SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14A-11(c) or Rule 14A-12
VIROGROUP, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Persons(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each clas 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
calcuted and state how it was determined):
(4) Proposed maximum agregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and Identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously
paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
VIROGROUP, INC.
428 PINE ISLAND ROAD, S.W., CAPE CORAL, FLORIDA 33991
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 23, 1997
----------
To the Shareholders
of ViroGroup, Inc.
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders (the
"Annual Meeting") of ViroGroup, Inc., a Florida corporation (the "Company"),
will be held at 11:00 a.m., local time, on Thursday, January 23, 1997, at the
Westin Hotel Atlanta Airport, 4736 Best Road, Atlanta, Georgia for the
following purposes:
(1) The election of seven members of the Company's Board of Directors to
hold office until the Company's 1998 Annual Meeting of Shareholders or
until their successors are duly elected and qualified;
(2) To effectuate a one-for-eight reverse stock split as a result of which
shareholders of the Company will receive one share of Common Stock for
each eight shares of Common Stock owned on the Record Date;
(3) The ratification of the appointment of Arthur Andersen LLP, Miami,
Florida, as the Company's independent accountants; and
(4) The transaction of such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on November 29,
1996 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
SYLVESTER O. OGDEN
CHAIRMAN OF THE BOARD
Cape Coral, Florida
December 20, 1996
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO
EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY
AND VOTE THEIR SHARES IN PERSON.
<PAGE>
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
VIROGROUP, INC.
----------
PROXY STATEMENT
----------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of ViroGroup, Inc., a Florida corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), for use at the 1997 Annual Meeting
of Shareholders of the Company to be held at 11:00 a.m., local time, on
Thursday, January 23, 1997, at the Westin Hotel Atlanta Airport, 4736 Best
Road, Atlanta, Georgia, or at any adjournment(s) or postponement(s) thereof
(the "Annual Meeting"), pursuant to the foregoing Notice of Annual Meeting of
Shareholders.
Shareholders should review the information provided herein in conjunction
with the Company's 1996 Annual Report to Shareholders, which accompanies this
Proxy Statement. The Company's principal executive offices are located at 428
Pine Island Road, S.W., Cape Coral, Florida 33991, and its telephone number
is (941) 574-1919.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in
person should any shareholder giving the proxy so desire. Shareholders have
an unconditional right to revoke their proxy at any time prior to the
exercise thereof, either in person at the Annual Meeting or by filing with
the Company's Secretary at the Company's headquarters a written revocation or
duly executed proxy bearing a later date; however, no such revocation will be
effective until written notice of the revocation is received by the Company
at or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be
borne by the Company. In addition to the use of mail, employees of the
Company may solicit proxies personally and by telephone. The Company's
employees will receive no compensation for soliciting proxies other than
their regular salaries. The Company may request banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy material
to their principals and to request authority for the execution of proxies.
The Company may reimburse such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:
(1) The election of seven members to the Company's Board of Directors to
serve until the Company's 1998 Annual Meeting of Shareholders or until
their successors are duly elected and qualified;
(2) To effectuate a one-for-eight reverse stock split as a result of which
shareholders of the Company will receive one share of Common Stock for
each eight shares of Common Stock owned on the Record Date;
<PAGE>
(3) The ratification of the appointment of Arthur Andersen LLP, Miami,
Florida, as the Company's independent accountants; and
(4) The transaction of such other business as may properly come before the
Annual Meeting, including any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation
(and which have not been revoked in accordance with the procedures set forth
above) will be voted for the election of the nominees for director named
below and in favor of the other matters presented. In the event a shareholder
specifies a different choice by means of the enclosed proxy, his shares will
be voted in accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on November 29, 1996
as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 6,361,708 shares of Common Stock outstanding. Only
the holders of issued and outstanding shares of Common Stock are entitled to
vote at the Annual Meeting. Shareholders do not have the right to cumulate
their votes, and are entitled to one vote for each share held.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum with respect to all matters presented.
Directors will be elected by a plurality of the votes cast by the shares of
Common Stock represented in person or by proxy at the Annual Meeting. Any
other matter that may be submitted to a vote of the shareholders will be
approved if the number of shares of Common Stock voted in favor of the matter
exceeds the number of shares voted in opposition to the matter, unless such
matter is one for which a greater vote is required by law or by the Company's
Articles of Incorporation or Bylaws. If less than a majority of outstanding
shares entitled to vote are represented at the Annual Meeting, a majority of
the shares so represented may adjourn the Annual Meeting to another date,
time or place, and notice need not be given of the new date, time or place if
the new date, time or place is announced at the meeting before an adjournment
is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of
a quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions
will be considered as shares present and entitled to vote at the Annual
Meeting and will be counted as votes cast at the Annual Meeting, but will not
be counted as votes cast for or against any given matter.
A broker or nominee holding shares registered in its name, or in the name
of its nominee, which are beneficially owned by another person and for which
it has not received instructions as to voting from the beneficial owner, may
have discretion to vote the beneficial owner's shares with respect to the
election of directors and other matters addressed at the Annual Meeting. Any
such shares which are not represented at the Annual Meeting either in person
or by proxy will not be considered as shares present at the Annual Meeting,
and will not be considered to have cast votes on any matters addressed at the
Annual Meeting.
2
<PAGE>
SECURITY OWNERSHIP
COMMON STOCK
The following table sets forth information, as of November 29, 1996, with
respect to the beneficial ownership of shares of the Company's Common Stock
by (i) each person known to the Company to own beneficially more than 5% of
the aggregate shares of Common Stock outstanding, (ii) each director and
nominee for election as a director, (iii) the Named Executive Officers (as
defined in "Executive Compensation") and (iv) all directors and officers of
the Company as a group. On November 29, 1996, there were 6,361,708 shares of
Common Stock outstanding. Each of the persons, or group of persons, in the
table below has sole voting power and sole dispositive power as to all of the
shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME(1) BENEFICIALLY OWNED OF SHARES
- ---------------------------------------------------- ------------------- ------------
<S> <C> <C>
Ivan R. Cairns(2) .................................. -0- *
A. Denny Ellerman .................................. 8,500(4) *
Charles S. Higgins, Jr. ............................ 48,000(5) *
Laidlaw Osco Holdings, Inc.(2) ..................... 3,180,854 50.0%
Rick L. McEwen(2) .................................. -0- *
Sylvester O. Ogden ................................. 88,333(3) *
James L. Wareham ................................... 3,000(4) *
Earl M. Williams, Jr. .............................. 338,231 5.3%
Kenneth W. Winger(2) ............................... -0- *
All directors and officers as a group (11 persons) 723,433(6) 11.3%
<FN>
- ----------
* Less than 1%
(1) The business address of Messrs. Ellerman, Higgins, Ogden and Wareham is
428 Pine Island Road, S.W., Cape Coral, Florida 33991. The business
address of Laidlaw Osco Holdings, Inc. and Messrs. Cairns, McEwen and
Winger is 3221 North Service Road, Burlington, Ontario, Canada L73-348.
(2) Messrs. Cairns, McEwen and Winger are employed by affiliates of Laidlaw
Osco Holdings, Inc.
(3) Includes currently exercisable options to purchase 53,333 shares of
Common Stock.
(4) Includes currently exercisable options to purchase 3,000 shares of Common
Stock.
(5) Includes currently exercisable options to purchase 22,000
shares of Common Stock.
(6) Includes currently exercisable options to purchase 97,833 shares of
Common Stock.
</FN>
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding Common Stock, to file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock. Such persons are
required by SEC regulation to furnish the Company with copies of all such
reports they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners have
been met.
3
<PAGE>
ELECTION OF DIRECTORS
Seven persons are nominated for election as directors to serve until the
next Annual Meeting of Shareholders and until the director's successor is
duly elected and qualified. Although Management anticipates that all of the
nominees will be able to serve, if any nominee is unable or unwilling to
serve at the time of the Annual Meeting, the proxy will be voted for a
substitute nominee chosen by Management, or the number of directors to be
elected may be reduced in accordance with the Company's Bylaws.
On June 26, 1995, the Company and Laidlaw, Inc. ("Laidlaw"), the parent
corporation of Bryson Industrial Services, Inc. ("Bryson"), and Laidlaw Osco
Holdings, Inc. ("Osco"), entered into an agreement pursuant to which Bryson
and Osco surrendered the 200,000 and 600,000, respectively, shares of the
Company's Series A Preferred Stock then held by them in exchange for a total
of 3,180,854 shares of Common Stock which were issued to Osco. For so long as
such shares of Common Stock are held by Laidlaw or its affiliates, the
Company has agreed to nominate for election to its Board of Directors its
chief executive officer and three nominees proposed by Laidlaw. Mr. Ogden and
Messrs. Cairns, McEwen and Winger have been nominated pursuant to this
agreement. Laidlaw has further agreed that until June 30, 1997, unless
otherwise invited by the members of the Company's Board of Directors who have
not been nominated at the request of Laidlaw, it will not take any action
which would result in a change in control of the Company or acquire any
additional securities of the Company. For a description of certain other
provisions of the agreement, see "CERTAIN TRANSACTIONS."
The following table sets forth certain information as to the persons
nominated for election as directors of the Company at the Annual Meeting.
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- --- -------------------- -----
<S> <C> <C> <C>
Ivan R. Cairns 50 Senior Vice President and General Counsel, Laidlaw, Inc. 1995
A. Denny Ellerman 55 Executive Director of the Center for Energy and 1995
Environmental Policy Research, Massachusetts Institute of
Technology
Charles S. Higgins, Jr. 48 Executive Vice President and Chief Operating Officer of --
the Company
Rick L. McEwen 44 Senior Vice President, Laidlaw Waste Systems, Inc. 1995
Sylvester O. Ogden 61 President and Chief Executive Officer of the Company 1994
James L. Wareham 57 President, Chief Executive Officer, Chief Operating 1995
Officer and Chairman, Wheeling-Pittsburgh Steel
Corporation
Kenneth W. Winger 58 President and Chief Operating Officer, Laidlaw 1995
Environmental Services, Inc.
</TABLE>
Ivan R. Cairns has been Senior Vice President and General Counsel of
Laidlaw, Inc. since October, 1990. Mr. Cairns has held various other
management positions with Laidlaw, Inc. since joining that company in
November, 1981.
4
<PAGE>
A. Denny Ellerman has been the Executive Director of the Center for Energy
and Environmental Policy Research at the Massachusetts Institute of
Technology since March, 1992. He also serves as a Senior Lecturer in the
Sloan School of Management. From 1988 until 1992, Dr. Ellerman was a
Vice-President of Charles River Associates, Inc., a Boston, Massachusetts
economic and management consulting firm.
Charles H. Higgins, Jr., P.E. has been the Executive Vice President and Chief
Operating Officer of the Company since June 1995. From March 1993 until then he
was the Vice President in charge of the Environics division. Prior to that, for
a period in excess of two years he was President of Environics, Inc., a wholly
owned affiliate of Laidlaw, Inc., providing environmental consulting services.
Rick L. McEwen has been Senior Vice President Laidlaw Waste Systems, Inc.,
a wholly-owned subsidiary of Laidlaw, Inc., since July 1, 1996. Mr. McEwen
has held various other management positions within Laidlaw Waste Systems
since joining that company in February, 1989.
Sylvester O. Ogden was appointed Chief Executive Officer and President of
the Company on November 1, 1994. Prior to joining the Company he was
Executive Vice-President of Occidental Petroleum Company and President/Chief
Executive Officer of Island Creek, a coal mining subsidiary of Occidental
from November, 1984 to July, 1993. He was self employed as a consultant from
August, 1993 until joining the Company.
James L. Wareham has been the President, Chief Operating Officer and a
member of the Board of Wheeling-Pittsburgh Steel Corporation since May, 1989.
Mr. Wareham became Chairman of the Board and Chief Executive Officer of
Wheeling-Pittsburgh Steel Corporation in September, 1992. He also became
President of WHX Corporation in December, 1992. He is also a director of
Wesbanco Corporation.
Kenneth W. Winger has been President and Chief Operating Officer of
Laidlaw Environmental Services, Inc., a wholly-owned subsidiary of Laidlaw,
Inc., since July, 1995. Mr. Winger has held various other management
positions within Laidlaw, Inc. since joining that company in May, 1991.
Ms. Donna Peterman, a director since 1995, has declined to stand for
reelection due to other business commitments.
DIRECTORS' FEES
Outside directors currently receive an annual fee of $3,000 and an option
to purchase 1,500 shares of Common Stock plus $500 per meeting attended. The
receipt of such remuneration and options has been waived by Messrs. Cairns,
McEwen and Winger.
COMMITTEES AND MEETINGS
During fiscal year 1996 (September 1, 1995--August 31, 1996), the Board of
Directors held six meetings. No director attended fewer than 75% of the
meetings of the Board of Directors or any committee thereof held during
fiscal year 1996 (during the period of such director's service).
The Compensation Committee currently consists of Messrs. Wareham
(Chairman), Ellerman and Winger. The Compensation Committee held one meeting
during fiscal year 1996. The primary function
5
<PAGE>
of the Compensation Committee is to review and approve the Company's
compensation policies and practices, propose compensation levels for directors
and officers and propose changes in the Company's benefit plans.
The Audit Committee is currently composed of Ms. Peterman (Chairperson), who
is not standing for reelection, Mr. Winger and Dr. Ellerman. The Audit Committee
held three meetings during fiscal year 1996. The primary function of the Audit
Committee is to assist the Board in fulfilling its responsibilities with respect
to the accounting and financial reporting practices of the Company, and to
address the scope and expense of audit and related services provided by the
Company's independent accountants.
The Company does not have a Nominating Committee.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information relating to the total
annual compensation paid or accrued by the Company and its subsidiaries
during each of the three most recent fiscal years to its Chief Executive
Officer. There was no other executive officer whose total annual compensation
in fiscal year 1996 exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND ------------------ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------ ---- -------- ----- ------------
<S> <C> <C> <C> <C>
Sylvester O. Ogden, 1996 $110,788 -- --
President and Chief 1995 106,679 -- --
Executive Officer(1) 1994 -- -- --
<FN>
- ----------
(1) Mr. Ogden's employment commenced November 1, 1994.
</FN>
</TABLE>
LONG-TERM COMPENSATION AWARDS
No long-term compensation awards were made to the Named Executive Officer
during fiscal year 1996.
6
<PAGE>
OPTION GRANTS DURING FISCAL YEAR 1996
The following table sets forth all grants of options for Common Stock to
the Named Executive Officer for the fiscal year ended August 31, 1996.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTION EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ------------------- ------------ ---------------- ------------ ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SYLVESTER O. OGDEN 30,000 100% $.56 1/14/01 $0 $6,876
</TABLE>
UNEXERCISED OPTIONS AND OPTION VALUES AT FISCAL YEAR-END 1996
The following table sets forth information with respect to (i) the number
of unexercised options held by the Named Executive Officer as of August 31,
1996 and (ii) the value as of August 31, 1996 of unexercised in-the-money
options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
AUGUST 31, 1996 AT AUGUST 31, 1996
(#) ($)(1)
-------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------- ---------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sylvester O. Ogden 30,000 0 $0 $0
Sylvester O. Ogden 23,333 11,667 0 0
<FN>
- ----------
(1) As of August 31, 1996, the options held by Mr. Ogden were not
in-the-money due to the fact that the exercise prices for such options
were above the fair market value of the underlying Common Stock.
</FN>
</TABLE>
BENEFIT PLANS
401(K) PROFIT SHARING PLAN. All employees of the Company who have been
employed by the Company for six months or more are eligible to participate in
the Company's employee Profit Sharing Plan (the "Plan"). Participants may
make contributions to the Plan by voluntarily reducing their salary by up to
a maximum of 15%, and the Company will match such contributions up to 2% of a
participant's salary. The Company contributed $50,134 to the Plan during
fiscal year 1996. Amounts attributable to the Company's matching
contributions vest at 20% per year beginning after the first year of service,
or upon death or disability of the participant. Benefits are generally
distributed by means of a joint and survivor annuity or in a lump sum
following the participant's retirement, death, disability, termination of
employment or demonstration of extreme financial hardship.
1991 LONG-TERM INCENTIVE PLAN. The Company's 1991 Long-Term Incentive Plan
(the "Incentive Plan") was adopted by the Board of Directors and the
shareholders of the Company in 1991. The Incentive Plan permits the granting
of any or all of the following types of awards: (i) stock options, including
incentive stock options; (ii) stock appreciation rights; (iii) restricted
stock; (iv) deferred stock; (v) performance awards conditioned upon meeting
performance criteria; (vi) dividend equivalents; and (vii) other awards
denominated or payable in, or otherwise related to Common Stock of the
Company. Generally, awards under the Incentive Plan are granted for no
consideration other than prior or future
7
<PAGE>
services. Awards granted under the Incentive Plan may, at the discretion of
the Compensation Committee, be granted alone or in addition to, in tandem
with or in substitution for any other award under the Incentive Plan or other
plan of the Company. The exercise price for options granted under the
Incentive Plan may not be less than 85% of the fair market value of the
Common Stock on the date of grant. The Incentive Plan is administered by the
Compensation Committee of the Board of Directors, which is composed of
directors not eligible to participate in the Incentive Plan. There are
299,150 shares of Common Stock reserved for issuance under the Incentive
Plan. The Compensation Committee is authorized to determine, from time to
time, the term, exercise price, settlement terms, forfeiture provisions and
other terms and conditions of each of the types of awards. No such
determinations have been made by the Compensation Committee except with
respect to the award of options to purchase shares of Common Stock.
EMPLOYMENT, SEVERANCE AND CONSULTING AGREEMENTS
SYLVESTER O. OGDEN
The Company entered into an employment agreement ("Employment Agreement")
with Sylvester O. Ogden, effective November 1, 1994 ("Effective Date"), which
provides that he will serve as Chief Executive Officer and President. Under
the Employment Agreement, Mr. Ogden is to receive an annual salary of
$140,000, a car allowance and options to purchase 35,000 shares of Common
Stock, 50% of which vested upon execution of the Employment Agreement with
the remaining options vesting pro rata over the ensuing three-year period. On
March 1, 1995, Mr. Ogden voluntarily agreed to a 10% salary reduction for a
one year period. On January 1, 1996, Mr. Ogden agreed to an additional 21%
salary reduction.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company including specific compensation
levels for the Company's executive officers, and administers the Company's
Stock Option Plan and other employee incentive plans. The components of the
Company's executive officer compensation program and the basis on which
fiscal year 1996 compensation determinations were made by the Committee with
respect to the executive officers of the Company, including the Named
Executive Officer, are discussed below.
The Committee generally believes that the total cash compensation of its
executive officers prior to the voluntary salary reduction should be similar
to the total cash compensation of similarly-situated executives of peer group
public companies within the environmental services industry.
In evaluating base salary increases, as well as total compensation, the
Compensation Committee considers individual performance, inflation rates and
the salary levels prevailing at companies which are similar to the Company.
Increases to base salaries are also influenced by the performance of the
Company and the individual's responsibility and contribution to the Company's
results. The Compensation Committee examines a number of financial indicators
of corporate performance, including results of revenues, net profits,
earnings per share and return on shareholders' investment in setting base
salaries.
The Compensation Committee's goal in establishing the composition and
amount of executive compensation is to motivate, reward and retain creative
management talent which will accomplish the
8
<PAGE>
Company's objectives of increasing the Company's profitability and value of
its Common Stock. During the fiscal year ended August 31, 1996, this goal was
carried out through awards to its executive officers of base salary, as well
as the granting of stock options to the Chief Executive Officer and the Chief
Operating Officer.
Mr. Ogden's compensation is pursuant to an Employment Agreement effective
November 1, 1994. However, Mr. Ogden voluntarily accepted a 10% reduction in
his salary effective March 1, 1995, and an additional 21% reduction effective
January 1, 1996.
In December 1993, the Internal Revenue Service issued proposed regulations
concerning compliance with Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). Section 162(m) generally disallows a public
company's deduction for compensation to any one employee in excess of $1
million per year unless the compensation is pursuant to a plan approved by
the public company's shareholders. None of the executive officers of the
Company presently receives, and the Compensation Committee does not
anticipate that such persons will receive, annual cash compensation in excess
of the $1 million cap provided in Section 162(m). The Compensation Committee
intends to take the necessary steps to ensure compliance with Section 162(m)
of the Code.
James L. Wareham, Chairman
A. Denny Ellerman
Kenneth W. Winger
9
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative shareholder returns
from a $100 investment in the Company's Common Stock and reinvestment of
dividends from December 20, 1991 (the date the Common Stock was first offered
to the public at an initial public offering price of $7.00 per share) through
August 31, 1996 with the NASDAQ Stock Market and the MG Industry Group
095--Waste Management. The Company did not pay any dividends on its Common
Stock during this period.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG VIROGROUP, INC.,
NASDAQ MARKET INDEX AND GROUP INDEX
The Comparisons in this table are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of possible
future performance of the Common Stock.
10
<PAGE>
TRANSACTIONS WITH THE COMPANY
LAIDLAW, INC.
On June 26, 1995, the Company and Laidlaw, Inc. ("Laidlaw"), the parent
corporation of Bryson Industrial Services, Inc. ("Bryson"), and Laidlaw Osco
Holdings, Inc. ("Osco"), entered into an agreement (the "Agreement") pursuant
to which Bryson and Osco surrendered the 200,000 and 600,000, respectively,
shares of the Company's Series A Preferred Stock then held by them in
exchange for a total of 3,180,854 shares of Common Stock. For so long as such
shares of Common Stock are held by Laidlaw or its affiliates, the Company has
agreed to nominate for election to its Board of Directors its chief executive
officer and three nominees proposed by Laidlaw. Mr. Ogden and Messrs. Cairns,
McEwen and Winger have been nominated pursuant to the Agreement. Laidlaw
further agreed that until June 30, 1997, unless otherwise invited by the
members of the Company's Board of Directors who have not been nominated at
the request of Laidlaw, it will not take any action which would result in a
change in control of the Company or acquire any additional securities of the
Company. Bryson and Osco also waived all rights to dividends on the Preferred
Stock whether or not accrued or declared. Laidlaw further agreed to provide a
$3.0 million revolving line of credit to the Company with any amounts
outstanding at the end of the three-year period to be repaid over the next
three years in equal quarterly installments. Pursuant to the Agreement, on
February 20, 1996 a Laidlaw affiliate caused to be issued a one-year, $3.0
million letter of credit to secure the Company's $3.0 million revolving
credit line with a bank. Virtually all the Company's assets secure this
commitment by Laidlaw. Pursuant to the Agreement, Laidlaw has agreed not to
transfer any of the shares of Common Stock received until June 30, 1997 and
will cause any transferee of the shares during the period commencing July 1,
1997 and ending June 30, 2001 to extend to the other holders of Common Stock
the right to transfer their shares to such transferee on the same terms as
those provided to Laidlaw.
Laidlaw and its affiliates accounted for approximately $2.8 million or 20%
of the Company's consolidated gross revenues for the year ended August 31,
1996.
VIROGROUP OF SOUTH CAROLINA, INC.'S EXECUTIVE OFFICE LEASE
ViroGroup of South Carolina, Inc. (formerly ETE, Inc.) leases its
executive offices in Lexington, South Carolina from Lexington Office
Investors, a partnership owned two-thirds by Earl M. Williams, Jr. and
one-third by an employee of ViroGroup of South Carolina, Inc. who is neither
a Company executive officer nor a Company director. The lease expires on
November 15, 1997 and provides for rent at the rate of $15,500 per month.
During fiscal year 1996, the total rent paid under this lease by ViroGroup of
South Carolina, Inc. was $186,000.
THE REVERSE STOCK SPLIT
INTRODUCTION
The Company's Board of Directors has adopted a resolution, subject to and
effective upon shareholder approval, to effectuate a one-for-eight reverse
stock split (the "Reverse Split") of the Company's Common Stock. The effect
of the proposed Reverse Split upon holders of Common Stock
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<PAGE>
will be that the total number of shares of the Company's Common Stock held by
each shareholder will be automatically converted into that number of whole
shares of Common Stock ("Post-split Common Stock") equal to the number of
shares of Common Stock owned immediately prior to the Reverse Split divided
by eight, adjusted, as described below, for any fractional shares.
If the proposal is adopted by the Company's shareholders, each
shareholder's percentage ownership interest in the Company will remain
unchanged, except for minor differences resulting from adjustments for
fractional shares. The rights and privileges of the holders of shares of
Common Stock will be substantially unaffected by the adoption of the
proposal.
No certificates or script representing fractional shares of the Common
Stock will be issued to shareholders because of the Reverse Split. Instead,
the Transfer Agent will sell any fractional shares and pay cash to the
holders of such fractional shares.
Shareholders of the Company do not currently possess, nor upon adoption of
the proposal, will they acquire, preemptive rights, which would entitle such
persons as a matter of right, to subscribe for the purchase of any securities
of the Company.
REASON FOR THE REVERSE SPLIT
The Company's Common Stock is currently listed on the Nasdaq SmallCap
Market. The Company has been advised by the Nasdaq Stock Market, Inc.
("Nasdaq") that the Common Stock must maintain a closing bid price of the
Common Stock in excess of $1.00. The Board of Directors has therefore
proposed the Reverse Split to enable the Company to remain in compliance with
the listing criteria of the Nasdaq SmallCap Market. There can be no assurance
that the Reverse Split will result in the Company's compliance with Nasdaq's
listing requirements.
Nasdaq has recently proposed amendments to its listing criteria increasing
certain threshold listing requirements. The Company is unable to determine at
this time whether it will be able to satisfy these new criteria should they
be implemented.
IMPLEMENTATION OF THE PROPOSED REVERSE SPLIT
It is anticipated that the Reverse Split will be implemented immediately
upon its approval by the Company's shareholders. Implementation of the
Reverse Stock Split is contingent upon such shareholder approval.
The Reverse Split will be effectuated by amending the Company's articles
of incorporation to add the following provision:
"At 5:00 p.m., Eastern time, on the date of the filing of this
amendment to the Articles of Incorporation, all outstanding
shares of Common Stock held by each holder of record on such
date shall be automatically combined at the rate of
one-for-eight without any further action on the part of the
holders thereof or this Company. No fractional shares shall be
issued. In lieu of issuing fractional shares, the Company's
transfer agent will sell any such fractional shares at the then
prevailing price on the
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<PAGE>
Nasdaq SmallCap Market. The Company's transfer agent shall
determine the amount of the net proceeds of the sale to which
each holder of fractional shares is entitled, and shall, as soon
as practicable after such determination has been made, mail such
amount, without interest, to such holders."
The Reverse Split will become effective as of 5:00 p.m., Eastern time, on
the date of such filing (the "Effective Date"). It is expected that such
filing will take place on the date of the Annual Meeting, assuming the
shareholders approve the Reverse Split. The shares of Common Stock held by
shareholders of record will be converted at 5:00 p.m., Eastern time, on the
Effective Date without any further action on the part of the Company or the
shareholders, into that number of whole shares of Common Stock equal to the
number of shares owned immediately prior to the Reverse Split divided by
eight, adjusted for any fractional shares.
If the Reverse Split is approved, after the Effective Date, the Company's
1991 Long-Term Stock Incentive Plan (the "1991 Plan") as well as all non-1991
Plan options will be continued, and each outstanding option granted pursuant
to the 1991 Plan and these non-1991 Plan option agreements will automatically
be converted into an option to purchase .125 of the number of shares of
Common Stock at eight times the original exercise price and upon the same
terms and conditions as set forth in such options. The Company's other
employee benefit plans and arrangements will also be continued by the Company
upon the same terms and conditions.
PRINCIPAL EFFECTS OF THE REVERSE SPLIT
Shareholders have no right under Florida law or under the Company's
articles of incorporation or bylaws to dissent from the Reverse Split, or to
dissent from the payment of cash for any fractional share resulting from the
Reverse Split in lieu of issuing fractional shares.
On the Effective Date, the interest of each shareholder of record who owns
fewer than eight shares of Common Stock will thereby be terminated, and he or
she will have no right to vote as a shareholder or share in the assets or any
future earnings of the Company.
The Company has an authorized capitalization of 50,000,000 shares of
Common Stock, par value $.01 per share. The authorized capital stock of the
Company will not be reduced or otherwise affected by the Reverse Split. As of
the Record Date, the Company had 6,361,708 shares of Common Stock issued and
outstanding. Based on the Company's best estimates relating to fractional
shares, the aggregate number of shares of Common Stock that will be issued
and outstanding following the Reverse Split will be 795,011.
As of the Record Date, the Company had 299,150 shares reserved for grant
under the 1991 Plan and options to purchase 150,350 shares of Common Stock
were outstanding as of such date under the 1991 Plan. However, the number of
shares available for grant under the 1991 Plan is subject to adjustment in
the event of a change in capitalization, such as a reverse stock split, so
that following implementation of the Reverse Split the number of shares of
Post-split Common Stock available for grant under the 1991 Plan will be
reduced to 37,394 and the number of shares of Common Stock that may be issued
pursuant to existing 1991 Plan options is 18,794. The Company has granted
non-1991 Plan options to purchase 244,000 shares of Common Stock. Subsequent
to the Reverse Split, such non-1991 Plan options may be used to purchase
30,500 shares of Common Stock.
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<PAGE>
The Common Stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as a
result, the Company is subject to the periodic reporting and other
requirements of the Exchange Act. The proposed Reverse Split will not affect
the registration of the Common Stock under the Exchange Act.
If approved, the Reverse Split will result in some shareholders owning
"odd-lots" of less than 100 shares of Common Stock. Brokerage commissions and
other costs of transactions in odd-lots are generally somewhat higher than
the costs of transactions in "round-lots" of even multiples of 100 shares.
EXCHANGE OF STOCK CERTIFICATES
If the proposal to implement the Reverse Split is adopted, shareholders
will be required to exchange their stock certificates for new certificates
representing the shares of Post-split Common Stock. Shareholders of record on
the Effective Date will be furnished the necessary materials and instructions
for the surrender and exchange of share certificates at the appropriate time
by the Transfer Agent. Shareholders will not have to pay a transfer fee or
other fee in connection with the exchange of certificates. Shareholders
should not submit any certificates until requested to do so.
As soon as practicable after the Effective Date, the Company's Transfer
Agent (the "Transfer Agent") will send a letter of transmittal to each
shareholder advising such holder of the procedure for surrendering stock
certificates in exchange for new certificates representing the ownership of
one-eighth the number of shares of Common Stock. No certificates representing
fractional shares shall be issued. In lieu of issuing fractional shares, the
Transfer Agent shall sell any such fractional shares at the then prevailing
price on the Nasdaq Small-Cap Market. The Transfer Agent will determine the
amount of the net proceeds of the sale to which each holder of fractional
shares is entitled, and will, as soon as practicable after such determination
has been made, mail such amounts, without interest, to such holders.
Until they have surrendered their stock certificates for exchange,
shareholders will not be entitled to receive any dividends or other
distributions that may be declared and payable to holders of record. Upon the
surrender of certificates representing Common Stock, certificates
representing Common Stock together with any such withheld dividends or other
distributions, without interest, will be delivered. At the same time or as
soon as possible thereafter, any cash payment for a fractional share will be
paid (without interest).
Any shareholder whose certificate for Common Stock, has been lost,
destroyed or stolen will be entitled to issuance of a certificate
representing the shares of Common Stock into which such shares will have been
converted upon compliance with such requirements as the Company and the
Transfer Agent customarily apply in connection with lost, stolen or destroyed
certificates.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following description of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code"), the applicable
Treasury Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this
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Information Statement. This discussion is for general information only and
does not discuss consequences which may apply to special classes of taxpayers
(e.g., non-resident aliens, broker-dealers or insurance companies).
Shareholders are urged to consult their own advisors to determine the
particular consequences to them.
The exchange of shares of Common Stock for shares of Post-split Common
Stock will not result in recognition of gain or loss. The holding period of
the shares of Post-split Common Stock will include the shareholder's holding
period for the shares of Common Stock exchanged therefor, provided that the
shares of Common Stock were held as a capital asset. The adjusted basis of
the shares of Post-split Common Stock will be the same as the adjusted basis
of the shares of Common Stock exchanged therefor.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has recommended the firm of Arthur
Andersen LLP as the independent accountants of the Company for the current
fiscal year. Although the appointment of Arthur Andersen LLP as the
independent accountants of the Company does not require ratification by the
Company's shareholders, the Board of Directors considers it appropriate to
obtain such ratification. Accordingly, the vote of the Company's shareholders
on this matter is advisory in nature and has no effect upon the Board of
Directors' appointment of an accountant, and the Board of Directors may
change the Company's accountant at any time without the approval or consent
of the shareholders. The Board proposes and unanimously recommends that the
shareholders ratify the selection of Arthur Andersen LLP.
If the shareholders do not ratify the selection of Arthur Andersen LLP by
the affirmative vote of the holders of a majority of votes cast by the shares
represented in person or by proxy at the Annual Meeting, the Audit Committee
will investigate the reason for shareholder rejection and the Board will
reconsider the appointment.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will be afforded the opportunity to make a statement if
they so desire and to respond to appropriate questions.
GENERAL INFORMATION
OTHER MATTERS. The Board of Directors does not intend to present any
matter for action at this meeting other than the matters described in this
Proxy Statement. If any other matters properly come before the Annual
Meeting, it is intended that the holders of the proxies hereby solicited will
act in respect to such matters in accordance with their best judgment.
DEADLINE FOR SHAREHOLDER PROPOSALS. Proposals by holders of the Company's
Common Stock which are intended to be presented at the next annual meeting of
shareholders must be received by the Company for inclusion in the Company's
next proxy statement and form of proxy relating to that
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<PAGE>
meeting no later than August 19, 1997. Such proposals must also comply in
full with the requirements of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934.
By Order of the Board of Directors,
SYLVESTER O. OGDEN
CHAIRMAN OF THE BOARD
Cape Coral, Florida
December 20, 1996
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APPENDIX A
VIROGROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
COMMON STOCK
The undersigned holder of shares of Common Stock of VIROGROUP, INC., a
Florida corporation (the "Company"), hereby appoints Sylvester O. Ogden and
Larry D. Ackerly as proxies of the undersigned, with full power of substitution,
for an in the name of the undersigned to act for the undersigned and to vote, as
designated on the reverse side, all of the shares of stock of the Company that
the undersigned is entitled to vote at the 1997 Annual Meeting of Shareholders
of the Company, to be held on Thursday, January 23, 1997, at 11:00 a.m., local
time, at The Westin Hotel Atlanta Airport, 4736 Best Road, Atlanta, Georgia and
at any adjournment(s) or postponement(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL OF THE PROPOSALS.
<TABLE>
<CAPTION>
A BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF DIRECTORS AND FOR PORPOSAL (3).
Please mark you votes as indicated in this example [X]
<S> <C> <C> <C>
(1) Election of directors Ivan R. Clams, A. Denny Ellerman, (2) To affectuate a one-for-eight
Charles S. Higgins, Jr., Rick L. reverse stock split as a result
VOTE FOR all VOTE McEwen, Sylvester O. Ogden, James L. of which shareholders will
nominees listed, except WITHHELD Wareham, and Kenneth W. Winger as receive one share of common
votes withheld FROM ALL directors. stock for each eight shares of
from the indicated NOMINEES. company stock owned on the
nominees (if any). (INSTRUCTION: To withhold authority record date.
to vote for any individual nominee,
write that nominee's name in the space
provided below.) FOR AGAINST ABSTAIN
[ ] [ ] -------------------------------------- [ ] [ ] [ ]
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(3) Proposal to ratify the appointment of Arthur (4) in their discretion, the proxies are authorized to vote upon such other
Andersen LLP, Miami, Florida, as the Company's business as may properly come before the Annual Meeting, and any
independent accountants. adjournments or postponements thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the proxy Statement, and (iii) the Company's 1996 Annual Report.
Dated:__________________________________________ 1996
________________________________________________
(Signature)
________________________________________________
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears hereon and mail it
promptly even though you now plan to attend the meeting. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, tenant or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
</TABLE>
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, JANUARY 23, 1997
11:00 A.M.
THE WESTIN HOTEL
ATLANTA AIRPORT
4736 BEST ROAD
ATLANTA, GEORGIA
Dear Shareholder(s):
We have enclosed material relative to the 1997 Annual Meeting of Shareholders of
Virogroup, Inc. The Notice of the Annual Meeting and Proxy Statement describe
the formal business to be transacted at the meeting, as summarized on the
attached proxy card.
Whether or not you expect to attend our Annual Meeting, please complete and
return the attached proxy card in the envelope we have provided (no postage is
necessary if mailed in the United States). Your prompt return of the proxy will
save Virogroup, Inc. the expense of further requests for proxies to ensure a
quorum at the meeting.
Please remember that your vote is very important to Virogroup. We look forward
to hearing from you.
Sincerely,
Virogroup, Inc.
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
NAME JURISDICTION
- ---- ------------
ViroGroup of Georgia, Inc. Georgia
ViroGroup of Louisiana, Inc. Louisiana
ViroGroup of Texas, Inc. Texas
ViroGroup of Tennessee, Inc. Tennessee
ViroGroup of South Carolina, Inc. South Carolina
ViroGroup of California, Inc. California
ViroGroup of New York, Inc. New York
ViroGroup of Virginia, Inc. Virginia
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into the Company's
previously filed registration statements on Form S-8 (File Nos. 33-57614 and 33-
90254).
ARTHUR ANDERSEN LLP
Miami, Florida,
November 27, 1996
