<PAGE>
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
MEDICAL RESOURCES, 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 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 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>
MEDICAL RESOURCES, INC.
155 STATE STREET
HACKENSACK, NEW JERSEY 07601
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1997
The Board of Directors of Medical Resources, Inc., a Delaware corporation
(the "Company"), hereby gives notice that the 1997 Annual Meeting of
Stockholders of the Company will be held on Monday, May 19, 1997, at 10:00
a.m., Eastern Daylight Time, at the Sheraton New York Hotel and Towers, 811
7th Avenue, New York, New York, for the following purposes:
1. To elect six persons to serve on the Company's Board of Directors.
2. To consider and vote upon a proposal to approve the Company's 1996 Stock
Option Plan B.
3. To ratify the selection by the Board of Directors of Coopers & Lybrand
L.L.P., as the Company's independent public accountants for the fiscal
year ending December 31, 1997.
4. To transact such other and further business as may properly come before
the meeting or any adjournment(s) thereof.
Stockholders of record at the close of business on April 7, 1997 are
entitled to notice of and to vote at the meeting. If you attend the meeting
you may vote in person if you wish, even though you have previously returned
your proxy. A copy of the Company's Proxy Statement and its Annual Report for
the year ended December 31, 1996 are enclosed herewith.
By Order of The Board of Directors
/s/ Stephen M. Davis
Stephen M. Davis, Secretary
April 21, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED
PROXY, WHICH IS SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS AND RETURN IT IN
THE PRE-ADDRESSED ENVELOPE WHICH HAS BEEN PROVIDED. ANY STOCKHOLDER MAY REVOKE
HIS PROXY AT ANY TIME BEFORE THE MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY
SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND VOTING
IN PERSON.
<PAGE>
MEDICAL RESOURCES, INC.
155 STATE STREET
HACKENSACK, NEW JERSEY 07601
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON MAY 19, 1997
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders and Annual Report for the Year Ended December 31, 1996 are being
furnished in connection with the solicitation by the Board of Directors of
Medical Resources, Inc., a Delaware corporation (the "Company"), of proxies
for use at the 1997 Annual Meeting of Stockholders (the "Annual Meeting") of
the Company to be held on Monday, May 19, 1997, at 10:00 a.m., Eastern
Daylight Time, at the Sheraton New York Hotel and Towers, 811 7th Avenue, New
York, New York, and at any adjournments thereof. This Proxy Statement and the
enclosed proxy are first being sent to stockholders on or about April 21,
1997.
The close of business on April 7, 1997 has been selected as the record date
(the "Record Date") for determining the holders of outstanding shares of the
Company's common stock, par value $.01 per share (the "Common Stock"),
entitled to receive notice of and vote at the Annual Meeting. On the Record
Date, there were 20,197,541 shares of Common Stock outstanding and
approximately 697 holders of record. Holders of Common Stock are entitled to
one vote per share.
The presence in person or by properly executed proxy of the record holders
of a majority of the outstanding shares of Common Stock will constitute a
quorum at the Annual Meeting. Elections of directors will be determined by a
plurality vote of all shares present in person or by properly executed proxy
and voting at the Annual Meeting. The affirmative vote of the record holders
of a majority of the Common Stock present in person or by proxy at the Annual
Meeting and voting is required to approve the 1996 Stock Option Plan B (the
"Option Plan") described herein and to ratify the selection of the independent
public accountants. Abstentions will have the same effect as a withheld vote
with respect to the election of directors and a vote against the approval of
the Option Plan and will have no effect on the ratification of the selection
of the independent public accountants. Broker non-votes will have no effect on
the votes with respect to the election of directors, the approval of the
Option Plan or the ratification of the selection of the independent public
accountants.
Unless proxies have been previously revoked, all shares represented by
properly executed proxies will be voted at the Annual Meeting in accordance
with the directions given on such proxies. Any person giving a proxy has the
power to revoke it, in writing delivered to the Secretary of the Company at
the address given above, at any time prior to its exercise. If no direction is
given, a properly executed proxy will be voted FOR the election of the six
persons named under "Election of Directors", FOR the approval of the Option
Plan and FOR the ratification of the selection of Coopers & Lybrand L.L.P., as
the Company's independent public accountants. The Board of Directors does not
anticipate that any other matters will be brought before the Annual Meeting.
If, however, other matters are properly presented, the persons named in the
proxy will have discretion, to the extent allowed by Delaware law, to vote in
accordance with their own judgement on such matters.
<PAGE>
ELECTION OF DIRECTORS
ITEM 1--ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the Company's Board of Directors consists
of six members, each to hold office until the next annual meeting or until his
respective successor is elected and qualified. If any nominee listed below
should become unavailable for any reason, the proxy will be voted for any
substitute nominee or nominees who may be selected by management prior to or
at the Annual Meeting, or, if no substitute is selected prior to or at the
Annual Meeting, for a motion to reduce the membership of the Board to the
number of nominees available. Each nominee is currently a Director of the
Company.
NOMINEES FOR DIRECTOR:
Gary N. Siegler
Gary L. Fuhrman
John H. Josephson
Stephen M. Davis
William D. Farrell
Neil H. Koffler
Certain information regarding these nominees is set forth below in the
section entitled "Management of the Company--Directors, Executive Officers and
Certain Key Employees".
VOTE REQUIRED
The affirmative vote of the record holders of a plurality of the Common
Stock present in person or by proxy at the Annual Meeting and voting is
required to elect Directors. The enclosed proxy provides a means for
stockholders to vote for the election of all of the nominees, to withhold
authority to vote for one or more such nominees, or to withhold authority to
vote for all of such nominees. Abstentions with respect to the election of a
nominee for Director will have the same effect as a withheld vote and broker
non-votes will have no effect on the election of Directors.
It is the intention of the persons in the enclosed proxy to vote FOR the
election of the above-named nominees to serve as Directors of the Company. The
nominees, each of whom currently serves as a Director, have consented to be
named in this Proxy Statement and to continue to serve if elected. Management
does not contemplate or foresee that any of the nominees will be unable or
unwilling to serve or be otherwise unavailable for election.
BOARD RECOMMENDATION
The Board of Directors recommends that stockholders vote FOR the election of
the nominees for Director set forth above.
APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN B
ITEM 2--PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S 1996 STOCK OPTION
PLAN B
GENERAL
On May 20, 1996, the Company's Board of Directors adopted the Company's 1996
Stock Option Plan B (the "Option Plan"). The following summary of the
provisions of the Option Plan is qualified in its entirety by express
reference to the text of the Option Plan attached as Exhibit I hereto. Terms
not otherwise defined in this summary shall have the meaning given to them in
the text of the Option Plan.
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<PAGE>
SHARES GRANTED AND RESERVED
Under the Option Plan, a total of 1,000,000 shares of Common Stock are
reserved to be issued upon exercise of options granted under the plan, subject
to adjustment in the event of, among other things, an increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
stock dividend, combination or reclassification of the Common Stock of the
Company or the payment of a stock dividend with respect to the Common Stock.
As of April 7, 1997, options for the purchase of a total of 801,166 shares had
been granted and were outstanding under the Option Plan, 501,666 of which at
an exercise price of $8.50 per share, 167,000 of which at an exercise price of
$10.38 per share, 82,500 of which at an exercise price of $9.00 per share,
25,000 of which at an exercise price of $11.625 per share, 15,000 of which at
an exercise price of $11.125 per share and 10,000 of which at an exercise
price of $7.88 per share. Such exercise prices equaled or exceeded the fair
market value of the Common Stock on the dates of grant. A total of 198,834
shares were available for issuance under the Option Plan. Included within such
total are options granted to the Company's President, Mr. Farrell, to purchase
115,000 shares; to the Company's Executive Vice-President--Finance, Mr.
O'Malley, to purchase 40,000 shares; to non-employee directors Messrs.
Siegler, Koffler and Josephson, to purchase 336,666, 45,000 and 25,000 shares,
respectively; and to 26 other employees as a group, to purchase 239,500
shares. The options granted to Mr. Farrell and Mr. O'Malley vest in three
equal annual installments and expire five years from the date of grant. The
options granted to the non-employee directors vested immediately upon grant
and expire ten years from the date of grant. Options granted to employees vest
in three equal annual installments and expire five years from the date of
grant. On April 7, 1997 the closing sales price of one share of Common Stock
on The Nasdaq Stock Market's National Market (the "Nasdaq Market") was $11.38.
PLAN DESCRIPTION
Purpose. The Purpose of the Option Plan is to strengthen the Company by
providing an incentive to its employees, consultants and directors and
encouraging them to devote their abilities to the success of the Company. It
is intended that this purpose be achieved by extending to employees,
consultants and directors of the Company or any subsidiary an added long-term
incentive for high levels of performance and exceptional efforts through the
grant of options to purchase shares of the Common Stock of the Company.
Administration. The Option Plan provides that it shall be administered by a
disinterested committee consisting of at least two persons chosen by the Board
of Directors (the "Committee"). The Committee must consist of at least two
directors who are "disinterested" persons as defined in Rule 16b-3 as in
effect on May 20, 1996 ("Rule 16b-3") under the Securities Exchange Act of
1934 (the "Exchange Act"). Presently, Messrs. Fuhrman and Davis constitute the
Committee administering the Option Plan. Subject to the terms of the Option
Plan, the Committee has full power to select, from among the employees and
directors eligible for option grants, the individual to whom options will be
granted, and to determine the specific terms and conditions of each option
grant in a manner consistent with the Option Plan; to waive compliance by
participants with terms and conditions of option grants; to modify or amend
option grants in a manner consistent with the Option Plan; to interpret the
Option Plan and decide any questions and settle all controversies and disputes
that may arise in connection therewith; and to adopt, amend, and rescind rules
and regulations for the administration of the Option Plan. Determinations of
the Committee on all matters relating to the Option Plan are conclusive.
Eligibility. Options may be granted to any employee, consultant or director
of the Company, provided that incentive stock options (as defined below) may
only be granted to employees and to directors who are also employees. Under
Rule 16b-3, a member of the Committee may not participate in the Option Plan.
Options: Grants and Exercise. The Option Plan permits the granting of non-
transferable stock options that qualify as incentive stock options ("ISOs")
under Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), and non-transferable stock options that do not so qualify ("non-
statutory options"). The option exercise price of each option is to be
determined by the Committee, but it may not be less than 100% of the fair
market value of the shares on the date of grant (110% in the case of a person
who owns stock possessing more than 10% of the voting power of the Company (a
"10% stockholder")). For purposes of the Option Plan,
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<PAGE>
"fair market value" on any given date means the average of the high and low
sales price at which Common Stock is traded on such date as reflected on the
Nasdaq Market.
The term of each option shall be determined by the Committee; provided,
however, in the case of an ISO, the term may not exceed ten years from the
date of grant (five years, in the case of a 10% stockholder); non-statutory
options have a term limited to ten years (five years, in the case of a 10%
stockholder) from the date of grant.
The Committee determines at what time or times and under what conditions
(including performance criteria) each option may be exercised. Options may be
made exercisable in installments, and the exercisability of options may be
accelerated by the Committee. The Committee also determines, at the time of
grant of each option, the terms and conditions under which the options granted
to a participant may be exercised in the event of such participant's
termination of service as an employee or director as a result of death,
disability or termination of employment.
To the extent not otherwise provided by the Committee, options granted to
employees become exercisable in three installments, each equal to one-third of
the entire option granted and exercisable on the first, second and third
anniversaries of the grant date, respectively. In the event of termination of
a participant's service to the Company, vested options may be exercised within
six months following the date of death or following a determination of
disability and within three months following termination for any other reason;
except that, if such termination is for cause, the options will not be
exercisable following such termination. In no event may an option be exercised
later than the date of expiration of the term of the option as set forth in
the agreement evidencing such option.
In order to exercise an option, the participant must provide written notice
and full payment to the Secretary of the Company. The option exercise price of
options granted under the Option Plan must be paid for in cash or other shares
of Common Stock upon such terms and conditions as determined by the Committee.
The Committee may require that upon exercise of an option, certificates
representing shares thereby acquired bear an appropriate restrictive legend if
the sale of the shares has not been registered under the Securities Act of
1933, as amended.
No option may be transferred other than by will or by the laws of descent
and distribution, and during a participant's lifetime an option may only be
exercised by him or her.
Mergers and Consolidations. In the event of a dissolution or liquidation or
merger or consolidation of the Company, the options shall continue in effect
in accordance with their respective terms, and each participant shall be
entitled to receive the same number and kind of stock, securities, cash,
property or other consideration that each holder of Common Stock was entitled
to receive in the transaction in respect of the Common Stock.
Amendment. The Board may amend the Option Plan or any outstanding option for
any purpose which may at the time be permitted by law, except that no
amendment or termination of the Option Plan may adversely affect the rights of
any participant (without his or her consent) under an option previously
granted. Insofar as Rule 16b-3 has been amended, in order to streamline
administration of the Plan, the Board may amend the Option Plan to eliminate
provisions of the Option Plan no longer mandated by Rule 16b-3.
Term of Plan. Unless sooner terminated by the Board, the Option Plan will
terminate at the tenth anniversary of the date of adoption by the Board.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary generally describes the principal federal (and not
state and local) income tax consequences of options granted under the Option
Plan. It is general in nature and is not intended to cover all tax
consequences that may apply to Option Plan participants or to the Company. The
provisions of the Code and the Treasury regulations (the "Regulations")
thereunder relating to these matters are complex, and their impact in any one
case may depend upon the particular circumstances. Each holder of an option
under the Option Plan should consult the holder's own accountant, legal
counsel or other financial advisor regarding the tax
4
<PAGE>
consequences of participation in the Option Plan. This discussion is based on
the Code and Regulations as currently in effect.
If an option (whether an ISO or non-statutory option) is granted to a
participant in accordance with the terms of the Option Plan, no income will be
recognized by such participant at the time the option is granted, except in
the case of a non-statutory option with a readily ascertainable fair market
value.
Generally, on exercise of a non-statutory option, a participant in the
Option Plan will be subject to tax on ordinary income on the amount by which
the fair market value of the shares of the Common Stock on the date of
exercise exceeds the purchase price of such shares. In the case of any
employee, the Company will be required to withhold tax on the amount of income
recognized by the employee upon exercise of a non-statutory option. Such
amount of employee compensation will be deductible for tax purposes by the
Company as compensation expense in the year in which the participant
recognizes the ordinary income. The disposition of shares acquired upon
exercise of a non-statutory option will result in capital gain or loss (long-
term or short-term depending on the applicable holding period) in an amount
equal to the difference between the amount realized on such disposition and
the sum of the purchase price and the amount of ordinary income recognized in
connection with the exercise of the non-statutory option.
Generally, on exercise of an ISO, an employee will not recognize any income
and the Company will not be entitled to a deduction for tax purposes. However,
the difference between the purchase price and the fair market value of the
shares of Common Stock received ("ISO shares") on the date of exercise will be
treated as a positive adjustment in determining alternative minimum taxable
income for individual tax purposes of the employee, which may subject the
employee to the alternative minimum tax ("AMT"). Upon the disposition of the
ISO shares, the employee will recognize long-term or short-term capital gain
or loss (depending on the applicable holding period) in an amount equal to the
difference between the amount realized on such disposition and the purchase
price of such shares. Generally, however, if the employee disposes of the ISO
shares within two years after the date of option grant or within one year
after the date of option exercise (a "disqualifying disposition"), the
employee will recognize ordinary income, and the Company will be entitled to a
deduction for tax purposes for the taxable year in which the disqualifying
disposition occurs, in the amount of the excess of the fair market value of
the shares on the date of exercise over the purchase price (or, if less, the
amount of the gain on sale).
If an option is exercised through the use of Common Stock previously owned
by the employee, such exercise generally will not be considered a taxable
disposition of the previously owned shares and, thus, no gain or loss will be
recognized with respect to such shares upon such exercise. However, proposed
Treasury Regulations would provide that, if the previously owned shares are
ISO shares and the holding period requirement for those shares was not
satisfied at the time they were used to exercise an option, such use would
constitute a disqualifying disposition of such previously owned ISO shares,
resulting in the recognition of ordinary income (but not any additional
capital gain) in the amount described above. If an otherwise qualifying ISO
first becomes exercisable in any one year for shares having a fair market
value, determined as of the date of the grant, in excess of $100,000, the
portion of the option in respect of such excess shares will be treated as a
non-statutory option.
Section 16(b) of the Exchange Act generally requires officers, directors and
10% stockholders of the Company to disgorge profits realized by buying and
selling the Company's Common Stock within a six month period. Consequently,
the application of Code Section 83 to those participants who are subject to
Section 16, generally the relevant date for recognizing and measuring the
amount of ordinary income in connection with an exercise of a non-statutory
option (or AMT in the case of an ISO), as well as the relevant date for
recognizing and measuring the amount of an employee's ordinary income and the
Company's tax deduction in connection with a disqualifying disposition of ISO
shares as discussed above, will be the later of: (i) six months following the
date of grant, and (ii) the date of exercise of the option.
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VOTE REQUIRED
The affirmative vote of the record holders of a majority of the Common Stock
present in person or by proxy at the Annual Meeting and voting is required to
approve the Option Plan. Approval of the Option Plan by stockholders is
required for ISO options granted under the Option Plan to meet the
requirements of Code Section 422 and for options granted under the Option Plan
to persons potentially liable under Section 16 of the Exchange Act to be
exempt from liability to the extent provided under Rule 16b-3. Abstentions
will have the same effect as a vote against the approval of the Option Plan
and broker non-votes will have no effect on such vote.
BOARD RECOMMENDATION
The Board of Directors recommends that stockholders vote FOR the approval of
the Option Plan.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
ITEM 3--RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Coopers & Lybrand L.L.P., as
the Company's independent public accountants for the fiscal year ending
December 31, 1997. Although the selection of auditors does not require
ratification, the Board has directed that the appointment of Coopers & Lybrand
L.L.P. be submitted to stockholders for ratification because management
believes this matter is of such significance as to warrant stockholder
participation. The Company expects representatives of Coopers & Lybrand L.L.P.
to be present at the Annual Meeting in person or by telephone conference to
respond to appropriate stockholder questions, and they will be given the
opportunity to address the stockholders, if they so desire.
On February 5, 1997, on the recommendation of its Audit Committee, the
Company dismissed Ernst & Young LLP ("Ernst & Young") as the Company's
accountant and engaged Coopers & Lybrand L.L.P. as its independent accounting
firm. During the two fiscal years ended December 31, 1994 and 1995 and any
subsequent interim period (the "Reporting Period"), none of Ernst & Young's
reports on the Company's financial statements contained an adverse opinion or
a disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles. During the Reporting Period, there were no
matters of disagreement with Ernst & Young on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which, if not resolved to the satisfaction of Ernst & Young, would
have caused Ernst & Young to make a reference thereto in their report.
VOTE REQUIRED
The affirmative vote of the record holders of a majority of the Common Stock
present in person or by proxy at the Annual Meeting and voting is required to
ratify the selection of the independent public accountants. Abstentions and
broker non-votes will have no effect on such vote.
BOARD RECOMMENDATION
The Board of Directors recommends that stockholders vote FOR ratification of
the selection of Coopers & Lybrand L.L.P., as the Company's independent public
accountants for the fiscal year ending December 31, 1997.
6
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MANAGEMENT OF THE COMPANY
The directors, executive officers and certain key employees of the Company
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Gary N. Seigler..................... 35 Chairman of the Board
William D. Farrell.................. 34 President and Chief Operating Officer
and Director
John P. O'Malley III................ 35 Executive Vice-President--Finance and
Chief Financial Officer
Gary I. Fields...................... 44 Senior Vice-President--General
Counsel
Gregory Mikkelsen................... President and Chief Operating Officer
50 of StarMed
Gerald H. Allen..................... Senior Vice-President--Corporate
50 Operations
Carl B. Larson...................... Senior Vice-President--Center
43 Operations
Daniel F. Bafia..................... Senior Vice-President--Southeast
38 Operations
Michael J. Drumgoole................ Senior Vice-President--Sales and
50 Marketing
Robert L. Farrell................... Senior Vice-President--Business
32 Development
Stephen M. Davis.................... 42 Director and Secretary
Gary L. Fuhrman..................... 35 Director
John H. Josephson................... 35 Director
Neil H. Koffler..................... 30 Director
</TABLE>
DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN KEY EMPLOYEES
GARY N. SIEGLER. Mr. Siegler has served as Chairman of the Board of
Directors of the Company since 1990. Mr. Siegler is a co-founder and, since
January 1989, has been President of Siegler, Collery & Co., a New York-based
investment firm ("Siegler Collery"). Mr. Siegler is an executive officer of
the general partner of The SC Fundamental Value Fund, L.P., a fund investing
in marketable securities, and an executive officer of SC Fundamental Value
BVI, Inc., the investment advisor to an off-shore fund investing in marketable
securities. Mr. Siegler serves as the Chairman of the Board of Directors of
National R.V. Holdings, Inc. ("National RV"), a manufacturer of motorhomes and
other recreational vehicles.
WILLIAM D. FARRELL. Mr. Farrell has been a director since November 1995 and
has been the Company's President since September 1996 and served as Co-
President since August 1994 and Chief Operating Officer from April 1994. From
May 1986 to April 1994, Mr. Farrell served in various executive capacities
with the Company. Mr. Farrell is a certified public accountant.
JOHN P. O'MALLEY III. Mr. O'Malley was appointed Executive Vice-President-
Finance and Chief Financial Officer in April 1997 and Senior Vice-President--
Finance and Chief Financial Officer since September 1996. Prior thereto, Mr.
O'Malley was Executive Vice-President--Finance and Chief Financial Officer of
NMR of America, Inc. ("NMR") since December 1992 and was initially employed by
NMR in May 1992. The Company acquired NMR on August 30, 1996 (the "NMR
Acquisition"). From August 1984 to May 1992, Mr. O'Malley was employed by
Ernst & Young LLP, a public accounting firm, and its predecessors. Mr.
O'Malley is a certified public accountant.
GARY I. FIELDS. Mr. Fields was appointed Senior Vice-President--General
Counsel in April 1997. Prior thereto, Mr. Fields was a member of the Health
Law Group at Gordon Altman Butowsky Weitzen Shalov & Wein, a New York law
firm, where Mr. Fields assisted healthcare clients with the formation of
medical group practices, mergers and acquisitions, the development of joint
ventures, the creation of physician and other provider networks and the
development of integrated delivery systems.
GREGORY MIKKELSEN. Mr. Mikkelsen joined Starmed as President and Chief
Operating Officer in August 1996. Prior thereto, Mr. Mikkelsen was President
and Chief Executive Officer of Medical Recruiters of America, Inc. Mr.
Mikkelsen has held senior executive positions with Baxter Health Care and the
Norrell Corporation.
7
<PAGE>
GERALD H. ALLEN. Mr. Allen is Senior Vice-President--Corporate Operations of
the Company and since April 1995 has also held the positions of Vice-
President--Regional Operations and Senior Vice-President--Development. Mr.
Allen was also employed by the Company in several executive capacities from
1984 to 1993. From 1993 through 1995, Mr. Allen was Executive Vice-President
and Chief Financial Officer of Prime Capital Corporation, a merchant banking
company.
CARL B. LARSON. Mr. Larson is Senior Vice-President--Center Operations of
the Company. Prior to Mr. Larson's employment by the Company, Mr. Larson
managed a 13 site privately operated radiology practice in New York. Mr.
Larson is a licensed radiological technologist and, in prior positions, spent
eight years in hospital based radiological administration and five years as a
staff member at the American College of Radiology.
DANIEL F. BAFIA. Mr. Bafia is Senior Vice-President--Southeast Operations of
the Company. Mr. Bafia joined the Company in 1992 and prior thereto had over
10 years experience developing and managing radiation therapy and diagnostic
imaging centers for public and private companies and hospitals.
MICHAEL J. DRUMGOOLE. Mr. Drumgoole is Senior Vice-President--Sales and
Marketing of the Company and has held such position since 1993. Mr. Drumgoole
has over 25 years in medical sales and has held various sales, sales training
and sales management positions within the healthcare industry.
ROBERT L. FARRELL. Mr. Farrell is Senior Vice President--Business
Development of the Company and over the past decade has held a number of
executive positions with the Company, including Manager of Corporate
Accounting, Controller and Director of National Operations. Mr. Farrell is a
brother of William Farrell.
STEPHEN M. DAVIS. Mr. Davis has been a director and Secretary of the Company
since 1992 and is a member of the Company's Audit Committee. For more than the
last five years, Mr. Davis has been a partner of the law firm Werbel &
Carnelutti, A Professional Corporation. Mr. Davis is a director of National
RV.
GARY L. FUHRMAN. Mr. Fuhrman has been a director of the Company since 1992
and is a member of the Company's Audit Committee. Mr. Fuhrman has been a
Director and a Senior Vice President of Arnhold and S. Bleichroeder, Inc.
since March 1995 and January 1993, respectively, and a vice president of such
firm for more than five years prior thereto. Mr. Fuhrman is a director of
National RV.
JOHN H. JOSEPHSON. Mr. Josephson has been a director of the Company since
July 1995. Mr. Josephson is a Vice President and Director of Allen & Company
Incorporated, an investment banking firm, and has been with such firm since
1987. Mr. Josephson is also a director of Norwood Promotional Products, Inc.
NEIL H. KOFFLER. Mr. Koffler has been a director of the Company since
November 1995 and is a member of the Company's Audit Committee. Mr. Koffler
has been employed by Siegler Collery since 1989. Mr. Koffler is an executive
officer of Fundamental Value Fund and Fundamental Value BVI. Mr. Koffler is a
director of National RV.
BOARD OF DIRECTORS AND COMMITTEES
Pursuant to the Company's Bylaws, the Company's Board of Directors consists
of six members, each to hold office (subject to the Company's By-Laws) until
the next annual meeting or until his respective successor is elected and
qualified. In the case of a vacancy, a director will be appointed by a
majority of the remaining directors then in office to serve the remainder of
the term left vacant. Directors do not receive any fees for attending Board
meetings. Directors are entitled to receive reimbursement for travelling costs
and other out-of-pocket expenses incurred in attending Board meetings. During
the fiscal year ended December 31, 1996 ("fiscal 1996"), the Board of
Directors held 10 meetings and took action by written consent on 13 other
occasions. All incumbent directors attended at least 75 percent of those
meetings and of its committees of which they were members that were held while
they were serving on the Board or such committee.
8
<PAGE>
The Board of Directors has designated a Stock Option Committee, consisting
of Stephen M. Davis and Gary L. Fuhrman, which makes all decisions with
respect to the grant of stock options and administration of the Company's
1992, 1995 and 1996 Stock Option Plans. The Stock Option Committee held two
meetings during fiscal 1996 and took action by written consent on two other
occasions. The Stock Option Committee will also administer the 1996 Stock
Option Plan B which was adopted by the Board of Directors in May 1996. The
Board of Directors has also established an Audit Committee, consisting of
Messrs. Koffler, Fuhrman and Davis. The Audit Committee met once during fiscal
1996. The Audit Committee reviews the performance of the independent
accountants as auditors for the Company, discusses and reviews the scope and
the fees of the prospective annual audit and reviews the results with the
auditors. The Company does not have a standing compensation committee or
nominating committee.
Pursuant to the Company's Bylaws, officers of the Company hold office until
the first meeting of directors following the next annual meeting of
stockholders and until their successors are chosen and qualified. It is
anticipated that immediately following the Annual Meeting, the Board of
Directors elected at the Annual Meeting will hold the 1997 Annual Meeting of
the Board of Directors. At such meeting, it is anticipated that the current
officers of the Company will be re-elected to serve in the capacities set
forth above until the next Annual Meeting of the Board of Directors or until
their respective successors are duly elected and qualified.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons, the
Company believes that during fiscal 1996, all filing requirements applicable
to its officers and directors were complied with by such individuals, except
for one inadvertent untimely Form 4 filed by Mr. Gary Fuhrman, a director,
reporting three separate purchases of Common Stock.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation earned by each of the
Company's executive officers (the "Named Officers") for the Company's fiscal
years as specified below:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS
------------------------------------ ---------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND PRINCIPAL OTHER ANNUAL STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION AWARDS SARS(#) COMPENSATION($)(4)
------------------ ---- --------- -------- ------------ ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William D. Farrell...... 1996 $152,415 $150,000 $6,350(1) -0- 140,000 $4,093
President and 1995 $131,643 $ 60,000 $5,700 -0- 135,000 $3,245
Chief Operating Officer 1994 $109,308 $ 25,000 $5,700 -0- 50,000 $2,440
John P. O'Malley III(2). 1996 $183,333 -0- -0- -0- 203,438(5) -0-
Executive Vice
President-
Finance and Chief
Financial Officer
Robert J. Adamson(3).... 1996 $152,523 $ -0- $4,275(1) -0- 60,000 $2,964
Former Co-President and 1995 $131,643 $ 60,000 $5,208 -0- 135,000 $3,245
Chief Financial Officer 1994 $112,768 $ 12,500 $4,800 -0- 35,000 $1,191
</TABLE>
- --------
(1) Represents an automobile allowance for Mr. Farrell and Mr. Adamson.
(2) Mr. O'Malley was appointed Senior Vice-President--Finance and Chief
Financial Officer in September 1996.
(3) Mr. Adamson served as Co-President until September 1996. Mr. Adamson was
appointed Co-President in September 1994. Mr. Adamson's fiscal 1994
compensation includes compensation paid to him by StarMed prior to its
acquisition by the Company in August 1994.
(4) Matching contributions under Company 401(k) plan.
(5) Represents 40,000 shares underlying employee stock options and 163,438
shares underlying warrants issued to Mr. O'Malley, the former Executive
Vice-President--Finance and Chief Financial Officer of NMR, in connection
with the NMR Acquisition, an aggregate of 113,438 of which were issued in
exchange for his NMR employee stock options. See "Management of the
Company--Employment Agreements".
9
<PAGE>
EMPLOYMENT AGREEMENTS
The Company is a party to an employment agreement with Mr. William D.
Farrell which expires on December 31, 1999. Pursuant to such employment
agreement, Mr. Farrell acts as President and Chief Operating Officer of the
Company, for which he currently receives an annual salary of $225,000 and is
prohibited from competing with the Company for a period of fifteen months
following the term of the agreement.
The Company is party to a non-competition and consulting agreement with Mr.
John P. O'Malley III which expires on August 30, 1998 entered into in
connection with the NMR Acquisition. Such agreement is terminable by Mr.
O'Malley, at his discretion, on February 28, 1998. Pursuant to such consulting
agreement Mr. O'Malley receives $550,000 annually. Pursuant to such consulting
agreement, the Company issued to Mr. O'Malley at the closing of the NMR
Acquisition (i) five-year warrants to purchase 50,000 shares of Common Stock
at an exercise price of $8.00 per share, and (ii) in exchange for his NMR
employee stock options, four separate five-year stock purchase warrants to
purchase 10,313; 27,500; 41,250; and 34,375 shares of Common Stock at exercise
prices of $4.00, $3.36, $4.18 and $4.73, respectively. Subsequent to the
closing of the NMR Acquisition, Mr. O'Malley was appointed Senior Vice-
President--Finance and Chief Financial Officer of the Company in September
1996.
STOCK OPTION PLANS
1992 Stock Option Plan
In July 1992, the Company adopted and approved the 1992 Stock Option Plan
(the "1992 Plan"). The 1992 Plan is designed to serve as an incentive for
retaining qualified and competent directors, employees and consultants. The
1992 Plan provides for the award of options to purchase up to 240,000 shares
of Common Stock, of which 227,625 were subject to outstanding options as of
April 7, 1997. The 1992 Plan is administered by the Stock Option Committee of
the Board of Directors. The Stock Option Committee has, subject to the
provisions of the 1992 Plan, full authority to select Company individuals
eligible to participate in the 1992 Plan, including officers, directors
(whether or not employees) and consultants (the "Plan Participants"). The 1992
Plan provides for the awarding of incentive stock options (as defined in
Section 422 of the Internal Revenue Code of 1986) and non-incentive stock
options. Options granted pursuant to the 1992 Plan will have such vesting
schedules and expiration dates as the Stock Option Committee shall establish
in connection with each Plan Participant, which terms shall be reflected in an
option agreement executed in connection with the granting of the option. In
fiscal 1996, 100,000 options were granted under the 1992 Plan.
1995 Stock Option Plan
In March 1995, the Company's Board of Directors adopted and approved the
1995 Stock Option Plan (the "1995 Plan"). The 1995 Plan is designed to serve
as an incentive for retaining qualified and competent directors, employees and
consultants. The 1995 Plan provides for the award of options to purchase up to
400,000 shares of Common Stock, of which 331,000 were subject to outstanding
options as of April 7, 1997. The 1995 Plan is administered by the Stock Option
Committee of the Board of Directors. The Stock Option Committee has, subject
to the provisions of the 1995 Plan, full authority to select Company
individuals eligible to participate in the 1995 Plan, including officers,
directors (whether or not employees) and consultants. The 1995 Plan provides
for the awarding of incentive stock options (as defined in Section 422 of the
Internal Revenue Code of 1986) and non-incentive stock options. Options
granted pursuant to the 1995 Plan will have such vesting schedules and
expiration dates as the Stock Option Committee shall establish in connection
with each plan participant, which terms shall be reflected in an option
agreement executed in connection with the granting of the option. In fiscal
1996 141,000 options were granted under the 1995 Plan.
1996 Stock Option Plan
In February 1996, the Company's Board of Directors adopted and approved the
1996 Stock Option Plan (the "1996 Plan"). The 1996 Plan is designed to serve
as an incentive for retaining qualified and competent
10
<PAGE>
directors, employees and consultants. The 1996 Plan provides for the award of
options to purchase up to 250,000 shares of Common Stock, of which 224,000
were subject to outstanding options as of April 7, 1997. The 1996 Plan is
administered by the Stock Option Committee of the Board of Directors. The
Stock Option Committee has, subject to the provisions of the 1996 Plan, full
authority to select Company individuals eligible to participate in the 1996
Plan, including officers, directors (whether or not employees) and
consultants. The 1996 Plan provides for the awarding of incentive stock
options (as defined in Section 422 of the Internal Revenue Code of 1986) and
non-incentive stock options. Options granted pursuant to the 1996 Plan will
have such vesting schedules and expiration dates as the Stock Option Committee
shall establish in connection with each plan participant, which terms shall be
reflected in an option agreement executed in connection with the granting of
the option. In fiscal 1996, 249,000 options were granted under the 1996 Plan.
1996 Stock Option Plan B
In May 1996, the Company's Board of Directors adopted and approved the 1996
Stock Option Plan B. The Option Plan is designed to serve as an incentive for
retaining qualified and competent directors, employees and consultants. See
"Approval of the Company's 1996 Stock Option Plan B."
Options Issued to Former NMR Employees
Under the terms of the merger agreement relating to the NMR Acquisition, all
outstanding NMR employee stock options were deemed to be exercisable for the
number of shares of Common Stock the option holder would have received in the
NMR Acquisition had the holder exercised the NMR employee options prior to the
NMR Acquisition. At December 31, 1996, 78,627 options to purchase Common Stock
issued in exchange for such NMR employee options were outstanding, at exercise
prices ranging from $3.27 to $6.55 per share.
Other Grants of Stock Options
In February 1996, the Board of Directors granted to Messrs. Davis and
Fuhrman ten-year options outside of the above described plans to purchase
10,000 shares and 50,000 shares, respectively at exercise prices of $5.50 and
$6.00, respectively. In May 1996, the Board of Directors granted to Messrs.
Davis and Fuhrman ten-year options outside of the above described plans to
purchase 10,000 shares each, at an exercise price of $9.00 per share.
11
<PAGE>
Options and Warrants Granted in Last Fiscal Year
The following table sets forth certain information concerning options and
warrants granted during fiscal 1996 to the Named Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
-------------------------------- --------------------------
PERCENT OF
TOTAL
OPTIONS/SARS
GRANTED TO EXERCISE
EMPLOYEES IN OR BASE
OPTIONS FISCAL PRICE EXPIRATION
NAME GRANTED YEAR(3) ($/SH) DATE 0%($) 5%($) 10%($)
- ---- ------- ------------ -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
William D. Farrell...... 25,000 3.0% $5.50 2/15/01 $ 0 $ 37,989 $ 83,945
35,000 4.3% $9.00 5/20/01 $ 0 $ 87,029 $193,311
80,000 9.6% $8.50 11/1/01 $ 0 $187,871 $415,147
John P. O'Malley III.... 50,000(2) 6.1% $8.00 8/31/01 $ 12,500 $126,466 $264,335
10,313(2) 1.3% $4.00 8/31/01 $ 43,830 $ 67,337 $ 95,774
27,500(2) 3.4% $3.36 8/31/01 $134,475 $197,156 $272,984
41,250(2) 5.0% $4.18 8/31/01 $167,888 $261,910 $375,652
34,375(2) 4.2% $4.73 8/31/01 $121,000 $199,352 $294,137
40,000 4.9% $8.50 11/1/01 $ 0 $ 93,935 $207,573
Robert J. Adamson(4).... 25,000 3.0% $5.50 2/15/01 $ 0 $ 37,989 $ 83,945
35,000 4.3% $9.00 5/20/01 $ 0 $ 87,029 $192,311
</TABLE>
- --------
(1) The 5% and 10% assumed annual rates of appreciation of the grant date
market prices are mandated by rules of the Securities and Exchange
Commission and do not reflect estimates or projections of future Common
Stock prices. There can be no assurance that the amounts reflected in this
table will be achieved.
(2) Represents shares underlying warrants issued to Mr. O'Malley, the former
Executive Vice-President--Finance and Chief Financial Officer of NMR in
connection with the NMR Acquisition, an aggregate of 113,438 of which were
issued in exchange for his NMR employee stock options. See "Management of
the Company--Employment Agreements".
(3) Calculated as a percentage of the total number of options and warrants
issued to the Company's employees during fiscal 1996.
(4) Mr. Adamson served as Co-President until September 1996. One-half of each
of the option grants listed in this table became immediately vested and
exercisable until September 6, 1997 upon Mr. Adamson's departure and the
other one-half of the options expired effective as of such date.
OPTION/WARRANT VALUES
The following table sets forth, as of December 31, 1996, the number of
options and warrants the value of exercised and unexercised options and
warrants held by the Named Officers.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1996 (#) DECEMBER 31, 1996 ($)(1)
ACQUIRED IN VALUE -------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William D. Farrell...... -- -- 93,331 246,669 $604,985 $1,110,014
John P. O'Malley III.... -- -- 163,438(2) 40,000 $991,254 $ 115,000
Robert J. Adamson(3).... 123,331 $441,452 17,500 -- $ 41,563 $ 0
</TABLE>
- --------
(1) On December 31, 1996, the last reported sales price for the Common Stock
on the Nasdaq Market was $11.38.
(2) Represents shares underlying warrants issued to Mr. O'Malley, the former
Executive Vice-President--Finance and Chief Financial Officer of NMR, in
connection with the NMR Acquisition, an aggregate of 113,438 of which were
issued in exchange for his NMR employee stock options. See "Management of
the Company--Employment Agreements".
(3) Mr. Adamson served as Co-President until September 1996. Upon his
departure, Mr. Adamson retained the right to exercise all vested options
and one-half of all unvested options possessed by Mr. Adamson as of such
date. All of Mr. Adamson's remaining unvested options expired effective as
of such date.
12
<PAGE>
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has not established any compensation committee.
Therefore, the full Board reviews and make decisions regarding salaries,
compensation and benefits of executive officers and key employees of the
Company.
Compensation of the Company's executive officers and key employees has
historically consisted of two components: base salary and annual bonuses. Base
compensation levels have been developed in order to attract and retain
executives and key employees based on their level of responsibility within the
Company. Generally, the Company has positioned salaries at median compensation
levels for comparable positions and responsibilities in the market. Individual
salaries may be higher or lower based on the qualifications and experience of
the individual as well as Company performance. Base salaries have been subject
to periodic review and adjustment and annual salary adjustments have been made
based on the factors described above. Annual bonuses closely link executive
pay with performance in areas key to the Company's short term operating
success. The Company has granted annual bonuses to executives and employees
based upon subjective and objective performance criteria relating to both the
Company and the individual, including the level of Company revenues and
earnings, a person's responsibility level and other performance targets.
For fiscal 1996, the compensation package of the Company's President, Mr.
Farrell, was established pursuant to a written employment agreement which
expires December 31, 1999. Mr. Farrell currently receives an annual salary of
$225,000. See "Management of the Company--Employment Agreements."
The Board of Directors instituted the 1992 Stock Option Plan, the 1995 Stock
Option Plan, the 1996 Stock Option Plan and the 1996 Stock Option Plan B, all
of which plans are administered by Stock Option Committee. See "Management of
the Company--Stock Option Plans." The Company has adopted these stock option
plans in order to create incentives for retaining qualified and competent
employees and maximizing long-term stockholder values. For fiscal 1997, the
Board intends to examine and evaluate the performance of the Company's
officers and employees, through discussions with senior management and
otherwise, and make its decisions with respect to base salary, annual bonuses
and any other elements of compensation in light of an overriding Company
philosophy linking pay and performance.
BOARD OF DIRECTORS:
Gary N. Siegler
William D. Farrell
John H. Josephson
Gary L. Fuhrman
Stephen M. Davis
Neil H. Koffler
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing cumulative total stockholder returns
(assuming reinvestment of dividends) of the Company; the CRSP Total Return
Index for The Nasdaq Stock Market (US), comprising all domestic shares traded
in the Nasdaq National Market and the Nasdaq SmallCap Market; and self-
determined peer group of nine companies. The graph assumes $100 invested on
September 3, 1992 (the first day of trading of the Common Stock occurring in
connection with the Company's initial public offering) in the Company and in
each of the indices. The performance shown in the graph is not necessarily
indicative of future performance.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CRSP Total Returns Index for: 12/13/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
MEDICAL RESOURCES, INC. 101.6 38.1 64.3 107.1 216.7
Nasdaq Stock Market (US Companies) 101.5 118.1 135.6 132.6 187.5 230.6
Self-Determined Peer Group 127.2 82.8 40.7 22.7 40.3 54.3
</TABLE>
Companies in the Self-Determined Peer Group
ALLIANCE IMAGING INC DEL AMERICAN SHARED HOSPITAL SVCS
COMPLETE MANAGEMENT INC DIAGNOSTIC HEALTH SERVICES INC
HEALTHCARE IMAGING SERVICES INC INSIGHT HEALTH SERVICES CORP
NATIONAL DIAGNOSTICS INC RAYTEL MEDICAL CORP
S M T HEALTH SERVICES INC U S DIAGNOSTIC INC
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company pays a financial advisory fee to an affiliate (the "Affiliate")
of the Company's Chairman of the Board and controlling stockholder. Such fees
amounted to $102,084 for fiscal 1996. The Company also paid transaction
related advisory fees and expenses to the Affiliate of $362,500 and issued to
the Affiliate warrants to purchase 120,000 shares of the Company's Common
Stock exercisable at $9.00 per share for services rendered to the Company,
including services in connection with the NMR acquisition, the public offering
of the Company's Common Stock in October 1996 and other transactions.
In connection with financial advisory services rendered by the Affiliate in
connection with the Company's completion of a $52,000,000 private placement of
Senior Notes in February 1997 and the consummation of four acquisitions in
1997, the Company, in March 1997, paid $225,000 and issued warrants to
purchase 281,000 shares of the Company's Common Stock to the Affiliate. In
addition, the Company has authorized the issuance of warrants to purchase
168,000 shares of the Company's Common Stock to the Affiliate in connection
with a pending acquisition in 1997. The exercise prices of each of the
warrants issued to the Affiliate were based upon the market price of the
Common Stock on the dates of grant of such warrants. The Company believes that
the terms and amount of compensation paid to the Affiliate are no less
favorable to the Company than the terms and amount of compensation which would
have been paid to unaffiliated parties for rendering the same services to the
Company.
Werbel & Carnelutti, a law firm in which Mr. Davis, a Director, is a
partner, performed legal services for the Company during fiscal 1996.
15
<PAGE>
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The following table set forth as of April 7, 1997 the number and percentage
of shares of Common Stock held by (i) each of the executive officers and
directors of the Company, (ii) all persons who are known by the Company to be
the beneficial owners of, or who otherwise exercise voting or dispositive
control over, five percent or more of the Company's outstanding Common Stock
and (iii) all of the Company's present executive officers and directors as a
group:
<TABLE>
<CAPTION>
COMMON PERCENTAGE
NAME AND ADDRESS STOCK OF
OF BENEFICIAL OWNER OWNED(1) OUTSTANDING
------------------- --------- -----------
<S> <C> <C>
Gary N. Siegler (2)(3)................................... 4,254,117 20.0%
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019
Peter M. Collery (2)(4).................................. 3,044,002 15.0%
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019
StarMed Investors, L.P. (2).............................. 1,441,087 7.1%
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019
New England MRI (5)...................................... 1,255,000 6.2%
3000 Colby Street
Berkeley, California 94705
William D. Farrell (6)................................... 114,830 *
c/o Medical Resources, Inc.
155 State Street
Hackensack, NJ 07601
John P. O'Malley III (7)................................. 181,703 *
c/o Medical Resources, Inc.
155 State Street
Hackensack, NJ 07601
Gary L. Fuhrman (8)...................................... 177,591 *
c/o Arnhold and S. Bleichroeder, Inc.
45 Broadway
New York, NY 10006
John H. Josephson (9).................................... 44,375 *
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, NY 10022
Stephen M. Davis (10).................................... 48,387 *
c/o Werbel & Carnelutti
711 Fifth Avenue
New York, NY 10022
Neil H. Koffler (11)..................................... 98,580 *
c/o Siegler Collery & Co.
712 Fifth Avenue
New York, NY 10019
All officers and directors as a group (7 in number)
(2)(3)(6)(7)(8)(9)(10)(11).............................. 4,919,583 22.6%
</TABLE>
- --------
*Less than one percent.
16
<PAGE>
(1) Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to the shares of Common Stock
shown as beneficially owned by them.
(2) Messrs. Siegler and Collery, due to their joint ownership of Siegler
Collery and other affiliates which control StarMed Investors, L.P. (which
is included in the table), and certain other entities which beneficially
own an aggregate of 1,444,216 shares of Common Stock, including 12,500
shares underlying convertible debentures, are each deemed to beneficially
own all of the shares of Common Stock owned of record by all such
entities.
(3) Includes 608,666 shares underlying outstanding options which are
exercisable immediately or within 60 days, 6,250 shares underlying
convertible debentures and 401,000 shares issuable upon exercise of
certain warrants held by 712 Advisory Services, Inc. of which Mr. Siegler
is the sole shareholder.
(4) Includes 51,000 shares underlying outstanding options which are
exercisable immediately or within 60 days and 6,250 shares underlying
convertible debentures.
(5) Does not include 75,000 shares issuable pursuant to the Company's
acquisition of the assets of New England MRI, Inc., 200,000 of which are
contingent upon the acquired centers achieving certain earning objectives.
The total number of shares owned by New England MRI, Inc. is based on the
Company's stock records.
(6) Includes 113,330 shares underlying outstanding options which are
exercisable immediately or within 60 days.
(7) Includes 163,438 shares underlying outstanding options which are
exercisable immediately or within 60 days and 4,250 shares owned through
the Company's 401(k) plan.
(8) Includes 101,000 shares underlying outstanding options which are
exercisable immediately or within 60 days and 25,000 shares underlying
convertible debentures.
(9) Includes 40,000 shares underlying outstanding options which are
exercisable immediately or within 60 days.
(10) Includes 46,000 shares underlying outstanding options which are
exercisable immediately or within 60 days.
(11) Includes 95,000 shares underlying outstanding options which are
exercisable immediately or within 60 days.
OTHER MATTERS
The Board of Directors is not currently aware of any other matters to be
transacted at the Annual Meeting. However, if any other matter should properly
come before the Annual Meeting or any adjournment thereof, the persons named
in the accompanying proxy intend to vote on such matters as they, in their
discretion, may determine, subject, in any event, to the requirements of
Delaware Law.
The Company will bear all costs of soliciting proxies in the accompanying
form. Solicitation will be made by mail, and officers of the Company may also
solicit proxies by telephone or personal interview. In addition, the Company
expects to request persons who hold shares in their names for others to
forward copies of this proxy soliciting material to them and to request
authority to execute proxies in the accompanying form, and the Company will
reimburse such persons for their out-of-pocket and reasonable clerical
expenses in doing this.
FINANCIAL STATEMENTS
The Company's audited financial statements for the fiscal year ended
December 31, 1996 and certain other related financial and business information
of the Company are contained in the Annual Report to Stockholders mailed with
this Proxy Statement.
STOCKHOLDERS' PROPOSALS
Any proposal which an eligible stockholder wishes to include in the proxy
statement for the 1998 Annual Meeting of Stockholders must be received by the
Company at its principal executive offices at 155 State Street, Hackensack,
New Jersey 07601, not later than December 31, 1997.
By Order of the Board of Directors
/s/ Stephen M. Davis
Stephen M. Davis, Secretary
Dated: April 21, 1997
17
<PAGE>
EXHIBIT I
TO
PROXY STATEMENT
MEDICAL RESOURCES, INC.
1996 STOCK OPTION PLAN B
<PAGE>
MEDICAL RESOURCES, INC.
1996 STOCK OPTION PLAN B
1. Purpose. The purpose of this Plan is to strengthen Medical Resources,
Inc. by providing an incentive to its employees, consultants and directors,
encouraging them to devote their abilities to the success of the Company. It
is intended that this purpose be achieved by extending to employees,
consultants and directors of the Company or any subsidiary an added long-term
incentive for high levels of performance and exceptional efforts through the
grant of options to purchase shares of the Company's common stock under this
Medical Resources, Inc. 1996 Stock Option Plan B.
2. Definitions. For purposes of the Plan:
2.1. "Agreement" means the written agreement between the Company and an
Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.
2.2. "Board" means the Board of Directors of the Company.
2.3. "Cause" means with respect to an Eligible Employee, including an
Eligible Employee who is a director of the Company, (i) the voluntary
termination of employment by such Eligible Employee, (ii) intentional failure
to perform, or habitual neglect of, reasonably assigned duties, (iii)
dishonesty or willful misconduct in the performance of an Optionee's duties,
(iv) an Optionee's engaging in a transaction in connection with the
performance of such Optionee's duties to the Company or any of its
Subsidiaries thereof which transaction is adverse to the interests of the
Company or any of its Subsidiaries and which is engaged in for personal profit
to the Optionee, (v) willful violation of any law, rule or regulation in
connection with the performance of an Optionee's duties, (vi) willful
violation of any policy adopted by the Company relating to the performance or
behavior of employees or (vii) acts of carelessness or misconduct which have
in the reasonable judgment of the Company's Board of Directors, an adverse
effect on the Company.
2.4. "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, public offering, private placement, change in
corporate structure or otherwise.
2.5. "Code" means the Internal Revenue Code of 1986, as amended.
2.6. "Committee" means a committee consisting of at least two (2)
Disinterested Directors appointed by the Board to administer the Plan and to
perform the functions set forth herein.
2.7. "Company" means Medical Resources, Inc.
2.8. "Consultant Option" means an Option granted to a consultant pursuant to
Section 7.
2.9. "Director Option" means an Option granted to a Nonemployee Director
pursuant to Section 5.
2.10. "Disability" means a physical or mental infirmity which impairs the
Optionee's ability to perform substantially his or her duties for a period of
sixty (60) consecutive days.
2.11. "Disinterested Director" means a director of the Company who is
"disinterested" within the meaning of Rule 16b-3 under the Exchange Act.
2.12. "Eligible Employee" means an officer or other employee of the Company
or a Subsidiary who is designated by the Committee as eligible to receive
Options subject to the conditions set forth herein.
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2.13. "Employee Options" means an Option granted to an Eligible Employee
pursuant to Section 6.
2.14. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.15. "Fair Market Value" on any date means the average of the high and low
sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the
per Share closing bid price and per Share closing asked price on such date as
quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to Shares on
such date, the Fair Market Value shall be the value established by the Board
in good faith and in accordance with Section 422 of the Code.
2.16. "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive
Stock Option.
2.17. "Nonqualified Stock Option" means an Option which is not an Incentive
Stock Option.
2.18. "Nonemployee Director" means a director of the Company who is not an
employee of the Company or any Subsidiary.
2.19. "Option" means an Employee Option, a Director Option, a Consultant
Option or any or all of them.
2.20. "Optionee" means a person to whom an Option has been granted under the
Plan.
2.21. "Parent" means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.
2.22. "Plan" means the Medical Resources, Inc. 1996 Stock Option Plan B.
2.23. "Shares" means the common stock, par value $.01 per share, of the
Company.
2.24. "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the
Company.
2.25. "Successor Corporation" means a corporation, or a parent or subsidiary
thereof within the meaning of Section 424(a) of the Code, which issues or
assumes a stock option in a transaction to which Section 424(a) of the Code
applies.
2.26. "Ten-Percent Stockholder" means an Eligible Employee or other eligible
Plan participant, who, at the time an Incentive Stock Option is to be granted
to him or her, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1. The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of
the Plan. The Committee shall keep minutes of its meetings. A quorum shall
consist of not less than two members of the Committee and a majority of a
quorum may authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members of the Committee shall
be as fully effective as if made by a majority vote at a meeting duly called
and held. Each member of the Committee shall be a Disinterested Director. No
member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan
or any transaction hereunder, except for liability arising from his or her own
willful misfeasance, fraud or bad faith. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
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extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiation for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind
arising in connection with any action or failure to act in administering this
Plan or in authorizing or denying authorization to any transaction hereunder.
3.2. Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to determine those Eligible
Employees to whom Employee Options shall be granted under the Plan and the
number of Incentive Stock Options and/or Nonqualified Stock Options to be
granted to each Eligible Employee and to prescribe the terms and conditions
(which need not be identical) of each Employee Option, including the purchase
price per Share subject to each Employee Option, and make any amendment or
modification to any Agreement consistent with the terms of the Plan.
3.3. Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options granted thereunder
and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the
Plan or in any Agreement, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective, and all decisions
and determinations by the Committee in the exercise of this power shall be
final, binding and conclusive upon the Company, its Subsidiaries, the
Optionees and all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee on an individual basis without constituting a
termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan;
(d) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.
4. Stock Subject to Plan.
4.1. The maximum number of Shares that may be made the subject of Options
granted under the Plan is 1,000,000 Shares (or the number and kind of shares
of stock or other securities to which such Shares are adjusted upon a Change
in Capitalization pursuant to Section 9) and the Company shall reserve for the
purposes of the Plan, out of its authorized but unissued Shares or out of
Shares held in the Company's treasury, or partly out of each, such number of
Shares as shall be determined by the Board.
4.2. Whenever any outstanding Option or portion thereof expires, is canceled
or is otherwise terminated for any reason, the Shares allocable to the
canceled or otherwise terminated Option or portion thereof may again be the
subject of Options granted hereunder.
5. Option Grants for Nonemployee Directors.
5.1. Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Nonemployee
Directors who will receive Director Options, the terms and conditions of which
shall be set forth in an Agreement.
5.2. Purchase Price. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Director Option shall be
determined by the Committee and set forth in the Agreement evidencing the
Option, provided that the purchase price per Share under each Director Option
shall be not less than the Fair Market Value of a Share on the date the
Director Option is granted.
5.3. Duration. Director Options shall be for a term to be designated by the
Committee and set forth in the Agreement evidencing the Option.
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5.4. Vesting. Each Director Option shall, commencing not earlier than the
date of its grant, become exercisable in such installments (which need not be
equal or may be one installment) and at such times as may be designated by the
Committee and set forth in the Agreement evidencing the Option. To the extent
not exercised, installments shall accumulate and be exercisable, in whole or
part, at any time after becoming exercisable, to not later than the date the
Director Option expires. The Committee may accelerate the exercisability of
any Option or portion thereof at any time.
6. Option Grants for Eligible Employees.
6.1. Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Employees who will receive Employee Options, the terms and conditions of which
shall be set forth in an Agreement; provided, however, that no Eligible
Employee shall receive an Incentive Stock Option unless he is an employee of
the Company, a Parent or a Subsidiary at the time the Incentive Stock Option
is granted.
6.2. Purchase Price. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Employee Option shall be
determined by the Committee and set forth in the Agreement evidencing the
Option, provided that the purchase price per Share under each Employee Option
shall be (i) except as provided in clause (ii) of this Section 6.2, not less
than the Fair Market Value of a Share on the date the Employee Option is
granted; and (ii) with respect to any Incentive Stock Option granted to a Ten
Percent Stockholder, not less than 110% of the Fair Market Value of a Share on
the date the Option is granted.
6.3. Duration. Employee Options granted hereunder shall be for such term as
the Committee shall determine, provided that no Employee Option shall be
exercisable after the expiration of ten (10) years from the date it is granted
(five (5) years in the case of an Incentive Stock Option granted to a Ten-
Percent Stockholder). The Committee may, subsequent to the granting of any
Employee Option, extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding sentence.
6.4. Vesting. Each Employee Option shall, commencing not earlier then the
date of its grant, become exercisable in such installments (which need not be
equal or may be in one installment) and at such times as may be designated by
the Committee and set forth in the Agreement evidencing the Option. To the
extent not otherwise provided by the Committee, Employee Options shall be
exercisable in three (3) equal installments each equal to one-third of the
entire Option granted, the first of which shall become exercisable on the
first anniversary of the date of the grant of the Employee Option, the second
installment of which shall become exercisable on the second anniversary of the
date of grant of the Employee Option, and the final installment of which shall
become exercisable on the third anniversary of the date of grant. To the
extent not exercised, installments shall accumulate and be exercisable, in
whole or part, at any time after becoming exercisable, to not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5. Modification or Substitution. The Committee may, in its discretion,
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, no modification of an
Employee Option shall adversely alter or impair any rights or obligations
under the Employee Option without the Optionee's consent.
7. Option Grants for Consultants.
7.1. Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those consultants to
the Company or a Subsidiary who will receive Consultant Options, the terms and
conditions of which shall be set forth in an Agreement.
7.2. Purchase Price. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Consultant Option shall be
determined by the Committee and set forth in the Agreement evidencing the
Option, provided that the purchase price per Share under each Consultant
Option shall be not less than the Fair Market Value of a Share on the date the
Consultant Option is granted.
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7.3. Duration. Consultant Options granted hereunder shall be for such term
as the Committee shall determine, provided that no Consultant Option shall be
exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Consultant
Option, extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
7.4. Vesting. Each Consultant Option shall, commencing not earlier then the
date of its grant, become exercisable in such installments (which need not be
equal or may be in one installment) and at such times as may be designated by
the Committee and set forth in the Agreement evidencing the Option. To the
extent not otherwise provided by the Committee, Consultant Options shall be
exercisable in three (3) equal installments each equal to one-third of the
entire Option granted, the first of which shall become exercisable on the
first anniversary of the date of grant of the Consultant Options, the second
installment of which shall become exercisable on the second anniversary of the
date of grant, and the final installment of which shall become exercisable on
the third anniversary of the date of grant. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or part, at any
time after becoming exercisable, to not later than the date the Consultant
Option expires. The Committee may accelerate the exercisability of any Option
or portion thereof at any time.
8. Terms and Conditions Applicable to All Options
8.1. Non-transferability. No Option granted hereunder shall be transferable
by the Optionee to whom granted otherwise than by will or the laws of descent
and distribution, and an Option may be exercised during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal representative.
The terms of each Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the
Optionee.
8.2. Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the Company
at the Company's principal executive office, specifying the number of Shares
to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise, as determined by the Committee in
its discretion, by any one or a combination of the following: (i) cash, or
(ii) transferring Shares to the Company upon such terms and conditions as
determined by the Committee. At the Optionee's request and subject to the
consent of the Committee, Shares to be acquired upon the exercise of a portion
of an Employee Option will be applied automatically to pay the purchase price
in connection with the exercise of additional portions of the Employee Option
then being exercised. The written notice pursuant to this Section 8.2 may also
provide instructions from the Optionee to the Company that upon receipt of the
purchase price in cash from the Optionee's broker or dealer, designated as
such on the written notice, in payment for any Shares purchased pursuant to
the exercise of an Option, the Company shall issue such Shares directly to the
designated broker or dealer. Any Shares transferred to the Company as payment
of the purchase price under an Option shall be valued at their Fair Market
Value on the day preceding the date of exercise of such Option. If requested
by the Committee, the Optionee shall deliver the Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee. No fractional shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
8.3. Rights of Optionees. No Optionee shall be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered the Shares to the Optionee and (iii) the
Optionee's name shall have been entered as a stockholder of record on the
books of the Company. Thereupon, the Optionee shall have full voting, dividend
and other ownership rights with respect to such Shares.
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8.4. Termination of Employment. Unless otherwise provided in the Agreement
evidencing the Option, an Option (other than an Option granted to a consultant
or a Nonemployee Director) shall terminate upon an Optionee's termination of
employment with the Company and its Subsidiaries as follows:
(a) in the event the Optionee's employment terminates as a result of
Disability, the Optionee may at any time within three (3) months after such
event exercise the Option or portion thereof that was exercisable on the
date of such termination;
(b) if an Optionee's employment terminates for Cause, the Option shall
terminate immediately and no rights thereunder may be exercised;
(c) if an Optionee's employment terminates without Cause, the Optionee
may at any time within one (1) month after such event exercise the Option
or portion thereof that was exercisable on the date of such termination;
and
(d) if an Optionee dies while an employee of the Company or any
Subsidiary or within six (6) months after termination as a result of
Disability as described in clause (a) of this Section 8.4, the Option may
be exercised at any time within six (6) months after the Optionee's death
by the person or persons to whom such rights under the Option shall pass by
will or by the laws of descent and distribution; provided, however, that an
Option may be exercised to the extent, and only to the extent, that the
Option or portion thereof was exercisable on the date of death or earlier
termination.
Notwithstanding the foregoing, in no event may any Option be exercised by
anyone after the expiration of the term of the Option.
8.5. Termination of Nonemployee Director Options and Consultant
Options. Nonemployee Director Options and Consultant Options granted to
Nonemployee Directors and consultants to the Company or a Subsidiary shall
terminate under such circumstances as are provided in the Agreement evidencing
the Option, and if not expressly specified, as of the close of business on the
last day of the term of the Option, but in no event may such an Option be
exercised by anyone after the expiration of the term of the Option.
9. Adjustment Upon Changes in Capitalization.
9.1. Subject to Section 10, in the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
the maximum number or class of Shares or other stock or securities with
respect to which Options may be granted under the Plan, the number and class
of Shares or other stock or securities which are subject to outstanding
Options granted under the Plan, and the purchase price therefor, if
applicable.
9.2. Any such adjustment in the Shares or other stock or securities subject
to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the
extent otherwise permitted by Sections 422 and 424 of the Code.
9.3. If, by reason of a Change in Capitalization, an Optionee shall be
entitled to exercise an Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions which were applicable to the
Shares subject to the Option, as the case may be, prior to such Change in
Capitalization.
10. Effect of Certain Transactions.
In the event of (i) the liquidation or dissolution of the Company or (ii) a
merger or consolidation of the Company (a "Transaction"), the Plan and the
Options issued hereunder shall continue in effect in accordance with their
respective terms and each Optionee shall be entitled to receive in respect of
each Share subject to any outstanding Options, as the case may be, upon
exercise of any Option, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was entitled to
receive in the
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Transaction in respect of a Share. In the event that, after a Transaction,
there occurs any change of a type described in Section 2.4 hereof with respect
to the shares of the surviving or resulting corporation, then adjustments
similar to, and subject to the same conditions as, those in Section 9 hereof
shall be made by the Committee.
11. Termination and Amendment of the Program.
11.1. The Plan shall terminate on the day preceding the tenth anniversary of
the date of its adoption by the Board and no Option may be granted thereafter.
The Board may sooner terminate or amend the Plan at any time and from time to
time; provided, however, that to the extent necessary under Section 16(b) of
the Exchange Act and the rules and regulations promulgated thereunder or other
applicable law, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations
at an annual or special meeting held within twelve (12) months after the date
of adoption of such amendment.
11.2. Except as provided in Sections 9 and 10 hereof, rights and obligations
under any Option granted before any amendment or termination of the Plan shall
not be adversely altered or impaired by such amendment or termination, except
with the consent of the Optionee, nor shall any amendment or termination
deprive any Optionee of any Shares which he may have acquired through or as a
result of the Plan.
12. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall
not be construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or
only in specific cases.
13. Limitation of Liability. As illustrative of the limitations of liability
of the Company, but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to:
(i) give any person any right to be granted an Option other than at the
sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares except
as specifically provided in the Plan;
(iii) limit in any way the right of the Company to terminate the
employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or implied,
that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
14. Regulations and Other Approvals; Governing Law.
14.1. This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of New York.
14.2. The obligation of the Company to sell or deliver Shares with respect
to Options granted under the Plan shall be subject to all applicable laws,
rules and regulations, including all applicable federal and state securities
laws, and the obtaining of all such approvals by governmental agencies as may
be deemed necessary or appropriate by the Committee.
14.3. The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions
of the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
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14.4. The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to
obtain for Eligible Employees granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations promulgated
thereunder.
14.5. Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval
has been effected or obtained free of any conditions, or as otherwise
determined to be acceptable to the Committee.
14.6. Notwithstanding anything contained in the Plan to the contrary, in the
event that the disposition of Shares acquired pursuant to the Plan is not
covered by a then current registration statement under the Securities Act of
1933, as amended, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required by the
Securities Act of 1933, as amended, and Rule 144 or other regulations
thereunder. The Committee may require any individual receiving Shares pursuant
to the Plan, as a condition precedent to receipt of such Shares upon exercise
of an Option, to represent and warrant to the Company in writing that the
Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant
to an effective registration thereof under said act or pursuant to a exemption
applicable under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
15. Miscellaneous.
15.1. Multiple Agreements. The terms of each Option may differ from other
Options granted under the Plan at the same time, or at some other time. The
Committee may also grant more than one Option to a given Eligible Employee
during the term of the Plan, either in addition to, or in substitution for,
one or more Options previously granted to that Eligible Employee.
15.2. Withholding of Taxes. (a) The Company shall have the right to deduct
from any distribution of cash to any Optionee, an amount equal to the federal,
state and local income taxes and other amounts as may be required by law to be
withheld (the "Withholding Taxes") with respect to any Option. If an Optionee
is entitled to receive Shares upon exercise of an Option, the Optionee shall
pay the Withholding Taxes to the Company prior to the issuance of such Shares.
In satisfaction of the Withholding Taxes, the Optionee may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the Shares issuable
to him or her upon exercise of the Option having an aggregate Fair Market
Value, on the date preceding the date of exercise, equal to the Withholding
Taxes, provided that in respect of an Optionee who may be subject to liability
under Section 16(b) of the Exchange Act either (i) (A) the Optionee makes the
Tax Election at least six (6) months after the date the Option was granted,
(B) the Option is exercised during the ten day period beginning on the third
business day and ending on the twelfth business day following the release for
publication of the Company's quarterly or annual statements of earnings (a
"Window Period") and (C) the Tax Election is made during the Window Period in
which the Option is exercised or prior to such Window Period and subsequent to
the immediately preceding Window Period or (ii) (A) the Tax Election is made
at least six months prior to the date the Option is exercised and (B) the Tax
election is irrevocable with respect to the exercise of all Options which are
exercised prior to the expiration of six months following an election to
revoke the Tax Election. Notwithstanding the foregoing, the Committee may, by
the adoption of rules or otherwise, (i) modify the provisions in the preceding
sentence or impose such other restrictions or limitations on Tax Elections as
may be necessary to ensure that the Tax Elections will be exempt transactions
under Section 16(b) of the Exchange Act, and (ii) permit Tax Elections to be
made at such other
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times and subject to such other conditions as the Committee determines will
constitute exempt transactions under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Optionee pursuant to the exercise of an Incentive Stock Option
within the two-year period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the Optionee
shall, within ten (10) days of such disposition, notify the Company thereof,
by delivery of written notice to the Company at its principal executive
office, and immediately deliver to the Company the amount of Withholding
Taxes.
15.3. Designation of Beneficiary. Each Optionee may designate a person or
persons to receive in the event of his or her death, any Option or any amount
payable pursuant thereto, to which he or she would then be entitled. Such
designation will be made upon forms supplied by and delivered to the Company
and may be revoked in writing. If an Optionee fails effectively to designate a
beneficiary, then his or her estate will be deemed to be the beneficiary.
16. Effective Date. The effective date of the Plan shall be the date of its
adoption by the Board, subject only to the approval by the affirmative votes
of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly held in
accordance with the applicable laws of the State of Delaware within twelve
(12) months of such adoption.
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MEDICAL RESOURCES, INC.
-----------------------
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1997
The undersigned hereby appoints William D. Farrell and Stephen M. Davis
proxies of the undersigned, with full power of substitution, to vote all shares
of Common Stock, par value $.01 per share, of Medical Resources, Inc., a
Delaware Corporation (the "Company"), the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held on Monday, May 19, 1997
at 10:00 a.m., Eastern Standard Time, at the Sheraton New York Hotel and Towers,
811 7th Avenue, New York, New York, or any adjournments or postponements
thereof, with all the powers the undersigned would have if personally present on
the following matters:
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTORS IN ITEM 1 AND
"FOR" ITEMS 2 AND 3 AND THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO
ANY MATTERS REFERRED TO IN ITEM 4.
The undersigned stockholder(s) acknowledges receipt of an accompanying Notice of
Annual Meeting of Stockholders and accompanying Proxy Statement dated April 21,
1997.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _______________________, 1997
Signature(s):
_____________________________________________________________________________
(Note: Please complete, date and sign exactly as your name appears hereon. When
signing as attorney, administrator, executor, guardian, trustee or corporate
official, please add your title. If shares are held jointly, each holder should
sign.)
RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
<PAGE>
WITHHOLD
1. Election of the following nominees to AUTHORITY
serve as Directors. FOR to vote for
all nominees all nominees
NOMINEES: Gary N. Siegler, Gary L. [ ] [ ]
Fuhrman, John H. Josephson, Stephen M. - -
Davis, William D. Farrell and Neil H.
Koffler
INSTRUCTIONS: To withhold authority to
vote for any individual nominee, write
that nominee's name in the space provided
below.
__________________________________________ FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Proposal to approve the Company's 1996 - - -
Option Plan B.
3. Proposal to ratify and approve the FOR AGAINST ABSTAIN
selection by the Board of Directors of [ ] [ ] [ ]
Coopers & Lybrand L.L.P., as the Company's - - -
independent public accountants for the
fiscal year to end December 31, 1997.
4. In their discretion, the above-named
proxies are authorized to vote in
accordance with their own judgment upon
such other matters as may properly come
before the Annual Meeting or any
adjournments or postponements thereof.
