<PAGE> 1
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
AccuMed International, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
Not applicable
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
Not applicable
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
Not applicable
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not applicable
- --------------------------------------------------------------------------------
(5) Total fee paid:
Not applicable
- --------------------------------------------------------------------------------
[ ] 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:
Not applicable
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
Not applicable
- --------------------------------------------------------------------------------
(3) Filing party:
Not applicable
- --------------------------------------------------------------------------------
(4) Date filed:
Not applicable
- --------------------------------------------------------------------------------
<PAGE> 2
ACCUMED INTERNATIONAL, INC.
920 North Franklin Street, Suite 402
Chicago, Illinois 60610
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to
attend the combined Annual and Special Meeting of Stockholders (the "Meeting")
of AccuMed International, Inc. (the "Company") to be held at 10:00 a.m. (Chicago
time) on May 18, 1999 at the offices of the Company located at 920 North
Franklin Street, Suite 402, Chicago, Illinois.
At the Meeting, you will be asked to consider and vote upon the
following proposals:
1. To elect seven directors to serve on the Board of Directors until
the next annual meeting of stockholders.
2. To transact such other business and to consider and take action upon
any and all other matters that may properly come before the Meeting or any
adjournment or adjournments thereof.
You are urged to carefully consider all the material in the Proxy
Statement and mark, sign, date and return the enclosed proxy as soon as
possible, regardless of whether you expect to attend the Meeting. Giving a proxy
will not prevent you from voting in person at the Meeting.
Very truly yours,
PAUL F. LAVALLEE
Chairman of the Board
and Chief Executive Officer
Dated: April 9, 1999
<PAGE> 3
ACCUMED INTERNATIONAL, INC
920 North Franklin Street, Suite 402
Chicago, Illinois 60610
----------------------
NOTICE OF COMBINED ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
To be Held on May 18, 1999
----------------------
Dear Stockholders:
NOTICE IS HEREBY GIVEN THAT THE COMBINED ANNUAL AND SPECIAL MEETING
(the "Meeting") OF STOCKHOLDERS OF ACCUMED INTERNATIONAL, INC., a Delaware
corporation (the "Company"), will be held at the Company's offices located at
920 North Franklin Street, Suite 402, Chicago, Illinois, on Tuesday, May 18,
1999 at 10:00 a.m. (Chicago time), to consider and act upon the following
matters.
1. To elect seven directors to serve on the Board of Directors until
the next annual meeting of stockholders.
2. To transact such other business and to consider and take action upon
any and all other matters that may properly come before the Meeting or any
adjournment or adjournments thereof.
The Board of Directors knows of no matters, other than those set forth
in paragraphs (1) through (2) above (discussed in greater detail in the
accompanying Proxy Statement), that will be presented for consideration at the
Meeting.
The Board of Directors has fixed the close of business on April 1, 1999
as the record date for the determination of stockholders entitled to vote at the
Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE DATE,
SIGN AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED AS PROMPTLY AS
POSSIBLE. THE PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
Chicago, Illinois Jack H. Halperin
April 9, 1999 Secretary
<PAGE> 4
PROXY STATEMENT
OF
ACCUMED INTERNATIONAL, INC.
920 NORTH FRANKLIN STREET, SUITE 402
CHICAGO, ILLINOIS 60610
-----------------------
COMBINED ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999
-----------------------
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to holders of common stock, par
value $0.01 per share (the "Common Stock"), of AccuMed International, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Company's Board of Directors for use at the Combined Annual and
Special Meeting of Stockholders scheduled to be held at the Company's principal
offices located at 920 North Franklin Street, Suite 402, Chicago, Illinois on
May 18, 1999 and at any and all adjournments or postponements thereof (the
"Meeting").
It is anticipated that this Proxy Statement and the accompanying form
of proxy will first be sent to stockholders on or about April 18, 1999. Only
stockholders of record at the close of business on April 1, 1999 are entitled to
vote at the Meeting.
At the Meeting, stockholders will consider and vote upon proposals (i)
to elect seven directors to serve on the Board of Directors until the 1999
Annual Meeting of Stockholders, and (ii) to consider such other business as may
properly come before the Meeting.
VOTING AND PROXIES
REVOCABILITY OF PROXIES
A proxy for use at the Meeting is enclosed. Any stockholder who
executes and delivers such proxy may revoke it at any time prior to its use by:
(i) filing with the Secretary of the Company a notice of revocation of proxy or
a valid proxy bearing a later date, or (ii) by attending the Meeting and voting
in person.
SOLICITATION OF PROXIES
This proxy solicitation is being made by the Board of Directors of the
Company. The expense of the solicitation will be paid by the Company. The
Company has retained Corporate Investor Communications, Inc. ("CIC") to conduct
a broker search, distribute the proxy materials and act as proxy solicitor in
connection with the Meeting. For such services, the Company will pay CIC a fee
of $4,500 and reimburse CIC for certain out-of-pocket expenses, estimated not to
exceed $800. To the extent necessary to assure sufficient representation at the
Meeting, proxies may be solicited by any appropriate means by CIC and, in
addition, by directors, officers, regular employees of the Company and the stock
transfer agent for the Common Stock, who will not receive any additional
compensation therefor. CIC will request that banks, brokers and other
fiduciaries distribute proxy materials to their customers who own beneficially
the Common Stock listed of record in names of nominees and, although there is no
formal arrangement to do so, the Company will reimburse such persons the
reasonable expenses of such distribution.
OUTSTANDING SECURITIES
The Board of Directors has fixed April 1, 1999, as the record date (the
"Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the Meeting. At the close of business on the Record Date, there were
outstanding and entitled to vote 5,507,883 shares of Common Stock.
<PAGE> 5
VOTE REQUIRED AND VOTING PROCEDURES
Each holder of Common Stock will be entitled to one vote, in person or
by proxy, for each share standing in its name on the books of the Company as of
the Record Date on each of the matters duly presented for a vote at the Meeting.
In connection with the solicitation by the Board of Directors of
proxies for use at the Meeting, the Board of Directors has designated Paul F.
Lavallee, Chairman of the Board and Chief Executive Officer, and Gary A.
Newberry, Chief Financial Officer, as proxies. Shares represented by all
properly executed proxies will be voted at the Meeting in accordance with the
instructions specified thereon. If no instructions are specified, the shares
represented by any properly executed proxy will be voted FOR the proposals: (i)
to elect each of the seven nominees named below under the caption "Proposal No.
1 Election of Directors."
The Board of Directors is not aware of any matters that will come
before the Meeting other than as described above. However, if such matters are
presented, the named proxies will, in the absence of instructions to the
contrary, vote such proxies in accordance with the judgment of such named
proxies with respect to any such other matter properly coming before the
Meeting.
A majority of the outstanding shares of Common Stock must be
represented in person or by proxy at the Meeting in order to constitute a quorum
for the transaction of business. The validly-nominated nominees for election as
directors who rank first through seventh in the number of votes received from
holders of Common Stock represented (in person or by proxy) and voting at the
Meeting will be elected as directors, even if some or all of such nominees
receive less than a majority of the total votes cast (assuming presence of a
quorum).
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded from the vote and will have
no effect. With regard to other proposals, votes cast against a proposal will be
counted for purposes of determining (i) the presence or absence of a quorum and
(ii) the total number of votes cast with respect to such proposal.
With regard to proposals other than the election of directors,
abstentions will be counted for purposes of determining both (i) the presence or
absence of a quorum for the transaction of business and (ii) the total number of
votes cast with respect to such proposal.
A proxy submitted by a stockholder may indicate that all or a portion
of the shares of Common Stock represented by such proxy are not being voted by
such stockholder with respect to a particular matter. This could occur, for
example, when a broker is not permitted to vote stock held in street name on
certain matters in the absence of instructions from the beneficial owner of the
stock. The shares subject to any such proxy which are not being voted with
respect to a particular matter will be counted for purposes of determining both
(i) the presence or absence of a quorum for the transaction of business and (ii)
the total number of votes cast with respect to such proposal.
INSPECTOR OF ELECTIONS
The Board of Directors has appointed Jack H. Halperin, Secretary of the
Company, as the Inspector of Elections for the Meeting. The Inspector of
Elections will determine the number of shares of Common Stock represented in
person or by proxy at the Meeting, whether a quorum exists, the authenticity,
and validity and effect of proxies, and will receive and count the votes.
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Each of the seven nominees named below has consented to be named in
this Proxy Statement and has consented to serve as a director, if so elected.
The Company has no reason to believe that any of the nominees will not be
available to serve; if, however, any nominee should for any reason become unable
or unwilling to serve, the shares represented by proxies received by the Company
(unless otherwise directed) will be voted for the election of such other person
as the Board of Directors may recommend, in place of the unavailable nominee.
In the election of directors, the seven candidates receiving the
highest number of votes will be elected directors of the Company. Votes cast
against directors and votes withheld shall have no effect. Elections for
directors shall not be made by ballot, unless a stockholder shall demand
election by ballot at the Meeting before the voting begins.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES NAMED TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS. PROXIES
RETURNED TO THE COMPANY WILL BE VOTED "FOR" THE NOMINEES NAMED UNLESS OTHERWISE
INSTRUCTED.
EXECUTIVE OFFICERS AND DIRECTOR NOMINEES
The executive officers and director nominees of the Company and their
ages are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Paul F. Lavallee.......................... 59 Chairman of the Board and Chief Executive Officer
Norman J. Pressman, Ph.D.................. 50 Chief Scientific Officer and President
Gary A. Newberry.......................... 41 Chief Financial Officer
Mark Banister............................. 35 Director
Harold S. Blue............................ 37 Director
J. Donald Gaines.......................... 63 Director
Jack H. Halperin, Esq..................... 52 Director
Robert L. Priddy.......................... 52 Director
Leonard M. Schiller, Esq.................. 57 Director
</TABLE>
Set forth below is certain information regarding the business
experience of the director nominees and executive officers of the Company.
DIRECTOR NOMINEES
PAUL F. LAVALLEE. Mr. Lavallee has been a member of the Board since
December 1995 and has been Chairman of the Board and Chief Executive Officer of
the Company since January 30, 1998. From January 30, 1998 through March 2, 1999
he also served as President. Since 1995, he has been Chairman of the Board of
Biorthex, Inc., a venture capital backed start-up firm specializing in surgical
and non-surgical orthopedics located in Montreal. From January 1996 until
January 1997, Mr. Lavallee served as a consultant to Sigmedics, Inc., a
biomedical company. From 1989 until December 1995, Mr. Lavallee served as
Chairman, President and Chief Executive Officer of Sigmedics, Inc. Mr. Lavallee
has a Bachelor of Science degree in Biology from Bates College and a Masters in
Business Administration from the University of Chicago.
MARK BANISTER. Mr. Banister has been a director of the Company since
April 1, 1998. Mr. Banister has been an independent management consultant and
investment advisor specializing in identifying investment opportunities in the
smaller and medium company sector and assisting such companies with their
development since January 1993. Since 1993, he has been a director of Verex
Laboratories Inc., a pharmaceutical development company based in Denver. Mr
Banister previously held senior positions at Bisgood Bishop Ltd. and Morgan
Stanley International in London, England.
<PAGE> 7
HAROLD S. BLUE. Mr. Blue served as a director of the Company from July
1996 through May 23, 1997 and rejoined the Board on April 1, 1998. Since
February 1993, Mr Blue has served as Chairman of the Board and Chief Executive
Officer of ProxyMed, Inc., a healthcare information technology company. From
July 1992 until February 1995, Mr. Blue served as Chairman of the Board and
Chief Executive Officer of Health Services of Miami Lakes, Inc., Health Services
of Pembroke Lakes, Inc. and Health Services of North Miami, Inc., each a
physician practice management group. From June 1979 to February 1992, Mr. Blue
was President and Chief Executive Officer of Budget Drugs, Inc., a retail
discount pharmacy chain. From September 1984 to August 1988, Mr. Blue was
Executive Vice President of Best Generics Incorporated, a national generic
distribution company, which he co-founded.
J. DONALD GAINES. Mr. Gaines has been a director of the Company since
May 1997. From February 1991 until his retirement in December 1994, Mr. Gaines
served as President of the Storz Division of American Cyanamid Company. From
June 1977 until February 1991, Mr. Gaines served as President and Chief
Executive Officer of Storz Instrument Company. Mr. Gaines has a B.A. degree in
Business Administration from Memphis State University.
JACK H. HALPERIN, ESQ. Mr. Halperin has been a director of the Company
since June 1991 and served as Chairman of the Board of Directors from April
1995 through December 29, 1995. He also served as Secretary of the Company from
August until December 1996 and again became Secretary in February, 1999. Mr.
Halperin is a corporate attorney with expertise in venture capital financing
and has been practicing law independently since 1987. Mr. Halperin has a B.A.
degree in english from Columbia University and a law degree from New York
University School of Law. Mr. Halperin is also a member of the boards of
directors of I-Flow Corporation, Memry Corporation, and Nocopi Technologies,
Inc.
ROBERT L. PRIDDY. Mr. Priddy has been a director of the Company since
May 1997. Mr. Priddy has been Chairman of the Board and Chief Executive Officer
of ValuJet, Inc., since its inception in October 1995. He was one of the
founding partners of ValuJet Airlines, a wholly owned subsidiary of ValuJet,
Inc., and served as Chairman of its Board and its Chief Executive Officer from
July 1992 until November 1996. From July 1991 until January 1993, Mr Priddy
served as President of Florida Gulf Airlines. From January 1988 to November
1991, he served as President and Chief Executive Officer of Air Midwest, Inc.,
for which he also served as a director from November 1987 to November 1991. From
1979 to 1987, Mr. Priddy served as Vice President and Chief Financial Officer of
Atlantic Southeast Airlines, Inc., which he also served as a director from 1981
to 1987. Mr. Priddy has a B.A. degree in economics from Tulane University. Mr.
Priddy is also a member of the Board of Directors of Datalink, Inc., Lukens
Medical Corporation, Commonwealth Associates and AirTran Holdings, Inc.
LEONARD M. SCHILLER, ESQ. Mr. Schiller has been a director of the
Company since April 1995. Mr. Schiller has been a practicing attorney for over
25 years and is a partner in the law firm of Schiller, Klein & McElroy, P.C. in
Illinois. Since 1980, he has also been President of The Dearborn Group, a
residential property management and real estate company and is involved in the
ownership of residential properties throughout the Midwest. Mr. Schiller has a
B.A. degree in liberal arts from the University of Iowa and a law degree from
the ITT Kent College Law School. Mr. Schiller serves on the boards of directors
of Milestone Scientific, Inc., which develops dental equipment and disposable
products for use by health care providers, and Imall, Inc., an internet shopping
mall provider.
EXECUTIVE OFFICERS
NORMAN J. PRESSMAN, PH.D. Dr. Pressman has been Chief Scientific Officer
since May 1997 and President since March 1999. From May 1997 through March 1999,
he also served as Senior Vice President, Research. From July 1996 through May
1997, he served as a Senior Vice President of the Company and President of the
Cytopathology Division. From July 1993 until joining the Company, Dr. Pressman
was Manager for Biotechnology Development, Strategic Business Development Group
of Olympus America, the exclusive distributor of certain of the Company's
cytopathology products in the Western Hemisphere. Between July and September
1989, Dr. Pressman was engaged in the formation of Cell Systems International,
Inc., a consulting firm
<PAGE> 8
in biomedical specimen collection, processing and analysis, of which he served
as President from September 1989 until July 1993. Dr. Pressman was the lead
research scientist in the Cytometry and Histometry program of the Central
Research and Development Department at E.I. du Pont de Nemours & Company from
December 1986 until July 1989. From September 1976 until December 1986, he was
an Assistant Professor (Pathology and Engineering) at The Johns Hopkins
University School of Medicine and Head of the Quantitative Cytopathology
Laboratories at The Johns Hopkins Medical Institutions. Dr. Pressman has a B.S.
degree in electrical engineering from Columbia University, a M.S. degree in
systems engineering and a Ph.D. in biomedical engineering from the University of
Pennsylvania.
GARY A. NEWBERRY, CPA. Mr. Newberry has been Chief Financial Officer of
the Company since January 1999. He began his service with the Company in April
1997 as controller and served in that capacity until his appointment as Chief
Financial Officer. From January 1995 until March 1997, he was a director of GAN
Consulting, providing financial and accounting services to small businesses.
From August 1988 until December 1994, Mr. Newberry was corporate controller for
Tang Industries, Inc., a diversified holding company. Prior to that, he held
various accounting positions on the audit and tax staff Grant Thornton, a public
accounting firm. Mr. Newberry has a B.S. degree in Accounting from the
University of Illinois, Urbana and a Masters in Business Administration from
DePaul University.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors held 10 meetings during the 1998 fiscal
year. Each director attended a minimum of 75% of the aggregate of (x) such
meetings and (y) the meetings held by each committee, if any, of the Board of
Directors on which such director served during the last fiscal year, except that
each of Mark Banister and Harold S. Blue, each of whom served as a director
during April through December of 1998, attended five of the five meetings (100%)
of the Board which were held while they were directors. Donald Gaines attended
six of the ten meetings (60%).
The Company has an Executive Committee, an Audit Committee and a
Compensation Committee. Each of these committees is responsible to the full
Board of Directors, and its activities are therefore subject to approval of the
Board of Directors. The Board of Directors does not have a nominating or similar
committee. The functions performed by the Audit Committee and the Compensation
Committee and their membership are summarized below.
The Audit Committee is responsible for reviewing the Company's internal
accounting controls, meeting and conferring with the Company's certified public
accountants, and reviewing the results of the accountants' auditing engagement.
During fiscal year 1998, the Audit Committee held one meeting. From January
through May 1998 Messrs. Halperin, Chairman, Gaines, and Plandowski served on
the Audit Committee. Since May 1998, Messrs. Halperin, Gaines and Blue have
served on the Audit Committee.
The Compensation Committee of the Board of Directors is comprised
entirely of "disinterested" directors (within the meaning of Rule16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). The
Compensation Committee determines base compensation and discretionary cash
bonuses for the Company's senior executives, if not determined by the full Board
of Directors. These determinations are subject to the approval or ratification
of the full Board of Directors. The Compensation Committee also determines the
number and terms of stock options to be granted to employees, directors (other
than pursuant to the Board of Directors Compensation Plan described below), and
consultants of the Company under the Company' stock option plans, unless
previously determined by the full Board of Directors. During fiscal year 1998,
the Compensation Committee held one meeting.
Since May 1997, Messrs. Priddy and Schiller have served on the
Compensation Committee. From May 1997 until becoming Chief Executive Officer on
January 30, 1998, Mr. Lavallee served as Chairman of the Compensation Committee.
Since March 1998, Mr. Gaines has served as Chairman of the Compensation
Committee.
<PAGE> 9
At the time of service each member was a non-employee director. No
member of the Compensation Committee of the Company serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee. Information regarding transactions between the Company
and Mr. Priddy required to be disclosed under the caption "Certain Relationships
and Related Transactions" is also described below.
DIRECTOR COMPENSATION
Pursuant to the Board of Directors Compensation Plan as amended, each
non-employee director is entitled to the following compensation for services as
a director: (i) an immediately exercisable, five-year, nonqualified stock option
to purchase 3,334 shares of Common Stock to be granted upon election to the
Board of Directors, and (ii) an immediately exercisable, nonqualified stock
option to purchase 3,334 shares of Common Stock to be granted upon reelection of
a non-employee director to serve an additional year on the Board of Directors.
Such options are to be granted under the Company's stock option plans. The
exercise price per share shall be the fair market value of a share of Common
Stock on the date of grant. Directors are reimbursed for reasonable expenses
incurred in attending meetings of the Board of Directors and committees thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since May 1997, Messrs. Priddy and Schiller have served on the
Compensation Committee. From May 1997 until becoming Chief Executive Officer on
January 30, 1998, Mr. Lavallee served as Chairman of the Compensation Committee.
Since March 1998, Mr. Gaines has served as Chairman of the Compensation
Committee.
At the time of service each member was a non-employee director. No
member of the Compensation Committee of the Company serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee. Information regarding transactions between the Company
and Mr. Priddy required to be disclosed under the caption "Certain Relationships
and Related Transactions" is also described below.
Mr. Priddy is a director and principal stockholder of the Company, and
is the beneficial owner of 9.9% of the common stock of Commonwealth. Mr. Priddy
was named a director of Commonwealth in January, 1998. On February 3, 1998, Mr.
Priddy loaned the Company $1,000,000 in cash (the "1998 Priddy Loan") pursuant
to a Promissory Note (the "1998 Promissory Note") and Security Agreement each of
even date therewith. The 1998 Priddy Loan, was secured by a junior lien on
royalty payments to which the Company may be entitled under a License Agreement
with Becton Dickenson & Company, and bore interest at a rate of 12% per annum.
Principal and interest under the 1998 Promissory Note were due and payable on
the earlier of (x) April 2, 1998 and (y) upon closing of a securities offering
in which the Company received gross proceeds of at least $3,000,000. However, if
the principal and interest were repaid prior to April 2, 1998, the Company was
required to pay a prepayment premium equal to the difference between $20,000 and
the amount of accrued and unpaid interest under the 1998 Promissory Note. Mr.
Priddy elected to participate in the March 1998 placement by exchanging the
entire 1998 Priddy Loan into 222,222 shares of Common Stock and 222,222 warrants
to purchase shares of Common Stock at an exercise price of $4.50 per share. The
Company repaid the principal amount in full on March 19, 1998, and paid the
interest and prepayment premium on April 2, 1998.
<PAGE> 10
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE: The Compensation Committee of the Board of
Directors is composed entirely of outside directors. The Committee is
responsible for setting and adjusting the base salaries of all corporate
officers, establishing cash incentive programs for officers, and the awarding of
stock option grants to officers and all other employees. The Committee is also
responsible for the review and approval of any employment related contracts.
COMPENSATION PHILOSOPHY: It is the goal of the Company to attract and
retain a strong executive management team. The Committee believes that there
should be a link between the performance of the Company, from both financial and
shareholder value standpoints, and executive compensation. Accordingly, base
salaries are set to conformity with compensation market requirements for
comparable sized companies, taking into account levels of responsibility and
office location. However, short-term cash incentive compensation and long-term
stock option incentive awards, are primarily related to the achievement of the
Company's financial performance goals and to the enhancement of shareholder
value. Internal and personal performance objectives play a lesser role in the
executive incentive package.
The Committee is confident that the compensation and incentive policies
and practices followed by the Company are appropriate for the industry and the
compensation market in which the Company competes.
Submitted by the Compensation Committee of the Board of Directors:
Robert L. Priddy, J. Donald Gaines and Leonard M. Schiller
<PAGE> 11
SUMMARY COMPENSATION INFORMATION. The following tables set forth
information regarding compensation paid or accrued with respect to the three
proceeding fiscal years to the Company's Chief Executive Officer and other
executive officers of the Company whose total salary and bonus exceeded $100,000
for the 1998 fiscal year (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
----------------------------------------------- ------------------------
Securities
All Other Restricted Underlying
Name and Principal Position Year Salary Bonus Compensation Stock Options
- --------------------------- ---- ------ ----- ------------ ----- -------
<S> <C> <C> <C> <C> <C> <C>
Paul F. Lavallee (1) 1998 $ 208,212 --- --- --- 250,000
Chairman and Chief
Executive Officer
Peter P. Gombrich (2)(3) 1998 450,000 --- --- --- ---
Chairman and Chief 1997 212,500 52,500 $6,000 --- ---
Executive Officer 1996 75,000 87,154 --- --- ---
Norman J. Pressman, Ph.D.(4) 1998 157,500 --- --- --- ---
President and 1997 157,500 --- 6,000 --- 33,334
Chief Scientific Officer 1996 74,289 18,000 51,593 156,250 ---
Leonard R. Prange (5) 1998 160,000 --- --- --- ---
Chief Financial Officer and 1997 151,250 7,812 --- --- 33,334
Chief Operating Officer 1996 31,204 --- --- --- ---
Joyce L. Wallach, Esq.(6) 1998 105,000 --- --- --- ---
General Counsel 1997 105,000 --- --- --- 9,167
1996 6,394 --- --- --- ---
</TABLE>
- --------------------
(1) Mr. Lavallee joined the Company as Chairman, Chief Executive Officer and
President in January 1998.
(2) Mr. Gombrich became Acting Chief Executive Officer of the Company on April
21, 1995. He served as Chairman of the Board of Directors, Chief Executive
Officer and President from December 29, 1995 until January 30, 1998. Amounts
shown as salary in 1998 include amounts paid or accrued under terms of a
separation agreement signed September 15, 1998.
(3) Amounts shown as bonus represent $52,600 paid or accrued for 1996 in
accordance with Mr. Gombrich's Employment Agreement. The balance of $34,654
represents amount paid in 1995 for prior periods.
(4) Dr. Pressman joined the Company in July 1996. Amounts shown as Other
Compensation represent relocation costs and related taxes reimbursed to Dr.
Pressman under the terms of his Employment Agreement.
(5) Mr. Prange joined the Company in September 1996.
(6) Ms. Wallach joined the Company in December 1996.
<PAGE> 12
OPTION GRANTS DURING THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Total
Shares
Number of Underlying
Shares Options
Underlying Granted to Exercise Grant Date
Options Employees in Price Expiration Present
Name Granted Year ($/Share) Date Value(1)
---- ------- ---- --------- ---- --------
<S> <C> <C> <C> <C> <C>
Paul F. Lavallee 250,000 100% $4.50 1/30/08 $2.51
</TABLE>
-----------------
(1) The Company utilizes the Black-Scholes pricing model to determine the fair
value of options granted. The following assumptions were incorporated into
the model: risk-free rate - 6%, expected volatility - 20%, dividend yield -
0%, and time of exercise - 10 years. No adjustments were made for
non-transferability of risk or risk of forfeiture.
<PAGE> 13
AGGREGATE OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1998
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares Underlying
Unexercised Options Value of Unexercised in-the-Money
at December 31, 1998 Options at December 31, 1998
--------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Paul F. Lavallee 83,333 166,667 --- ---
Norman J. Pressman, Ph.D. 33,334 --- --- ---
Leonard R. Prange 33,334 --- --- ---
Joyce L. Wallach, Esq. 3,056 6,111 --- ---
</TABLE>
10-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OF STOCK AT EXERCISE PRICE REMAINING AT
OPTIONS TIME OF AT TIME OF NEW DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) AMENDMENT ($) PRICE ($) AMENDMENT
- ------ ---- ----------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul F. Lavallee 3/23/98 250,000 $ 4.50 $ 9.375 $ 4.50 9.8 years
Leonard R. Prange 5/23/97 33,334 23.64 32.28 23.64 9.3 years
Norman J. Pressman 5/23/97 33,334 23.64 37.50 23.64 9.1 years
Kenneth Miller 3/24/95 23,667 8.34 42.00 8.34 2.2 years
Mark Santor 3/24/95 4,827 8.34 42.00 8.34 1.8 years
</TABLE>
EMPLOYMENT AGREEMENTS; SEPARATION AGREEMENTS
LAVALLEE COMPENSATION ARRANGEMENTS; PROFESSIONAL SERVICES AGREEMENT.
Effective January 30, 1998, the Board of Directors appointed Mr. Lavallee
Chairman of the Board, Chief Executive Officer and President of the Company,
approved his compensation arrangements for such services, and directed
management to memorialize such compensation arrangements in a professional
services agreement to be effective retroactive to January 30, 1998. The Company
and Mr. Lavallee entered into a professional services agreement between the
Company and Gypsy Hill LLC, a professional services entity through which Mr.
Lavallee's services will be provided to the Company, which will be effective
retroactive to January 30, 1998. The agreement includes the following
provisions. Mr. Lavallee's compensation is $225,000 annually, and he is eligible
for an annual bonus of up to 30% thereof. The services can be terminated by the
Company upon 12 months' written notice, or by Mr. Lavallee upon 30 days' written
notice. Mr. Lavallee has been granted a non-qualified stock option to purchase
250,000 shares of Common Stock at an initial exercise price of $9.375 (the
"Initial Exercise Price") (the closing sales price per share of Common Stock on
the grant date, January 30, 1998). If in the Company's first equity offering
subsequent to the grant date, it sells Common Stock, or securities convertible
or exercisable for Common Stock, at a price per share lower than the Initial
Exercise Price, then the Initial Exercise Price shall be reduced to equal such
lower price per share. (In March 1998, the Company completed such equity
offering for shares of Common Stock and warrants exercisable to purchase Common
Stock at $4.50 per share, accordingly the Initial Exercise Price has been reset
to $4.50.) The option is exercisable as follows (i) one-third of the underlying
shares were immediately exercisable (subject to a subsequent lock-up described
below), and (ii) an additional one-third and the final one-third of the
underlying shares, respectively, will become exercisable on the second and third
anniversaries of the grant date. Mr. Lavallee will be reimbursed for reasonable
traveling expenses from South Dakota to Chicago and living expenses while in
Chicago.
<PAGE> 14
GOMBRICH EMPLOYMENT AND SEVERANCE AGREEMENT. Pursuant to an Employment
Agreement dated August 1, 1994 between Peter P. Gombrich and AccuMed, Inc. which
was assumed by the Company as a result of the merger of AccuMed, Inc. into the
Company (the "Gombrich Employment Agreement"), Mr. Gombrich served as Chairman
of the Board of Directors, Chief Executive Officer and President of the Company
from December 29, 1995 until he resigned on January 30, 1998. Under terms of a
settlement agreement signed September 4, 1998, Mr. Gombrich is to receive
$450,000, of which $150,000 was payable immediately with the balance payable in
16 monthly installments of $18,750, starting September 15, 1998 and ending
January 15, 2000.
PRESSMAN EMPLOYMENT AGREEMENT. Pursuant to the Employment Agreement
dated June 13, 1996 as amended July 16, 1996, between the Company and Dr.
Pressman (the "Pressman Employment Agreement"), Dr. Pressman will serve as
President of the Cytopathology Division and Senior Vice President of the Company
for five years beginning July 5, 1996. Dr. Pressman's annual salary is $157,500
and he is eligible to receive annually (i) cash bonuses of up to 30% of such
annual salary, and (ii) incentive stock options to purchase up to 8,334 shares
of Common Stock based on the achievement of mutually agreed upon goals and
objectives. On July 8, 1996, Dr. Pressman was granted an option to purchase an
aggregate of 41,665 shares of Common Stock at an exercise price of $37.50 per
share (the last reported sale price of the Common Stock on the Nasdaq SmallCap
Market on the date on which Dr. Pressman's employment commenced) which was
immediately exercisable with respect to 8,333 shares and was to become
exercisable with respect to 8,333 additional shares on each of the first through
fourth anniversaries of the grant date. (Dr. Pressman surrendered such options
in February 1997 in order that the shares reserved for issuance upon exercise
thereof could be reserved for issuance in a private placement of the Company's
securities completed in March 1997.) Dr. Pressman was granted 4,167 shares of
Common Stock on the date on which Dr. Pressman's employment commenced. Such
shares may not be transferred during the 18-month period following the date of
issuance and would be forfeited to the Company if Dr. Pressman terminates the
Pressman Employment Agreement during such period, other than due to a breach by
the Company. Dr. Pressman is entitled to borrow up to $85,200 from the Company
for the purpose of paying taxes due in connection with the grant of such shares.
Such loan shall be repaid without interest in installments to be mutually agreed
upon by Dr. Pressman and the Company. The Company may terminate Dr. Pressman's
employment for cause at any time upon written notice. The Company may terminate
his employment without cause upon six months' written notice, in which case Mr.
Pressman would be entitled to an amount equal to 12 months' salary as severance,
paid over 12 months. Dr. Pressman may terminate the Pressman Employment
Agreement for any reason upon six months' written notice.
Dr. Pressman was entitled to receive replacement options to purchase
41,667 shares of Common Stock in May 1997. However, he waived his right to
receive 8,333 of such options and was granted options to purchase 33,334 shares
of Common Stock at such time.
PRANGE EMPLOYMENT AGREEMENT. Pursuant to the Employment Agreement dated
as of September 9, 1996 between the Company and Mr. Prange (the "Prange
Employment Agreement"), Mr. Prange serves as Chief Financial Officer and
Corporate Vice President of the Company at an initial annual salary of $125,000.
In March 1997, Mr. Prange was appointed Chief Operating Officer and the
Compensation Committee increased his annual base salary to $160,000. He is
eligible to receive annual cash bonuses of up to 25% of such annual salary. Upon
joining the Company, Mr. Prange was granted options to purchase an aggregate of
25,000 shares of Common Stock at an exercise price of $32.28 per share (the fair
market value of the Common Stock on the grant date), which were immediately
exercisable with respect to 4,165, shares and were to become exercisable with
respect to 4,167 additional shares on each of the first through fifth
anniversaries of the grant date. (Mr. Prange surrendered such options in
February 1997 in order that the shares reserved for issuance upon exercise
thereof could be reserved for issuance in a private placement of the Company's
securities completed in March 1997.) In the event of a change of control of the
Company or if Peter P. Gombrich ceased to be Chairman of the Board and Chief
Executive Officer, the options were to become fully vested and immediately
exercisable. The Company may terminate Mr. Prange's employment for Cause (as
defined in the Prange Employment Agreement) at any time upon written notice. The
Company may terminate his employment without Cause upon written notice, in which
case Mr. Prange would be entitled to an amount of cash equal to 12 months'
salary as severance, paid semi-monthly over 12 months, and his options shall
become fully vested and immediately exercisable. Mr. Prange's employment shall
be extended for additional one-year terms unless either party delivers written
notice of termination at least 60 days prior to the end of the then current
period.
<PAGE> 15
WALLACH EMPLOYMENT LETTER. Pursuant to an Employment Letter dated as of
November 25, 1996, Ms. Wallach serves as General Counsel and Secretary of the
Company. Her annual salary is $105,000, and she is eligible for a bonus of up to
20% of her the current annual salary, based upon mutually agreed goals and
objectives. Ms. Wallach received options to purchase 5,000 shares of Common
Stock upon acceptance of employment at an exercise price of $23.64 per share
(the fair market value under such Plan on the grant date).
<PAGE> 16
PERFORMANCE GRAPH
The following graph depicts the cumulative total return on the Company's
Common Stock compared to the cumulative total return for the Nasdaq Composite
Index and the Nasdaq Biotechnology index. The graph assumes an investment of
$100 on December 31, 1993. Reinvestment of dividends is assumed in all cases.
COMPARISON OF FIVE YEAR CUMULATIVE
RETURN AMONG ACCUMED INTERNATIONAL, INC.,
NASDAQ COMPOSITE AND NASDAQ BIOTECHNOLOGY INDEX
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
AccuMed International, Inc. 100 23 51 101 53 9
NASDAQ Composite 100 97 135 166 202 283
NASDAQ Biotechnology 100 82 154 153 153 222
</TABLE>
<PAGE> 17
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
COMMON STOCK
The table below sets forth certain information as of April 1, 1999 (the
"Reference Date") with respect to the beneficial ownership of Common Stock by
(i) each person known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of Common Stock; (ii) each director and nominee; (iii)
the Named Executive Officers (as hereinafter defined) and (iv) executive
officers and directors as a group. On the Reference Date, there were 5,507,883
shares of Common Stock outstanding.
<TABLE>
<CAPTION>
PERCENT OF SHARES
NAME AND ADDRESS NUMBER OF SHARES BENEFICIALLY
OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED (2) OWNED (2)
----------------------- ---------------------- ----------------
<S> <C> <C> <C>
Bellingham Capital Industries................................ 1,333,334 (3) 21.6%
P.O. Box 323
St. Helier Jersey, Chan. Islands
Robert L. Priddy............................................. 1,342,255 (4) 21.1%
Michael Falk................................................. 629,575 (5) 10.6%
c/o Commonwealth Associates
830 Third Avenue
New York, NY 10022
Commonwealth Associates...................................... 421,106 (6) 7.3%
830 Third Avenue
New York, NY 10022
Peter P. Gombrich............................................ 391,072 (7) 7.1%
c/o Bell National Corporation
900 North Franklin Street, Suite 210
Chicago, Illinois 60610
Edmund Shea.................................................. 307,556 (8) 5.4%
Paul F. Lavallee............................................. 91,000 (9) 1.6%
Harold S. Blue............................................... 62,223 (10) 1.1%
Leonard M. Schiller.......................................... 35,360 (11) *
Leonard R. Prange ........................................... 23,966 (12) *
c/o Bell National Corporation
900 North Franklin Street, Suite 210
Chicago, Illinois 60610
Norman J. Pressman........................................... 20,834 (13) *
Jack H. Halperin............................................. 20,065 (14) *
J. Donald Gaines............................................. 6,667 (15) *
Mark Banister................................................ 3,333 (16) *
Joyce L. Wallach, Esq........................................ 1,252 (17) *
All directors and executive officers as a group
(10 persons).............................................. 1,606,952 (18) 23.2%
</TABLE>
- --------------------------------
* Represents less than 1%.
(1) Except as otherwise noted, the address for each person is c/o AccuMed
International, Inc., 920 North Franklin Street, Suite 402, Chicago,
Illinois 60610.
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock listed as beneficially owned by them. A person is deemed to be
the beneficial holder of securities that can be acquired by such person
within 60 days from the Reference Date upon the exercise of warrants or
options or the conversion of convertible preferred stock. Each beneficial
owner's percentage ownership is determined by including shares, underlying
options or warrants which are exercisable or preferred stock which is
convertible by such person currently, or within 60 days following the
Reference Date, and excluding shares underlying options, warrants and
convertible preferred stock held by any other person.
<PAGE> 18
(3) Includes 667,667 shares underlying warrants held by Bellingham Capital
Industries which are exercisable currently or within 60 days following the
Reference Date.
(4) Mr. Priddy directly owns 355,555 shares of Common Stock and warrants to
purchase up to 322,897 shares of Common Stock. The number shown includes
6,667 shares underlying stock options that are exercisable and 236,031
shares underlying Series A Convertible Preferred Stock that are convertible
currently or within 60 days following the Reference Date. The number shown
includes an additional 120,926 shares, and 300,180 shares underlying
warrants that are exercisable currently or within 60 days following the
Reference Date, held by Commonwealth Associates (excluding securities held
in Commonwealth Associates' trading account). Mr. Priddy is a control
person of the corporate general partner of Commonwealth Associates and may
be deemed to be beneficial owner of securities held by Commonwealth
Associates. Mr. Priddy disclaims beneficial ownership of the securities
held by Commonwealth Associates except to the extent of his percentage
ownership interests in Commonwealth Associates.
(5) Mr. Falk directly owns 72,593 shares of Common Stock and warrants to
purchase up to 119,210 shares of Common Stock. The number shown includes an
additional 120,926 shares, and 300,180 shares underlying warrants that are
exercisable currently or within 60 days following the Reference Date, held
by Commonwealth Associates (excluding securities held in Commonwealth
Associates' trading account). Mr. Falk is a control person of the corporate
general partner of Commonwealth Associates and may be deemed to be
beneficial owner of securities held by Commonwealth Associates. The number
of shares also includes an additional 16,667 shares underlying warrants
that are exercisable currently or within 60 days following the Reference
Date held by Anne Falk, Mr. Falk's spouse. Mr. Falk disclaims beneficial
ownership of the securities held by Commonwealth Associates except to the
extent of his percentage ownership interests in Commonwealth Associates.
Certain shares and warrants held directly by Mr. Falk were transferred to
him by Commonwealth Associates.
(6) Includes 300,180 shares underlying warrants held by Commonwealth Associates
that are exercisable currently or within 60 days following the Reference
Date. Excludes securities held in Commonwealth Associates' trading
accounts.
(7) Includes 52,078 shares held of record by Gwenda Gombrich, Mr. Gombrich's
wife, directly or as custodian for a minor child, as to which Mr. Gombrich
disclaims beneficial ownership.
(8) Includes 85,334 shares underlying 12% Convertible Promissory Notes due 2000
and 111,112 shares underlying warrants which are currently convertible or
exercisable or within 60 days following the Reference Date.
(9) Includes 91,000 shares underlying stock options held by Mr. Lavallee that
are exercisable currently or within 60 days following the Reference Date.
(10) Includes 55,556 shares underlying warrants and 6,667 shares underlying
stock options held by Mr. Blue that are exercisable currently or within 60
days following the Reference Date.
(11) Includes 12,500 shares underlying warrants and 10,833 shares underlying
stock options held by Mr. Schiller that are exercisable currently or within
60 days following the Reference Date.
(12) Includes 16,667 shares underlying stock options held by Mr. Prange that are
exercisable currently or within 60 days following the Reference Date.
(13) Includes 16,667 shares underlying stock options held by Mr. Pressman that
are exercisable currently or within 60 days following the Reference Date.
(14) Includes 12,216 shares underlying stock options held by Mr. Halperin that
are exercisable currently or within 60 days following the Reference Date.
(15) Includes 6,667 shares underlying stock options held by Mr. Gaines that are
exercisable currently or within 60 days following the Reference Date.
(16) Includes 3,333 shares underlying stock options held by Mr. Banister that
are exercisable currently or within 60 days following the Reference Date.
<PAGE> 19
(17) Includes 1,000 shares underlying stock options held by Ms. Wallach that are
exercisable currently or within 60 days following the Reference Date.
(18) Includes 236,031 shares underlying Series A Convertible Preferred Stock and
862,682 shares underlying warrants or options held by executive officers
and directors that are exercisable currently or within 60 days of the
Reference Date.
<PAGE> 20
PREFERRED STOCK
The table below sets forth certain information as of April 1, 1999 (the
"Reference Date") with respect to the beneficial ownership of the Series A
Convertible Preferred Stock by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Series A
Convertible Preferred Stock, (ii) the only director, nominee or Named Executive
Officer who owns any such stock, and (iii) executive officers and directors as a
group. On the Reference Date, there were 944,334 shares of Series A Convertible
Preferred Stock outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) PERCENT OF CLASS
- ---------------------------------------------- ------------------------ ----------------
<S> <C> <C>
Robert L. Priddy . . . . . . . . . . . . . . 354,046 37.5%
Conzett Europa - Inv Limited . . . . . . 177,023 18.7%
William Hobe, 20 Reid Street
Hamilton, Bermuda hm11
Egger & Co. Cust for Courcoux Bouvet . 59,062 6.3%
c/o Chase Manhattan Bank N.A.
Church Street Station
New York, NY 10008
France Finance IV 47,250 5.0%
51, rue Vivienne
75002 Paris, FRANCE
All executive officers and directors as a
group (12 persons) . . . . . . . . . . . . . 354,046 37.5%
</TABLE>
(1) Except as otherwise noted, the address for each person is c/o AccuMed
International, Inc., 920 North Franklin Street, Suite 402, Chicago,
Illinois 60610
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Series A Convertible Preferred Stock listed as beneficially owned by them.
<PAGE> 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
COMMONWEALTH ASSOCIATES
COMMONWEALTH ASSOCIATES ("COMMONWEALTH") IS A PRINCIPAL STOCKHOLDER OF
THE COMPANY. On February 23, 1998, the Company consummated the exchange (the
"Note Exchange") of $5,275,000 in principal amount of the Convertible Notes
together with the right to receive an aggregate of $329,030 in accrued and
unpaid interest thereon for (i) 1,245,340 shares of Series A Convertible
Preferred Stock, and (ii) five-year warrants to purchase an aggregate of
1,245,340 shares of Common Stock at an exercise price of $6.75 per share.
Commonwealth served as placement agent in the Note Exchange for which it
received from the Company, (i) 8,334 shares of Common Stock in lieu of a cash
retainer, (ii) $175,000 in cash, and (iii) seven-year warrants to purchase an
aggregate of 58,334 shares of Common Stock (issuable to Commonwealth and/or its
designees), at an exercise price of $6.75 per share. In addition, the warrants
to purchase 33,334 shares of Common Stock issued to Commonwealth and its
designees as compensation for the original placement of the Convertible Notes,
with an exercise price of $18.75 have been replaced with warrants having
identical terms except that the exercise price was reduced to $6.75 per share.
On March 19 and 23, 1998, the Company consummated a private placement
(the "March 1998 Placement") of 1,447,778 shares of Common Stock and seven-year
warrants to purchase an aggregate of 1,447,778 shares of Common Stock at an
exercise price of $4.50 per share. Commonwealth acted as placement agent in the
March 1998 Placement for which it received from the Company, (i) 22,223 shares
of Common Stock in lieu of a cash retainer, (ii) $251,750 in cash, (iii) and
seven-year warrants to purchase 55,705 shares of Common Stock at an exercise
price of $4.50 per share, and (iv) an accountable expense reimbursement $97,500
in cash. In addition, the warrants to purchase an aggregate of 58,334 shares of
Common Stock issued to Commonwealth and its designees as compensation for its
services in connection with the Note Exchange, at an exercise price of $6.75,
have been replaced with warrants having identical terms except that the exercise
price was reduced to $4.50 per share.
HAROLD S. BLUE
Mr. Blue, a director of the Company, served as a finder in the March
1998 Placement for which he received $124,875 in cash.
ROBERT L. PRIDDY
Mr. Priddy is a director and principal stockholder of the Company, and
is the beneficial owner of 9.9% of the common stock of Commonwealth. He was
elected a director of Commonwealth in January, 1998. On February 3, 1998, Mr.
Priddy loaned the Company $1,000,000 in cash (the "1998 Priddy Loan") pursuant
to a Promissory Note (the "1998 Promissory Note") and Security Agreement each of
even date therewith. The 1998 Priddy Loan, was secured by a junior lien on
royalty payments to which the Company may be entitled under a License Agreement
with Becton Dickenson & Company, and bore interest at a rate of 12% per annum.
Principal and interest under the 1998 Promissory Note were due and payable on
the earlier of (x) April 2, 1998 and (y) upon closing of a securities offering
in which the Company received gross proceeds of at least $3,000,000. However, if
the principal and interest were repaid prior to April 2, 1998, the Company was
required to pay a prepayment premium equal to the difference between $20,000 and
the amount of accrued and unpaid interest under the 1998 Promissory Note. Mr.
Priddy elected to participate in the March 1998 placement by exchanging the
entire 1998 Priddy Loan into 222,222 shares of Common Stock and 222,222 warrants
to purchase shares of Common Stock at an exercise price of $4.50 per share. As a
result, the Company repaid the principal amount in full on March 19, 1998, and
paid the interest and prepayment premium on April 2, 1998.
<PAGE> 22
NORMAN J. PRESSMAN, PH.D
The Company loaned to Dr. Pressman, President, and Chief Scientific
Officer of the Company, an aggregate of $164,409.20 pursuant to a Promissory
Note in the original principal amount of $100,000 dated as of October 25, 1996,
and a Promissory Note in the original principal amount of $64,409.20 dated as of
December 30, 1996, respectively (collectively, the "Pressman Notes"). Such loan
was made in accordance with the provisions of the Pressman Employment Agreement
to cover relocation expenses and taxes in connection with shares of Common Stock
issued to Dr. Pressman upon commencement of employment. The Pressman Notes bear
no interest. Repayment of principal under the Pressman Notes shall be made by
withholding 50% of any bonus payments due to Dr. Pressman under the terms of the
Pressman Employment Agreement. Payments shall continue until the principal is
repaid in full, but in no event shall the term of the Pressman Notes extend
beyond five years from the respective dates on which they were made, at which
dates any amounts outstanding shall become immediately due and payable. Dr.
Pressman has pledged to the Company 25,000 shares of Common Stock to secure
$100,000 of such indebtedness, pursuant to a Stock Pledge Agreement dated as of
October 27, 1996. At April 1, 1999, the outstanding balance due under the
Pressman Notes was $123,250.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of the Company's records, the Company believes that each
report disclosing beneficial ownership of securities of the Company pursuant to
Section 16(a) of the Securities Exchange Act of 1934, as amended, required to be
filed by the executive officers and directors of the Company during the fiscal
year ended December 31, 1998 were timely filed.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP ("KPMG") have been the Company's principal accountants for the
fiscal years ended December 31, 1996, 1997 and 1998. The Board of Directors have
not selected the principal accountants to serve for the 1999 fiscal year due to
the change in the nature of the Company's operations. Representatives of KPMG
are expected to be present at the Meeting, will have the opportunity to make a
statement if they so desire, and are expected to be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS---2000 ANNUAL MEETING
Shareholder Proposals intended to be presented at the next Annual
Meeting of the Shareholders of the Company must be received by the Company not
later than December 31, 1999, to be considered for inclusion in the company's
Proxy Statement relating to that meeting. Shareholder proposals should be
addressed to the attention of the Secretary, 920 N. Franklin, Suite 402,
Chicago, IL 60610.
OTHER MATTERS
Management is not aware of any matters to be presented for action at the
Annual Meeting other than as set forth in this Proxy Statement. If other
business should come before the meeting, the persons named as proxy holders in
the accompanying Proxy intend to vote the shares in accordance with their
judgment, and discretionary authority to do so is included in the Proxy.
ANNUAL REPORT
An Annual Report to Stockholders including audited financial statements
for the fiscal year ended December 31, 1998 is enclosed with this Proxy
Statement.
<PAGE> 23
By Order of the Board of Directors
Jack H. Halperin
Secretary
<PAGE> 24
ACCUMED INTERNATIONAL, INC.
P 820 NORTH FRANKLIN STREET, SUITE 402
CHICAGO, ILLINOIS 60610
R
FOR THE COMBINED ANNUAL AND SPECIAL MEETING
O OF STOCKHOLDERS TO BE HELD MAY 18, 1999
X The undersigned hereby appoints Paul F. Lavallee and Gary A. Newberry
and each of them, Proxies, each with full power of submission to vote
Y all of the stock of the undersigned at the Combined Annual and Special
Meeting of Stockholder of AccuMed International, Inc. (the "Company")
to be held on Tuesday, May 18, 1999 at 10:00 a.m. (Chicago time) at
the Company's offices located at 920 North Franklin Street, Suite 402,
Chicago, Illinois, and at any adjournments thereof, in the manner
indicated and in their discretion on any other business which may
properly come before said meeting, all in accordance with and as more
fully described in the Notice and accompanying Proxy Statement for
said meeting, receipt of which is hereby acknowledged. THE SHARES
REPRESENTED BY THIS PROXY SHALL BE VOTED AS SPECIFIED BELOW. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR APPROVAL OF EACH
OF THE PROPOSALS LISTED ON THE REVERSE SIDE INCLUDING FOR THE ELECTION
OF DIRECTOR NOMINEES.
1. Election Of Mark Bannister, Harold S. Bluc, J. Donald Gaines,
Jack H. Halperin, Paul F. Lavallee, Robert L. Priddy And Leonard M.
Schiller as directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified.
[SEE REVERSE SIDE]
- ------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 25
<TABLE>
<S> <C>
[X]Please mark 3281
vote as in
this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED TO ITS EXERCISE.
IF NO SPECIFICATION IS MADE THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS DESCRIBED BELOW.
FOR WITHHELD
1. Election of [ ] [ ] 2. In their discretion, the proxy holders are to vote upon such
authorized other business as may properly come before the meeting, or
Directors any adjournments thereof, if such business was known to the
(see reverse) Board of Directors prior to the solicitation of this Proxy.
For, except vote withheld from the following nominee(s):
- -----------------------------------------------------------
SIGNATURE(S) DATE , 1999
------------------------------------------------------------------------------------------ -------------------
Please sign exactly as name appears hereon. Please date, sign and return the Proxy promptly in the endorsed envelope. When signing
as attorney, executor, administrator, trustee or guardian, please give full title. If the signature is for a corporation, please
sign full corporate name by authorized officer. If the shares are registered in more than one name all holders must sign.
- -----------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
</TABLE>
