SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
E-Z-EM, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
- --------------------------------------------------------------------------------
(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)(1) and 0-11
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
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<PAGE>
E-Z-EM, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 19, 1999
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of E-Z-EM, INC., a Delaware corporation (the "Company"), will be held at the
Milleridge Inn, Jericho, New York, on October 19, 1999 at 10:00 a.m., Local
Time, for the following purposes:
1. To elect two Class III directors, each to serve for a term of three
years;
2. To approve an amendment to the 1983 Stock Option Plan;
3. To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending June 3, 2000;
4. To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on August 31, 1999 as the
record date (the "Record Date") for the Meeting. Only stockholders of record of
the Company's Class A Common Stock, $0.10 par value, on the Company's stock
transfer books on the close of business on that date are entitled to vote at the
Meeting.
By Order of the Board of Directors
PETER J. GRAHAM, Secretary
Westbury, New York
Dated: September 20, 1999
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
If you wish to attend, please check the appropriate box on the enclosed proxy
and return it in the enclosed envelope.
<PAGE>
E-Z-EM, INC.
717 MAIN STREET
WESTBURY, NEW YORK 11590-5021
---------------------
PROXY STATEMENT
FOR
MEETING OF STOCKHOLDERS
OCTOBER 19, 1999
---------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders by the Board of
Directors of E-Z-EM, Inc., a Delaware corporation (the "Company"), in connection
with the solicitation of the accompanying proxy (each a "Proxy" and
collectively, the "Proxies") for use at the 1999 Annual Meeting of Stockholders
of the Company (the "Meeting") to be held at the Milleridge Inn, Jericho, New
York, on Tuesday, October 19, 1999 at 10:00 a.m., or at any adjournment thereof.
The principal executive offices of the Company are located at 717 Main
Street, Westbury, New York 11590-5021. The approximate date on which this Proxy
Statement and the accompanying Proxy will first be sent or given to stockholders
is September 20, 1999.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and accordingly files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed with the Commission are available for inspection and copying
at the public reference facilities maintained by the Commission at 450 Fifth
Street, Washington, D.C. 20549 and at certain of the Commission's regional
offices. Copies of such documents may be obtained from the Public Reference
Section of the Commission at prescribed rates. In addition, such material and
other information concerning the Company can be inspected at the American Stock
Exchange, on which exchange shares of the Company's securities are listed.
<PAGE>
TABLE OF CONTENTS
Page
----
Summary of Proxy Statement.......................................... 1
Record Date and Voting Securities................................... 1
Voting of Proxies................................................... 1
Security Ownership.................................................. 2
Election of Directors............................................... 4
Nominees....................................................... 4
Meetings....................................................... 6
Executive Compensation......................................... 7
Compensation and Stock Option Committee Report...................... 12
Certain Transactions................................................ 15
Section 16 (a) Beneficial Ownership Reporting Compliance............ 15
Amendment to the 1983 Stock Option Plan............................. 15
Ratification of Appointment of Independent Auditors................. 17
Annual Report....................................................... 18
Stockholder Proposals............................................... 18
Other Matters....................................................... 18
-i-
<PAGE>
SUMMARY OF PROXY STATEMENT
The following is a summary of certain information contained in this Proxy
Statement. This summary should not be considered complete and is qualified in
its entirety by the more detailed information and financial statements contained
in the Proxy Statement. Certain capitalized terms used in this summary are
defined in the Proxy Statement.
The principal offices of the Company are located at 717 Main Street,
Westbury, New York 11590-5021, (516) 333-8230.
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
Two of the Company's seven directors are to be elected at the Annual
Meeting. Each of the directors will serve until the 2002 Annual Meeting of
Shareholders and until, in each case, his successor is duly elected and
qualified.
AMENDMENT TO THE 1983 STOCK OPTION PLAN
(PROPOSAL NO. 2)
Shareholders are being asked at the Annual Meeting to approve an amendment
to the 1983 Stock Option Plan (the "1983 Plan") to increase the number of shares
of the Company's Common Stock for which options may be issued by 800,000 and
raise the total amount authorized under the 1983 Plan from 1,817,974 to
2,617,974.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 3)
Shareholders are also being asked at the Annual Meeting to ratify the
appointment of Grant Thornton LLP, certified public accountants, as the
independent auditors for the Company for the 2000 fiscal year.
RECORD DATE AND VOTING SECURITIES
As of the close of business on August 31, 1999, the record date (the
"Record Date"), there were 4,035,346 outstanding shares of the Company's Class A
Common Stock, $0.10 par value (the "Class A Common Stock"). Holders of the Class
A Common Stock have one vote per share on each matter to be acted upon. Only
stockholders of Class A Common Stock of record at the close of business on the
Record Date for the Meeting (the "Stockholders") will be entitled to vote at the
Meeting and at any adjournment thereof. A majority of the outstanding shares of
Class A Common Stock present in person or by proxy is required to constitute a
quorum at the Meeting.
Additionally, the Company had 6,037,344 shares of Class B Common Stock,
$0.10 par value (the "Class B Common Stock" and collectively with the Class A
Common Stock, the "Common Stock") outstanding as of the Record Date. Shares of
Class B Common Stock are nonvoting shares.
VOTING OF PROXIES
Shares of Class A Common Stock represented by Proxies that are properly
executed, duly returned and not revoked, will be voted in accordance with the
instructions contained therein. If no specification is indicated on the Proxy,
the shares of Class A Common Stock represented thereby will be voted: (i) for
the election as Directors of the persons who have been nominated by the Board of
Directors; (ii) for the amendment to the 1983 Plan; (iii) for the ratification
of the appointment of Grant Thornton LLP as the Company's independent auditors
for the fiscal year ending June 3, 2000 (the "2000 Fiscal Year"); and (iv) with
respect to any other matter that may properly be brought before the Meeting in
accordance with the judgment of the person or persons voting the Proxies.
The execution of a Proxy will in no way affect a Stockholder's right to
attend the Meeting and vote in person. Any Proxy executed and returned by a
Stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Meeting, or by execution of a subsequent proxy which is presented
before the Meeting, or if the Stockholder attends the Meeting and votes by
ballot, except as to any matter or matters upon which a vote shall have been
cast pursuant to the authority conferred
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<PAGE>
by such Proxy prior to such revocation. For purposes of determining the presence
of a quorum for transacting business at the Meeting, abstentions and broker
"non-votes" (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other persons
entitled to vote shares on a particular matter with respect to which the brokers
or nominees do not have discretionary power) will be treated as shares that are
present but which have not been voted.
The cost of solicitation of the Proxies being solicited on behalf of the
Board of Directors will be borne by the Company. In addition to the use of the
mail, proxy solicitation may be made by telephone, telegraph and personal
interview by officers, directors and employees of the Company. The Company will,
upon request, reimburse brokerage houses and persons holding Class A Common
Stock in the names of their nominees for their reasonable expenses in sending
soliciting material to their principals.
SECURITY OWNERSHIP
The following table sets forth information, as of the Record Date, as to
the beneficial ownership of the Company's voting Class A Common Stock by each
person known by the Company to own beneficially more than 5% of the Company's
voting Class A Common Stock:
Name and Address of Shares Percent of
Beneficial Owner Beneficially Owned Class
---------------- ------------------ -----
Howard S. Stern,.................... 956,412 23.7
Chairman of the Board,
President, Chief Executive
Officer, Director
717 Main Street
Westbury, NY 11590
Betty S. Meyers,.................... 820,806 20.3
401 Emerald Street
New Orleans, LA 70124
David P. Meyers,.................... 311,551 (1) 7.7
Director
1220 Pasadena Avenue
Atlanta, GA 30306
Jonas I. Meyers,.................... 311,551 (2) 7.7
904 Oakland Avenue
Ann Arbor, MI 48104
Stuart J. Meyers,................... 311,551 (3) 7.7
434 Bellaire Drive
New Orleans, LA 70124
Dimensional Fund Advisors, Inc.,.... 222,475 5.5
1299 Ocean Avenue
Santa Monica, CA 90401
Wellington Management Company,...... 219,258 5.4
75 State Street
Boston, MA 02109
- ----------
(1) Includes 154,801 shares in which David P. Meyers has only a remainder
interest. Betty S. Meyers holds a life estate in such shares.
-2-
<PAGE>
(2) Includes 154,801 shares in which Jonas I. Meyers has only a remainder
interest. Betty S. Meyers holds a life estate in such shares.
(3) Includes 154,801 shares in which Stuart J. Meyers has only a remainder
interest. Betty S. Meyers holds a life estate in such shares.
The following table sets forth information, as of Record Date, as to the
beneficial ownership of the Company's voting Class A and nonvoting Class B
Common Stock, by (i) each of the Company's directors, (ii) each of the Company's
Named Executive Officers, and (iii) all directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
Class A Class B
-------------------------- -----------------------------
Shares Percent Shares Percent
Name of Beneficially of Beneficially of
Beneficial Owner Owned (1) Class Owned (2) Class
---------------- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Howard S. Stern, ................................... 956,412 23.7 1,256,164 20.5
Chairman of the Board,
President, Chief Executive
Officer, Director
David P. Meyers, ................................... 311,551(3) 7.7 614,439(4) 10.2
Director
Arthur L. Zimmet, .................................. 28,750 * 90,784 1.5
Senior Vice President
Robert M. Topol, ................................... 25,291 * 66,933 1.1
Director
Paul S. Echenberg, ................................. 2,291 * 76,497 1.3
Chairman of the Board of
E-Z-EM Canada, Director
Donald A. Meyer, ................................... 19,470 * 44,462 *
Director
James L. Katz, ..................................... 2,316 * 55,763 *
Director
Dennis J. Curtin, .................................. 2,052 * 53,382 *
Vice President
Eamonn P. Hobbs, ................................... 50 * 39,604 *
Vice President
Michael A. Davis, M.D., ............................ None * 39,836 *
Medical Director/Technical
Director, Director
Joseph J. Palma, ................................... None * 27,974 *
Vice President
All directors and executive
officers as a group (17
persons) .......................................... 1,348,183(3) 33.4 2,490,988(4) 37.5
</TABLE>
- ----------
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<PAGE>
* Does not exceed 1%.
(1) Includes Class A Common Stock shares issuable upon exercise of options
currently exercisable or exercisable within 60 days from the Record Date as
follows: Robert M. Topol (1,791), Paul S. Echenberg (1,791), Donald A.
Meyer (1,791), James L. Katz (1,791) and all directors and executive
officers as a group (7,164).
(2) Includes Class B Common Stock shares issuable upon exercise of options
currently exercisable or exercisable within 60 days from Record Date as
follows: Howard S. Stern (78,786), Arthur L. Zimmet (50,884), Robert M.
Topol (41,041), Paul S. Echenberg (74,807), Donald A. Meyer (18,869), James
L. Katz (52,952), Dennis J. Curtin (50,556), Eamonn P. Hobbs (39,595),
Michael A. Davis, M.D. (39,836), Joseph J. Palma (27,974) and all directors
and executive officers as a group (601,450).
(3) Includes 154,801 shares in which Mr. Meyers has only a remainder interest.
Betty S. Meyers, a principal shareholder, holds a life estate in such
shares.
(4) Includes 201,014 shares in which Mr. Meyers has only a remainder interest.
Betty S. Meyers, a principal shareholder, holds a life estate in such
shares. Also includes 190,035 shares owned by a partnership which Mr.
Meyers has an interest in.
PROPOSAL I--ELECTION OF DIRECTORS
NOMINEES
The Board of Directors consist of seven directors. The Board is classified
into three classes, each of which has a staggered three-year term. At the
Meeting, the Stockholders will elect two Class III directors each of whom will
hold office until the Annual Meeting of Stockholders to be held in 2002 and
until their successors are duly elected and qualified. The Class I directors and
Class II directors will continue in office during the terms indicated below.
Unless otherwise specified, all Proxies received will be voted in favor of the
election of the persons named below (the "Nominees") as directors of the
Company. Directors shall be elected by a plurality of the votes cast, in person
or by proxy, at the Meeting. Abstentions from voting and broker non-votes on the
election of directors will have no effect since they will not represent votes
cast at the Meeting for the purpose of electing directors.
The term of each of the current Class III directors expires at the Meeting
when his respective successor is duly elected and qualified. Management has no
reason to believe that any of the Nominees will be unable or unwilling to serve
as a director, if elected. Should any of the Nominees not remain a candidate for
election at the date of the Meeting, the Proxies will be voted in favor of the
Nominees who remain candidates and may be voted for substitute nominees selected
by the Board of Directors. The names of the Nominees and certain information
concerning them are set forth below:
Nominees to Class III of the Board of Directors
First Year
Became
Name Principal Occupation Age Director
---- -------------------- --- --------
Howard S. Stern Chairman of the Board, 68 1962
President and Chief Executive
Officer of the Company
David P. Meyers Founder, President and Chief 35 1996
Executive Officer of MedTest
Express, Inc.
HOWARD S. STERN, age 68, is a co-founder of the Company and has served as
Chairman of the Board and Director of the Company since its formation in 1962.
Mr. Stern has also served as President and Chief Executive Officer of the
Company since 1997. From 1990 to 1994, Mr. Stern served as Chief Executive
Officer, and from the
-4-
<PAGE>
formation of the Company until 1990, he served as President and Chief Executive
Officer. Mr. Stern is also a director of ITI Medical Technologies, Inc. The
Company has an investment in ITI Medical Technologies, Inc.
DAVID P. MEYERS, age 35, has been a director of the Company since 1996. He
is the founder of MedTest Express, Inc., an Atlanta, Georgia provider of
contracted laboratory services for home health agencies, and has served as its
President, Chief Executive Officer and Director since 1994.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
The following Class I and II Directors will continue on the Board of Directors
for the terms indicated:
Class I Directors
(Term Expiring in 2000):
JAMES L. KATZ, CPA, JD, age 63, has been a director of the Company since
1983. He is a founder and managing director since its organization in 1995 of
Chapman Partners LLC (investment banking). Previously, he had been the co-owner
and President of Ever Ready Thermometer Co., Inc. from its acquisition in 1985
until its sale in 1994. From 1971 until 1980 and from 1983 until 1985, he held
various executive positions with Baxter International and subsidiaries of Baxter
International, including that of Chief Financial Officer of Baxter
International. He is also a director of Intec, Inc., Lakeshore Medical Fitness,
LLC and ELPAS North America, Inc.
MICHAEL A. DAVIS, M.D., age 58, has served as Medical Director/Technical
Director and Director of the Company since 1997, and previously served as
Medical Director and Director of the Company from 1995 to 1996, and as Medical
Director from 1994 to 1995. He has been Professor of Radiology and Nuclear
Medicine and Director of the Division of Radiologic Research, University of
Massachusetts Medical Center since 1980. He is also the President, Chief
Executive Officer and Director of Amerimmune Pharmaceuticals, Inc. and its
wholly-owned subsidiary, Amerimmune, Inc., since February 1999. He is also a
director of MacroChem Corp.
Class II Directors
(Term Expiring in 2001):
PAUL S. ECHENBERG, age 55, has been a director of the Company since 1987
and has served as Chairman of the Board of E-Z-EM Canada Inc. since 1994. He is
the President, Chief Executive Officer and Director of Schroders & Associates
Canada Inc. (investment buy-out advisory services) and Director of Schroders
Ventures Ltd. since 1997. He is also a founder and has been a general partner
and director of Eckvest Equity Inc. (personal investment and consulting
services) since 1989. He is also a director of Lallemand Inc., ISG Technologies,
Inc., Benvest Capital Inc., Colliers MacAuley Nicholl, Huntington Mills (Canada)
Ltd., ITI Medical Technologies, Inc., Flexia Corporation, Fib-Pak Industries
Inc. and Shirmax Fashions Ltd. The Company has investments in ISG Technologies,
Inc. and ITI Medical Technologies, Inc.
DONALD A. MEYER, age 65, has been a director of the Company since 1968. He
is currently an independent consultant in legal matters to arts and business
organizations, specializing in technical assistance. He had been the Executive
Director of the Western States Arts Federation, Santa Fe, New Mexico, which
provides and develops regional arts programs, from 1990 to 1995. From 1958
through 1990, he was an attorney practicing in New Orleans, Louisiana.
ROBERT M. TOPOL, age 74, has been a director of the Company since 1982.
Prior to his retirement in 1994, he served as an Executive Vice President of
Smith Barney, Inc. (financial services). He is also a director of First American
Health Concepts, Fund for the Aging, City Meals on Wheels, American Health
Foundation, State University of New York - Purchase, and Redstone Resources Inc.
-5-
<PAGE>
MEETINGS
The Board of Directors held four regular meetings and three special
meetings by conference call during the 1999 Fiscal Year. From time to time, the
members of the Board of Directors act by unanimous written consent pursuant to
the laws of the State of Delaware. All directors attended all Board meetings
during the 1999 Fiscal Year, except that Messrs. Meyer and Topol each missed one
meeting and Mr. Katz missed three meetings.
The Company has a standing Executive Committee, Audit Committee, Nominating
Committee, Compensation Committee and Finance Committee.
The Executive Committee has the power and authority to act on behalf of the
Board during intervals between regularly scheduled Board meetings. The members
of the Executive Committee are Messrs. Stern, Echenberg, Katz and Topol. The
Executive Committee did not meet during the 1999 Fiscal Year.
The Audit Committee recommends to the Board the selection of independent
accountants and reviews the scope and results of the annual audit. The members
of the Audit Committee are Messrs. Katz and Topol. The Audit Committee met once
during the 1999 Fiscal Year.
The Nominating Committee recommends to the Board nominees for election to
the Board. The members of the Nominating Committee are Messrs. Meyer and Topol.
The Nominating Committee did not meet during the 1999 Fiscal Year.
The Compensation Committee determines the cash and other incentive
compensation, if any, to be paid to the Company's executive officers and key
employees. The Compensation Committee also sets the policies and parameters of
the Company's executive compensation programs and awards thereunder, and makes
determinations as to stock option grants under the 1983 Stock Option Plan and
the 1984 Directors and Consultants Stock Option Plan. The members of the
Compensation Committee are Messrs. Meyer and Katz. During the 1999 Fiscal Year,
the Compensation Committee met four times.
The Board of Directors created a Finance Committee in 1995. Its members are
Messrs. Topol and Katz. The Finance Committee did not meet during the 1999
Fiscal Year.
-6-
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation for
services, in all capacities for 1999, 1998 and 1997, of those persons who were,
at the end of 1999, Chief Executive Officer ("CEO") (Howard S. Stern) and each
of the four most highly compensated executive officers of the Company other than
the CEO (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------- -----------------------------------
Awards Payouts
-------------------------- -------
Other
Annual Restricted All Other
Name and Compensa- Stock Options LTIP Compensa-
Principal Fiscal Salary Bonus tion (1) Awards --------------- Payouts tion (4)
Position Year ($) ($) ($) ($) # (2) # (3) ($) ($)
--------- ------ -------- -------- --------- ---------- ----- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Howard S. Stern, .......................... 1999 $250,000 $83,250 None None None .2273 None $15,404
Chairman of the Board, 1998 250,000 61,874 None None None .2273 None 19,609
President and Chief 1997 250,000 11,538 None None None 8.5227 None 7,090
Executive Officer
Arthur L. Zimmet, ......................... 1999 $165,000 $54,945 None None None None None $ 9,264
Senior Vice President 1998 155,000 40,283 None None None None None 8,069
1997 153,000 7,062 None None None None None 7,380
Eamonn P. Hobbs, .......................... 1999 $200,000 $17,481 None None None .2273 None $ 8,083
Vice President 1998 195,000 21,923 None None None .2273 None 7,630
1997 176,250 6,058 None None None 45.4545 None 7,902
Dennis J. Curtin, ......................... 1999 $160,000 $39,996 None None None None None $ 8,956
Vice President 1998 146,667 38,861 None None None None None 7,637
1997 144,000 6,646 None None None 3.4091 None 7,534
Joseph J. Palma, .......................... 1999 $150,000 $49,950 None None None None None $ 9,150
Vice President 1998 135,000 33,247 None None None None None 6,052
1997 132,000 3,046 None None None None None 6,428
</TABLE>
- ----------
(1) The Company has concluded that the aggregate amount of perquisites and
other personal benefits paid to each of the Named Executive Officers for
1999, 1998 and 1997 did not exceed the lesser of 10% of such officer's
total annual salary and bonus for 1999, 1998 or 1997 or $50,000; such
amounts are, therefore, not reflected in the table.
(2) Options are exercisable in Class B Common Stock of the Company.
(3) Options are exercisable in Class B Common Stock of AngioDynamics, Inc., a
wholly-owned subsidiary of the Company.
(4) For 1999, 1998 and 1997, includes for each of the Named Executive Officers
the amounts contributed by the Company under the Profit-Sharing Plan and,
as matching contributions, under the companion 401(k) Plan. For 1999 and
1998, also includes for Howard S. Stern fees of $6,000 and $12,000,
respectively, relating to attendance at AngioDynamics directors' meetings.
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<PAGE>
Option/SAR Grants Table
The following table forth certain information concerning stock option
grants made during 1999 to the Named Executive Officers. These grants are also
reflected in the Summary Compensation Table. All of the options granted during
1999 have an exercise price not less than the fair market value of the Class B
Common Stock of AngioDynamics, Inc., a wholly-owned subsidiary of the Company,
on the date of grant, and expire in ten years. In accordance with SEC disclosure
rules, the hypothetical gains or "option spreads" for each option grant are
shown based on compound annual rates of stock price appreciation of 5% and 10%
from the grant date to the expiration date. The assumed rates of growth are
prescribed by the SEC and are for illustrative purposes only; they are not
intended to predict future stock prices, which will depend upon market
conditions and the Company's future performance. The Company did not grant any
stock appreciation rights during 1999.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term
- --------------------------------------------------------------------------------------- ----------------------------------------
Number of % of Total
Securities Options 5% 10%
Underlying Granted to Exercise -------------------- -----------------
Options Employees in or Base Stock Potential Stock Potential
Granted Fiscal Year Price Expiration Price Value Price Value
Name (#) 1999 ($/Sh) Date ($/Sh) $ ($/Sh) $
---- ---------- ------------ -------- ---------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Howard S. Stern ................ .2273 (1) 29%(2) $40,000 (3) 5/28/09 $ 65,156 $ 5,717 $103,750 $ 14,489
Arthur L. Zimmet ............... None
Eamonn P. Hobbs ................ .2273 (1) 29%(2) $40,000 (3) 5/28/09 $ 65,156 $ 5,717 $103,750 $ 14,489
Dennis J. Curtin ............... None
Joseph J. Palma ................ None
</TABLE>
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(1) Options are exercisable in Class B Common Stock of AngioDynamics, Inc., a
wholly-owned subsidiary of the Company. Options are exercisable 20% per
year over five years from the date of grant, provided a threshold event
occurs or 100% on the ninth anniversary of the grant, if no threshold event
occurs. A threshold event is the earlier of (i) fourteen months after
either an initial public offering ("IPO") or the spin off of all
AngioDynamics stock to the Company's shareholders, or (ii) two months after
the occurrence of both an IPO and the spin off of all AngioDynamics stock
to the Company's shareholders.
(2) Represents the percentage of total options granted to employees during 1999
and exercisable in Class B Common Stock of AngioDynamics, Inc.
(3) The options granted during 1999 have an exercise price not less than the
fair market value of the Class B Common Stock of AngioDynamics, Inc. on the
date of grant. A total of 136.36 shares of AngioDynamics' Class B Common
Stock may be issued under this plan.
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<PAGE>
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth certain information concerning all exercises
of stock options during 1999 by the Named Executive Officers and the fiscal
year-end value of unexercised stock options on an aggregated basis:
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
May 29, 1999 May 29, 1999
(#) ($) (1)
-------------- -------------
Shares Value Exercisable/ Exercisable/
Acquired on Realized Unexercisable Unexercisable
Name Exercise (#) ($) (2) (2)
---- ------------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Howard S. Stern ........... None None 78,786/ $61,428/
None None
Arthur L. Zimmet .......... None None 50,884/ $33,347/
None None
Eamonn P. Hobbs ........... None None 39,595/ $25,449/
None None
Dennis J. Curtin .......... None None 50,556/ $39,207/
None None
Joseph J. Palma. .......... None None 27,974/ $17,551/
None None
</TABLE>
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(1) Options are "in-the-money" if on May 29, 1999, the market price of the
stock exceeded the exercise price of such options. At May 29, 1999, the
closing price of the Company's Class A and Class B Common Stock was $5.06
and $5.00, respectively. The value of such options is calculated by
determining the difference between the aggregate market price of the stock
covered by the options on May 29, 1999 and the aggregate exercise price of
such options.
(2) Options granted prior to the Company's recapitalization on October 26, 1992
are exercisable one-half in Class A Common Stock and one-half in Class B
Common Stock. Options granted after the recapitalization are exercisable in
Class B Common Stock.
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Compensation of Directors
On an annual basis, directors, who are not employees of the Company, are
entitled to directors fees of $15,000, 1,000 shares of the Company's Class B
Common Stock, and stock options for 1,000 shares of Class B Common Stock, which
vest one year from date of grant. Directors, who are not employees of the
Company, are also entitled to a fee of $1,000 for each regular board meeting
attended and $250 for each telephonic board meeting attended. Directors, who
serve on committees of the Company and who are not employees or consultants of
the Company, are entitled to a fee of $500 for each committee meeting attended,
except that the chairman of a committee is entitled to a fee of $1,000 for each
committee meeting attended.
Employment Contract
During 1994, the Company entered into an employment contract with Howard S.
Stern. This employment contract is for a term of eight years at an annual
compensation of $250,000.
Severance Arrangements
The Company has entered into severance agreements ("Severance Agreements")
with the Named Executive Officers (excluding Howard S. Stern) and certain other
executive officers and key employees ("Executives").
Each Severance Agreement provides certain security to the Executives in
connection with a change of control. A change of control ("Change of Control")
is defined as the acquisition of 50% or more of the outstanding voting power of
all capital stock of the Company; or the transfer of all or substantially all of
the assets of either or both of the AngioDynamics or Contrast Systems business
segments. Upon a Change of Control, all outstanding stock options vest and
remain exercisable until the original expiration date of such options without
regard to the need to remain employed by the Company. The Company will provide
the Executive (or his estate) with an interest-free loan in the amount necessary
to pay the exercise price and the income and employment taxes due as a result of
the option exercise.
If an Executive's employment with the Company is terminated by the Company
for good cause (as defined below), death or disability, or by the Executive
other than for good reason (as defined below), during the term of the Severance
Agreement and within two years following a Change of Control, the Executive
shall be entitled to accrued but unpaid base salary.
A termination of employment is for good cause ("Good Cause") under the
Severance Agreements if the basis of termination is (i) repeated acts or serious
omissions constituting dishonesty, intentional breach of fiduciary obligation or
intentional wrongdoing or malfeasance; (ii) conviction of a crime involving
fraud, dishonesty or moral turpitude; or (iii) a material breach of the
Severance Agreement or the conditions and requirements of employment.
Good reason ("Good Reason") exists under the Severance Agreements if there
is (i) a significant reduction in the nature or the scope of the Executive's
authority and/or responsibility; (ii) a material reduction in the Executives
rate of base salary; (iii) a significant reduction in employee benefits; or (iv)
a change in the principal location in which the Executive is required to perform
services, which significantly increases commuting distance.
If an Executive's employment with the Company is terminated by the Company
without Good Cause or by the Executive for Good Reason, during the term of the
Severance Agreement and within two years following a Change of Control, the
Executive shall be entitled to: (i) accrued but unpaid base salary; (ii) a lump
sum payment equal to between one and two times annual base salary, based upon
years of service; (iii) any benefits accrued under any incentive and retirement
plans; (iv) paid medical plan coverage until the earlier of 18 months from
termination or the time when the Executive obtains comparable coverage through a
new employer; (v) a lump sum payment equal to the unvested portion, if any, of
the Executive's 401(k) plan; and (vi) outplacement and career counseling
services.
Each Severance Agreement provides that if any amounts due to an Executive
thereunder become subject to the "golden parachute" rules set forth in Section
4999 of the Internal Revenue Code, then such amounts will be reduced to the
extent necessary to avoid the application of such rules.
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Compensation Committee Interlocks and Insider Participation
From the beginning of fiscal 1999 until September 3, 1998, the Compensation
Committee consisted of Howard S. Stern and Donald A. Meyer. On September 3,
1998, Mr. Stern resigned and was replaced by James L. Katz. Mr. Stern has also
served as President and Chief Executive Officer since 1997. From 1990 until
1994, Mr. Stern served as Chief Executive Officer, and from the formation of the
Company until 1990, he served as President and Chief Executive Officer.
A facility of the Company located in Westbury, New York is owned 27% by
Howard S. Stern. Aggregate rentals, including real estate tax payments, were
$154,000 during 1999. The lease term expires in 2004.
During 1998, the Company entered into a split dollar life insurance
arrangement with Howard S. Stern. On an annual basis, the Company makes interest
bearing advances of approximately $100,000 toward the cost of such life
insurance. Interest on the advances is to be paid to the Company annually. Under
a collateral assignment agreement, the proceeds from the underlying life
insurance policies will first be paid to the Company to repay the advances it
made. If the policies are terminated prior to the death of Mr. Stern or his wife
Linda B. Stern (the "insureds"), the Company will be entitled to the cash
surrender value of the policies at that time, and any shortfall between that
amount and the amount of the advances made by the Company will be repaid to the
Company by the insureds.
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<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
General
The Compensation Committee (the "Committee") determines the cash and other
incentive compensation, if any, to be paid to the Company's executive officers
and key employees, and administers the Company's stock option plans. The
Committee is currently composed of two non-employee directors: Donald A. Meyer
and James L. Katz.
Compensation Philosophy
The primary philosophy of the Company regarding compensation to executive
officers is to offer a program which rewards each member of senior management
commensurately with the Company's overall growth and financial performance,
including each person's individual performance during the previous fiscal year.
The compensation policies are designed to enhance the overall strength and
financial performance of the Company by aligning the financial interests of the
Company's executive officers with those of the stockholders. The three primary
components of executive compensation are base salary, annual performance bonus
and stock option awards.
The key elements of the Committee's executive compensation philosophy
include (a) setting levels of compensation designed to attract and hold superior
executives in a highly competitive business environment, (b) providing incentive
compensation that varies directly with the Company's financial performance and
individual initiative and achievement contributions to such performance, (c)
linking compensation to elements which affect the Company's annual and long-term
performance, (d) evaluating the competitiveness of executive compensation
programs based upon information drawn from a variety of sources, and (e)
establishing salary levels and bonuses intended to be consistent with
competitive practice and level of responsibility, with salary increases and
bonuses reflecting competitive trends, the overall financial performance of the
Company, the performance of the individual executive and the contractual
arrangements that may be in effect with the individual executive.
Internal Revenue Code Section 162 (m) Considerations
Section 162 (m) of the Internal Revenue Code of 1986, as amended (the
"Code"), prohibits a publicly held corporation, such as the Company, from
claiming a deduction on its federal income tax return for compensation in excess
of $1 million paid for a given fiscal year to the chief executive officer (or
person acting in that capacity) and to the four most highly compensated officers
of the corporation, other than the chief executive officer, at the end of the
corporation's fiscal year. The $1 million compensation deduction limitation does
not apply to "performance based compensation." The Company believes that any
compensation received by the Named Executive Officers in connection with the
exercise of options granted under the 1983 Stock Option Plan will qualify as
"performance based compensation", except for a certain de minimus option grant
awarded in 1996. Stock options issued pursuant to the Company's AngioDynamics
subsidiary 1997 Stock Option Plan will not qualify as "performance based
compensation." The Company has not established a policy with respect to Section
162 (m) of the Code because the Company has not and does not currently
anticipate paying compensation in excess of $1 million per annum to any
employee.
Base Salaries
Base salaries for the Company's executive officers are determined initially
by evaluating the responsibilities of the position held and the experience of
the individual, and by reference to the competitive marketplace for management
talent, including a comparison of base salaries for comparable positions at
comparable companies. Annual salary adjustments are determined consistent with
the Company's compensation policy by evaluating the competitive marketplace, the
performance of the Company, the performance of the executive particularly with
respect to the ability to manage growth of the Company, and any increased
responsibilities assumed by the executive.
Annual Incentive Compensation
The Company administers an Executive Incentive Bonus Plan (the "Bonus
Plan"), under which cash bonuses may be made to the CEO and President, other
corporate officers, and certain divisional personnel. The bonus pool
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is determined at the beginning of each fiscal year based on budgeted earnings
for the year. Depending upon the Company's financial results as compared to
budget, bonuses may or may not be earned during each fiscal year. A
discretionary bonus may be awarded if certain performance objectives, including
corporate, business unit and departmental goals, have been met, as determined by
the Committee. Based upon the Company's achievements during the 1999 Fiscal
Year, the Company awarded bonuses ranging up to 33% of base salary to corporate
officers under the Bonus Plan for the 1999 Fiscal Year.
Stock Option Agreements
The Committee views stock options as an important long-term incentive
vehicle for its executive officers. The use of stock options ensures that the
interest of the Company's executive officers are tied to the interests of the
Company's stockholders by making a portion of the executive's long-term
compensation dependent upon the value created for stockholders. This promotes a
continuing focus on the Company's profitability and stockholder value. The
Committee may grant options under the Company's shareholder approved stock
option plans. Options are granted at an exercise price equal to the fair market
value of the Company's Class B Common Stock on the date of grant. Optionees can
receive value from stock option grants only if the underlying Common Stock
appreciates in the long-term. Generally, stock options utilize vesting periods
ranging from two to nine years to encourage key executives to continue in the
employ of the Company. In determining long-term incentive awards, the Committee
considers the amount of stock options previously granted to each officer, the
officers responsibility, as well as the officer's current performance and
contribution to the Company.
Compensation of the Chief Executive Officer
During the 1999 Fiscal Year, Mr. Stern continued to serve in his dual
capacity as Chairman of the Board and Chief Executive Officer and President. The
Committee has targeted Mr. Stern's total compensation, including compensation
derived from awards of stock options, at a level it believes is competitive with
the average amount paid by the Company's competitors and companies with which
the Company competes for executive talent. During the 1999 Fiscal Year, no
options were granted to Mr. Stern and no options previously granted to Mr. Stern
were exercised. During the 1999 Fiscal Year, Mr. Stern's base salary was not
adjusted and remained at $250,000. Mr. Stern participates in the Bonus Plan, as
outlined above, and received a cash bonus of $83,250 for the 1999 Fiscal Year.
Mr. Stern's bonus was ratified by the entire Board of Directors.
THE COMPENSATION COMMITTEE
Donald A. Meyer
James L. Katz
Common Stock Performance
The following graph compares the cumulative total shareholder return on the
Company's Class A and Class B Common Stock with returns on the American Stock
Exchange Market Value Index ("AMEX Market Value") and the Standard and Poor's
Health Care (Medical Products and Supplies) Index ("S&P Health Care Index"), for
the five year period ended May 29, 1999. The total return of the Class A Common
Stock presented in the following graph treats all stock dividends payable in
Class B Common Stock as cash dividends and assumes the reinvestment of such
dividends in Class A Common Stock. As prescribed by the SEC, the measurements
are indexed to a value of $100 at May 31, 1994, and assume all dividends were
reinvested.
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<PAGE>
[GRAPH]
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL]
[GRAPHIC OMITTED]
Total Return - Data Summary
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------------------
5/94 5/95 5/96 5/97 5/98 5/99
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
E-Z-EM, INC. - CLASS B (EZM.B) 100 116 307 184 161 116
E-Z-EM, INC. - CLASS A (EZM.A) 100 88 281 167 132 113
AMEX MARKET VALUE (1) 100 112 139 141 168 186
S & P HEALTH CARE INDEX 100 147 200 248 330 413
</TABLE>
Graph Produced by Research Data Group, Inc.
- ----------
(1) As of July 24, 1995 the Company's Common Stock commenced trading on the
American Stock Exchange ("AMEX") and ceased being quoted on NASDAQ.
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<PAGE>
CERTAIN TRANSACTIONS
A facility of the Company located in Westbury, New York is owned 27% by
Howard S. Stern, 25% by Betty S. Meyers, a principal shareholder, 2% by other
employees of the Company and 46% by unrelated parties, which includes a 25%
owner who manages the property. Aggregate rentals, including real estate tax
payments, were $154,000 during 1999. The lease term expires in 2004.
During 1998, the Company entered into split dollar life insurance
arrangements with Howard S. Stern (including his spouse) and Betty S. Meyers
(the "insureds"). On an annual basis, the Company makes interest bearing
advances of approximately $100,000 per insured toward the cost of such life
insurance policies. Interest on the advances is to be paid to the Company
annually by the insureds. Under collateral assignment agreements, the proceeds
from the policies will first be paid to the Company to repay the advances it
made. If the policies are terminated prior to the death of the insured, the
Company will be entitled to the cash surrender value of the policies at that
time, and any shortfall between that amount and the amount of the advances made
by the Company will be repaid to the Company by the insureds.
The Company has an unsecured, two-year interest bearing note receivable
from Eamonn P. Hobbs, an executive officer of the Company, in the principal
amount of $320,000. The outstanding principal and interest matures on September
30, 1999.
The Company has engaged Michael A. Davis, M.D., a director of the Company,
for consulting services. Fees for such services were approximately $147,000
during 1999.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934, as amended (the
"Act") requires the Company's executive officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of initial ownership and changes in ownership with the Securities
and Exchange Commission (the "SEC"). Based solely on its review of copies of
such forms received by the Company, or on written representations from certain
reporting persons that no reports were required for such persons, the Company
believes that, during the fiscal year ended May 29, 1999, all of the filing
requirements applicable to its executive officers, directors and 10%
shareholders were complied with.
PROPOSAL II--AMENDMENT TO THE 1983 STOCK OPTION PLAN
The Company's Board of Directors has unanimously adopted and recommended
for stockholder approval an amendment to the 1983 Stock Option Plan (the "1983
Plan").
The proposed amendment would modify the 1983 Plan to increase the number of
shares of the Company's Common Stock for which options may be issued by 800,000
and raise the total amount authorized under the 1983 Plan from 1,817,974
(previously authorized amount of 1,600,000 plus effect of 3% stock dividends on
authorized shares of 217,974) to 2,617,974.
Summary of the 1983 Plan
The 1983 Plan was adopted by the Board of Directors on August 8, 1983, and
approved by the shareholders on August 9, 1983. Currently, a total of 1,817,974
shares of the Company's Common Stock may be issued under the 1983 Plan pursuant
to the exercise of options. Approximately 200 officers and key employees of the
Company are eligible to receive options under the 1983 Plan. As of the Record
Date, options to purchase 17,911 shares of Class A Common Stock and 1,105,365
shares of Class B Common Stock were outstanding under the 1983 Plan, and an
aggregate of 663,792 options have been exercised. As of the Record Date, there
remained 30,906 options available for grant under the 1983 Plan and, in
accordance with existing practices, a substantial portion of these remaining
options could be granted in the near future.
The 1983 Plan provides for the grant of both non-qualified stock options
and incentive stock options ("ISO's"). All stock options must have an exercise
price of not less than the fair market value of the shares on the date of grant,
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except that, with respect to ISO's granted to holders of 10% or more of the
Common Stock of the Company, the exercise price shall not be less than 110% of
the fair market value of such shares. Options granted under the 1983 Plan are
exercisable over a period of time determined by the 1983 Plan administrators
(but not more than 10 years from the date of grant) and are subject to such
other terms and conditions as the administrators may determine. The exercise
price of an option may be paid by the optionee in cash or by surrendering
previously owned shares of Common Stock of the Company, or by a combination of
cash and such shares. Each option granted under the 1983 Plan is
non-transferable, other than by will or the laws of descent and distribution.
The 1983 Plan also provides that vested options may only be exercised while the
optionee is an employee of the Company or within three months thereafter, with
certain exceptions. The Board or Compensation Committee may determine other time
periods in which an optionee who is no longer an employee of the Company may
exercise his or her options. Options granted prior to the Company's
recapitalization on October 26, 1992 are exercisable one-half in Class A Common
Stock and one-half in Class B Common Stock. Options granted after the
recapitalization are exercisable in Class B Common Stock. The 1983 Option Plan
terminates on December 31, 2005.
Administration of the Plan
To the extent required by Rule 16b-3 of the Securities Exchange Act of
1934, as amended, (the "Act") the 1983 Plan shall be administered by the
Company's Compensation Committee composed of two or more non-employee members of
the Board of Directors of the Company, each of whom is a "non-employee director"
within the meaning of Rule 16b-3 of the Act.
Closing Price of Common Stock
The market value for a share of Class B Common Stock was $5.00 on August
31, 1999.
Federal Income Tax Consequences
The ISO's granted under the 1983 Plan are intended to qualify as incentive
stock options within the meaning of the Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") while the non-qualified stock options granted
under the 1983 Plan are intended to be non-qualified options within the meaning
of the Code. The following general summary is based upon the Code and does not
include a discussion of any state or local tax consequences.
Incentive Stock Options
An ISO is an option intended to satisfy the requirements of Section 422 of
the Code. If an option is treated as an ISO, the optionee generally recognizes
no taxable income as a result of the grant or exercise of the option unless the
optionee is subject to the alternative minimum tax ("AMT"). Except as set forth
below, the Company generally will not be entitled to a deduction for federal
income tax purposes in connection with the grant or exercise of an ISO,
regardless of the applicability of the AMT to the optionee. If an optionee holds
the shares acquired in the exercise of an ISO for more than two years after the
date the ISO is granted or more than one year after the date the ISO shares are
transferred to him or her, any gain or loss will be characterized for federal
income tax purposes as long-term capital gain or loss, equal to the difference
between the sale price and the exercise price and the Company will not be
entitled to take a deduction for federal income tax purposes. If the optionee
disposes of the shares prior to completion of either of these holding periods,
the optionee will have made a "disqualifying disposition" and he or she will
recognize ordinary income at the time of disposition and the Company will be
entitled to a corresponding deduction.
Non-Qualified Stock Options
An optionee will generally not recognize any taxable income upon the grant
of a non-qualified option and the Company will not be entitled to any
corresponding deduction for the grant, because under current Treasury
regulations pursuant to Section 83 of the Code, the fair market value of an
option at the time of grant is ordinarily not considered to be "readily
ascertainable." However, upon exercise of a non-qualified option, an optionee
will realize ordinary income equal to the excess of the fair market value of the
shares on the date of exercise over the option price, and the Company will be
entitled to take a corresponding deduction at that time. The Company must
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<PAGE>
withhold federal income taxes and the optionee's holding period will begin to
run at that time. On the sale of the shares acquired upon the exercise of a
non-qualified option, an optionee will realize short-term or long-term capital
gain or loss, depending upon whether the shares have been held for more than one
year. Such gain or loss will be measured by the difference between the sale
price and the fair market value of the shares on the date of exercise.
If an optionee exercises an option and pays some or all of the option price
by using previously owned shares of Common Stock of the Company, he will be
treated for federal income tax purposes as having exchanged tax free the number
of shares of Common Stock surrendered for an equal number of shares acquired
upon the exercise of the option. The tax basis of the surrendered shares will
carryover to the new shares and the holding period of the new shares will
include the holding period of the surrendered shares. The fair market value of
the number of shares acquired on exercise of a non-qualified option in excess of
the number surrendered will be included in the optionee's income as ordinary
income on the date those shares are transferred to him, and the Company will be
entitled to a corresponding deduction, and must withhold federal income tax at
that time.
The foregoing summary with respect to federal income tax consequences does
not purport to be complete, and reference is made to the applicable provisions
of the Code.
The Board of Directors believes that the 1983 Plan assists the Company in
attracting and retaining high-quality employees important to the success of the
Company by offering them the opportunity to share in the Company's success, and
provides the Company with an effective way of aligning employees compensation
with increased stockholder value. The Board believes that an increase in the
total number of shares for which options may be issued under the 1983 Plan will
allow for the continued availability of options for future grants under the 1983
Plan.
The proposed amendment to increase the number of authorized shares under
the 1983 Plan, if approved by stockholders, would only make such additional
authorized shares available for grants on or after October 19, 1999. All future
grants and awards under the 1983 Plan are entirely within the discretion of the
Compensation Committee and the total future benefits under the 1983 Plan are not
at present determinable. Therefore, with respect to such future grants, the
Company has omitted the tabular disclosure of the benefits or amounts allocated
under the 1983 Plan.
Recommendation of the Board
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE IN FAVOR OF THE
AMENDMENT TO THE 1983 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK FOR WHICH OPTIONS MAY BE ISSUED UNDER THE 1983 PLAN BY
800,000 AND RAISE THE TOTAL AMOUNT AUTHORIZED UNDER THE 1983 PLAN FROM 1,817,974
TO 2,617,974 SHARES.
PROPOSAL III--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors appointed Grant Thornton LLP, certified public
accountants, who were the Company's independent auditors for the 1999 Fiscal
Year, as the Company's independent auditors for the 2000 Fiscal Year. Although
the selection of auditors does not require ratification, the Board of Directors
has directed that the appointment of Grant Thornton LLP be submitted to the
Stockholders for ratification due to the significance of their appointment to
the Company.
The approval of the proposal to ratify the appointment of Grant Thornton
LLP requires the affirmative vote of a majority of the votes cast by all
Stockholders represented and entitled to vote thereon. Therefore, an abstention,
withholding of authority to vote or broker non-vote will not have the same legal
effect as an "against" vote and will not be counted in determining whether the
proposal has received the required shareholder vote.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
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<PAGE>
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE 2000 FISCAL YEAR.
ANNUAL REPORT
All stockholders of record as of the Record Date, have been sent, or are
concurrently herewith being sent, a copy of the Company's 1999 Annual Report for
the 1999 Fiscal Year.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE 1999 FISCAL YEAR (WITHOUT
EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO
STOCKHOLDER INFORMATION, E-Z-EM, INC., 717 MAIN STREET, WESTBURY, NEW YORK
11590-5021.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next Annual Meeting of Stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than May 1, 2000.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters
other than those set forth herein which will be presented for consideration at
the Meeting. If any other matter or matters are properly brought before the
Meeting or any adjournment thereof, the persons named in the accompanying Proxy
will have discretionary authority to vote, or otherwise act, with respect to
such matters in accordance with their judgment.
PETER J. GRAHAM
Secretary
September 20, 1999
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
E-Z-EM, INC.
Proxy--Annual Meeting of Stockholders
October 19, 1999
The undersigned, a stockholder of Class A Common Stock, $.10 par value (the
"Class A Common Stock") of E-Z-EM, Inc., a Delaware corporation (the "Company"),
does hereby appoint Howard S. Stern and David P. Meyers, and each of them, the
true and lawful attorneys and proxies with full power of substitution, for and
in the name, place and stead of the undersigned, to vote all of the shares of
Class A Common Stock of the Company which the undersigned would be entitled to
vote if personally present at the 1999 Annual Meeting of Stockholders of the
Company to be held at the Milleridge Inn in Jericho, New York, on Tuesday,
October 19, 1999, at 10:00 a.m., Local Time, or at any adjournment or
adjournments therof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS
For Howard S. Stern and David P. Meyers as Class III directors:
<TABLE>
<CAPTION>
<S> <C> <C>
TO WITHHOLD AUTHORITY TO VOTE
WITHOLD FOR ANY NOMINEE(S), PRINT
FOR ___________ VOTE ___________ NAME(S) BELOW
________________________________
</TABLE>
2. AMENDMENT TO THE 1983 STOCK OPTION PLAN
FOR ___________ AGAINST ___________ ABSTAIN ___________
3. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR ___________ AGAINST ___________ ABSTAIN ___________
To transact such other business as may properly come before the meeting or any
adjournment thereof.
Please mark, date and sign exactly as your name appears on this Proxy card. When
shares are held jointly, both holders should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
the holder is a corporation or partnership, the full corporate or partnership
name should be signed by a duly authorized officer.
Signature _________________ Signature ________________________ Date ____________
<PAGE>
SHAREHOLDERS LETTER
Dear E-Z-EM Shareholder:
Fiscal highlights
Net Earnings Improve Dramatically
I am very pleased to report net earnings for fiscal 1999 of $4,797,000. This was
an improvement of $10.8 million compared to last year's loss of $5,967,000. Your
Company returned to positive earnings in the last quarter of fiscal 1998 and
continued its profitability through four additional quarters of 1999.
E-Z-EM posted record sales for fiscal 1999 of $107,179,000. Operating profit of
our Diagnostic Segment quadrupled to over $8 million due to sales growth,
increased productivity and lower operating expenses. Operating profit of our
AngioDynamics business segment improved by over $6 million from last year's loss
of $7.3 million, which included a write-off of over $4.1 million related to
cardiovascular products.
Diagnostic Segment
Partnering with Key Players in the Imaging Field
One of our strategies for growth is partnering with key players in the medical
field. This approach is based on two forms of a partnering relationship: E-Z-EM
offering companies our four decades of radiology marketing expertise for their
products; or key industry players providing us with market access for unique,
E-Z-EM-developed product technology.
Several years ago we signed an agreement with Pharmacyclics, a company which
understood the benefits of capitalizing on E-Z-EM's marketing presence in the
imaging field. They are a California-based company that develops contrast agents
for Magnetic Resonance Imaging as well as treatments for cancer and
cardiovascular disease. The agreement is an example of the first type of
partnering relationship mentioned above. It gave us exclusive marketing rights
for Citra Vu(TM) Oral Suspension (originally called GADOLITE(R)), a product
which helps enhance visualization of the G.I. tract and which nicely complements
our line of G.I. diagnostic imaging products. Pharmacyclics, in turn, will
depend on us to manufacture and market the product. Citra Vu is currently under
FDA review.
As an example of the second type of partnership, General Electric is helping us
distribute our PercuPump(R) CT contrast injector with proprietary EDA(TM)
(Extravasation Detection Accessory) technology. Ours is the first CT injector
that can help detect infiltration of contrast during power injection. We
realized the difficulty of entering a field dominated by companies owned by
giants like Schering and Mallinckrodt, and were able to forge an alliance with
G.E. They are the world leader in CT scanner sales, and have chosen the EDA to
be their preferred injector in the United States. This gave immediate
credibility to our product and assisted us in placing injectors into sites to
which our access may been limited.
As an aside, we received another vote of confidence for our EDA device when it
became the CT injector rated highest for 1999 by the influential MDB Information
Network (formerly MD Buyline). MDB is considered the "Consumer Reports" of the
medical equipment industry. Hospitals and imaging centers subscribe to this
service for independent, unbiased evaluation of products based on customer
interviews and comprehensive product testing. It is a testimonial to our
engineering staff and our sales and marketing teams that we were chosen to
receive this accolade.
Recently, E-Z-EM proudly announced another agreement -- this time with Eli Lilly
and Company for marketing and distribution of a glucagon diagnostic kit. This
injectable product is used for diagnostic procedures of the gastrointestinal
tract and for the treatment of severe hypoglycemia in patients with diabetes. By
inhibiting gastrointestinal motility, glucagon can improve the quality of upper
and lower G.I. studies. It is also widely used for ERCP procedures.
Glucagon is a very small part of Lilly's product line; over the years marketing
efforts to radiologists and gastroenterologists have been minimal. They too were
looking to leverage their resources by partnering. Using E-Z-EM's marketing and
sales experience in G.I. imaging and gastroenterology made more economic sense
for them than establishing their own sales group for this niche product.
Product News
This year we added several contrast media products to our line of G.I. imaging
products. These products are part
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of our "solutions-based" approach to selling -- solving problems identified by
the marketplace, as we've done for over 37 years.
o Digibar(TM) 190 [Barium Sulfate for Suspension], introduced in the summer of
1999, is a contrast designed specifically to enhance x-ray studies done under
digital imaging. It was found that existing contrast media products were
yielding less than optimal results with new digital fluoroscopic units. Digibar
will help allow practitioners to take full advantage of their sizeable
investment in this new technology.
o Banana Smoothie Readi-CAT(R) 2 [Barium Sulfate Suspension] is a very flavorful
contrast that is palatable for the patient, and, being barium sulfate based,
eliminates the problems associated with iodinated contrast media. Banana
Smoothie is the latest in a long line of E-Z-EM CT contrast products that offer
the CT suite an alternative to iodine.
o Liquid EnteroVu(TM) [Barium Sulfate Suspension] is a new, convenient liquid
form of the powdered product that helped revolutionize small bowel imaging
studies when introduced several years ago. As with Digibar, a new type of study
- -- in this case the "see-through" small bowel examination developed in Canada --
required a new type of contrast media to optimize results.
E-Z-EM Canada Inc.
While E-Z-EM is best known for its presence in the pharmaceutical and medical
device field, E-Z-EM Canada is also a highly respected contract manufacturer for
the cosmetics industry. Recently, they have expanded their packaging
capabilities to include contract work for the defense industry.
This past June, E-Z-EM Canada entered into an agreement with O'Dell Engineering
Ltd. of Ontario to commercialize a decontamination lotion for chemical warfare
agents. The product line, known as Reactive Skin Decontaminant Lotion (RSDL), is
aimed at the defense sector market. RSDL is a decontamination lotion which
neutralizes and destroys chemical warfare agents on personnel. It has
demonstrated effectiveness against the various families of nerve agents (which
include Sarin -- used in the Tokyo subway terrorist attack) and blister agents,
which include Mustard and Lewisite. Developed by the Canadian Department of
National Defense, the product patent is held by the Canadian government. To
date, patents have been issued for RSDL in the United States, Canada and over a
dozen European countries.
E-Z-EM, the exclusive worldwide manufacturer of the product, has completed
deliveries of an initial order to the Canadian Armed Forces and has shipped an
order of US $1.9 million to the Netherlands Armed Forces. Other countries and
organizations have recently placed orders to evaluate the new product for use as
standard protection for their armed forces.
AngioDynamics Segment
This year, AngioDynamics has begun refocusing its efforts on the business of
interventional radiology and away from the cardiovascular marketplace. Products
such as our Pulse*Spray(R) delivery systems for dissolving blood clots in veins,
arteries and dialysis grafts, and our vascular access devices for accessing the
central venous system, are already in place. Additional new products are on the
way:
o In February, AngioDynamics received FDA 510(k) clearance to market its
VISTAFLEX(TM) stent for the treatment of biliary strictures, a procedure which
currently falls within the domain of the interventional radiologist. This stent
is manufactured with a high-radiopacity alloy which offers good
biocompatibility, flexibility and radial strength.
o AngioDynamics has developed a new line of catheters named ABSCESSION(TM) for
drainage of abscesses and other fluid pockets by abdominal and interventional
radiologists. FDA has cleared the product line for sale, and initial test
marketing is scheduled to start in the fall of 1999. Additionally, we have filed
a 510(k) application with FDA to market a biliary drainage version of this
catheter line.
Other Initiatives
The Internet is rapidly reshaping the way we all do business. Electronic
commerce will become an important means of accessing global markets quickly and
efficiently, regardless of a company's size. We are already seeing the
healthcare field moving away from paper to an electronically-based industry --
we have witnessed it in radiology with the growth of PACS and digital imaging.
As a cost-effective tool, the Internet will level the playing field by
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allowing companies of any size to globally market their products. Customers all
over the world can be served with a few clicks of a mouse.
For E-Z-EM, establishing an Internet presence has become a business priority.
This is an endeavor which can require a major commitment of time, people and
funds --our goal is to get into the game as quickly and cost-effectively as
possible. Aside from setting up a workable web site, there are many issues which
need to be addressed. Businesses will worry about angering their dealers. Timely
delivery of product to worldwide customers will require re-engineering of many
current distribution channels. Eventually, though, these barriers will fall to
the powerful lure of the convenience and efficiency of the Web. We want E-Z-EM
to be there when they do.
In closing, I would like to note that the progress we've made over the last
several years would not have been possible without the continuing contributions
and support of our customers, employees, directors and shareholders. And I look
forward to reporting in 2000 the positive results of our business strategies and
marketing efforts.
Sincerely,
Howard S. Stern
Chairman of the Board
and Acting Chief Executive Officer
The statements made in this document contain certain forward-looking statements
that involve a number of risks and uncertainties. Actual events or results may
differ from the Company's expectations. In addition to the matters described
above, future actions by the FDA, results of pending or future clinical trials,
as well as the risk factors listed from time to time in the Company's SEC
reports, including but not limited to its Annual Report on Form 10-K for the
year ended May 29, 1999, may affect the actual results achieved by the Company.
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