<PAGE> 1
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities and 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
Meridian Diagnostics, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined)
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
[ ] 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 this filing.
(1) Amount Previously Paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
Meridian Logo
MERIDIAN DIAGNOSTICS, INC.
3471 River Hills Drive
Cincinnati, Ohio 45244
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
Dear Shareholder:
We invite you to attend our annual meeting of shareholders on January 21, 1999
in Cincinnati, Ohio. At the meeting, you will hear a report on our operations
and have a chance to meet your directors and executives.
This booklet includes the formal notice of the meeting and the proxy statement.
The proxy statement tells you more about the agenda and procedures for the
meeting. It also describes how the Board operates and gives personal information
about our director candidates.
Even if you only own a few shares, we want your shares to be represented at the
meeting. I urge you to complete, sign, date, and return your proxy card promptly
in the enclosed envelope.
Sincerely yours,
/s/ William J. Motto
William J. Motto
Chairman of the Board
December 23, 1998
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- ------------------------------------------------------------------
<S> <C>
GENERAL INFORMATION......................................... -1-
ELECTION OF DIRECTORS....................................... -1-
APPROVAL OF 1999 DIRECTORS' STOCK OPTION PLAN............... -3-
APPROVAL OF AMENDING AND RESTATING THE COMPANY'S 1996
STOCK OPTION PLAN......................................... -3-
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS.................. -4-
DIRECTOR COMPENSATION....................................... -4-
BOARD COMMITTEES............................................ -5-
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION..... -5-
PRINCIPAL SHAREHOLDER....................................... -6-
DIRECTORS AND EXECUTIVE OFFICERS............................ -7-
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE........ -8-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. -8-
SUMMARY COMPENSATION TABLE.................................. -8-
OPTION GRANTS IN LAST FISCAL YEAR........................... -9-
FISCAL 1998 OPTION EXERCISES AND FISCAL YEAR-END OPTION
VALUES.................................................... -9-
PERFORMANCE GRAPH........................................... -10-
SHAREHOLDER PROPOSALS FOR NEXT YEAR......................... -11-
QUESTIONS?.................................................. -11-
EXHIBIT A................................................... -12-
EXHIBIT B................................................... -15-
</TABLE>
<PAGE> 4
NOTICE OF ANNUAL MEETING
OF
SHAREHOLDERS OF MERIDIAN DIAGNOSTICS, INC.
TIME:
3:00 p.m., Eastern Time
DATE:
January 21, 1999
PLACE:
The Phoenix
812 Race Street
Cincinnati, Ohio 45202
PURPOSE:
- Elect directors
- Vote on the 1999 Directors' Stock Option Plan
- Vote on amending and restating the 1996 Stock Option Plan
- Ratify appointment of Arthur Andersen LLP as the Company's independent
public accountants for fiscal year 1999
- Conduct other business if properly raised
Only shareholders of record on December 4, 1998 may vote at the meeting.
The approximate mailing date of this Proxy Statement and accompanying Proxy Card
is December 18, 1998.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
Gerard Blain
Secretary
December 23, 1998
<PAGE> 5
-1-
GENERAL INFORMATION
WHO MAY VOTE
Shareholders of Meridian, as recorded in our stock register on December 4, 1998,
may vote at the meeting. As of that date, Meridian had 14,383,718 shares of
Common Stock outstanding.
HOW TO VOTE
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
HOW PROXIES WORK
Meridian's Board of Directors is asking for your proxy. Giving us your proxy
means you authorize us to vote your shares at the meeting in the manner you
direct. You may vote for all, some, or none of our director candidates. You may
also vote for or against the other proposals or abstain from voting.
If you sign and return the enclosed proxy card but do not specify how to vote,
we will vote your shares in favor of our director candidates, in favor of the
1999 Directors' Stock Option Plan, in favor of amending and restating the
Company's 1996 Stock Option Plan and in favor of the ratification of Arthur
Andersen LLP as the Company's independent public accountants for fiscal year
1999.
You may receive more than one proxy or voting card depending on how you hold
your shares. Shares registered in your name are covered by one card. And if you
hold shares through someone else, such as a stockbroker, you may get material
from them asking how you want to vote.
REVOKING A PROXY
You may revoke your proxy before it is voted by submitting a new proxy with a
later date, by voting in person at the meeting, or by notifying Meridian's
Secretary in writing at the address under "Questions?" on page 11.
QUORUM
In order to carry on the business of the meeting, we must have a quorum. This
means at least a majority of the outstanding shares eligible to vote must be
represented at the meeting, either by proxy or in person.
VOTES NEEDED
The six director candidates receiving the most votes will be elected to fill the
seats on the Board. Approval of the other proposals requires the favorable vote
of a majority of the votes cast. Only votes for or against a proposal count.
Abstentions and broker non-votes count for quorum purposes but not for voting
purposes. Broker non-votes occur when a broker returns a proxy card but does not
have authority to vote on a particular proposal.
OTHER MATTERS
Any other matters considered at the meeting, including adjournment, will require
the affirmative vote of a majority of shares voting.
VOTING BY PROXY
All proxies properly signed will, unless a different choice is indicated, be
voted "FOR" the election of all nominees for Directors proposed by the Board of
Directors, "FOR" the adoption of the 1999 Directors' Stock Option Plan, "FOR"
amending and restating the Company's 1996 Stock Option Plan and "FOR"
ratification of the selection of independent public accountants.
If any other matters come before the meeting or any adjournment, each proxy will
be voted in the discretion of the individuals named as proxies on the card.
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
The Board has nominated the director candidates named below.
The Board of Directors oversees the management of the Company on your behalf.
The Board reviews Meridian's long-term strategic plans and exercises direct
decision-making authority in key areas, such as, choosing the Chief Executive
Officer, setting the scope of his authority to manage the company's business day
to day, and evaluating management's performance.
The Board is nominating for reelection all of the following current directors:
James A. Buzard, John A. Kraeutler, Gary P. Kreider, William J. Motto, Robert J.
Ready and Jerry L. Ruyan.
Proxies solicited by the Board will be voted for the election of these nominees.
All directors elected at the Annual Meeting will be elected to hold office
<PAGE> 6
-2-
until the next annual meeting. In voting to elect directors, shareholders are
entitled to cumulate their votes and to give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
shares held by the shareholder, or to distribute their votes on the same
principle among as many candidates as the shareholder sees fit. In order to
invoke cumulative voting, notice of cumulative voting must be given in writing
by a shareholder to the President, a Vice President or the Secretary of Meridian
not less than 48 hours prior to the Annual Meeting. The proxies solicited
include discretionary authority to cumulate their votes.
Three of our six nominees are not Meridian employees. Only non-employee
directors serve on Meridian's Audit and Compensation committees. All Meridian
directors are elected for one-year terms. Personal information on each of our
nominees is given below.
The Board met nine times last year and took action in writing on one occasion.
If a director nominee becomes unavailable before the election, your proxy card
authorizes us to vote for a replacement nominee if the Board names one.
Nominees receiving the highest number of votes cast for the positions to be
filled will be elected.
THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE FOLLOWING CANDIDATES:
- --------------------------------------------------------------------------------
James A. Buzard, Ph.D.
Age 71
Director since 1990 James A. Buzard, Ph.D. has been a Director since
1990 and serves as Chairman of the Compensation
Committee. From March 1981 until December 1989,
he was Executive Vice President of Merrell Dow
Pharmaceuticals Inc. From December 1989 until his
retirement in February 1990, he was Vice
President of Marion Merrell Dow, Inc. He has been
a business consultant since February 1990.
- --------------------------------------------------------------------------------
John A. Kraeutler
Age 50
Director since 1997 John A. Kraeutler has over 20 years of experience
in the medical diagnostics industry and joined
the Company as Executive Vice President and Chief
Operating Officer in January 1992. In July 1992,
Mr. Kraeutler was named President of the Company,
and has been a Director since 1997. Before
joining Meridian, Mr. Kraeutler served as Vice
President, General Manager for a division of
Carter-Wallace, Inc. Prior to that, he held key
marketing and technical positions with Becton,
Dickinson and Company and Organon, Inc.
- --------------------------------------------------------------------------------
Gary P. Kreider, Esq.
Age 60
Director since 1991 Gary P. Kreider has been a Director since 1991.
For over five years Mr. Kreider has been a Senior
Partner of the Cincinnati law firm of Keating,
Muething & Klekamp, P.L.L., counsel to the
Company. He is also an Adjunct Professor of Law
in securities at the University of Cincinnati
College of Law.
- --------------------------------------------------------------------------------
William J. Motto
Age 57
Director since 1977 William J. Motto has more than 25 years of
experience in the pharmaceutical and diagnostics
products industries, is a founder of the Company
and has been Chairman of the Board since 1977.
From that date until June 1986, Mr. Motto served
as President. He served as Chief Executive
Officer from June 1986 until September 1989, and
assumed that title again in May 1995. Before
forming the Company, Mr. Motto served in various
capacities for Wampole Laboratories, Inc., Marion
Laboratories, Inc. and Analytab Products, Inc., a
division of American Home Products Corp.
<PAGE> 7
-3-
- --------------------------------------------------------------------------------
Robert J. Ready
Age 58
Director since 1986 Robert J. Ready has been a Director since 1986
and serves as Chairman of the Audit Committee. In
1976, Mr. Ready founded LSI Industries, Inc.,
Cincinnati, Ohio, which engineers, manufactures
and markets commercial/industrial lighting and
graphics products, and has served as its
President and Chairman of its Board of Directors
since that time.
- --------------------------------------------------------------------------------
Jerry L. Ruyan
Age 52
Director since 1977 Jerry L. Ruyan has more than 20 years of
experience in the diagnostics products and
medical industries, is a founder of the Company
and has been a Director since 1977. Mr. Ruyan's
principal occupation is investment in business
ventures, primarily privately held organizations,
and presently is a partner in Redwood Ventures
LLC. Mr. Ruyan served as Chief Executive Officer
of Meridian from July 1992 to May 1995. In May
1995, Mr. Ruyan reduced his day-to-day
involvement in the Company in order to pursue
outside interests. He relinquished the title of
Chief Executive Officer at that time, but
continues to serve as a Director. Mr. Ruyan
served as President of the Company from June 1986
to July 1992. From June 1986 through January
1992, Mr. Ruyan served as Chief Operating
Officer. Mr. Ruyan is also a director of Meritage
Hospitality Group Inc.
- --------------------------------------------------------------------------------
APPROVAL OF 1999 DIRECTORS' STOCK OPTION PLAN (ITEM 2 ON THE PROXY CARD)
The Board of Directors recommends the approval of the 1999 Directors' Stock
Option Plan under which 50,000 shares of Meridian Common Stock would be reserved
for issuance. This Plan was adopted by the Board of Directors on December 1,
1998, subject to shareholder approval. This Plan is designed to replace a
similar plan approved by the Shareholders in 1994. The following is a summary of
the Plan which appears in its entirety as Exhibit A to this Proxy Statement.
The Plan provides that each non-employee director elected at the 1999 Annual
Meeting of Shareholders shall be granted an option to purchase 2,317 shares of
Company Common Stock and, upon each subsequent election as a director, another
option for 2,317 shares. Persons who become eligible directors after the
effective date of this Plan shall be granted an option for 2,317 shares as a
result of their election, whether by shareholders or directors, and upon each
subsequent election as a director, another option for 2,317 shares. All grants
shall be made on the date of the event giving rise to the option.
The Plan provides that options are to be granted with exercise prices at the
last closing sale price of the Common Stock of the Company reported prior to the
date of the grant. The closing price of the Company's Common Stock on December
4, 1998 was $5.75 per share. Options are granted for a term of ten years.
The right to exercise options vests immediately upon the time of grant. Options
may be exercised for cash or for Company Common Stock at its fair market value
on the date of the exercise. If at any time a holder of an option under this
Plan becomes an employee, officer or director of a competitor of Meridian, such
option shall automatically terminate.
Non-employee directors who receive options incur no federal income tax liability
at the time of grant. Non-employee directors exercising options recognize
taxable income and the Company has a tax deduction at the time of exercise to
the extent of the difference between the market price on the day of exercise and
the exercise price.
The affirmative vote of a majority of votes cast at the meeting is required to
approve the adoption of this Plan.
APPROVAL OF AMENDING AND
RESTATING THE COMPANY'S 1996 STOCK
OPTION PLAN (ITEM 3 ON THE PROXY CARD)
The Board is recommending that the Company's 1996 Stock Option Plan be amended
and restated. This Plan was adopted by shareholders at the 1997 Annual
Shareholders' Meeting. It provided options for 200,000 shares. With the growth
of the Com-
<PAGE> 8
-4-
pany and the passage of time, all of the shares provided by the Plan have been
subjected to options. The Board considers it advisable for Meridian to have
additional shares available in order to provide awards designed to attract and
retain key employees. In addition to increasing the number of shares by 500,000,
the Plan also contains several other modifications designed to provide more
flexibility in utilization of the options and to provide certain protections to
the Company. The complete text of the Plan is attached as Exhibit B to this
Proxy Statement, with the changes marked to show changes from the Plan as
originally adopted.
A committee established by the Board of Directors administers the Plan. The
Committee evaluates the duties of employees and their present and potential
contributions to the Company and such other factors as it deems relevant in
determining key persons to whom options will be granted and the number of shares
covered by such grants. All employees of the Company are eligible to be
considered by the Committee for the grant of options.
The Plan provides that all options are to be granted with exercise prices of not
less than 95% of the last closing sale price of the Common Stock reported prior
to the date of grant. Options may be granted for varying periods of up to ten
years. Options may be granted either as Incentive Stock Options designed to
provide certain tax benefits under the Internal Revenue Code or as Non-Qualified
Options without such benefits. However, persons who beneficially own 10% or more
of the Company=s outstanding Common Stock may not be granted incentive options
for terms exceeding five years and their exercise prices must be at least 110%
of market value at the time of grant.
The right to exercise options will vest according to a schedule determined at
the time of grant which generally is at the rate of 25% per year commencing on
the first anniversary of the date of grant, with this right to exercise
cumulative to the extent not utilized in prior periods. Options granted under
the Plan will not become exercisable until one year from the date of grant. The
Committee is empowered to grant options with different vesting provisions.
Options may be exercised for cash or for the Company common stock at its fair
market value. If the employment of a person holding an option is terminated for
any reason other than death, total permanent disability or retirement, the
option terminates.
Persons who receive options incur no federal income tax liability at the time of
grant.
Persons exercising Non-Qualified Options recognize taxable income and the
Company has a tax deduction at the time of exercise to the extent of the
difference between market price on the day of exercise and the exercise price.
Persons exercising Incentive Stock Options do not recognize taxable income until
they sell the stock. Sales within two years of the date of grant or one year of
the date of exercise result in taxable income to the holder and a deduction for
the Company, both measured by the difference between the market price at the
time of sale and the exercise price. Sales after such period are treated as
capital transactions to the holder and the Company receives no deduction.
The affirmative vote of a majority of votes cast at the meeting also is required
to approve the adoption of this Plan.
RATIFICATION OF APPOINTMENT OF
ACCOUNTANTS (ITEM 4 ON THE PROXY CARD)
Although not required by law, the Board is seeking shareholder ratification of
its selection of Arthur Andersen LLP as the Company's independent public
accountants for fiscal 1999. An affirmative vote of a majority of shares voting
at the meeting is required for ratification. If ratification is not obtained,
the Board intends to continue the employment of Arthur Andersen LLP at least
through fiscal 1999. Representatives of Arthur Andersen LLP are expected to be
present at the Shareholders' Meeting and will be given an opportunity to
comment, if they so desire, and to respond to appropriate questions that may be
asked by shareholders.
DIRECTOR COMPENSATION
Non-employee directors of Meridian receive $12,000 per year for serving as a
director and as members of committees of the Board. They also receive $1,000 for
each director or committee meeting attended except if a committee meeting occurs
on the same day as a directors' meeting, the committee meeting fee is $800. They
receive $500 for each director or committee meeting held by telephone. Committee
chairman receive an addi-
<PAGE> 9
-5-
tional $500 for each committee meeting held. Each non-employee director is also
granted a non-qualified option to purchase 2,317 shares of Common Stock at the
time of election or re-election to the Board of Directors, with the exercise
price being the closing sale price reported immediately prior to the date of
grant. Directors who are employees of Meridian are not separately compensated
for serving as directors.
BOARD COMMITTEES
The Board appoints committees to help carry out its duties. In particular, Board
committees work on key issues in greater detail than would be possible at full
Board meetings. Each committee reviews the results of its meetings with the full
Board. The Board of Directors does not have a nominating committee or executive
committee.
THE AUDIT COMMITTEE is responsible for reviewing the Company's internal
accounting operations. It also recommends the employment of independent
accountants and reviews the relationship between the Company and its outside
accountants.
Committee members: Messrs. Buzard, Kreider and Ready (Chairman).
Meetings last year: 2
THE COMPENSATION COMMITTEE is responsible for establishing compensation for
management and administering the Company's stock option plans.
Committee members: Messrs. Buzard (Chairman), Kreider and Ready.
Meetings last year: 6
Actions in writing last year: 5
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is charged with establishing compensation for
executive officers through the establishment of salaries and bonus plans as well
as making bonus awards and awarding stock options.
At a meeting held September 15, 1997, the Committee set salaries for executive
officers for fiscal 1998. In establishing these salaries, the Committee reviewed
recommendations of management presented in July against studies of local
comparable companies as well as 1996 data prepared by the Health Industries and
Manufacturers Association. These studies compared entities by sales, assets and
employee range on a profit margin basis and other aspects. In making its
decisions the Committee noted that Meridian had a less than satisfactory year
and believed that in these circumstance the range of compensation for executive
officers should be approximately the same as for the entire work force. This
process allowed increases to be tied more into the bonus performance and stock
option plans established by the Committee. The salary of the Chief Executive
Officer, Mr. Motto, was set in the same manner.
At a meeting held November 18, 1998, the Committee reviewed with management the
financial results for fiscal 1998 as compared to the bonus plan previously
established by the Board. Since targets set forth in the plan were not met, no
bonuses were awarded. The Committee then adopted a proposed bonus plan for
fiscal 1999 similar in concept to those previously utilized.
At other meetings during fiscal 1998, the Committee awarded options from the
Company's previously approved Stock Option Plan reflecting its view of the
importance of particular executives to the Company's future performance.
Compensation Committee of
the Board of Directors
James A. Buzard, Chairman
Gary P. Kreider
Robert J. Ready
<PAGE> 10
-6-
PRINCIPAL SHAREHOLDER
The following person is the only shareholder known by the Company to own
beneficially 5% or more of its outstanding Common Stock as of December 4, 1998:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------ -------------------- --------
<S> <C> <C>
William J. Motto 4,667,163 32.3%
</TABLE>
The business address of Mr. Motto is 3471 River Hills Drive, Cincinnati, Ohio
45244.
Mr. Motto is a party to an agreement with Jerry L. Ruyan and Meridian pursuant
to which he must offer his shares for sale to Meridian, and if it declines to
purchase, to Mr. Ruyan, based on the current market price, if he desires to sell
more than 1% of Meridian's Common Stock in any three-month period.
The shares of Common Stock reported as beneficially owned by Mr. Motto include
809,539 shares held by his three children as trustees of various trusts, 51,646
shares held by the William J. Motto Family Charitable Remainder Unitrust and
75,452 shares subject to options exercisable within 60 days.
<PAGE> 11
-7-
DIRECTORS AND EXECUTIVE OFFICERS
This table lists the executive officers and directors of Meridian and shows
how much common stock each owned on December 4, 1998.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
NAME AND AGE POSITION AMOUNT(1) PERCENTAGE
------------ -------- --------- ----------
<S> <C> <C> <C>
William J. Motto Chairman of the Board of Directors, Chief Executive 4,667,163(2) 32.3%
57 Officer
John A. Kraeutler President, Chief Operating Officer and Director 138,425 *
50
Gerard Blain(3) Executive Vice President, Chief Financial Officer and 31,834 *
58 Secretary
Ching Sui Arthur Yi,(4) Vice President, Research and Development 35,000 *
Ph.D.
52
Antonio A. Interno(5) Senior Vice President 361,635 2.5%
48
Richard L. Eberly(6) Vice President, Sales and Marketing 6,675 *
37
James A. Buzard, Ph.D.(7) Director 19,442 *
71
Gary P. Kreider(7) Director 31,453(8) *
60
Robert J. Ready(7) Director 20,697 *
58
Jerry L. Ruyan Director 515,094(9) 3.6%
52
All Executive Officers and 5,827,418 39.0%
Directors as a Group (10)
</TABLE>
- ---------------
1 Includes options exercisable within 60 days from Mr. Motto of 75,452 shares,
Mr. Kraeutler of 134,073 shares, Mr. Blain of 30,020 shares, Dr. Yi of 13,910
shares, Mr. Interno of 202,318 shares, Mr. Eberly of 6,375 shares, Mr. Buzard
of 18,190 shares, Mr. Kreider of 11,587 shares, Mr. Ready of 20,697 shares,
and Mr. Ruyan of 50,378 shares.
2 See description of Common Stock ownership contained under "Principal
Shareholder".
3 Gerard Blain joined the Company as Vice President and Chief Financial Officer
on March 1, 1994. He was elected Secretary in April 1996. Prior to joining the
Company, Mr. Blain was Vice President and Controller of Marion Merrell Dow,
Inc. Mr. Blain had been with Marion Merrell Dow, Inc. and its predecessor
companies since 1966.
4 Ching Sui Arthur Yi, Ph.D., has more than 18 years of experience in the
diagnostic industry and has been Vice President, Research and Development of
the Company since August 1989. From May 1986 until he joined the Company, he
was Director of Product Development of Cambridge BioScience Corporation.
Previously he was a partner of BioClinical System Inc. from July 1983 to April
1986, Manager of Research and Development of Terumo Medical Corporation from
March 1982 to June 1983 and Senior Scientist of Leeco Diagnostics from August
1979 to February 1982.
5 Antonio A. Interno was appointed as a Vice President in August 1991 and
appointed a Senior Vice President in September 1997. He has been Managing
Director of the Company's European subsidiary, Meridian Diagnostics Europe
since February 1990. Prior to that time, he was the marketing manager for
Diagnostics International Distribution SPA, a major Italian diagnostics
distributor.
6 Richard L. Eberly was appointed Vice President of Sales and Marketing in
January 10 1997. He has over 12 years of experience in the medical diagnostic
industry and joined the Company in January 1995. Prior to his appointment to
Vice President of Sales and Marketing, Mr. Eberly served as the Director of
Sales for the Company. Before joining Meridian he held key sales and marketing
positions at Abbott Diagnostics.
7 Audit Committee Member and Compensation Committee Member.
8 Includes 145 shares held directly by his wife and 9,364 shares held by trusts
of which Mr. Kreider is trustee and a beneficiary.
9 Includes 23,265 shares holds by the Ruyan Family Charitable Remainder Unitrust
of which Mr. Ruyan is trustee and a beneficiary.
<PAGE> 12
-8-
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership. Based on a review of the copies of such forms received by
it, the Company believes that during the last fiscal year, all of its executive
officers, directors and ten percent stockholders complied with the Section 16
reporting requirements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gary P. Kreider, who is a member of the Compensation Committee, is a senior
partner of Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio, a law firm
that provided legal services to Meridian in fiscal 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------------------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
------------------ ---- -------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
William J. Motto 1998 $338,000 $ -- -- $14,279
Chairman of the Board of Directors, 1997 325,000 -- -- 4,742
Chief Executive Officer 1996 302,000 75,509 20,000 12,832
John A. Kraeutler 1998 $245,000 $ -- 50,000 $ 9,844
President, Chief Operating Officer 1997 235,000 -- -- 4,641
1996 215,000 53,841 24,000 11,816
Gerard Blain 1998 $162,000 $ -- 50,000 $13,533
Executive Vice President, Chief 1997 147,000 -- -- 4,593
Financial Officer and Secretary 1996 135,000 25,341 10,000 7,970
Antonio A. Interno 1998 $200,000 $ -- 7,000 $ 0
Vice President 1997 200,000 -- -- 0
1996 181,250 25,700 10,000 0
Ching Sui Arthur Yi 1998 $125,000 $ -- 8,000 $ 9,123
Vice President, Research 1997 114,000 -- -- 3,730
and Development 1996 108,000 20,288 2,000 8,022
</TABLE>
- ---------------
1 Amounts accrued under the Company's Savings and Investment Plan.
<PAGE> 13
-9-
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
% OF TOTAL AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL PRICE ------------------------
NAME GRANTED 1998 ($/PER SHARE) EXPIRATION DATE 5% 10%
---- ---------- ---------- ------------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William J. Motto -- -- -- -- -- --
John A. Kraeutler 7,121 4.8% 10.875 10/15/07 $126,143 $200,862
12,879 8.7% 10.875 10/15/07 228,142 363,277
22,500 15.2% 12.500 4/21/08 458,127 729,490
7,500 5.1% 12.500 4/21/08 152,709 243,163
Gerard Blain 7,500 5.1% 10.875 10/15/07 $132,857 $211,552
2,500 1.7% 10.875 10/15/07 44,286 70,517
21,610 14.6% 12.500 4/21/08 440,005 700,635
18,390 12.4% 12.500 4/21/08 374,442 596,237
Antonio A. Interno 5,000 3.4% 10.875 10/15/07 $ 88,571 $141,035
2,000 1.4% 12.500 4/21/08 40,722 64,844
Ching Sui Arthur Yi 6,000 4.1% 10.875 10/15/07 $106,285 $169,242
2,000 1.4% 12.500 4/21/08 40,722 64,844
</TABLE>
FISCAL 1998 OPTION EXERCISES
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS AT
UNDERLYING UNEXERCISED FY-END
SHARES ACQUIRED VALUE OPTIONS AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
William J. Motto 8,354 25,516 75,452/15,000 119,198/0
John A. Kraeutler -- -- 134,073/68,000 271,557/0
Gerald Blain -- -- 30,020/51,250 28,047/0
Antonio A. Interno -- -- 202,318/9,500 1,083,159/0
Ching Sui Arthur Yi 3,342 15,223 13,910/8,795 20,093/3,781
3,183 18,404
4,635 29,013
</TABLE>
<PAGE> 14
-10-
PERFORMANCE GRAPH
The following graph shows the yearly percentage change in Meridian's
cumulative total shareholder return on its Common Stock as measured by dividing
the sum of (A) the cumulative amount of dividends, assuming dividend
reinvestment during the periods presented and (B) the difference between
Meridian's share price at the end and the beginning of the periods presented; by
the share price at the beginning of the periods presented with the Wilshire 5000
Equity Index and a Peer Group Index. The Peer Group consists of Diagnostics
Products Corp., Gamma Biologicals, Inc., Hycor Biomedical, Inc. and Immucor,
Inc.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MERIDIAN DIAGNOSTICS, INC., THE WILSHIRE 5000 EQUITY INDEX
AND A PEER GROUP
<TABLE>
<CAPTION>
'MERIDIAN
DIAGNOSTICS, INC.' PEER GROUP WILSHIRE 5000
<S> <C> <C> <C>
SEP-93 100.00 100.00 100.00
SEP-94 95.40 123.31 102.71
SEP-95 151.44 195.72 132.52
SEP-96 254.46 185.17 157.44
SEP-97 230.39 157.33 217.60
SEP-98 151.06 142.38 244.75
</TABLE>
* $100 invested on 9/30/93 in stock or index -
including reinvestment of dividends.
Fiscal year ending September 30.
<PAGE> 15
-11-
SHAREHOLDER PROPOSALS FOR NEXT YEAR
The deadline for shareholder proposals to be included in the Proxy
Statement for next year's meeting is August 19, 1999.
The form of Proxy for this meeting grants authority to the designated
proxies to vote in their discretion on any matters that come before the meeting
except those set forth in the Company's Proxy Statement and except for matters
as to which adequate notice is received. In order for a notice to be deemed
adequate for the 2000 Annual Shareholders' Meeting, it must be received prior to
November 4, 1999. If there is a change in the anticipated date of next year's
annual meeting or these deadlines by more than 30 days, we will notify you of
this change through our Form 10-Q filings.
QUESTIONS?
If you have questions or need more information about the annual meeting,
write to:
Gerard Blain, Secretary
Meridian Diagnostics, Inc.
3471 River Hills Drive
Cincinnati, Ohio 45244
or call us at (513) 271-3700 .
For information about your record holdings call the Fifth Third Bank
Shareholder Services at 1-800-837-2755.
<PAGE> 16
-12-
EXHIBIT A
MERIDIAN DIAGNOSTICS, INC.
1999 DIRECTORS' STOCK OPTION PLAN
The purpose of the 1999 Directors' Stock Option Plan is to advance the
interests of Meridian Diagnostics, Inc. and its shareholders by affording
non-employee members of the Company's Board of Directors an opportunity to
increase their proprietary interest in the Company by the grant of options to
them under the terms set forth herein. The Company believes that this Plan will
give an incentive to these members of the Board to increase revenues and
profits.
1. Effective Date of the Plan. This Plan shall become effective at such
time as it is approved by shareholders at the 1999 Annual Meeting of
Shareholders of the Company.
2. Shares Subject to the Plan. The shares to be issued upon the exercise of
the options granted under the Plan shall be shares of Common Stock, no par
value, of the Company. Either treasury or authorized and unissued shares of
Common Stock, or both, as the Board of Directors shall from time to time
determine, may be so issued. No shares of Common Stock which are subject of any
lapsed, expired or terminated options may be available for reoffering under the
Plan.
Subject to the provisions of Section 4, the aggregate number of shares of
Common Stock for which options may be granted under the Plan shall be 50,000.
3. Administration. The Plan shall be administered by a committee appointed
in accordance with the Company's Code of Regulations and consisting of directors
who may also be eligible to participate in the Plan.
Subject to the express provisions of the Plan, the Committee shall have the
authority to establish the terms and conditions of such option agreements,
consistent with this Plan. Such agreements need not be uniform.
4. Adjustments to Common Stock and Option Price.
4.1 In the event of changes in the outstanding Common Stock of the
Company as a result of stock dividends, split-ups, recapitalizations,
combinations or exchanges, the number and class of shares of Common Stock
authorized to be the subject of options under the Plan and the number and
class of shares of Common Stock and Option Price for each option which is
outstanding under this Plan shall be correspondingly adjusted by the
Committee.
4.2 The Committee shall make appropriate adjustments in the Option
Price to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
4.3 In the event of the dissolution or liquidation of the Company or
any merger, consolidation or combination in which the Company is not the
surviving corporation or in which the outstanding shares of Common Stock of
the Company are converted into cash, other securities or other property,
each outstanding option issued hereunder shall terminate as of a date fixed
by the Committee provided that not less than 20 days' written notice of the
date of expiration shall be given to each holder of an option. Each such
holder shall have the right during such period following notice to exercise
the option as to all or any part of the option for which it is exercisable
at the time of such notice.
5. Eligible Directors; Grant of Options. An Eligible Director shall be each
director of the Company, now serving as a director or elected hereafter, who is
not also an employee of the Company.
Each Eligible Director elected as such at the 1999 Annual Meeting of
Shareholders shall be granted an option for the purchase of 2,317 shares of
Common Stock and, upon each subsequent election as a director, another option
for 2,317 shares. Persons who become Eligible Directors after the effective date
of the Plan shall be granted an option for 2,317 shares as a result of their
election, whether by shareholders or directors, and upon each subsequent
election as a director, another option for 2,317 shares. All grants shall be
made on
<PAGE> 17
-13-
the date of the event giving rise to the option. Such grants shall continue
until the number of shares provided for in this Plan in Section 2 are exhausted.
6. Price. The purchase price of the shares of Common Stock which may be
acquired pursuant to the exercise of any option granted pursuant to the Plan
shall be the last closing sale price reported on the last trading date prior to
the date of grant.
7. Period of Option. The term of each option shall be ten years from the
date of grant.
8. Exercise of Options. An option may be exercised by an Eligible Director
at any time as to all or part of the shares covered thereby by giving written
notice to the Company at its principal office, directed to the attention of its
Secretary, accompanied by payment of the Option Price in full for shares being
purchased. The payment of the Option Price shall be either in cash or, subject
to any conditions set forth in the option agreement, by delivery of previously
owned shares of Common Stock of the Company having a fair market value equal to
the purchase price on the date of exercise of the option, or by any combination
of cash and such shares.
Additionally, an option may be exercised by delivering written notice of
exercise to Meridian to the attention of its Secretary accompanied by
irrevocable instructions to deliver shares to a broker-dealer with a copy of
irrevocable instructions to the broker-dealer to deliver the exercise Option
Price to Meridian.
Unless there is in effect at the time of exercise a registration statement
under the Securities Act of 1933 permitting the resale to the public of shares
acquired under the Plan, the holder of the option shall, except to the extent
determined by the Committee that such is not required, (i) represent and warrant
in writing to the Company that the shares acquired are being acquired for
investment and not with a view to the distribution thereof, (ii) acknowledge
that the shares acquired may not be sold unless registered for sale under said
Act or pursuant to an exemption from such registration, and (iii) agree that the
certificates evidencing such shares shall bear a legend to the effect of clauses
(i) and (ii).
9. Nontransferability of Options. No option granted under the Plan shall be
transferable otherwise than by will or by the laws of descent and distribution,
and an option may be exercised during the lifetime of the holder only by the
holder.
10. Death or Disability of an Optionee. If an optionee dies or becomes
disabled all options granted to such person may be exercised by the legal
representative of the estate of the deceased option holder or by the person or
persons to whom such Eligible Director's rights under the option passes by will
or the laws of descent and distribution. "Disabled" shall have the meaning
ascribed to it in Section 105(d)(4) of the Internal Revenue Code of 1986, as
amended.
11. Rights as a Shareholder. The holder of an option shall not have any of
the rights of a shareholder of the Company with respect to the shares subject to
an option until a certificate for such shares shall have been issued upon the
exercise of the option.
12. Amendment and Termination.
12.1 The Plan shall terminate five years after its effective date and
thereafter no options shall be granted. All options outstanding at the time
of termination of the Plan shall continue in full force and effect in
accordance with and subject to the terms and conditions of the Plan. The
Board of Directors of the Company at any time prior to that date may
terminate the Plan or make such amendments to it as the Board of Directors
shall deem advisable; provided, however, that except as provided in Section
4, the Board of Directors may not, without shareholder approval, increase
the maximum number of shares as to which options may be granted under the
Plan, change the class of persons eligible to receive options under the
Plan or change the number of options to be granted to each eligible person
under the Plan. No termination or amendment of the Plan may, without the
consent of the holder of an option then existing, terminate his option or
materially and adversely affect his rights under the option.
<PAGE> 18
-14-
12.2 This Plan may not be amended more than once every six months
other than to conform with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder.
13. Automatic Termination of Option. Notwithstanding anything contained
herein to the contrary, if at any time a holder of an option granted under this
Plan becomes an employee, officer or director of or a consultant to an entity
which the Committee determines is a competitor of the Company, such option shall
automatically terminate as of the date such conflicting relationship was
established.
<PAGE> 19
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enclosed in brackets "[" and "]" in the electronic format.
-15-
EXHIBIT B
MERIDIAN DIAGNOSTICS, INC.
1996
STOCK OPTION PLAN
AMENDED AND RESTATED EFFECTIVE JANUARY 22, 1999
ARTICLE 1
OBJECTIVES
Meridian Diagnostics, Inc. [("Meridian") has] established this Stock Option
Plan effective November 14, 1995 and amended and restated it effective January
22, 1999 as an incentive to the attraction and retention of dedicated and loyal
employees of outstanding ability, to stimulate the efforts of such persons in
meeting the Company's objectives and to encourage ownership of the Company's
Common Stock by employees.
ARTICLE 2
DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the definition
which is attributed to them, unless another definition is clearly indicated by a
particular usage and context.
A. "Code" means the Internal Revenue Code of 1986.
B. The "Company" means Meridian and any subsidiary of Meridian, as the
term "subsidiary" is defined in Section 424(f) of the Code.
C. "Date of Exercise" means the date on which the Company has received
a written notice of exercise of an Option, in such form as is acceptable to
the Committee, and full payment of the purchase price.
D. "Date of Grant" means the date on which the Committee makes an
award of an Option.
E. "Eligible Employee" means any individual who performs services for
the Company and is treated as an employee for federal income tax purposes.
F. "Fair Market Value" means the last sale price reported on any stock
exchange or over-the-counter trading system on which Shares are trading on
the last trading day prior to a specified date or, if no last sales price
is reported, the average of the closing bid and asked prices for a Share on
a specified date. If no sale has been made on the specified date, then
prices on the last preceding day on which any such sale shall have been
made shall be used in determining Fair Market Value under either method
prescribed in the previous sentence.
G. "Incentive Stock Option" shall have the same meaning as given to
that term by Section 422 of the Code.
H. "Nonqualified Stock Option" means any Option granted under the Plan
which is not considered an Incentive Stock Option.
I. "Option" means the right to purchase a stated number of Shares at a
specified price. The option may be granted to an Eligible Employee subject
to the terms of this Plan, and such other conditions and restrictions as
the Committee deems appropriate. Each Option shall be designated by the
Committee to be either an Incentive Stock Option or a Nonqualified Stock
Option.
J. "Option Price" means the purchase price per Share subject to an
Option and shall be fixed by the Committee, but shall not be less than 100%
of the Fair Market Value of a Share on the Date of Grant in the case of an
Incentive Stock Option.
<PAGE> 20
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enclosed in brackets "[" and "]" in the electronic format.
-16-
K. "Permanent and Total Disability" shall mean any medically
determinable physical or mental impairment rendering an individual unable
to engage in any substantial gainful activity, which disability can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months.
L. "Plan" means this 1996 Stock Option Plan as it may be amended from
time to time.
M. "Share" means one share of the Common Stock, no par value, of the
Company.
ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee [(the "Committee")]
designated by the Board of Directors of the Company. The Committee shall be
[comprised] composed solely of [three or more] directors each of whom shall be
(i) a ["disinterested person]"non-employee director" as defined under Rule 16b-3
of the Securities and Exchange Act of 1934 (the "Act") and (ii) an "outside
director" to the extent required by Section 162(m) of the Internal Revenue Code
("Section 162(m)"). [Notwithstanding the foregoing, to the extent relevant state
law now or hereafter permits, the Committee may be comprised solely of two or
more such directors.]
Actions shall be taken by a majority of the Committee.
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
A. Determine which Eligible Employees shall be granted Options;
B. Determine the number of Shares which may be subject to each Option;
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive Stock Option or
Nonqualified Stock Option;
F. Interpret the provisions of the Plan and decide all questions of
fact arising in its application; and
G. Prescribe such rules and procedures for Plan administration as from
time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the Committee
with respect to the application or administration of this Plan shall be final
and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions of
Options.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or any Option
granted hereunder, and to the extent permitted by law, all members shall be
indemnified by the Company for any liability and expenses which may occur
through any claim or cause of action.
<PAGE> 21
-17-
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options granted under the Plan
shall not exceed 200,000 700,000 Shares in the aggregate. Except as provided in
Section 4.2, upon lapse or termination of any Option for any reason without
being completely exercised, the Shares which were subject to such Option may
again be subject to other Options.
4.2 The maximum number of Shares with respect to which options may be
granted to any employee during each fiscal year of the Company is 50,000 Shares.
If an Option is cancelled, it continues to be counted against the maximum number
of Shares for which Options may be granted to an employee. If an Option is
repriced, the transaction is treated as a cancellation of the Option and a grant
of a new Option.
ARTICLE 5
GRANTING OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, from
time to time prior to November 14, 2005, grant Options to Eligible Employees on
such terms and conditions as the Committee may determine. More than one Option
may be granted to the same Eligible Employee.
ARTICLE 6
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock Options set
forth in Article 9, each Option shall be for a term of from one to ten years
from the Date of Grant and may not be exercised during the first twelve months
of the term of said Option. Commencing on the first anniversary of the Date of
Grant of an Option, the Option may be exercised for 25% of the total Shares
covered by the Option with an additional 25% of the total Shares covered by the
Option becoming exercisable on each succeeding anniversary until the Option is
exercisable to its full extent. This right of exercise shall be cumulative and
shall be exercisable in whole or in part. The Committee in its sole discretion
may permit particular holders of Options to exercise an Option to a greater
extent than provided herein. The Committee may establish a different exercise
schedule and impose other conditions upon exercise for any particular Option or
groups of Options.
6.2 The holder of an Option must remain continuously in the service of the
Company as an employee for a period of at least twelve months. Nothing contained
in this Plan or in any Option granted pursuant to it shall confer upon any
employee any right to continue in the employ of the Company or to interfere in
any way with the right of the Company to terminate employment at any time. So
long as a holder of an Option shall continue to be an employee of the Company,
the Option shall not be affected by any change of the employee's duties or
position.
6.3 If the grantee of an Option dies or becomes subject to a Permanent and
Total Disability either while employed by the Company, or within 90 days
following termination of employment for any reason other than cause, or if such
grantee retires after age 55 through a plan of retirement acceptable to
Meridian, all Options granted to such person shall become fully vested and
immediately exercisable as of the date of termination of employment.
6.4 In the event of the dissolution or liquidation of Meridian or any
merger, other than a merger for the purpose of the redomestication of Meridian
and not involving a change in control, consolidation, exchange or other
transaction in which Meridian is not the surviving corporation or in which the
outstanding Shares of Meridian are converted into cash, other securities or
other property, each outstanding Option shall automatically become fully vested
and fully exercisable immediately prior to such event. Thereafter the holder of
each such Option shall, upon exercise of the Option, receive, in lieu of the
stock or other securities and property receivable upon exercise of the Option
prior to such transaction, the stock or other securities or
<PAGE> 22
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
-18-
property to which such holder would have been entitled upon consummation of such
transaction if such holder had exercised such Option immediately prior to such
transaction.
ARTICLE 7
EXERCISE OF OPTIONS
7.1 Any person entitled to exercise an Option in whole or in part, may do
so by delivering a written notice of exercise to the Company, attention
Corporate Secretary, at its principal office. The written notice shall specify
the number of Shares for which an Option is being exercised and the grant date
of the option being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased.
7.2 An Option may also be exercised by delivering a written notice of
exercise to Meridian, Attention Corporate Secretary, accompanied by irrevocable
instructions to deliver shares to a broker-dealer and a copy of irrevocable
instructions to the broker-dealer to deliver the Option Price to Meridian.
ARTICLE 8
PAYMENT OF OPTION PRICE
[8.1] Payment of the Option Price may be made in cash, by the tender of
previously owned Shares which have been owned at least six months and [Shares,
or both. Shares tendered shall be valued at their Fair Market Value on the date
of tender.]
[8.2 Payment through tender of Shares may be made by instruction from the
Optionee to the Company to withhold from the Shares issuable upon exercise that
number] which have a Fair Market Value equal to the purchase price on the date
of [tender equal to the] exercise [price for the Option or portion thereof being
exercised.] or by any combination of cash and such Shares.
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is to
be considered an Incentive Stock Option or a Nonqualified Stock Option. The
Committee may grant both an Incentive Stock Option and a Nonqualified Stock
Option to the same individual. However, where both an Incentive Stock Option and
a Nonqualified Stock Option are awarded at one time, such Options shall be
deemed to have been awarded in separate grants, shall be clearly identified, and
in no event will the exercise of one such Option affect the right to exercise
the other such Option.
9.2 Any option designated by the Committee as an Incentive Stock Option
will be subject to the general provisions applicable to all Options granted
under the Plan. In addition, the Incentive Stock Option shall be subject to the
following specific provisions:
A. At the time the Incentive Stock Option is granted, if the Eligible
Employee owns, directly or indirectly, stock representing more than 10% of
(i) the total combined voting power of all classes of stock of the Company,
or (ii) a corporation that owns 50% or more of the total combined voting
power of all classes of stock of the Company, then:
(i) The Option Price must equal at least 110% of the Fair Market
Value on the Date of Grant; and
(ii) The term of the Option shall not be greater than five years
from the Date of Grant.
B. The aggregate Fair Market Value of Shares (determined at the Date
of Grant) with respect to which Incentive Stock Options are exercisable by
an Eligible Employee for the first time during any calendar year under this
Plan or any other plan maintained by the Company shall not exceed $100,000.
<PAGE> 23
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
-19-
9.3 If any Option is not granted, exercised, or held pursuant to the
provisions noted immediately above, it will be considered to be a Nonqualified
Stock Option to the extent that the grant is in conflict with these
restrictions.
ARTICLE 10
TRANSFERABILITY OF OPTION
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law and
may be exercised only by such individual. Upon the death of an Eligible Employee
to whom an Option has been granted, the Option may be transferred to the
beneficiaries or heirs of the holder of the Option by will or by the laws of
descent and distribution.
Notwithstanding the above, the Committee may, with respect to particular
Nonqualified Stock Options, establish or modify the terms of the Option to allow
the Option to be transferred at the request of the grantee of the Option to
trusts established by the grantee or as to which the grantee is a grantor or to
family members of the grantee or otherwise for personal and tax planning
purposes of the grantee. If the Committee allows such transfer, such Options
shall not be exercisable for a period of six months following the action of the
Committee.
ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
A. Upon exercise or expiration by its terms.
B. Except as provided below in this Subsection [11.1.C] 11.1, upon
termination of employment for reasons other than cause, the
then-exercisable portion of any Option will terminate on the [60th] 90th
day after the date of termination. The portion not then exercisable will
terminate on the date of termination of employment. For purposes of the
Plan, a leave of absence approved by the Company shall not be deemed to be
termination of employment.
C. If an Eligible Employee holding an Option dies or becomes subject
to a Permanent and Total Disability either while employed by the Company,
or within [60] 90 days [after] following termination of employment, for
[reasons] any reason other than cause,such Option may be exercised, [to the
extent exercisable on the date of death, Permanent and Total Disability or
termination of employment,] at any time within one year after the date the
employment of such Eligible Employee terminated, by the estate or guardian
of such person or by those persons to whom the Option may have been
transferred by will or by the laws of descent and distribution.
D. Options shall terminate immediately if employment is terminated for
cause or by voluntary action of the grantee without the consent of
Meridian. Cause is defined as including, but not limited to, theft of or
intentional damage to Company property, intentional harm to the Company's
reputation, material breach of the optionee's duty of fidelity to the
Company, the use of illegal drugs, the commission of a criminal act,
willful violation of Company policy, or trading in securities of the
Company for personal gain based on knowledge of the Company's activities or
results when such information is not available to the general public.
E. If an Eligible Employee holding an Option violates any terms of any
written employment, confidentiality or noncompetition agreement between the
Company and the Eligible Employee, all existing options held by such
Employee will terminate. In addition, if at the time of such violation the
Employee has exercised Options but has not received certificates for the
shares to be issued, the Company may void the Option and its exercise. Any
such actions by the Company shall be in addition to any other rights or
remedies available to the Company in such circumstances.
<PAGE> 24
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enclosed in brackets "[" and "]" in the electronic format.
-20-
F. If the grantee of a Nonqualified Stock Option retires after age 55
through a plan of retirement acceptable to Meridian, such Option may be
exercised at any time within two years after the date of termination of
employment.
G. The Committee, in its discretion, may as to any particular
outstanding Nonqualified Stock Option or upon the grant of any Nonqualified
Stock Option, establish terms and conditions which are different from those
otherwise contained in this Article 11, by, without limitation, providing
that upon termination of employment for any designated reason, vesting may
occur in whole or in part at such time and that such Option may be
exercised for any period during the remaining term of the Option.
11.2 Except as provided [in Article 12 hereof] elsewhere herein, in no
event will the continuation of the term of an Option beyond the date of
termination of employment allow the Eligible Employee, or his beneficiaries or
heirs, to accrue additional rights under the Plan, or to purchase more Shares
through the exercise of an Option than could have been purchased on the day that
employment was terminated. In addition, notwithstanding anything contained
herein, no option may be exercised in any event after the expiration of ten
years from the date of grant of such option.
ARTICLE 12
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock of the Company
as a result of stock dividends, splitups, recapitalizations, combinations of
Shares or exchanges of Shares, the number and class of Shares for all purposes
covered by the Plan and number and class of Shares and price per Share for each
Option and each outstanding Option covered by the Plan shall be correspondingly
adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option Price
to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
12.3 In the event of the dissolution or liquidation of the Company or any
merger, other than a merger for the purpose of the redomestication of Meridian
which does not involve a change in control, consolidation, exchange or other
transaction in which the Company is not the surviving corporation or in which
the outstanding Shares of the Company are converted into cash, other securities
or other property, each outstanding Option shall [terminate as of a date fixed
by the Committee provided that not less than 20 days' written notice of the date
of expiration shall be given to each holder of an Option and each such holder
shall have the right during such period following notice to] automatically
become fully vested and fully exercisable immediately prior to such event.
Thereafter, the holder of each such Option shall, upon exercise of the Option,
receive, in lieu of the stock or other securities and property receivable upon
exercise of the Option [as to all or any part of the Shares for which it is
exercisable at the time of such notice. The Committee, in its sole discretion,
may provide that Options in such circumstances may be] prior to such
transaction, the stock or other securities or property to which such holder
would have been entitled upon consummation of such transaction if such holder
had exercised [to an extent greater than the number of shares for which they
were exercisable at the time of such a notice.] such Option immediately prior to
such transaction.
12.4 All outstanding Options shall become immediately exercisable in full
if a change in control of the Company occurs. For purposes of this Agreement, a
"change in control of the Company" shall be deemed to have occurred if (a) any
"person," as such term is used in Sections 13(d) and 14(d) of the Act, other
than a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or William J. Motto becomes the "beneficial owner," as
defined in Rule 13d-3 under the Act, directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power of the
Company's then outstanding securities; or (b) during any period of one year (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors and any new
director whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds ( 2/3) of the
Directors then still in office who either were Directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof.
<PAGE> 25
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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ARTICLE 13
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole discretion may
determine.
13.2 Each optionee, by acceptance of an Option under this Plan, shall be
deemed to have consented to be bound, on the optionee's own behalf and on behalf
of the optionee's heirs, assigns and legal representatives, by all terms and
conditions of this Plan.
ARTICLE 14
AMENDMENT OR DISCONTINUANCE OF PLAN
14.1 The Board of Directors of the Company may at any time amend, suspend,
or discontinue the Plan; provided, however, that no amendments by the Board of
Directors of the Company shall, without further approval of the shareholders of
the Company:
A. Change the definition of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof, increase the number
of Shares which may be subject to Options granted under the Plan.
C. Cause the Plan or any Option granted under the Plan to fail to (i)
be excluded from the $1 million deduction limitation imposed by Section
162(m) of the Code, or (ii) qualify as an "Incentive Stock Option" as
defined by Section 422 of the Code.
14.2 No amendment or discontinuance of the Plan shall alter or impair any
Option granted under the Plan without the consent of the holder thereof.
ARTICLE 15
EFFECTIVE DATE
This Plan [shall become] became effective [as of November 14, 1995,]
January 25, 1996, having been [adopted by the Board of Directors of the Company
on such date subject to approval] approved by the affirmative vote of the
holders of a majority of the shares of Capital Stock of the Company voting on
the issue, [and all Options granted prior to such approval are expressly
conditioned upon such.] The amendment and restatement to the Plan became
effective January 21, 1999 upon approval [being received. If shareholder
approval is not received, within 12 months of the effective date, Options
granted pursuant to this Plan shall be null and void] by a majority of the
outstanding shares of Common Stock of the Company voting on the Plan.
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board of
Directors or shareholders of the Company shall constitute the granting of an
Option. An Option shall be granted only at such time as a written Option shall
have been executed and delivered to the respective employee and the employee
shall have executed an agreement respecting the Option in conformance with the
provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will be
issued in regular course after exercise of the Option and payment therefor as
called for by the terms of the Option but in no event shall the Company be
obligated to issue certificates more often than once each quarter of each fiscal
year. No persons holding an Option or entitled to exercise an Option granted
under this Plan shall have any rights or privileges of a shareholder of the
Company with respect to any Shares issuable upon exercise of such Option until
<PAGE> 26
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certificates representing such Shares shall have been issued and delivered. No
Shares shall be issued and delivered upon exercise of an Option unless and until
the Company, in the opinion of its counsel, has complied with all applicable
registration requirements of the Securities Act of 1933 and any applicable state
securities laws and with any applicable listing requirements of any national
securities exchange on which the Company securities may then be listed as well
as any other requirements of law.
16.3 This Plan shall continue in effect until the expiration of all Options
granted under the Plan unless terminated earlier in accordance with Article 14;
provided, however, that it shall otherwise terminate ten years after the
Effective Date.
<PAGE> 27
MERIDIAN DIAGNOSTICS, INC.
PROXY The undersigned hereby appoints WILLIAM J. MOTTO and GERARD BLAIN, or
FOR either of them, proxies of the undersigned, each with the power of
ANNUAL substitution, to vote cumulatively or otherwise all shares of Common
MEETING Stock which the undersigned would be entitled to vote on the matters
specified below and in their discretion with respect to such other
business as may properly come before the Annual Meeting of
Shareholders of Meridian Diagnostics, Inc. to be held on January 21,
1999 at 3:00 P.M. Eastern Time at The Phoenix, 812 Race Street,
Cincinnati, Ohio or any adjournment of such Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING
PROPOSALS:
1. Authority to elect as directors the six (6) nominees listed
below.
FOR _______ WITHHOLD AUTHORITY _______
JAMES A. BUZARD, JOHN A. KRAEUTLER, GARY P. KREIDER, WILLIAM J.
MOTTO, ROBERT J. READY AND JERRY L. RUYAN
WRITE THE NAME OF ANY NOMINEE(S) FOR WHOM AUTHORITY TO VOTE IS
WITHHELD _______________________________________________________
2. Approval of the 1999 Directors' Stock Option Plan.
FOR _______ AGAINST_______ ABSTAIN _______
3. Approval of Amending and Restating the Company's 1996 Stock
Option Plan.
FOR _______ AGAINST_______ ABSTAIN _______
4. Ratification of the appointment of Arthur Andersen LLP as
independent public accountants for fiscal 1999.
FOR _______ AGAINST_______ ABSTAIN _______
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS
UNLESS A CONTRARY CHOICE IS SPECIFIED.
(This proxy is continued and is to be signed on the reverse side)
<PAGE> 28
Date , 19
-------------------------- --
------------------------------------
------------------------------------
Important: Please sign exactly as
name appears hereon indicating, where
proper, official position or
representative capacity. In the case
of joint holders, all should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
