. Mr.
Wright also served as president and chief executive officer of Western State
Testing, as national group vice president of United States Testing Company, and
as executive vice president of Professional Service Industries during this
period of time.
Gary H. Elzweig, P.E., is a co-founder of Professional Engineering and
has served as president of Professional Engineering since its incorporation in
March 1987. Mr. Elzweig has served as our executive vice president and director
since May 1998. He is a registered professional engineer with over 20 years of
experience in engineering, design and testing. Mr. Elzweig earned his Bachelor's
Degree from Columbia University, School of Engineers in 1977. Mr. Elzweig also
serves as Chairman of Broward County's Board of Rules and Appeals Foundations
Subcommittee and Building Envelope Subcommittee.
Donald C. Alford, M.B.A., has served as our executive vice president
and director since May 1998 and secretary since June 1999. Mr. Alford was an
owner of Wyman Enterprises, Inc. and served as its vice president and chief
financial officer from April 1996 until its acquisition by U.S. Labs. Mr. Alford
continued to work for U.S. Labs as an officer of Wyman Testing after the
acquisition of Wyman Enterprises, Inc. Mr. Alford was co-founder of Cornerstone
Development, a real estate company that developed approximately 20 major
projects in the San Diego area from 1983 to 1991. From October 1991 to June
1994, Mr. Alford served as president of Procom Supply Corporation, a wholesale
distributor of telephone equipment. Mr. Alford also served as managing partner
of S.A. Assets, LLC, a real estate development company, from July 1994 to
September 1996.
Mark Baron has been president and director of San Diego Testing
Engineers since May 1998 and has served as our executive vice president and
director since May 1998. Mr. Baron also was employed in the position of manager
of business development with Professional Service Industries from November 1989
to October 1996. He has over 20 years experience in the construction industry.
Mr. Baron is a certified OSHPD Class A Construction Inspector.
Martin B. Lowenthal is president and a director of U.S. Engineering
and has served as our executive vice president and director since May 30, 1998.
Mr. Lowenthal has served as president and director of U.S. Engineering since
November 1994 and as secretary of U.S. Engineering since its incorporation in
October 1993. Mr. Lowenthal has 16 years of management experience in the
engineering and testing industry. He has overseen inspection
-2-
<PAGE>
and testing operations in six states, including New Jersey, New York, Delaware,
Pennsylvania, Maryland and Virginia.
Joseph M. Wasilewski, C.P.A./M.B.A., has served as our chief financial
officer, treasurer and director since July 1999. Mr. Wasilewski has been
instrumental in establishing accounting systems and internal controls for the
company and its subsidiaries since its incorporation in 1993 on a consulting
basis prior to becoming CFO. He has over 30 years experience on the financial
side of the inspection/consulting/engineering business. Mr. Wasilewski's
previous experience includes serving as CFO for LK Comstock & Co., Inc., a part
of a multinational French-based conglomerate performing construction services.
Before Comstock, he was the CFO for the 25-branch operation of SGS/United States
Testing Co., Inc., a multinational Swiss-based engineering conglomerate.
Thomas H. Chapman, R.C.E., has served as a director of San Diego
Testing Engineers since March 1997 and has served as one of our directors since
May 1998. Mr. Chapman previously served as president of San Diego Testing
Engineers from March 1997 to May 1998 and has been employed by San Diego Testing
Engineers since May 1997. Mr. Chapman originally joined the predecessor to San
Diego Testing Engineers in 1968 and eventually left San Diego Testing Engineers
in 1989 when he went to work for Law Engineering. He served as the office
manager for Law Engineering until he rejoined San Diego Testing Engineers in
1997. He is currently a vice president of San Diego Testing Engineers. Mr.
Chapman has been involved in several notable projects in San Diego, including
the San Diego Convention Center, the Hyatt Regency Hotel, the City Front Terrace
and One Harbor Drive. Mr. Chapman earned his degree in Civil Engineering from
San Diego State University and is a California Registered Civil Engineer.
James L. McCumber is the chairman, chief executive officer and founder
of McCumber Golf, an internationally recognized firm noted for the design and
construction of landmark golf courses. McCumber Golf was founded in 1971. Mr.
McCumber has been one of our directors since May 1998. Additionally, he serves
as a committee man for the United States Golf Association.
Robert E. Petersen has served as one of our directors since May 1998.
Mr. Petersen has served as president of Asset Management Group, a retail and
industrial property management firm, since October 1983. Mr. Petersen has also
served as senior vice president and chief financial officer of Collins
Development Co. and vice president of La Jolla Development Co., both of which of
are real estate development companies, since October 1983.
Current Board Composition, Meetings and Committees
Our Board met three times in 1999. All the directors attended the
meetings except Mr. Petersen who missed one meeting. Currently, we have a
standing compensation committee currently composed of Messrs. McCumber and
Petersen. The compensation committee reviews and acts on matters relating to
compensation levels and benefit plans for our executive officers and key
employees, including salary and stock options. The committee is
-3-
<PAGE>
also responsible for granting stock awards, stock options, stock appreciation
rights and other awards to be made under our existing incentive compensation
plans. We also have a standing audit committee composed of Messrs. McCumber and
Petersen. The audit committee assists in selecting our independent auditors and
in designating services to be performed by, and maintaining effective
communication with, those auditors. The compensation and audit committees met
once during 1999.
Director Compensation
We reimburse our directors for all reasonable and necessary travel and
other incidental expenses incurred in connection with their attendance at
meetings of the Board. Beginning in December 1998, we began compensating
non-employee directors $500 for each Board meeting attended. In 1998, under our
1998 stock option plan, each non-employee director received an option to
purchase 5,000 shares of common stock at an exercise price of $6.00 per share.
Directors who are members of our subsidiaries' Boards received an additional
grant of an identical option to purchase 5,000 shares for each Board membership.
In the future, a director who is first elected to the Board may receive an
option to purchase shares of common stock for the first year of the director's
board term. The Board has not yet determined the number of option shares that
each director will receive for each additional year the director remains on the
Board. These options will have an exercise price equal to 100% of the fair
market value of the common stock on the grant date.
Employment Agreements
We have entered into employment agreements with Messrs. Wright,
Elzweig, Alford, Baron, Lowenthal and Wasilewski. Each of these agreements has a
term of three years and provides that we may terminate any of the agreements
with or without cause. These employment agreements also provide for 12 months of
severance pay at the rate of 50% of the applicable executive's compensation in
the event the executive is terminated other than for cause prior to the end of
the three-year term, except for Mr. Wasilewski whose agreement provides for 24
months of severance pay at a rate of 50%.
-4-
<PAGE>
Executive Compensation
The following table sets forth certain information concerning
compensation paid or accrued for the fiscal year ended December 31, 1999 by us
to or for the benefit of our chief executive officer and our other executive
officers whose total annual compensation for 1999 exceeded $100,000.
<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------------------------------------------
Awards
-----------------------------------
Securities
Restricted Underlying
Name and Stock Options and All Other
Principal Position Salary Bonus Awards Warrants Compensation
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dickerson Wright 1999 $192,664 $81,550+ 7,844 15,000 $32,015
Chief Executive Officer 1998 $175,000 -0- -- 170,000 *
- ----------------------------------------------------------------------------------------------------------------------------------
Gary H. Elzweig 1999 $140,000 $31,567+ -- 10,000 *
Executive Vice President 1998 $171,567 -0- -- 65,000 *
- ----------------------------------------------------------------------------------------------------------------------------------
Martin B. Lowenthal $23,000+
Executive Vice President; 1999 $81,200 $ 5,000++ 3,400 -0- *
Director 1998 $74,190** -0- -- 35,000 *
- ----------------------------------------------------------------------------------------------------------------------------------
Donald C. Alford 1999 $91,708 $15,000+ -- 15,000 *
Executive Vice President;
Secretary; Director 1998 $59,446** -0- -- 30,000 *
- ----------------------------------------------------------------------------------------------------------------------------------
Joseph M. Wasilewski 1999 $91,000 $ 6,000 1,715 65,000 *
Chief Financial Officer;
Director 1998 $15,000** -0- -- 5,000 *
* The aggregate amount of perquisites and other personal benefits, securities or
property was less than the lesser of either $50,000 or 10% of the total annual salary and
bonus reported for the named executive officer.
** These officers and directors were employed by the Company for only a portion of
1998.
+ The 1998 bonus was paid in 1999.
++ The 1999 bonus was paid in 1999.
</TABLE>
-5-
<PAGE>
<TABLE>
Options/SAR Grants in Last Fiscal Year
<CAPTION>
Number of Percent Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Fiscal Base Price Expiration
Name Granted Year ($/Sh) Date
- --------------------------- ------------------ ----------------------- ------------------ -------------
<S> <C> <C> <C> <C>
Dickerson Wright 15,000 9.8% $6.60 10/15/04
Gary H. Elzweig 10,000 6.6% $6.60 10/15/04
Donald C. Alford 15,000 9.8% $6.00 10/15/04
Joseph M. Wasilewski 50,000 32.8% $6.00 4/01/02
Martin B. Lowenthal 15,000 9.8% $6.00 10/15/04
</TABLE>
The following table provides information concerning exercises of
options and warrants to purchase our common stock in the fiscal year ended
December 31, 1999, and unexercised options and warrants held at fiscal year end
by the persons named in the Summary Compensation Table. The value of the
unexercised options and warrants that are in the money was calculated by
determining the difference between the fair market value per share of our
company's common stock on December 31, 1999 and the exercise price of the
options and warrants.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year End Option Values
<CAPTION>
Number
of Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised In-the-
on Value Options and Warrants at Money Options and Warrants
Name Exercise Realized December 31, 1999 at December 31, 1999
- -------------------------- ------------- ----------- --------------------------------- ----------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-------------- ----------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Dickerson Wright 0 $0 90,302 94,698 $0 $0
Gary H. Elzweig 0 $0 60,302 14,698 $0 $0
Donald C. Alford 0 $0 33,332 1,668 $0 $0
Joseph M. Wasilewski 0 $0 21,666 48,334 $0 $0
Martin B. Lowenthal 0 $0 35,000 -0- $0 $0
</TABLE>
-6-
<PAGE>
Approval of 1999 Stock Incentive Plan
General
The following describes the general terms of the Plan. It is not part
of the Plan and does not modify the Plan or serve as a legal interpretation of
any of its provisions. The summary below is qualified in its entirety by the
terms of the Plan. Participants should refer to the Plan for further
information.
The Plan was adopted by the Board of Directors of the company (the
"Board") on December 15, 1999, and the amendment to the Plan was approved by the
Board on April 4, 2000. We are asking for stockholder approval of the Plan, as
amended, at the 2000 annual meeting. The Plan will remain in effect, subject to
the right of the Board to terminate the Plan at any time, until all shares
subject to the Plan are purchased or acquired.
The Plan is not required to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and is not subject to
the provisions of the Employee Retirement Income Security Act of 1974 (commonly
known as "ERISA").
Purpose
The Plan was established primarily to provide a means for the company
to attract and retain the services of competent employees and motivate high
levels of performance by providing them with an opportunity to acquire an equity
interest in the company.
Administration
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"), consisting of not less than two directors. Members
of the Committee are selected by and serve at the discretion of the Board. If at
any time the Committee is not in existence, the Board will administer the Plan.
Subject to certain limitations, the Board may delegate the Committee's authority
under the Plan to another committee of the Board or one or more senior officers
of the company. References in this summary to the Committee also refer to the
Board, as appropriate.
Among other functions, the Committee has the authority to establish
rules for the administration of the Plan; to select individuals to receive
awards; to determine the types of awards to be granted and the number of shares
covered by such awards; and to set the terms and conditions of such awards. The
terms of awards may differ from participant to participant.
The Committee also has the authority and discretion to interpret the
Plan and to establish, amend and rescind any rules and regulations relating to
the Plan. Any interpretation of the Plan by the Committee and any decision made
by it under the Plan is final and binding on all persons.
-7-
<PAGE>
Eligibility
Employees of the company and its subsidiaries, are eligible to receive
awards under the Plan. The Committee decides which eligible persons should
receive awards.
Shares Subject to the Plan
The Plan authorizes the grant of stock up to 100,000 shares of common
stock are available for awards under the Plan, subject to adjustment in the
event of any stock dividend or split, recapitalization, reclassification or
other similar corporate change which affects the total number of shares
outstanding. If any shares of common stock subject to awards granted under the
Plan are forfeited or if an award otherwise terminates, expires or is cancelled
prior to the delivery of all of the shares issuable thereunder, such shares will
be available for the granting of new awards under the Plan.
Stock Bonus
In the event of any stock dividend or split, recapitalization,
reclassification or other similar corporate change which affects the total
number of shares outstanding, the Committee may make an appropriate adjustment
to change the number, type and exercise price of outstanding options as well as
the number and type of shares subject to the Plan.
The stock may not be sold or otherwise transferred for a period of
time if the Committee places a restriction on the transfer.
Amendment and Termination
The Board may amend or terminate the Plan at any time (subject to
shareholder approval if required by or deemed by the Board to be advisable under
applicable law, regulation or exchange listing requirements), provided that no
termination or amendment of the Plan may materially adversely affect the rights
of any participant or beneficiary under any award made under the Plan prior to
the date the amendment is adopted by the Board.
Withholding
If the company determines that it is required to withhold any taxes as
a result of the grant of the stock, the participant must pay to the company or
make arrangements satisfactory to the company regarding the payment of such
taxes. The company may defer making payment of an award if any such tax is
pending.
Federal Income Tax Considerations
The following is a summary of significant federal income tax
consequences associated with awards granted under the Plan. The discussion is
not a complete description of all of the federal income tax aspects of the Plan,
and some of the provisions contained in the
-8-
<PAGE>
Code have only been summarized. No discussion of state, local or foreign income
tax has been included. Each participant should consult with his or her own tax
advisor with respect to the tax consequences of participating in the Plan.
Stock Bonus
The grant of a stock bonus under the Plan will be included in the
compensation of the employee and the employee will be required to pay taxes on
the value of the stock bonus in excess of the amount the employee paid for
stock. Such income will be realized by the employee at the time the employee
becomes the owner of shares for tax purposes. The company will set the value of
the common stock for tax purposes.
A subsequent disposition of the common stock will give rise to capital
gain or loss to the extent the amount realized from the sale differs from the
tax basis, i.e., the fair market value of the common stock on the date of grant.
This capital gain or loss will be a short-term or long-term capital gain or loss
depending on how long the common stock has been held from the date of exercise.
Performance Based Compensation
Section 162(m) of the Code limits the company's income tax deduction
for compensation paid in any taxable year to certain executive officers to
$1,000,000 per individual, subject to several exceptions including an exception
for performance-based compensation. To the extent that the Committee determines
that it is necessary or desirable to grant awards under the Plan that qualify
for the performance-based compensation exception, it may take such steps and
impose such restrictions on awards as it determines to be necessary. The stock
grant can be structured so as to qualify for this exception.
Resales
The committee may restrict a participant's ability to sell common
stock acquired under the Plan. Generally, and subject to the limitations
discussed below, a participant may sell common stock acquired under the Plan at
any time, except while in possession of "inside" information. Inside information
is information which has not yet been made public and is likely to influence an
investor's decision to buy, sell or hold the company's securities. Participants
are prohibited by securities laws and company policy from trading common stock
until the information has become public.
Participants who are directors or officers of the company or who
otherwise may be deemed to control the affairs of the company (i.e.,
"affiliates") at the time of sale, may sell such securities only in compliance
with state securities laws and (i) pursuant to an effective registration
statement under the Securities Act; (ii) in compliance with Rule 144 under the
Securities Act; or (iii) in a transaction otherwise exempt from registration.
Also, participants who are subject to Section 16 of the Securities Exchange Act
of 1934 (executive officers, directors and more than 10% shareholders) may be
liable under Section 16(b) of such Act for any "profit" realized from a sale of
common stock received under the Plan within six months
-9-
<PAGE>
before or after a purchase of another company security. Generally, the grant and
exercise of options will not constitute purchases of common stock for purposes
of Section 16(b). Further, participants subject to Section 16 must report the
grant of an option or resale of common stock acquired under the Plan on certain
reports to the SEC. Failure to timely report transactions in the company's
securities may subject the participant and the company to public disclosure of
the delinquency in the company's proxy statement and other SEC enforcement.
Our Board of Directors recommends a vote to approve the 1999 Stock
Incentive Plan, as amended. The affirmative vote of the holders of a majority of
the shares of common stock represented and voting at the annual meeting is
necessary to approve the Stock Incentive Plan, as amended.
The following table provides information regarding benefits that will
be received by or allocated to each of the following under the Plan.
- --------------------------------------------------------------------------------
NEW PLAN BENEFITS
- --------------------------------------------------------------------------------
1999 Stock Incentive Plan
- --------------------------------------------------------------------------------
Name and Position Dollar Value ($) Number of Units
----------------- ---------------- ---------------
- --------------------------------------------------------------------------------
Dickerson Wright $25,003 7,844
Chief Executive Officer
- --------------------------------------------------------------------------------
Gary H. Elzweig -0- -0-
Executive Vice President
- --------------------------------------------------------------------------------
Martin B. Lowenthal $10,838 3,400
Executive Vice President; Director
- --------------------------------------------------------------------------------
Donald C. Alford -0- -0-
Executive Vice President; Secretary;
Director
- --------------------------------------------------------------------------------
Joseph M. Wasilewski $5,467 1,715
Chief Financial Officer; Director
- --------------------------------------------------------------------------------
Thomas Chapman $2,550 800
Director
- --------------------------------------------------------------------------------
Mark Baron $3,825 1,200
Executive Vice President, Director
- --------------------------------------------------------------------------------
Robert E. Petersen -0- -0-
Director
- --------------------------------------------------------------------------------
James L. McCumber -0- -0-
Director
- --------------------------------------------------------------------------------
Executive Group $45,133 14,159
- --------------------------------------------------------------------------------
Non-Executive Director Group $2,550 800
- --------------------------------------------------------------------------------
Non-Executive Officer Employee Group $3,506 1,100
- --------------------------------------------------------------------------------
-10-
<PAGE>
Principal Stockholders
The following table sets forth certain information regarding
beneficial ownership of our common stock as of April 14, 2000, and as adjusted
to reflect the sale of the units offered by us, by:
o each person who is known to own beneficially more than 5% of the
outstanding shares of our common stock;
o each of our directors; and
o all our directors and executive officers as a group.
The persons listed below have sole voting and investment power with
respect to all shares of common stock shown as being beneficially owned by them,
subject to community property laws, where applicable. The number of shares
column in the table includes shares issuable upon exercise of options and
warrants exercisable within 60 days of December 31, 1999. The number of options
and warrants exercisable within 60 days of December 31, 1999 are listed in the
shares issuable upon exercise of options or warrants column. The address of all
stockholders is care of U.S. Laboratories Inc., 7895 Convoy Court, Suite 18, San
Diego, California 92111.
Shares Issuable
Name and Address of Number Percentage Upon Exercise of
Beneficial Owner of Shares Ownership Options or Warrants
- ---------------- --------- --------- -------------------
Dickerson Wright.................. 1,818,638 56.80% 90,302
Gary H. Elzweig................... 380,789 13.20% 60,302
Martin B. Lowenthal............... 91,526 3.76% 35,000
Donald C. Alford.................. 101,810 4.32% 43,332
Mark Baron........................ 74,852 3.42% 40,000
Thomas H. Chapman................. 51,061 2.26% 25,000
Joseph M. Wasilewski.............. 28,373 1.49% 21,666
James L. McCumber................. 5,000 * 5,000
Robert E. Petersen................ 7,000 * 5,000
Horwitz & Associates, Inc.**...... 222,750 6.63% 0
All current directors and
officers as a group (9 persons)... 2,781,799 76.34% 325,602
- -----------------------------
* Represents less than 1%
** Based solely on information contained in a Schedule 13G filed by
Horwitz & Associates, Inc. with the SEC on February 14, 2000.
-11-
<PAGE>
Related Transactions
All ongoing present and future transactions with our affiliates have
been, and will continue to be, on terms no less favorable to us than could have
been obtained from unaffiliated parties, and will be approved by a majority of
no less than two of our independent directors. These independent directors will
not have an interest in those transactions and will have access, at our expense,
to our counsel or independent legal counsel.
During 1999, we signed a three year office building lease with a
related party to lease office space in New Jersey for the company's financial
and mergers and acquisition staff. The rental payments are $1,600 per month plus
utilities.
In December 1999, we entered into a stock purchase agreement with Gary
Elzweig for all of the outstanding stock of the Building Department, Inc. (BDI),
for a total price of $93,000. $30,000 cash was paid in 1999 and the balance of
$63,000 was paid in February 2000.
At December 31, 1998, we owed Dickerson Wright, the Chief Executive
Officer and majority stockholder, $81,461. The amounts are non-interest bearing
and are payable upon demand. Mr. Wright loaned these amounts to us through the
use of his personal line of credit that was personally guaranteed by Mr. Wright
and his spouse. In May 1998, we repaid a portion of that line of credit by
borrowing under a new $1,700,000 line of credit that is also personally
guaranteed by Mr. Wright and his spouse. At December 31, 1999, Dickerson Wright
owed our company $140,714. The amount is non-interest bearing and is payable on
demand.
In October 1998, the $1,700,000 line of credit was refinanced into a
$1,200,000 note payable and a $500,000 line of credit, both of which are
guaranteed by Mr. Wright and his spouse. In July 1998, we also entered into a
$500,000 line of credit that is personally guaranteed by Mr. Wright and his
spouse. We used this $500,000 line of credit to repay in full to the bank the
$480,000 loan made to us through the use of Mr. Wright's personal line of
credit.
As part of the consideration for the acquisition of Wyman Enterprises,
Inc.'s assets, we issued a non-interest-bearing note payable to Donald C. Alford
in the principal amount of $150,000. The note payments are due in four equal
annual installments of $37,500 beginning in March 1999.
During the year ended December 31, 1997 and 1996 and the nine months
ended September 30, 1998 and 1997, we paid $181,067, $169,594, $92,052 and
$137,063, respectively, in management fees to Gary Elzweig. The management fees
were based on 5% of net sales of a subsidiary, and have been discontinued
effective January 1, 1999.
On January 1, 1998, we issued (a) 315,488 shares of our common stock
to Gary H. Elzweig in exchange for 100 shares of the common stock of
Professional Engineering; (b) 55,526 shares of our common stock to Martin B.
Lowenthal in exchange for 18.5 shares of the
-12-
<PAGE>
common stock of U.S. Engineering; (c) 33,652 shares of our common stock to Mark
Baron in exchange for 1.67 shares of the common stock of San Diego Testing
Engineers; and (d) 24,061 shares of our common stock to Thomas H. Chapman in
exchange for 5.67 shares of the common stock of San Diego Testing Engineers.
On January 1, 1998, we issued 10,937 shares of our common stock to
Christopher O'Malley, Vice President of U.S. Engineering under the terms of a
restricted stock agreement containing restrictions on the disposition of the
common stock. The common stock was issued in exchange for a capital contribution
made by Mr. O'Malley to U.S. Engineering.
On April 1, 1998, we issued 50,478 shares of our common stock to
Donald C. Alford in exchange for 25 shares of the common stock of Wyman
Enterprises, Inc.
Availability of Form 10-KSB and Annual Report to Stockholders
SEC rules require us to provide an annual report to stockholders who
receive this proxy statement. We will also provide copies of the annual report
to brokers, dealers, banks, voting trustees and their nominees for the benefit
of their beneficial owners of record. Additional copies of the annual report,
and attached exhibits are available without charge to stockholders upon written
request to Secretary, U.S. Laboratories Inc., 7895 Convoy Court, Suite 18, San
Diego, California 92111.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our company's officers and
directors, and persons who own more than 10% of a registered class of our
company's equity securities, to file reports of ownership and changes in
ownership with the SEC and the Nasdaq SmallCap Market. Our officers, directors
and greater than 10% beneficial owners are required by SEC regulations to
furnish us with copies of all Section 16(a) forms they file with the SEC.
Based solely on review of the copies of forms furnished to us or
written representations from certain reporting persons that no Forms 5 were
required, we believe that, during the 1999 fiscal year, except for one late
filing by Joseph Wasilewski, our officers, directors and greater than 10%
beneficial owners complied with all applicable Section 16(a) filing
requirements.
Other Matters
We expect that the election of directors and the proposed amendments
to the plan will be the only matters presented for stockholder consideration at
the annual meeting. Other matters may properly come before the annual meeting,
and the proxies named in the accompanying proxy will vote on them in accordance
with their best judgment.
We will bear the cost of soliciting proxies. We expect to solicit
proxies mainly by mail. Some of our employees may also solicit proxies
personally and by telephone. We do
-13-
<PAGE>
not anticipate that we will retain anyone to solicit proxies or that we will pay
compensation to anyone for that purpose. We will, however, reimburse brokers and
other nominees for their reasonable expenses in communicating with the persons
for whom they hold common stock.
Our Board has selected not yet selected an independent auditor for the
current year. This selection will be made at the 2000 annual meeting. The firm
of Singer Lewak Greenbaum & Goldstein LLP was the independent auditor for fiscal
year 1999. The Board presently anticipates that there will be no representative
from an independent auditor present at the 2000 annual meeting.
If you wish to include a proposal in our proxy statement for the 2001
annual meeting, SEC Rule 14a-8 requires that you forward the proposal to our
secretary by December 29, 2000. If you submit a proposal other than pursuant to
SEC Rule 14a-8 less than 120 days in advance of the 2001 meeting, your proposal
will be considered untimely and we will not be required to present your proposal
at the 2001 annual meeting. If our Board chooses to present your proposal
despite its untimeliness, the people named in the proxies solicited by our Board
for the 2001 annual meeting will have the right to exercise discretionary voting
power with respect to your proposal.
U.S. Laboratories Inc.
Dickerson Wright
Chief Executive Officer
San Diego, California
April 28, 2000
-14-
<PAGE>
U.S. LABORATORIES INC.
1999 STOCK INCENTIVE PLAN
1. Purposes of The Plan
The U.S. Laboratories Inc. 1999 Incentive Plan (the "Plan") is established
to promote the interests of U.S. Laboratories Inc., a Delaware corporation (the
"Company"), by creating an incentive program to (a) attract and retain employees
who will strive for excellence and (b) motivate those individuals to set and
achieve above-average objectives by providing them with rewards for
contributions to the operating profits and earning power of the Company.
2. Administration of The Plan
The Compensation Committee of the Board of Directors of the Company (the
"Committee") will administer the Plan and adopt rules and regulations to
implement the Plan. Decisions of the Committee are final and binding on all
parties who have an interest in the Plan. In the absence of a Compensation
Committee, the Board of Directors will administer the Plan.
3. Definitions. For purposes of the Plan:
3.1. Employee. An individual shall be considered an "Employee" while the
individual remains employed by the Company or one or more of its Subsidiaries.
3.2. Subsidiary. Each corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company shall be considered to be a
"Subsidiary" of the Company, provided each such corporation (other than the last
corporation in the unbroken chain) owns, at the time of determination, stock
possessing more than 50% of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
4. Stock Subject to Plan
4.1. Number. Subject to adjustment as provided in Section 4.2, the total
number of shares of the Company's common stock that may be issued under the Plan
is 100,000. The shares to be delivered under the Plan may consist, in whole or
in part, of authorized but unissued stock or treasury stock.
4.2. Adjustment in Capitalization. If the Committee determines that any
dividend or other distribution (whether in the form of cash, stock, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of stock or other securities of the Company, issuance of
warrants or other rights to purchase stock or other securities of the Company,
or other similar corporate transaction or event affects the stock and the
Committee determines that an adjustment is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee may adjust
-i-
<PAGE>
any or all of (i) the number and type of shares of stock subject to the Plan and
which thereafter may be made the subject of awards under the Plan; (ii) the
number and type of shares of stock subject to outstanding awards; and (iii) the
grant, purchase or exercise price with respect to any award, or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
award.
5. Bonus Awards
5.1. Eligibility. All employees of the Company and its subsidiaries are
eligible under the Plan.
5.2. Allocations. The Committee will determine the bonus pool and
allocations to be paid under the Plan for the Company's fiscal year. These
allocations will be reviewed and approved by the Board of Directors prior to
grant of the bonus. The determinations of the Committee and the Board are final.
5.3. The Committee may restrict the resale of the bonus shares by Employees
for up to one year from the date of the grant.
5.4. Entitlement to Bonus. The Committee will determine who will receive
allocations under the Plan. This determination will be reviewed and approved by
the Board of Directors. If an eligible Employee receives no allocation under
section 5.1 above, then that Employee is not entitled to any bonus under the
Plan.
6. Payment Of Bonus Awards
6.1. The bonus awards may be paid in cash or shares of the Company's common
stock at the discretion of the Committee and the Board of Directors.
6.2. The individual bonus award allocated to each Employee under Section 5
will be paid to the Employee within 30 days after completion of the annual audit
of the Company's financial statements by its independent auditors, regardless of
whether the individual has remained in Employee status through the date of
payment.
7. Valuation of Stock. The Committee will place a value on the stock in order
to determine the compensation received by employees.
8. Withholding. The Company may withhold taxes owed by Employee.
9. Term. This Plan will expire ten (10) years from the date of its adoption,
unless extended by the Board of Directors.
10. General Provisions
10.1. Plan Amendments. The Plan will become effective when adopted by the
Company's Board of Directors. The Board of Directors may at any time amend,
suspend or terminate the Plan, provided that it must do so in a written
resolution and the action may not
-ii-
<PAGE>
adversely affect rights and interests of Plan participants to individual bonuses
allocated prior to such amendment, suspension or termination.
10.2. Benefits Unfunded. No amounts awarded or accrued under this Plan are
actually funded, set aside or otherwise segregated prior to payment. The
obligation to pay the bonuses awarded hereunder shall at all times be an
unfunded and unsecured obligation of the Company. Plan participants shall have
the status of general creditors and shall look solely to the general assets of
the Company for the payment of their bonus awards.
10.3. Benefits Nontransferable. No Plan participant has the right to
alienate, pledge or encumber his or her interest in this Plan, and this interest
may not (if permitted by law) be subject in any way to the claims of the
Employee's creditors or to attachment, execution or other process of law.
10.4. No Employment Rights. No action of the Company in establishing the
Plan, no action taken under the Plan by the Committee and no provision of the
Plan itself may be construed to grant any person the right to remain in the
employ of the Company or its subsidiaries for any period of specific duration.
Rather, each Employee will be employed "at will," which means that either such
Employee or the Company may terminate the employment relationship at any time
and for any reason, with or without cause.
10.5. Exclusive Agreement. This Plan document is the full and complete
agreement between the eligible Employees and the Company on the terms described
herein.
-iii-
<PAGE>
<TABLE>
U. S Laboratories Inc. 2000 Annual Meeting of Shareholders - June 3, 2000
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Dickerson Wright and Joseph Wasilewski, and each or either of them as proxies, each with the
power to appoint his substitute, and hereby authorizes each or either of them to represent and to vote, as designated below, all
the shares of common stock of U. S. Laboratories Inc. held of record by the undersigned on April 14, 2000 at the 2000 annual
meeting of shareholders scheduled to be held on June 3, 2000 and any adjournment thereof. The undersigned hereby acknowledges
receipt of the notice of annual meeting and accompanying proxy statement relating to our Company's 2000 annual meeting of
shareholders and our company's 1999 annual report.
This proxy, when properly executed, will be voted in the manner directed by you. If you make no direction, this proxy will be
voted FOR the specified director nominees and FOR the approval of the 1999 stock incentive plan, as amended, and on such other
business as may properly come before the meeting in accordance with the best judgment of the proxies.
<CAPTION>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: 4. Mark Baron 7. James L. McCumber [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
1. Dickerson Wright 5. Thomas H. Chapman 8. Robert E. Petersen listed to the left to vote for all nominees
2. Gary Elzweig 6. Joseph Wasilewski 9. Martin B. Lowenthal (except as listed to the left
3. Donald C. Alford specified below).
(Instructions: To withhold authority to vote for any indicated nominee, write -> -------------------------------------------------
the number(s) of the nominee(s) in the box provided to the right.)
-------------------------------------------------
2. Approval of the proposed 1999 stock incentive plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come before the meeting and at any adjournment thereof.
[Continued on other side]
[Continued from other side]
Date _______________ No. of Shares ____________
-------------------------------------------------
-------------------------------------------------
Signature(s) in Box. Please sign exactly as your
name appears hereon. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give your full title as such. If
a corporation, please sign in full corporate name
by the president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
</TABLE>
