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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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
[ ] 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.
Our annual shareholders’ meeting will be held at 3:00 p.m. on January 23, 2001 at The Phoenix, 812 Race Street, Cincinnati, Ohio. We hope you will attend. 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.
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,Shareholders of Meridian, as recorded in our stock register on December 1, 2000, may vote at the meeting. As of that date, Meridian had 14,590,095 shares of Common Stock outstanding.
How to voteYou 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 workMeridian’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 company name change, in favor of amending the 1996 Stock Option Plan and in favor of the ratification of Arthur Andersen LLP as the Company’s independent public accountants for fiscal year 2001.
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. 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. 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 proxyYou 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 12.
QuorumIn 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 neededThe six director candidates receiving the most votes will be elected to fill the seats on the Board.
Approval of the company name change requires the affirmative vote of the holders of two-thirds of the issued and outstanding common shares. Accordingly, abstentions from voting and broker non-votes will have the effect of a vote against this proposal. Approval of the amendment to the 1996 Stock Option Plan to increase the authorized number of shares for issuance and ratification of appointment of accountants requires the favorable vote of a majority of the votes cast. Only votes for or against these proposals count.
Other MattersAny other matters considered at the meeting, including adjournment, will require the affirmative vote of a majority of shares voting.
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 election all of the following current directors: James A. Buzard, John A. Kraeutler, Gary P. Kreider, William J. Motto, David C. Phillips, and Robert J. Ready. Mr. Phillips was appointed to the Board in October 2000.
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 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.
Four 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.
Board meetings last year: 5Nominees 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. James A. Buzard, Ph.D. serves as Chairman of the Compensation Committee.
Age 73 From March 1981 until December 1989, he was Executive Vice President of
Director since 1990 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.
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John A. Kraeutler John A. Kraeutler has more than 20 years of experience in the medical
Age 52 diagnostics industry and joined the Company as Executive Vice President
Director since 1997 and Chief Operating Officer in January 1992. In July 1992, Mr. Kraeutler
was named President of the Company. 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.
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Gary P. Kreider, Esq. Gary P. Kreider has been a Senior Partner of the Cincinnati law firm of
Age 62 Keating, Muething & Klekamp, P.L.L., counsel to the Company, since 1975.
Director since 1991 He is also an Adjunct Professor of Law in securities at the University of
Cincinnati College of Law.
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William J. Motto William J. Motto has more than 25 years of experience in the
Age 59 pharmaceutical and diagnostics products industries, is a founder of the
Director since 1977 Company and has been Chairman of the Board since 1977. 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.
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David C. Phillips David C. Phillips spent 32 years with Arthur Andersen LLP. His service
Age 62 with this firm included several managing partner leadership positions.
Director since October 2000 After retiring from Arthur Andersen in 1994, Mr. Phillips became Chief
Executive Officer of Downtown Cincinnati, Inc., which is responsible for
economic revitalization of Downtown Cincinnati. Mr. Phillips retired
from DCI in 1999 to devote full time to Cincinnati Works, Inc., an
organization dedicated to reducing the number of people living below the
poverty level by assisting them to strive towards self-sufficiency
through work.
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Robert J. Ready Robert J. Ready serves as Chairman of the Audit Committee. In 1976, Mr.
Age 60 Ready founded LSI Industries, Inc., Cincinnati, Ohio, which engineers,
Director since 1986 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.
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You are being asked to approve an amendment to The Company’s Articles of Incorporation that will change the Company’s official name to Meridian Bioscience, Inc. from Meridian Diagnostics, Inc. To accomplish this name change, the Board proposes to amend the first Article of the Articles of Incorporation to read as follows:
FIRST: The name of the Corporation is Meridian Bioscience, Inc.
The Board believes that the corporate name Meridian Bioscience, Inc. better reflects the Company’s expanding capabilities in bioscience, research reagent development and other services that will enable the discovery and realization of new pharmaceuticals, vaccines and diagnostics. In addition, the Company’s Nasdaq trading symbol will be changed from KITS to VIVO in the near future. The symbol KITS has served well, however, it is now far too limiting in suggesting Meridian is only a diagnostic test kit company. VIVO suggests life and indeed Meridian will be engaged in a broad range of life science business opportunities in the future, including diagnostics.
It will not be necessary for you to surrender your share certificates upon approval of the proposed name change. Rather, when share certificates are presented for transfer, new share certificates bearing the name Meridian Bioscience, Inc. will be issued. Adoption of the proposed amendment to the Articles of Incorporation requires the affirmative vote of the holders of two-thirds of the issued and outstanding common shares. Accordingly, abstentions from voting and broker non-votes will have the effect of a vote against the proposed amendment. The Board recommends a vote FOR the proposed amendment.
The Board is recommending that the Company’s 1996 Amended and Restated Stock Option Plan be amended to provide 500,000 additional shares available for issuance. This plan was adopted at the 1997 Annual Shareholder’s Meeting. It was amended and restated at the 1999 Annual Shareholders Meeting to, among other things, increase the number of shares available for issuance from 200,000 to 700,000. With the continued growth of the Company and the passage of time, nearly all of the 700,000 shares provided by the Plan have been subjected to options. The Board considers it advisable to have an additional 500,000 shares available for issuance in order to provide awards that are designed to attract and retain key employees. If approved, this amendment would increase the maximum available shares from 700,000 to 1,200,000. The closing sale price for Meridian on Nasdaq on December ___, 2000 was $_____ per share.
A committee established by the Board 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 the exercise prices of such options must be at least 110% of market value at the time of grant.
The right to exercise options vests 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 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 proposal.
Although not required, the Board is seeking shareholder ratification of its selection of Arthur Andersen LLP as the Company’s independent public accountants for fiscal 2001. The 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 2001. Representatives of Arthur Andersen LLP are expected to be present at the Shareholders’ Meeting and will be given an opportunity to make a statement, if they so desire, and to respond to appropriate questions that may be asked by shareholders.
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 and then the committee meeting fee is $800. They receive $500 for each director or committee meeting held by telephone. Committee chairmen receive an additional $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 on Nasdaq reported immediately prior to the date of grant. Directors who are employees of Meridian are not separately compensated for serving as directors.
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. The Audit Committee’s charter is included herein as Appendix I.
Meetings last year: 5In November 1999, the Committee adopted the Audit Committee Charter, which is attached to this Proxy Statement as Appendix I. The Charter outlines the activities and responsibilities of the Committee.
In November 1999, the Committee reviewed with representatives of Arthur Andersen LLP (“Arthur Andersen”) the results of the audit of the Company’s financial statements that had been completed by the independent public accountants for fiscal 1999. The Arthur Andersen representatives presented a report to the Committee in compliance with Statement on Auditing Standards No. 61, as amended. At that meeting, Arthur Andersen presented a letter affirming its independent status as accountants as required by Independence Standards Board Standard No. 1. The Committee discussed this information with Arthur Andersen. The Committee recommended that the Company retain Arthur Andersen as the Company’s independent public accountants for fiscal 2000.
In August 2000, the Committee met with representatives of Arthur Andersen and the Company’s internal accountants and reviewed with them the outline of the audit for fiscal 2000. The Committee also discussed the fee arrangements with Arthur Andersen and areas that warranted particular concentration on the audit. At that meeting, the Committee also discussed its Charter and its implementation and reviewed its requirements with the representatives of Arthur Andersen and Meridian’s internal accounting staff. In addition, the Committee recommended the engagement of Arthur Andersen as the Company’s independent public accountants for fiscal 2001. They also discussed with the Arthur Andersen representatives, without the presence of the Company’s accountants or other members of management, the adequacy of the Company’s accounting functions, personnel and other matters related to the Company’s financial reporting procedures.
At its meeting in November 2000, the Committee reviewed with management, Arthur Andersen and the Company’s accounting officers the results of the audit for fiscal 2000, including the audited financial statements. The Arthur Andersen representatives presented a report to the Committee in compliance with Statement on Auditing Standards No. 61, as amended. The Committee reviewed the requirements of its Charter previously adopted and the reports that were required to be disclosed by the Committee in this Proxy Statement. The Arthur Andersen representatives reviewed with the Committee written disclosures required by the Independence Standards Board Standard No. 1 regarding independence of the public accountants and presented a letter regarding that matter to the Committee.
Relying upon the discussions and reviews described above, the Committee recommended to the Board of Directors that the audited financial statements of Meridian be included in its Annual Report on Form 10-K for the year ended September 30, 2000 for filing with the Securities and Exchange Commission.
Respectfully submitted,The Compensation Committee is responsible for establishing compensation for management and administering the Company’s stock option plans.
Meetings last year: 4Meridian’s Compensation Committee is composed of Messrs. Buzard (Chairman), Kreider and Ready. The Compensation Committee is responsible for establishing compensation for executive officers, establishing salary levels and bonus plans, making bonus awards and otherwise dealing in all matters concerning compensation of the executive officers and awarding stock options for all employees.
At its meeting in August 1999, the Committee set the salaries for the executive officers for fiscal 2000 as shown in the Summary Compensation Table. The Committee had available to it in establishing executive salaries the recommendations of management with respect to overall staff level compensation for the coming fiscal year for the Company, as well as a summary of studies supplied to the Committee by Meridian personnel and members of the Committee. The Committee took into account these considerations plus the financial performance of the Company during fiscal 1999 in establishing salary levels. It determined the compensation for the Chief Executive Officer in the same manner it did for its other executive officers. The Committee also recommended that Meridian’s bonus plan covering fiscal 2000 be amended by adding an additional earnings target level, which would provide for additional bonus compensation should those target levels be met. The Committee met without the Company’s management in making its decisions. At its meeting in November 1999, the Committee awarded stock options pursuant to the Company’s Stock Option Plan to various employees including the stock options to executive officers listed elsewhere in this Proxy Statement.
At its meeting in November 2000, the Committee reviewed Meridian’s financial results against the terms of the bonus plan established for fiscal 2000 and confirmed management’s recommendations as to the earnings targets reached as set forth in the plan. The Committee also approved a personal achievement rating schedule for the participants in the bonus plan. These awards are reflected in the Summary Compensation Table.
Respectfully submitted,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 1, 2000:
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
------------------------ -------------------- --------
4,619,261
William J. Motto 31.6%
The business address of Mr. Motto is 3471 River Hills Drive, Cincinnati, Ohio 45244.
The shares of Common Stock reported as beneficially owned by Mr. Motto include 613,117 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 15,000 shares subject to options exercisable within 60 days.
This table lists the executive officers and directors of Meridian and shows how much common stock each owned on December 1, 2000.
Common Stock
Name and Age Position Beneficially Owned
------------ --------
Amount1 Percentage2
------ -----------
William J. Motto Chairman of the Board of Directors,
59 Chief Executive Officer 4,619,2612 31.6%
John A. Kraeutler President, Chief Operating Officer
52 and Director 212,467 1.4%
Antonio A. Interno3
50 Senior Vice President 372,585 2.5%
Richard L. Eberly4 Executive Vice President, Sales,
39 Marketing and Operations 22,125 *
Kenneth J. Kozak5 Vice President, Research and
46 Development 3,659 *
James A. Buzard, Ph.D.6
73 Director 24,076 *
Gary P. Kreider6
62 Director 39,9017 *
Robert J. Ready6
60 Director 26,781 *
David C. Phillips
62 Director 1,0008 *
--------- ------
All Executive Officers and 5,321,855 35.6%
Directors as a Group
Section 16 of the Securities Exchange Act of 1934 requires the Company’s executive officers, directors and persons who own more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership. Mr. Motto filed his Form 5 with the Securities and Exchange Commission one day past due its November 14, 2000 filing deadline. Based on a review of the copies of such other 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 except as noted above.
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 2000.
Annual Compensation
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Securities All Other
-
Name and Underlying
Principal Position Year Salary Bonus Options Compensation1
------------------ ---- ------ ----- ------- -------------
William J. Motto 2000 $ 371,000 $ 104,344 20,000 $ 43,908
Chairman of the Board of Directors, 1999 355,000 144,813 - 41,139
Chief Executive Office 1998 338,000 - - 29,312
John A. Kraeutler 2000 $ 280,400 $ 75,544 50,000 $ 31,401
President, Chief Operating Officer 1999 257,000 111,738 50,000 24,121
1998 245,000 - 50,000 15,635
Antonio A. Interno 2000 $ 200,000 $ 39,621 15,000 $ 16,200
Senior Vice President, Managing 1999 210,000 59,527 - -
Director MDE 1998 200,000 - 7,000 -
Richard L. Eberly 2000 $ 170,000 $ 43,594 10,000 $ 34,461
Executive Vice President, Sales, 1999 116,000 64,150 7,500 18,362
Marketing and Operations 1998 110,000 9,400 10,500 9,719
Kenneth J. Kozak 2000 $ 109,700 $ 30,853 - $ 23,589
Vice President, Research and Development
% of Total
Number of Options Potential Realized Value
Securities Granted to at Assumed Annual
Underlying Employees Rates of Price
Options in Fiscal Exercise Price Expiration Appreciation
- -----------
Names Granted 2000 ($/Per Share) Date for Option Term
----- ------- ---- ------------- ---- ---------------
5% 10%
-- ---
Willam J. Motto 20,000 12.5% $8.663 11/18/04 $ 282,206 $ 449,366
John A. Kraeutler 50,000 31.3% 7.875 11/18/09 641,377 1,021,286
Antonio A. Interno 15,000 9.4% 7.875 11/18/09 192,413 306,386
Kenneth J. Kozak - - - - - -
Richard L. Eberly 10,000 6.3% 7.875 11/18/09 128,275 204,257
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Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at FY-End FY-End
Shares Acquired
---------------
Name on Exercise Value Realized Exercisable/Unexercisale Exercisable/Unexercisable
---- ----------- -------------- ------------------------ -------------------------
- - 15,000 / 15,000 $ - / $ -
William J. Motto
- - 210,273 / 91,800 331,700 / 28,125
John A. Kraeutler
154,702 $ 1,027,253 58,616 / 13,500 75,914 / -
Antonio A. Interno
- - 22,025 / 16,500 4,519 / 8,072
Richard L. Eberly
Kenneth J. Kozak 309 $ 640 3,350 / 7,000 718 / 2,153
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 Biomerica, Inc., Biosite Diagnostics, Inc., Diagnostic Products Corp., Hemagen Diagnostics, Inc., Hycor Biomedical, Inc., Idexx Laboratories Corp., Neogen Corp., Quidel Corp., Sybron International and Trinity Biotech Plc.
The deadline for shareholder proposals to be included in the Proxy Statement for next year’s meeting is August 19, 2001.
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 2002 Annual Shareholders’ Meeting, it must be received prior to November 3, 2001. 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.
Meridian’s Code of Regulations provides that only persons nominated by an officer, director or in writing by a shareholder at least five days prior to the meeting at which directors are to be selected shall be eligible for election.
If you have questions or need more information about the annual meeting, write to:
Melissa Lueke, Acting SecretaryFor information about your record holdings call the Fifth Third Bank Shareholder Services at 1-800-837-2755.
TABLE OF CONTENTS Page GENERAL INFORMATION............................................................1 ELECTION OF DIRECTORS..........................................................1 COMPANY NAME CHANGE............................................................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...............................................................4 AUDIT COMMITTEE REPORT.........................................................5 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION........................6 PRINCIPAL SHAREHOLDER..........................................................7 DIRECTORS AND EXECUTIVE OFFICERS ..............................................8 SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE...........................9 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION....................9 SUMMARY COMPENSATION TABLE.....................................................9 OPTION GRANTS IN LAST FISCAL YEAR.............................................10 FISCAL 2000 OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES................10 PERFORMANCE GRAPH.............................................................11 SHAREHOLDER PROPOSALS FOR NEXT YEAR...........................................12 QUESTIONS?....................................................................12 AUDIT COMMITTEE CHARTER...............................................APPENDIX I
The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial reports and other financial information provided by the Corporation to any governmental body or the public; the Corporation’s systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established; and the Corporation’s auditing, accounting and financial reporting processes generally. Consistent with this function, the Audit Committee should encourage continuous improvement of, and should foster adherence to, the company’s policies, procedures and practices at all levels. The Audit Committee shall:
Serve as an independent and objective party to monitor the corporation’s financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent public accountants and any internal auditing efforts.
Provide an open avenue of communication among the independent public accountants, financial and senior management, any internal auditing efforts, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying out the activities enumerated in Section IV of this Charter.
II COMPOSITIONThe Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be independent directors. All members of the Committee shall have a working familiarity with basic finance and accounting practices. At least one member of the Committee shall have had past employment experience in finance or accounting or a professional certification in accounting or comparable experience or background which results in that individual possessing financial sophistication.
The members of the Committee shall be elected by the Board at the annual organizational meeting of the Board and serve until their successors shall be duly elected and qualified. Unless a Chair is elected by the Board, the members of the Committee shall designate a Chair.
III MEETINGSThe Committee shall meet at least four times annually, and more frequently as circumstances dictate. As part of its job to foster open communication, the Committee should meet at least annually with management, the director or coordinator of any internal auditing efforts, if applicable, or the chief financial officer and the independent public accountants in separate executive sessions to discuss any matters that the Committee or any of these groups believe should be discussed independently. In addition, the Committee or at least its Chair should meet with the independent accountants and management quarterly to review the Corporation’s financials. The Committee shall maintain minutes of its meetings and activities.
IV RESPONSIBILITIES AND DUTIESTo fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
------------------------
The following items are not included above which the Committee may want to consider:
(1) Review policies and procedures with respect to officers’ expense accounts and perquisites, including their use of corporate assets, and consider the results of any review of these areas by the internal auditor or the independent public accountant.
(2) Prepare a letter for inclusion in the annual report that describes the Committee’s composition and responsibilities, and how they were discharged.
The undersigned hereby appoints WILLIAM J. MOTTO and MELISSA LUEKE, or either of them, proxies of the undersigned, each with the power of substitution, to vote cumulatively or otherwise all shares of Common 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 23, 2001 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 nominees listed below.
FOR _______ WITHHOLD AUTHORITY _______
JAMES A. BUZARD, JOHN A. KRAEUTLER, GARY P. KREIDER, WILLIAM J. MOTTO, DAVID C. PHILLIPS, AND ROBERT J. READY
WRITE THE NAME OF ANY NOMINEE(S) FOR WHOM AUTHORITY TO VOTE IS WITHHELD
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2. To amend the Articles of Incorporation to change the Company's name to Meridian Bioscience, Inc.
FOR _______ AGAINST _______ ABSTAIN _________
3. To amend the 1996 Stock Option Plan .
FOR _______ AGAINST _______ ABSTAIN _________
4. To ratify the appointment of Arthur Andersen LLP as independent public accountants for fiscal 2001.
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)
Date ,
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______________________________________________________________
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______________________________________________________________
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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.)
__________
Meridian Diagnostics, Inc.
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. 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. 3.1 The Plan shall be
administered by a committee designated by the Board of Directors of the Company.
The Committee shall be composed solely of directors each of whom shall be (i) a
“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)”). 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: 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. 4.1 The Shares that may be
made subject to Options granted under the Plan shall not exceed 700,000 Shares
in the aggregate. Except as provided in Section , 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. 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. 6.1 Subject to specific
provisions relating to Incentive Stock Options set forth in Article , 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 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. 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. 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 which have a Fair Market Value equal to the
purchase price on the date of exercise or by any combination of cash and such
Shares. 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: 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. 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. 11.1 An Option will terminate as follows: 11.2 Except as provided
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. 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 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 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. 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. 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. 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: 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. This Plan became effective
January 25, 1996, having been approved by the affirmative vote of the holders of
a majority of the shares of Capital Stock of the Company voting on the issue.
The amendment and restatement to the Plan became effective January 21, 1999 upon
approval by a majority of the outstanding shares of Common Stock of the Company
voting on the Plan. 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 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 ; provided, however, that
it shall otherwise terminate ten years after the Effective Date. MERIDIAN
DIAGNOSTICS, INC.
1996
Stock Option
Plan
Amended and
Restated Effective January 22, 1999
ARTICLE 1
OBJECTIVES
ARTICLE 2
DEFINITIONS
ARTICLE 3
ADMINISTRATION
ARTICLE 4
SHARES
SUBJECT TO PLAN
ARTICLE 5
GRANTING OF
OPTIONS
ARTICLE 6
TERMS OF
OPTIONS
ARTICLE 7
EXERCISE OF
OPTIONS
ARTICLE 8
PAYMENT OF
OPTION PRICE
ARTICLE 9
INCENTIVE
STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
(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.
ARTICLE 10
TRANSFERABILITY
OF OPTION
ARTICLE 11
TERMINATION
OF OPTIONS
ARTICLE 12
ADJUSTMENTS
TO SHARES AND OPTION PRICE
ARTICLE 13
OPTION
AGREEMENTS
ARTICLE 14
AMENDMENT OR
DISCONTINUANCE OF PLAN
ARTICLE 15
EFFECTIVE
DATE
ARTICLE 16
MISCELLANEOUS
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