SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
Magna-Lab Inc.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Lawrence A. Minkoff, Ph.D.
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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: __N/A____________________________________________
2) Form, Schedule or Registration No. __N/A_________________________________
3) Filing party: __N/A______________________________________________________
4) Date filed: __N/A________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
[LOGO MAGNA-LAB INC.]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JULY 24, 1996
TO THE SHAREHOLDERS OF MAGNA-LAB INC.
Notice is hereby given that the annual meeting of shareholders of
Magna-Lab Inc., a New York corporation (the "Company"), will be held at the
Hofstra University Club, Hempstead Turnpike, Hempstead, New York 11550, on July
24, 1996 at 2:00 p.m. local time, for the following purposes:
1. To consider and vote upon the election of five directors;
2. To ratify the appointment of Rothstein Kass & Company, P.C. as
independent auditors.
3. To transact such other business as may be presented at the Annual
Meeting or any adjournments thereof which the Board of Directors did not know a
reasonable time before the mailing of this notice would be presented at the
meeting.
The close of business on June 27, 1996 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the meeting. The stock transfer books of the Company will not be closed.
All shareholders are cordially invited to attend the meeting. Whether
or not you expect to attend, you are respectfully requested by the Board of
Directors to sign, date and return the enclosed proxy promptly. Shareholders who
execute proxies retain the right to revoke them at any time prior to the voting
thereof. A return envelope which requires no postage if mailed in the United
States is enclosed for your convenience.
By the order of the Board of Directors,
Lawrence A. Minkoff, Ph.D.
Chairman of the Board
Dated: June 28, 1996
<PAGE>
MAGNA-LAB INC.
250Z Executive Drive,
Edgewood, New York 11717
516-595-2111
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Magna-Lab Inc. (the "Company") for the
Annual Meeting of Shareholders to be held at the Hofstra University Club,
Hempstead Turnpike, Hempstead, New York 11550 on July 24, 1996 at 2:00 p.m.,
local time, and for any adjournment or adjournments thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of Shareholders. Any
shareholder giving such a proxy has the power to revoke it at any time before it
is voted. Written notice of such revocation should be forwarded directly to the
Secretary of the Company, at the above stated address. Attendance at the meeting
will not have the effect of revoking the proxy unless such written notice is
given or the shareholder votes by ballot at the meeting, thereby canceling any
proxy previously given.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted and if a choice is specified in the proxy, the
shares represented thereby will be voted in accordance with the specification so
made. Any proxy on which no direction is specified will be voted in favor of the
actions described in this Proxy Statement, for the election of the nominees set
forth under the caption "Election of Directors", and for the ratification of
Rothstein Kass & Company, P.C. as independent auditors.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will first be mailed or given to the Company's shareholders is
July 5, 1996.
Your vote is important. Accordingly, you are urged to sign and return
the accompanying proxy card whether or not you plan to attend the meeting. If
you do attend, you may vote by ballot at the meeting, thereby canceling any
proxy previously given.
VOTING
Only holders of shares of Class A Common Stock, par value $.001 per
share, and Class B Common Stock, par value $.001 per share (collectively, the
"Shares"), of record as at the close of business on June 27, 1996, are entitled
to vote at the meeting. On the record date there were issued and outstanding
3,743,899 shares of Class A Common Stock and 1,846,101 shares of Class B Common
Stock. Each outstanding share of Class A Common Stock and Class B Common Stock
is entitled to one vote and five votes, respectively, upon all matters to be
acted upon at the meeting. A majority in interest of the voting power of the
outstanding Shares represented at the meeting in person or by proxy shall
constitute a quorum. The affirmative vote of a plurality of the voting power of
the Shares so represented is necessary to elect the nominees as directors, and
the affirmative vote of the majority of the outstanding voting power of the
Shares represented at the meeting is necessary to ratify Rothstein Kass &
Company, P.C. as independent auditors. Of the 52 Class B Common Shareholders,
five (each of whom is, or has one or more shareholder who is, a member of
management or the Board of Directors of the Company) possess approximately 62%
of the total voting power (including their presently outstanding shares of Class
A Common Stock) of the Shares and, as such, will be able to control the vote on
each matter to be acted upon at the meeting. The Shareholders vote at the
meeting by casting ballots (in person or by proxy) which are tabulated by a
person appointed by the Board of Directors before the meeting to serve as the
inspector of election at the meeting and who has executed and verified an oath
of office. Abstentions and broker non-votes are included in the determination of
the number of Shares present at the meeting for quorum purposes but not counted
in the tabulation of the votes cast on proposals presented to shareholders.
Thus, an abstention from voting on any matter has the same legal effect as a
vote "against" the matter, even though the shareholder may interpret such action
differently.
<PAGE>
SOLICITATION OF PROXIES
The solicitation of proxies hereby is being made by the Board of
Directors of the Company. The cost of preparing, assembling and mailing the
proxy, this Proxy Statement and the other materials enclosed will be borne by
the Company. In addition to the solicitation of proxies by use of the mails,
officers and employees may solicit proxies by telephone or other means of
communication. The Company, through its transfer agent, will request brokerage
houses, banking institutions, and other custodians, nominees and fiduciaries,
with respect to Shares held of record in their names or in the names of their
nominees, to forward the proxy material to the beneficial owners of such Shares
and will reimburse them for their reasonable expenses in forwarding the proxy
material.
ELECTION OF DIRECTORS
At the meeting, five directors will be elected by the shareholders to
serve until the next Annual Meeting of Shareholders or until their successors
are elected and shall qualify. Each of the nominees is currently a director of
the Company. Management recommends that the persons named below be elected as
directors of the Company and it is intended that the accompanying proxy will be
voted for their election as directors, unless the proxy contains contrary
instructions. The Company has no reason to believe that any of the nominees will
not be a candidate or will be unable to serve. However, in the event that any of
the nominees should become unable or unwilling to serve as a director, the
persons named in the proxy have advised that they will vote for the election of
such person or persons as shall be designated by Management.
The following sets forth the names and ages of the five nominees for
election to the Board of Directors, their respective principal occupations or
employment during the past five years and the period during which each has
served as a director of the Company.
Lawrence A. Minkoff, Ph.D., 48
Lawrence A. Minkoff, Ph.D. is a co-founder of the Company and has
served as Chairman of the Board, President and Chief Executive Officer since its
inception in February 1991. Since October 1989, Dr. Minkoff has served as
President and a director of Minkoff Research Labs, Inc. which can be considered
a predecessor of the Company (the "Predecessor"). The Predecessor is a principal
shareholder of the Company and prior to the formation of the Company conducted
the development activities relating to the Company's current technology. From
October 1989 to February 1992, Dr. Minkoff was engaged in the development of MRI
technology. From July 1978 to October 1989, Dr. Minkoff was an executive
vice-president of Fonar Corporation, a publicly traded corporation, engaged in
developing and commercializing the use of nuclear magnetic resonance for
scanning the human body. Dr. Minkoff served as a member of its Board of
Directors from January 1985 to February 1989.
Joel M. Stutman Ph.D., 61
Joel M. Stutman, Ph.D. is a co-founder of the Company and has served as
Vice President, Chief Operating Officer and a Director since its inception in
February 1991. From November 1987 to June 1991, Dr. Stutman was president and a
director of Imaging Systems International (ISI). ISI is a company that
establishes and manages MRI centers. From October 1989 to June 1991, he served
as the general manager of ISI's North Georgia Diagnostic Imaging, L.P., a public
limited partnership providing MRI imaging services. From July 1978 to August
1986, Dr. Stutman served as vice-president of computer sciences and from August
1986 to November 1987, as an executive vice-president of marketing, at Fonar
Corporation.
Cynthia R. May, 43
Ms. Cynthia R. May has served as a Director of the Company since
January 1996. Since 1981, Ms. May has been employed by Saginaw Controls &
Engineering Corp., a private manufacturing company, most recently as a vice
president. Since 1994, Ms. May has been treasurer of Marathon Investments L.L.C.
and since 1995 vice president and treasurer of GRQ, L.L.C., two entities
involved in investment and financing. Marathon Investments L.L.C. is a principal
shareholder of the Company.
Dr. Herbert Moskowitz, 55
Dr. Herbert Moskowitz has served as a Director of the Company since
February 1992 and as its Treasurer from February 1992 to July 1994. Dr.
Moskowitz has been the chairman of the board of Life Medical Sciences, Inc.
("Life Medical"), a publicly traded medical technology company, from August 1990
to the present, and has
<PAGE>
been its Chief Executive Officer from August 1990 to March 1993 and from
December 1994 to June 1996. From 1986 to June 1990 he served in various
capacities, including director, chairman of the board, chief executive officer
and president of Advanced Tissue Sciences, Inc., a publicly traded medical
technology company. Dr. Moskowitz is also a director of EchoCath, Inc.
("EchoCath"), a publicly traded medical technology company. Dr. Moskowitz is
also president, a director and principal stockholder and a director of Magar
Inc. ("Magar"), a private investment firm and a general partner of Alliance
Partners ("Alliance Partners"), a general partnership.
Irwin M. Rosenthal, 67
Irwin M. Rosenthal has served as a Director of the Company since
February 1992. He has served as a senior partner at Rubin Baum Levin Constant &
Friedman since December 1991. From December 1989 to December 1991, he served as
a partner at Baer Marks Upham, and from 1983 to December 1989, a senior partner
at Botein Hays & Sklar. Mr. Rosenthal is a director of Life Medical, Symbollon
Corporation, a publicly traded chemical and medical technology company, and a
director and officer of EcohCath. Mr. Rosenthal serves as secretary and director
of Magar of which he is a principal stockholder, and is a general partner of
Alliance Partners.
In October 1995, the Company's Board of Directors voted to increase the number
of directors from five to seven. In connection therewith, Ms. Cynthia R. May was
elected to serve as a Director with her term to commence after the effectiveness
of a public offering of securities which became effective in December 1995. In
February 1996, Hon. Leonard Braman resigned from the Board.
The Company has obtained key-person life insurance coverage in the face amount
of $1,000,000 for each of Dr. Lawrence A. Minkoff and Dr. Joel M. Stutman naming
the Company as beneficiary under such policies.
General Information Concerning the Board of Directors and its Committees
The Board of Directors of the Company met four times in the fiscal year
ended February 29, 1996 and acted by unanimous written consent five times. The
New York Business Corporation Law provides that the Board of Directors, by
resolution adopted by a majority of the entire board, may designate one or more
committees, each of which shall consist of three or more directors. The Board of
Directors annually elects from its members the Audit Committee and the
Compensation Committee. During the last fiscal year each of the directors
attended at least 75% of the aggregate of (1) the total number of meetings of
the Board of Directors and (2) the total number of meetings held by all
committees of the Board on which he served.
Audit Committee. The Audit Committee reviews the engagement of the
independent accountants and reviews the independence of the accounting firm. The
Audit Committee also reviews the audit and non-audit fees of the independent
accountants and the adequacy of the Company's internal control procedures. The
Audit Committee is composed of two directors, Messrs. Minkoff and Rosenthal,
with one vacancy as a result of Hon. Leonard Braman's resignation in February
1996. The Audit Committee met once during the fiscal year ended February 29,
1996.
Compensation Committee. The Compensation Committee reviews and
recommends to the Board of Directors remuneration arrangements and compensation
plans for the Company's officers and key employees. The Compensation Committee
also administers the 1992 Stock Option Plan. The Compensation Committee is
composed of two directors, presently Messrs. Minkoff and Stutman, with one
vacancy as a result of Hon. Leonard Braman's resignation in February 1996. The
Compensation Committee met twice during the fiscal year ended February 29, 1996.
All Directors of the Company are elected by the shareholders, or in the
case of a vacancy, are elected by the Directors then in office, to hold office
until the next annual meeting of shareholders of the Company and until their
successors are elected and qualify or until their earlier resignation or
removal.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Class A and Class B Common Stock as of
June 27, 1996 for (i) each of the Company's directors and the executive officers
named in the Summary Compensation Table, (ii) each person known by the Company
to own beneficially
<PAGE>
5% or more of the outstanding shares of any class of its voting securities and
(iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Percentage
of Total
Number of Class A and
Class of Shares Percent Class B Percentage of
Name and Address Common Beneficially of Common Total Voting
of Beneficial Owner (1) Stock (2) Owned(3) Class(4) Stock (4) Power (2)(3)
- ----------------------- --------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Lawrence A. Minkoff, Ph.D. (5)(6) Class A 100,000 2.6%%
Class B 511,957 27.7%
----------
611,957 10.8% 20.3%
----------
Minkoff Research Labs, Inc.(6) Class B 511,957 27.7% 9.2% 19.7%
Harry Minkoff (6) Class B 511,957 27.7% 9.2% 19.7%
Joel M. Stutman, Ph.D. (5) Class A 100,000 2.6%
Class B 454,503 24.6%
----------
554,503 9.8% 18.2%
----------
Dr. Herbert Moskowitz (7)(8)(9) Class A 515,075 12.5%
Class B 572,670 31.0%
----------
1,087,745 18.3% 25.3%
----------
Irwin M. Rosenthal (7)(8)(10) Class A 125,000 3.2%
Class B 103,920 5.6%
----------
203,920 4.0% 4.9%
----------
Magar Inc.(7) Class B 103,920 5.6% 1.9% 4.0%
Martin D. Fife (7)(8) Class B 103,920 5.6% 1.9% 4.0%
John Haytaian (5) Class A 150,000 3.9%
Class B 60,092 3.3%
-----------
210,092 3.7% 3.4%
----------
Kenneth C. Riscica (5) Class A 112,500 2.9% 1.9% 0.9%
Marathon Investments, L.L.C.(11) Class A 272,706 7.3% 4.9% 2.1%
Cynthia R. May(12) Class A 309,606 8.3% 5.5% 2.4%
Theodore J. Murin(12) Class A 272,706 7.3% 4.9% 2.1%
Fred Kassner(11) Class A 250,000 6.7% 4.5% 1.9%
All Executive Officers and Directors Class A 1,412,181 30.1%
as a Group (7 persons) Class B 1,599,222 86.7%
----------
3,011,403 46.0% 67.5%
----------
(see following page for notes)
</TABLE>
<PAGE>
[GRAPHIC OMITTED]
- ----------------------
(1) All shares are beneficially owned and sole voting and investment power is
held by the persons named, except as otherwise noted.
(2) Class B Common Stock is entitled to five votes per share but is otherwise
substantially identical to the Class A Common Stock, which has one vote per
share. Each share of Class B Common Stock is convertible into one share of Class
A Common Stock.
(3) Each holder of Class B Common Stock has agreed that approximately 53.3% of
his or its shares of Class B Common Stock are subject to transfer to the Company
for no consideration upon the failure of certain stock price or earnings levels
to be achieved. So long as such shares are subject to such conditions, the
holder may vote, but not dispose of, the Class B Common Stock.
(4) Based upon 3,743,899 shares of Class A Common Stock and 1,846,101 shares of
Class B Common Stock outstanding and reflecting as outstanding, with respect to
the relevant owner, the shares which that beneficial owner could acquire upon
exercise of options which are presently exercisable or become exercisable within
the next 60 days.
(5) The address for each of Messrs. Minkoff (Lawrence), Stutman, Haytaian and
Riscica is c/o Magna-Lab Inc., 250Z Executive Drive, Edgewood, NY 11717. Amounts
for Messers. Minkoff (Lawrence) and Stutman include currently exercisable
options to purchase 100,000 shares of Class A Common Stock. Amounts for Mr.
Haytaian include currently exercisable options to purchase 150,000 shares of
Class A Common Stock (including options to purchase 50,000 shares of Class A
Common Stock which are exercisable in the next 60 days). Amounts for Mr.
Riscica include currently exercisable options to purchase 112,500 shares of
Class A Common Stock.
(6) Dr. Lawrence A. Minkoff and Harry Minkoff are each officers and directors
and principal shareholders of Minkoff Research Labs, Inc. and as such may be
considered to beneficially own, and to have shared investment and voting power
with respect to, all shares of Class B Common Stock owned by Minkoff Research
Labs, Inc. Harry Minkoff is the father of Lawrence A. Minkoff. Information
relating to shares owned by each of these individuals assumes that each
beneficially owns all shares of Class B Common Stock owned of record by Minkoff
Research Labs, Inc. The address for Minkoff Research Labs, Inc. and for Harry
Minkoff is P.O. Box 338, Locust Valley, NY 11560.
(7) Dr. Moskowitz and Messrs. Rosenthal and Fife are each officers and directors
and principal stockholders of Magar Inc. As such, these individuals may be
considered to beneficially own, and to have shared investment and voting power
with respect to, all shares of Class B Common Stock owned by Magar Inc.
Information relating to shares owned by each of these individuals assumes that
each beneficially owns all shares of Class B Common Stock owned of record by
Magar Inc. The address of these individuals is c/o Magar Inc., 30 Rockefeller
Plaza, New York, NY 10112.
(8) Includes 103,920 shares of Class B Common Stock owned by Magar Inc.
(9) Class A Common Stock beneficially owned includes 150,900 shares of Class A
Common Stock (including 2,100 shares of stock held by Dr. Moskowitz' wife),
approximately 52,345 shares of Class A Common Stock issuable pursuant to Class A
Warrants (exercisable at approximately $8.16 per share), approximately 181,830
shares of Class A Common Stock issuable pursuant to Class B Warrants
(exercisable at approximately $12.25 per share), 15,000 shares of Class A Common
Stock issuable pursuant to Class B Warrants (exercisable at $4.375 per share)
and options to acquire an aggregate of 100,000 shares of Class A Common Stock.
Class B Common Stock beneficially owned includes 468,750 shares held by Dr.
Moskowitz and the shares held by Magar Inc. (see notes 7 and 8).
(10) Includes currently exercisable options to purchase an aggregate of 125,000
shares of Class A Common Stock.
(11) The address for Marathon Investments L.L.C. is 13260 Spencer Road, Hemlock,
Michigan 48626. The address for Mr. Kassner is c/o Lib/Go Travel, 69 Spring St.,
Ramsey, New Jersey 07446.
(12) Includes 272,706 shares owned by Marathon Investments, L.L.C. and with
respect to which Ms. May and Mr. Murin share investment and voting power.
Amounts for Ms. May also include 26,900 shares of Class A Common Stock owned of
record by GRQ L.L.C. and 10,000 shares of Class A Common Stock underlying Class
B Warrants (exercisable at $4.375 per share) owned of record by GRQ L.L.C. The
address for each of Ms. May and Mr. Murin is c/o Marathon Investments, L.L.C.
See Note 11.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
<PAGE>
ownership and changes in ownership with the Securities and Exchange Commission.
Such persons are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to the Company's officers, directors and greater than ten percent
shareholders have been complied with during the last fiscal year, except (i) Mr.
Haytaian failed to timely report an option grant in January 1995, (ii) Messrs.
Haytaian, Rosenthal and Riscica failed to timely report option replacements and
Messrs. Riscica and Rosenthal and Dr. Moskowitz failed to timely report option
grants in February 1995, (iii) Hon. Leonard Braman failed to report an option
replacement and Drs. Minkoff and Stutman and Hon. Leonard Braman failed to
report option grants in March 1995 and (iv) Mr. Rosenthal failed to timely
report on option grant in January 1996.
EXECUTIVE COMPENSATION
The following tables set forth certain information relating to
compensation paid by the Company for the past three fiscal years to its Chief
Executive Officer and its executive officers whose compensation exceeded
$100,000 for the year ended February 29, 1996 (the "Named Executive Officers").
Only those columns which call for information applicable to the Company or the
Named Executive Officers for the periods indicated have been included in such
tables.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
Year ------------------- Long Term
Ended Salary Bonus Compensation
Feb. 28 ------ ----- Options/
Name & Principal Position or 29, ($) ($) SARs (#)
------------------------- --------- ------------ -------- --------
<S> <C> <C> <C> <C>
Lawrence A. Minkoff, Ph.D. 1996 $112,000(a) - 100,000
Chairman of the Board, President 1995 $112,000(a) - -
and Chief Executive Officer 1994 $112,000 - -
Joel M. Stutman, Ph. D. 1996 $112,000(a) - 100,000
Vice President-Chief Operating 1995 $112,000(a) - -
Officer 1994 $112,000 - -
Annual Compensation
Year ------------------- Long Term
Ended Salary Bonus Compensation
Feb. 28 ------ ----- Options/
Name & Principal Position or 29, ($) ($) SARs (#)
------------------------- --------- ------------ -------- --------
John D. Haytaian 1996 $100,000(a) - -
Vice President-Sales & 1995 $100,000(a) - 100,000
Marketing 1994 $100,000 $ 30,000 50,000
Kenneth C. Riscica 1996 $100,000(a) - -
Vice President - Finance, Chief 1995 $100,000(a) - 12,500
Financial Officer, Assistant 1994 58,333(b) - 100,000
Secretary, Treasurer
</TABLE>
- -------------
(a) Of amounts earned in the fiscal year ended February 28, 1995, approximately
$23,333, 23,333, 20,833 and 20,833 for Messrs. Minkoff, Stutman, Haytaian and
Riscica, respectively, had been deferred due to the cash position of the Company
at the time. A portion of such amounts was paid later in 1995 and new amounts
were subsequently deferred. In December 1995, such amounts were paid to Messrs.
Minkoff, Stutman, Haytaian and Riscica.
<PAGE>
(b) Mr. Riscica commenced his employment with the Company in August 1993.
See "Report on Repricing of Options" relating to repricing of options
granted to Messrs. Haytaian and Riscica in prior fiscal years.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information with respect to options
granted during the last fiscal year to the Named Executive Officers of the
Company.
Individual Grants
<TABLE>
<CAPTION>
% of Total
Options/SAR's
Options/ Granted to Exercise or
SARs Employees in Base Price
Name Granted(#) Fiscal Year ($/share) Expiration Date
---- ---------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
Lawrence A. Minkoff, Ph.D 100,000 50% $2.50 March 6, 2000
Joel M. Stutman, Ph.D. 100,000 50% $2.50 March 6, 2000
</TABLE>
- -----------------
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values
The following table sets forth certain information with respect to
stock option exercises by the Named Executive Officers during the fiscal year
ended February 29, 1996 and the value of unexercised options held by them at
year-end.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the Money
Options/SARs at Options/SARs
Shares F/Y End (#) at F/Y End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable(1)
- ---- ----------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
Lawrence A. Minkoff, Ph.D. 0 0 100,000/-0- $106,250/-0-
Joel M. Stutman, Ph.D. 0 0 100,000/-0- $106,250/-0-
John D. Haytaian 0 0 100,000/50,000 $106.250/53,125
Kenneth C. Riscica 0 0 112,500/-0- $119,530/-0-
</TABLE>
- ---------------
(1) Based on a closing price of $3 9/16 per share of Class A Common Stock on
February 29, 1996, less the exercise price.
<PAGE>
Report on Repricing of Options
In February 1995, the The Board of Directors of the Company determined
that the purposes of the 1992 Stock Option Plan were not being adequately
achieved with respect to those employees and consultants holding options that
were exercisable above current market value and that it was essential to the
best interests of the Company and the Company's shareholders that the Company
retain and motivate such employees and consultants. The Board concluded that
such retention was particularly important given the Company's financial
situation at that time and that a cost-effective approach to retention and
motivation was required. The Board further determined that it would be in the
best interests of the Company and the Company's shareholders to provide such
optionees the opportunity to exchange their above market value options for
options exercisable at the current market value. On February 28, 1995, upon
approval of the Board of Directors of the Company, the Company offered all the
holders of outstanding options under the 1992 Stock Option Plan with exercise
prices above $4.00 per share the opportunity to exchange such options for new
stock options at an exercise price of $2.50 per share. The bid price for the
Class A Common stock on Nasdaq on that date was $2.25. Any holder accepting this
offer was required to give up existing options.
In March 1995, Mr. Haytaian and Mr. Riscica agreed to the termination
of 50,000 and 100,000, respectively, of their existing options to purchase Class
A Common Stock at $6.00 and $4.69, respectively, per share in exchange for
50,000 and 100,000, respectively, of new options with an exercise price of $2.50
per share. Mr. Haytaian's existing options had been fully vested and Mr.
Riscica's existing options had been vested with respect to 50,000 shares and the
remainder vested in August 1995 (25,000) and August 1996 (25,000). At the time
of the repricing, Mr. Haytaian's existing options had an additional
approximately 3.1 to 4 years remaining and Mr. Riscica's options had an
additional approximately 3.5 to 5.5 years remaining. The new options are fully
vested and expire in February 2000.
See "Directors' Compensation" below for information regarding Mr.
Rosenthal.
Employment Agreements
On February 28, 1992, the Company entered into three year employment
agreements with Dr. Lawrence A. Minkoff, its Chairman of the Board, Chief
Executive Officer and President and a principal beneficial shareholder, and Dr.
Joel M. Stutman, its Vice President, Chief Operating Officer, Director and a
principal shareholder (the "Employment Agreements"). Effective February 28,
1995, the terms of the Employment Agreements were extended to August 9, 1996.
The Employment Agreements provided for an initial salary of $96,000 per annum,
which amounts were increased to $112,000 for the fiscal year ended February 28
or 29, 1994, 1995 and 1996. It is anticipated that the Board of Directors will
review the terms of the Employment Agreements and that the Company may enter
into revised agreements with such individuals. They have each agreed to devote
all of their business time, attention and skills to the business of the Company.
Each of them is entitled to participate in employee benefit plans.
Each of them has agreed not to disclose to anyone confidential
information of the Company during the term of his employment or thereafter and
will not compete with the Company during the term of his employment and for a
period of 24 months following termination of his employment. All work, research
and results thereof, including, without limitation, inventions, processes or
formulae made, conceived or developed by Dr. Lawrence A. Minkoff or Dr. Joel M.
Stutman during the term of employment which are related to the business,
research and development work or field of operation of the Company shall be the
property of the Company.
Directors' Compensation
The Company has agreed to pay all outside Directors $500 for each Board
or committee meeting attended. Outside Directors may be reimbursed for expenses
incurred by them in acting as a Director or as a member of any committee of the
Board of Directors. In March and April 1993 Mr. Rosenthal was awarded options to
purchase 25,000 shares of Class A Common Stock of the Company at an exercise
price of $6.00 per share and expiring in 1998. In February 1995, Mr. Rosenthal
and Dr. Moskowitz were awarded options to purchase 75,000 and 100,000 shares,
respectively, of Class A Common Stock of the Company at an exercise price of
$2.50 per share, and an option held by Mr. Rosenthal to purchase 25,000 shares
at $6.00 was cancelled and regranted with an exercise price of $2.50. Each such
options expires in February of 2000. In January 1996, Mr. Rosenthal was granted
an
<PAGE>
option to purchase 25,000 shares of Class A Common Stock at $2.63 and expiring
in 2001. See "Executive Compensation" for options granted to Drs. Minkoff and
Stutman. Accrued but unpaid director fees totaled approximately $17,000 at June
27, 1996.
CERTAIN TRANSACTIONS
In November 1994, Dr. Moskowitz and Mr. Rosenthal advanced $90,000 and
$10,000, respectively, to the Company for working capital purposes. In November
1994, the Company sold $400,000 principal amount of bridge notes and 200,000
Class C Warrants for $400,000 to Michael Cantor ($240,000) and four other
individuals in a private placement. The bridge notes carried interest at 10% and
were repaid at their maturity on May 23, 1995. Dr. Moskowitz and Mr. Rosenthal
agreed to pledge certain assets in connection with these bridge notes and the
amounts advanced by Dr. Moskowitz and Mr. Rosenthal were repaid, in November
1994, out of the proceeds of the notes and warrants. The Class C Warrants grant
the holders the right to purchase a total of approximately 212,000 (127,200 with
respect to Michael Cantor) shares of Class A Common Stock at a per share price
estimated at $2.70 (subject to adjustment) prior to November 1999 and carry
certain registration rights. The warrant holders also have certain rights to
participate in a private offering of Company securities and, under certain
circumstances in connection therewith, receive additional warrants to purchase
200,000 shares of Class A Common Stock at $2.85 (subject to adjustment). In
connection with a public offering of equity securities completed in January
1996, the Company has agreed to issue 25,000 shares of Class A Common Stock to
the Class C Warrantholders in exchange for their agreement to not sell the
shares underlying the Class C Warrants as well as such 25,000 shares before July
1, 1996 and deferral of their registration right relating to the shares
underlying the Class C Warrants.
In December 1994 the Company sold for $1,250,000 a total of $1,250,000
principal amount (including $500,000 to Marathon Investments, L.L.C. and
$500,000 to Fred Kassner) of 12% bridge notes payable in December 1995 (or
earlier completion of a public or private offering of securities) and five year
warrants to purchase a total of 625,000 shares (including 250,000 to Marathon
Investments, L.L.C. and 250,000 to Fred Kassner) of Class A Common Stock at
$2.85 (subject to adjustment) in a private placement. During July and August
1995, all of the holders of $1,250,000 principal amount of the 12% Notes
converted their 12% Notes (together with accrued interest), Class D Warrants to
purchase 625,000 shares of Class A Common Stock (at an exercise price of $2.85
per share) and an additional $166,667 in cash (including $100,000 from Marathon
Investments, L.L.P. and $66,667 from Fred Kassner) into 625,000 shares of Class
A Common Stock. Ms. Cynthia May, who has been elected to serrve on the Board of
Directors beginning in January 1996, is a beneficial owner and officer of
Marathon Investments, L.L.C. In November 1995, Ms May loaned to the Company
$100,000 under a 10% note which was paid in January 1996. In December 1995,
$75,000 of this amount was repaid and then reborrowed.
In December 1994, the Company entered into a sales, marketing and
distribution agreement with Beta Numerics, Inc. ("Beta"). Beta is a private
company, two founders and principal stockholders of which are Dr. Herbert
Moskowitz and Mr. Irwin Rosenthal, each of whom is a director and stockholder of
the Company. Further, Marathon Investments, L.L.P. and Fred Kassner also have
financial investments in Beta. Under the agreement, Beta was granted the
following rights: (i) an exclusive worldwide right to distribute the Company's
MAGNA-SL on a fee-for-service lease basis, (ii) a non-exclusive right to act as
an additional leasing source for customers preferring to lease rather purchase
the Company's scanners, (iii) an exclusive worldwide right to distribute the
MAGNA-SL in the veterinary market, (iv) an exclusive worldwide right to
distribute mobile versions of the MAGNA-SL which may be developed in the future
and (v) an exclusive right to distribute the MAGNA-SL in certain territories
other than the United States. The agreement, which has a term of ten years
(subject to renewal by Beta for an additional ten year period), is terminable by
the Company if Beta fails to place orders for a minimum of eight scanners in
year one, 16 scanners in year two and 24 scanners in each year thereafter. Under
the agreement, the purchase price to be paid is to be at a minimum discount of
15% from the then list price. The Company is required to offer Beta any better
pricing, or other terms, with respect to the same number of units, offered to
any other customer. Beta has agreed to fund up to $350,000 of expenses in
connection with the development of a mobile version of the MAGNA-SL, subject to
its right to terminate such funding if it determines that such development is
not advantageous. Although the Company anticipates that Beta will seek financing
sufficient to meet its minimum obligations under the agreement, there can be no
assurance that Beta will be successful in obtaining such financing or that these
minimum obligations will be met. The Company and Beta are in discussions
concerning an extension of the initial time frame necessary for Beta to purchase
its minimum obligations. Through May 20, 1996, Beta has paid the Company
approximately $1,075,000, representing payment on the first system delivered,
deposits on another six additional scanners and advance payments for development
of the mobile version. Four of the deposits received from Beta do not represent
orders, and there can be no assurance that such deposits will ultimately be
converted to orders. In February 1996, the Company returned $30,000 in deposits
to Beta at Beta's request and in April 1996, the Company returned an additional
$80,000 in deposits to Beta at Beta's request.
<PAGE>
The Company sublet approximately 950 square feet of space at its
Corporate Headquarters to a company of which Magar Inc. is a principal
shareholder and Irwin M. Rosenthal and Dr. Herbert Moskowitz are directors. The
sublease provided for a minimum annual rental commitment of approximately
$18,000 (excluding allocated real estate taxes, utilities and other costs)
through September 1997. During 1995, the sublease was terminated by the Company
after collection of a total of approximately $28,000 of rent and related costs.
Transactions between the Company and its Directors, officers and
principal shareholders have been approved by the disinterested directors of the
Company and determined to be on terms no less favorable than those available
from independent third parties.
RATIFICATION OF THE INDEPENDENT AUDITORS
Rothstein Kass & Co., P. C. has served as the Company's independent
accountants for the fiscal years' ended February 28, 1992 through 1996. The
Company has requested that a representative of Rothstein Kass & Company, P. C.
attend the Annual Meeting. Such representative will have the opportunity to make
a statement, if he or she desires, and will be available to respond to
appropriate questions of shareholders.
The Board of Directors of the Company recommends a vote FOR the
ratification of Rothstein Kass & Company, P. C. as the independent auditors for
the Company.
OTHER MATTERS
The Board of Directors is not aware of any matters not set forth herein
that may come before the meeting. If, however, further business properly comes
before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their judgment.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for
shareholder action at annual meetings in accordance with regulations adopted by
the Securities and Exchange Commission. To be considered for inclusion in the
proxy statement and form of proxy relating to the 1997 annual meeting, such
proposals must be received by the Company not later than March 6, 1997.
Proposals should be directed to the attention of the Secretary of the Company.
ANNUAL REPORT ON FORM 10-KSB
The Company will furnish without charge to each person whose proxy is
being solicited, upon the written request of such person, a copy of the
Company's annual report on Form 10-KSB for the fiscal year ended February 29,
1996, including the financial statements, but excluding exhibits. Request for
copies of such report should be directed to the Company, Attention: Investor
Relations.
By order of the Board of Directors,
Lawrence A. Minkoff, Ph.D.
Chairman of the Board
Dated: June 28, 1996
<PAGE>
MAGNA-LAB INC. PROXY
Annual Meeting of Shareholders
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Lawrence A. Minkoff, Ph.D., and Joel M.
Stutman, Ph.D., and each of them (with full power to act without the other), as
proxies with full power of substitution, to represent the undersigned at the
Annual Meeting of Shareholders to be held at the Hofstra University Club,
Hempstead, New York 11550 on July 24, 1996 at 2:00 p.m. local time, and at any
adjournment thereof, and to vote the shares of common stock the undersigned
would be entitled to vote if personally present, as indicated below.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
Lawrence A. Minkoff, Ph.D., Joel M. Stutman, Ph.D., Cynthia R. May, Dr. Herbert
Moskowitz, Irwin M. Rosenthal
(INSTRUCTION: To withhold authority for any individual nominee, print that
nominee's name on the line provided below.)
2. To ratify the appointment of Rothstein Kass & Company, P.C. as the
independent auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon matters incident
to the conduct of the meeting and such matters as may come up before the meeting
which the Board of Directors did not know a reasonable time before the mailing
of this proxy are to be presented at the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
1
<PAGE>
If properly executed and returned, the shares of common stock
represented by this proxy will be voted and if a choice is specified in the
above boxes, the shares will be voted in accordance with the specifications so
made. If no contrary instruction is given, the shares will be voted FOR the
Proposed Amendment. On any other matters incident to the conduct of the meeting
or that may come before the meeting (and which the Board of Directors did not
know a reasonable time before the mailing of this proxy are to be presented at
the meeting), the proxy will be voted in the discretion of the above named
persons.
Please mark, sign, date and return this proxy promptly using the enclosed
envelope.
Date _________________________________, 1996
Signature __________________________________
Signature if held jointly___________________
(Please date, sign as name appears at the
left, and return promptly. If the shares are
registered in the names of two or more
persons, each should sign. When signing as
Corporate Officer, Partner, Executor,
Administrator, Trustee or Guardian, please
give full title. Please note any changes in
your address alongside the address as it
appears in the proxy.)
