<PAGE> 1
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
AMERICAN BIO MEDICA CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
--------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
--------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.
--------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------
<PAGE> 2
AMERICAN BIO MEDICA CORPORATION
122 SMITH ROAD
KINDERHOOK, NEW YORK 12106
800-227-1243
August __, 1999
Dear Fellow Shareholder:
The Fiscal 2000 Annual Shareholders' Meeting of American Bio Medica
Corporation will be held at 10:00 a.m. on Wednesday, September 22, 1999, at the
Company's Corporate Headquarters located at 122 Smith Road, Kinderhook, New York
(the "Annual Meeting"). Enclosed you will find a Notice of Annual Meeting, Proxy
Statement and proxy, detailing the matters which will be acted upon. Directors
and executive officers of the Company will be present to help host the Annual
Meeting and to respond to any questions from our shareholders. I hope you will
be able to attend.
Please sign, date and return the enclosed proxy without delay in the
enclosed envelope. If you attend the Annual Meeting, you may vote in person even
if you have previously mailed a proxy by withdrawing your proxy at the Annual
Meeting. Any shareholder giving a proxy may revoke such proxy at any time prior
to the voting of such proxy by giving written notice of revocation to the
Secretary of the Company, by submitting a later dated proxy or by attending the
Annual Meeting and voting in person. The Company's Annual Report on Form 10-KSB
(including audited financial statements) for the fiscal year ended April 30,
1999 accompanies this Proxy Statement. The Annual Report is not a part of the
proxy soliciting material. All shares represented by proxies will be voted at
the Annual Meeting in accordance with the specifications marked thereon, or if
no specifications are made, (a) as to Proposal 1, the proxy confers authority to
vote for all of the six persons listed as nominees for the Board of Directors;
(b) as to Proposal 2, the proxy confers authority to vote "For" the approval of
the issuance of common shares of the Company in connection with the conversion
of outstanding preferred stock and exercise of outstanding warrants issued in a
private financing transaction; (c) as to Proposal 3, the proxy confers authority
to vote "For" the approval of the adoption by the Board of Directors of the
Fiscal 2000 Non-Qualified Stock Option Plan; and (d) as to any other business
which comes before the Annual Meeting, the proxy confers upon the proxy holders
authority to vote in their discretion in the best interests of the Company.
The Company's Board of Directors believes that a favorable vote for
each nominee for the Board of Directors and a favorable vote for Proposals 2 and
3 are in the best interests of the Company and its shareholders and unanimously
recommends a vote "FOR" all nominees and for Proposals 2 and 3. Accordingly, we
urge you to review the accompanying material carefully and to return the
enclosed proxy promptly.
<PAGE> 3
Thank you for your investment and continued interest in American Bio
Medica Corporation.
Sincerely,
/s/ Stan Cipkowski
-----------------------------------
Stan Cipkowski,
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE> 4
NOTICE OF FISCAL 2000
ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF AMERICAN BIO MEDICA CORPORATION:
NOTICE is hereby given that the Fiscal 2000 Annual Meeting of
Shareholders (the "Annual Meeting") of American Bio Medica Corporation (the
"Company") will be held at 10:00 A.M. on Wednesday, September 22, 1999 at the
Company's Corporate Headquarters located at 122 Smith Road, Kinderhook, New
York, for the following purposes:
1. To elect six directors to serve for the Fiscal 2001 Annual
Meeting and until their successors are elected;
2. To approve the issuance of common shares in connection with
the conversion and exercise of outstanding preferred stock and
warrants issued in a private financing transaction.
3. To approve the adoption by the Board of Directors of the
Fiscal 2000 Stock Option Plan; and
4. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on August 2, 1999
are entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete statement regarding matters proposed to be acted upon
at the Annual Meeting.
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT IN THE RETURN
ENVELOPE PROVIDED. YOUR PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS EXERCISE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Edmund Jaskiewicz
-----------------------------------------
Edmund Jaskiewicz,
Secretary to the Board of Directors
August ____, 1999
<PAGE> 5
PROXY STATEMENT
FOR
FISCAL 2000 ANNUAL MEETING OF SHAREHOLDERS
AMERICAN BIO MEDICA CORPORATION
122 SMITH ROAD
KINDERHOOK, NEW YORK 12106
Solicitation of the enclosed proxy is made by and on behalf of the
Board of Directors (the "Board of Directors") of American Bio Medica Corporation
(the "Company") to be used at the Fiscal 2000 Annual Meeting of Shareholders
(the "Annual Meeting") to be held at 10:00 A.M. on Wednesday, September 22,
1999, at the Company's Corporate Headquarters located at 122 Smith Road,
Kinderhook, New York and at any adjournments thereof. The Company intends to
mail this Proxy Statement and the accompanying proxy on or about August __,
1999.
All properly executed proxies delivered pursuant to this solicitation
will be voted at the Annual Meeting in accordance with any instructions
thereupon. Any person signing and mailing the enclosed proxy may, nevertheless,
revoke the proxy at any time prior to the actual voting thereof by attending the
Annual Meeting and voting in person, by providing written notice of revocation
of the proxy or by submitting a signed proxy bearing a later date. Any written
notice of revocation should be sent to the attention of the Secretary of the
Board of Directors at the Company's address.
A copy of the Company's Annual Report on Form 10-KSB (including audited
financial statements) for the fiscal year ended April 30, 1999 is enclosed with
these materials, but should not be considered proxy solicitation material.
Shareholder nominations for directors and shareholder proposals for the
Fiscal 2001 Annual Meeting should be sent to the Company in writing on or before
June 30, 2000. The Company has received no shareholder nominations or proposals
for the Annual Meeting.
The Company has fixed the close of business on August 2, 1999 as the
record date for determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting or any adjournments thereof. As of the record date, the
Company had one class of voting shares outstanding - common shares, $.01 par
value per share ("Common Shares"). As of August 2, 1999, there were 14,875,190
outstanding Common Shares. Each Common Share is entitled to one vote on each
matter to be voted on at the Annual Meeting. The holders of a majority of Common
Shares entitled to vote and represented in person or by proxy at the Annual
Meeting will constitute a quorum for the transaction of business at the Annual
Meeting. In general, Common Shares represented by a properly signed and returned
proxy will be counted as Common Shares present and entitled to vote at the
Annual Meeting for purposes of determining a quorum, without regard to whether
the proxy reflects abstentions (or is left blank) or reflects a "broker
non-vote" on a matter (i.e., a proxy returned by a broker because voting
instructions have not been received and the broker has no discretionary
authority to vote). Holders of Common Shares are not entitled to cumulative
voting rights.
<PAGE> 6
Except for Proposal 1, each proposal in this Proxy Statement will be
approved if it receives a majority of the votes present, either in person or by
proxy, at the Annual Meeting. Proposal 1, the election of directors, is somewhat
different: the six nominees who receive the most votes will be elected to the
six available memberships on the Board. If you return a signed proxy form or
attend the Annual Meeting but choose to abstain from voting on any proposal, you
will be considered present at the Annual Meeting and not voting in favor of the
proposal. Since most proposals pass only if they receive favorable votes from a
majority of votes present at the Annual Meeting, the fact that you are
abstaining and not voting in favor of a proposal will have the same effect as if
you had voted against the proposal. (In contrast, a "broker non-vote," where a
broker withholds authority to cast a vote as to a certain proposal, is deemed
not present at the Annual Meeting with regard to that proposal.)
SOLICITATION OF PROXIES
The cost of the soliciting of proxies on behalf of the Board of
Directors will be borne by the Company. In addition to the use of the mails,
proxies may be solicited by the directors, officers and employees of the
Company, without additional compensation, by telephone, other electronic means
or in person. Arrangements may also be made with brokerage firms or other
custodians, nominees or fiduciaries for the forwarding of soliciting material to
the beneficial owners of Common Shares of the Company held of record by such
persons; and the Company will reimburse such respective brokers, custodians,
nominees and fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection therewith. ADP has been retained to assist in soliciting
proxies at a fee of $4,600 plus distribution costs and other costs and expenses.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
As of August 2, 1999, there were 14,875,190 Common Shares outstanding
and entitled to vote at the Annual Meeting. Each Common Share is entitled to one
vote on each of the matters to be voted on at the Annual Meeting. The following
table sets forth, as of August 2, 1999, the beneficial ownership of the
Company's Common Shares by (i) each nominee for director, (ii) each of the
executive officers named in the Summary Compensation Table; (iii) all directors
and executive officers of the Company as a group; and (iv) each shareholder,
known to management of the Company, to beneficially own more than five percent
of the outstanding Common Shares.
2
<PAGE> 7
<TABLE>
<CAPTION>
Number of
Beneficial Owner Common Shares Percent of Total
---------------- ------------- ----------------
<S> <C> <C>
Stan Cipkowski 2,817,500 (1) 18.5%
122 Smith Road
Kinderhook, New York 12106
Edmund Jaskiewicz 2,159,155 (2) 14.4%
1730 M Street, NW
Washington, DC 20036
Jay Bendis 749,999 (3) 4.9%
John F. Murray 130,000 (4) *
Karen Russo 21,250 (5) *
Gerald Moore 10,000 (6) *
Douglas Casterlin 262,500 (7) 1.7%
Directors and executive officers as a group
(7 persons) 6,140,404 (8) 38.7%
</TABLE>
- -------------------------------------
* Less than one percent (1%).
(1) Includes 338,500 Common Shares subject to stock options exercisable
within 60 days of August 2, 1999.
(2) Includes 151,500 Common Shares subject to stock options exercisable
within 60 days of August 2, 1999.
(3) Includes 194,000 Common Shares subject to stock options exercisable
within 60 days of August 2, 1999.
(4) Includes 130,000 Common Shares subject to stock options exercisable
within 60 days of August 2, 1999.
(5) Includes 20,000 Common Shares subject to stock options exercisable
within 60 days of August 2, 1999.
(6) Includes 10,000 Common Shares subject to stock options exercisable
within 60 days of August 2, 1999.
(7) Includes 150,000 Common Shares subject to stock options exercisable
within 60 days of August 2, 1999.
(8) Includes an aggregate of 994,000 Common Shares subject to stock options
exercisable within 60 days of August 2, 1999.
3
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
------------------- -----------------------------
Restricted Securities All Other
Name and Principal Position Year Salary Bonus Stock Awards Underlying Options Compensation
- --------------------------- ---- ------ ----- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Stan Cipkowski 1999 $ 96,000 $ 64,992 $ 0 0 $ 0
Chairman and Chief 1998 97,231 23,080 0 0 0
Executive Officer 1997 99,068 0 0 550,000 5,232
0
Jay Bendis 1999 84,000 64,992 0 0 0
Vice-President Sales 1998 85,077 23,080 2,356,000 0 0
and Marketing
Douglas Casterlin 1999 84,000 54,992 0 0 0
Vice-President Operations 1998 73,807 11,540 540,000 0 0
</TABLE>
AGGREGATED OPTIONS EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money Options at
Options at Fiscal Year-End Fiscal Year-End
-------------------------- ---------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stan Cipkowski 0 0 338,500 0 $ 0 $ 0
Jay Bendis 0 0 174,000 0 0 0
Douglas Casterlin 0 0 150,000 0 0 0
</TABLE>
COMPENSATION OF DIRECTORS
Directors who are not employees or officers of the Company ("Outside
Directors") are awarded 10,000 options at the time of election. Outside
Directors receive a fee of $1,000 for attending meetings of the Board, and are
reimbursed for out-of-pocket expenses incurred in attending such meetings.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers and key managers
("executives") is reviewed and approved annually by the Board of Directors. The
Board
4
<PAGE> 9
of Directors has established a Compensation/Option Committee. In addition to
reviewing and approving executives' salaries and bonus arrangements, the Board
of Directors establishes policies and guidelines for other benefits and
administers the awards of stock options pursuant to the Company's stock option
plans.
COMPENSATION POLICIES AND PROCEDURES
APPLICABLE TO EXECUTIVES FOR FISCAL 1999
General. Compensation of the Company's executives is intended to
attract, retain and reward persons who are essential to the corporate
enterprise. The fundamental policy of the Company's executive compensation
program is to offer competitive compensation to executives that appropriately
rewards the individual executive's contribution to corporate performance. The
Board of Directors utilizes subjective criteria for evaluation of individual
performance and relies substantially on the executives in doing so. The Board
focuses on two primary components of the Company's executive compensation
program, each of which is intended to reflect individual and corporate
performance: base salary compensation and long-term incentive compensation. The
Company also paid cash incentive bonuses during fiscal 1999.
Base Salary Compensation. Executives' base salaries are determined
primarily by reference to compensation packages for similarly situated
executives of companies of similar size or in comparable lines of business with
which the Company expects to compete for executive talent and with reference to
the revenues, gross profits and other financial criteria of the Company. The
Board also assesses subjective qualitative factors to discern a particular
executive's relative value to the corporate enterprise in establishing base
salaries. The salaries of the two named executive officers other than the
Chairman and Chief Executive Officer have been determined by employment
agreements. The Board intends to award year-end bonuses to executives, pursuant
to their employment contracts, based on the net sales of drug test kits by the
Company. Bonuses were awarded to executives in fiscal 1999.
Long-Term Incentive Compensation. It is the Board's philosophy that
significant stock ownership by management creates a powerful incentive for
executives to build long-term shareholder value. Accordingly, the Board believes
that an integral component of executive compensation is the award of
equity-based compensation, which is intended to align executives' long-term
interests with those of the Company's shareholders. Awards of stock options to
executives have historically been at then-current market prices. The Board
believes that option grants should be considered on an annual basis.
The Company's Fiscal 1998 Nonstatutory Stock Option Plan (the "Fiscal
1998 Plan") authorizes the Board or the Compensation/Option Committee to grant
nonstatutory stock options to employees of the Company. The Committee will
determine the prices and terms at which such options are granted. The Committee
uses stock options as a significant element of the compensation package of
executives, because it believes options provide an incentive to executives to
maximize stockholder value and because they compensate executives only to the
extent that the Company's shareholders receive a return on their investment. In
determining the total number of
5
<PAGE> 10
Common Shares to be covered by option grants to executives in a given year, the
Committee will take into account the number of outstanding Common Shares, the
number of Common Shares reserved for issuance under the Company's stock option
plans, recommendations of management concerning option grants to employees below
executive level, and the Company's projected hiring needs for the coming year.
In making individual stock option grants to executives, the Committee will
consider the same factors considered in the determination of base salary levels,
as well as the stock and option holdings of each executive and the remaining
vesting schedule of such executive's options.
Compensation of the CEO. In reviewing and approving Mr. Cipkowski's
fiscal 1999 compensation, the Board of Directors considered the same criteria
detailed herein with respect to executives in general. Mr. Cipkowski's base
salary for fiscal 1999 was established in his employment agreement at $96,000
which is below the midpoint of base compensation for CEOs of comparable
companies. This amount represented a 1.3% decrease over the base salary received
by Mr. Cipkowski in fiscal 1998. The bonus paid to Mr. Cipkowski in fiscal 1999
was also established in his employment agreement at 1% of net sales of drug test
kits.
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee. This Committee makes recommendations to the Board of
Directors with respect to the Company's financial statements and the appointment
of independent auditors, reviews significant audit and accounting policies and
practices, meets with the Company's independent public accountants concerning,
among other things, the scope of audits and reports, and reviews the performance
of the overall accounting and financial controls of the Company. Members of the
Audit Committee are John Murray, Gerald Moore and Karen Russo.
Compensation/Option Committee. This committee makes recommendations to
the Board of Directors relating to salaries, bonuses and other compensation and
benefits of executive officers, reviews and advises management regarding
benefits and other terms and conditions of compensation of management and
administers the Company's stock option plans. Members of the Compensation/Option
Committee are Stan Cipkowski, Gerald Moore and Karen Russo.
The Board of Directors does not have a standing nominating committee.
Nominations for election to the Board of Directors may be made by the Board of
Directors, or by any shareholder entitled to vote for the election of directors.
Nominations made by shareholders must be made by written notice received by the
Secretary of the Company by June 30 of the year preceding the annual meeting or
within ten days of the date on which notice of a special meeting for the
selection of directors is first given to shareholders.
Special meetings are held from time to time to consider matters for
which approval of the Board of Directors is desirable or is required by law.
Four meetings of the Board of Directors were held during fiscal 1999. The Audit
and Compensation/Option Committees met and the Compensation/Option Committee met
four times each.
6
<PAGE> 11
PERFORMANCE GRAPH
The following graph compares the cumulative total return for the
periods indicated for each of (a) the Company Common Shares, (b) the Standard &
Poors 500 Stock Index (the "S&P 500") and (c) the NASDAQ Medical Device Index.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/26/96 12/26/97 12/28/98 4/30/99
-------- -------- -------- -------
<S> <C> <C> <C> <C>
S&P 500 $100.00 $126.28 $168.11 $187.76
Nasdaq Medical Device Index $100.00 $112.70 $124.73 $148.74
American Bio Medica Corporation $100.00 $135.45 $ 59.68 $ 48.38
</TABLE>
(1) The Amex-Biotech Index was used in the performance graph included in the
Proxy Statement for the Fiscal 1999 Annual Meeting of Shareholders. The
Company believes that because its Common Shares are traded in the Nasdaq
Small Cap Market, the Nasdaq Medical Device Index provides a more
comparable indication of cumulative total return. Because the Amex-Biotech
Index is no longer published, it is not possible to compare the Company's
cumulative total return with the Amex-Biotech Index.
(2) Registration of the Company's Common Shares under Section 12 of the
Securities Exchange Act of 1934 (the "1934 Act") became effective on
December 26, 1996.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Directors elected at the Annual Meeting will serve until the next
Annual Meeting of Shareholders and until their successors are elected and
qualified. The
7
<PAGE> 12
Board of Directors of the Company has nominated Stan Cipkowski, Edmund
Jaskiewicz, Jay Bendis, John F. Murray, Karen Russo and Gerald Moore.
STAN CIPKOWSKI (51) founded the predecessor of the Company in 1982 and
has been an executive officer and Director of the Company since its
incorporation in April 1986. From 1982 to 1986, he was sole proprietor of
American Micro Media, the predecessor, which was acquired by the Company. In
addition, from 1983 to 1987, Mr. Cipkowski was a general partner of Florida
Micro Media, a Fort Lauderdale-based marketer of educational software and was a
principal shareholder and Chief Financial Officer of Southeast Communications
Group, Inc., a publisher of direct response media. In 1982, he became a
consultant to Dialogue Systems, Inc., a New York-based developer of training and
communications materials, where he served as Vice-President of Sales and
Marketing. From 1977 to 1982, he was employed by Prentice-Hall Publishing
Company, reaching the position of National Sales Manager. Prior to 1977 he was
employed as an accountant for the New Seabury Corporation and as Mid-West Area
Manager for the Howard Johnson Company.
EDMUND JASKIEWICZ (76) is a lawyer-engineer. He has practiced
international patent and corporate law as a sole practitioner since 1963 and
served as Chairman of the Board of Directors from 1992 until 1999. From 1953 to
1963, Mr. Jaskiewicz was associated with Toulmin and Toulmin, Esqs., Washington,
D.C. From 1960 to 1962, he resided in Frankfurt, Germany managing that firm's
local office. From 1952 to 1953 he was with the Patent Section of the Bureau of
Ordinance of the Department of the Navy working on patent infringement and
licensing matters. He received his J.D. in 1952 from George Washington
University Law School and his B.S. in Engineering from the University of
Connecticut in 1947.
JAY BENDIS (52) has been Vice-President of Sales and Marketing and a
Director of the Company since 1995. He was an independent consultant to
biomedical companies from 1990 to 1995, specializing in commercializing new
concept products in both domestic and international markets. From 1990 to 1992,
he was a principal of Scientific Imaging Instruments and served as
Vice-President of Sales and Marketing. From 1985 to 1990, Mr. Bendis served as
National Sales Manager of the Laser Corp., a division of Johnson & Johnson,
where he directed its national sales force and developed its marketing strategy
for integrating high power lasers into the hospital market. From 1979 to 1984,
he was the Eastern Area Sales and Marketing Manager for the IVAC Corp., a
division of Eli Lilly. Prior to 1979, Mr. Bendis held sales management positions
with Xerox Corporation and A.M. International. Mr. Bendis earned his B.A. in
Marketing/Management from Kent State University and is currently a member of the
Edison BioTechnology Center Advisory Council for the State of Ohio.
JOHN F. MURRAY (55) has served as Chief Financial Officer and a
Director of the Company since 1997. He was Chief Financial Officer of Federal
Supply, Inc., Pompano Beach, Florida from 1994 to 1997. From 1988 to 1994, Mr.
Murray served as Controller for Bio Therapeutics, Inc., Woodbridge, New Jersey.
He also was Controller of Shortline, a group of transportation companies, from
1982 to 1988 and, from 1974 to 1982, of Kleber Tire & Rubber Corp. Mr. Murray
was Director of Accounting of Accounting for Western Union Telegraph Company
from 1972 to 1974 and Senior Accountant for S.D. Leidesdorf & Co. (now Ernst &
Young) from 1969 to 1972. Mr. Murray received his B.B.A. in Accounting from the
Baruch School of the
8
<PAGE> 13
City University of New York in 1968 and became a Certified Public Accountant in
the State of New York in 1974.
KAREN RUSSO (38) has been a Director of the Company since 1997. She
works with leading consulting firms to deliver training programs to Fortune 1000
corporations. Topics include interpersonal and strategic selling, service
excellence, teamwork, and the prevention of workplace violence and sexual
harassment. From 1989 to 1995, Ms. Russo was an account executive with The Forum
Corporation, Los Angeles, California, responsible for business development and
client service. She served as an Assistant Vice President at Bankers Trust
Company from 1987 to 1989. Ms. Russo earned her M.B.A. from Columbia University
in 1987 and her B.A. from University of Maryland in 1981.
GERALD MOORE (61) has been a Director of the Company since May 1999
when he was appointed to fill a vacancy when Jasper R. Clay Jr. resigned due to
a conflict of interest with a new government position he attained. Gerald Moore
currently serves as President and CEO of Med-Ox Diagnostics of Canada. Mr. Moore
was President of UNIPATH (North America) from 1990 to 1998 when he reached
parent-company Unilever's mandatory retirement age. Brooke Bond, Inc. took a
majority equity position in MED-OX in 1978 and renamed it Oxoid. In 1980, Mr.
Moore opened Oxoid US in Columbus, MD and was appointed President and Chief
Executive Officer of both Oxoid CANADA and Oxoid USA. Unilever acquired all of
Oxoid International's holdings and subsidiaries in 1984 and changed its name to
UNIPATH in 1990. Mr. Moore is a member of the Board of Directors of the Canadian
Assoc. of Clinical Microbiology and Infectious Diseases (CACMID), a Director of
the Canadian Clinical Standards Organization, a member of the National Committee
for Clinical Laboratory Standards (NCCLS), a member of the NCCLS Committee for
Antimicrobial Susceptibility testing and Veterinary Diagnostics, an advisor to
the NCCLS Committee on Culture Media, and a liaison to the Board of Exhibitors
of the Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC)
of the American Society of Microbiology. Mr. Moore received his degree in
chemistry and mathematics from Strathclyde University in Glascow, Scotland in
1961.
It is the intention of the persons named as proxies in the accompanying
proxy, unless instructed otherwise, to vote for the persons nominated by the
Board of Directors. If any nominee should become unavailable to serve, the proxy
may be voted for the election of such substitute nominee as may be designated by
the Board of Directors. The Board of Directors has no reason to believe that any
of the nominees will be unable to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR
THE BOARD OF DIRECTORS.
9
<PAGE> 14
PROPOSAL 2
APPROVAL OF ISSUANCE OF COMMON
SHARES WITH THE CONVERSION AND EXERCISE OF
OUTSTANDING PREFERRED STOCK AND WARRANTS
ISSUED IN A PRIVATE FINANCING TRANSACTION
The Company is seeking approval from the shareholders of the issuance
of Common Shares issuable upon (i) conversion of an aggregate of 2,500 shares of
the Company's Series D Convertible Preferred Stock ("Series D Stock") sold in a
private transaction on April 27, 1998, and (ii) exercise of warrants (the
"Warrants") issued in connection with this transaction to purchase 107,335
Common Shares of the Company. Such approval would have the effect of removing
certain limitations under rules of the National Association of Securities
Dealers, Inc. (the "NASD"), which would limit the conversion rights of the
holders of the Series D Stock and exercise rights of the holders of the Warrants
to converting only such number of shares of Series D Stock and exercising such
Warrants as would collectively cause 2,745,000 shares of Common Stock to be
issued. The terms of the private transaction in which the Company sold the
Series D Stock require the Company to seek this approval and provide that if
this approval is not obtained on or before September 30, 1999 then, under
certain conditions, the Series D Stock will become redeemable at the option of
the holders.
BACKGROUND
On April 27, 1998 the Company raised $2,500,000 in a private financing
by selling 2,500 shares of Series D Stock and Warrants to purchase 100,000
Common Shares of the Company to CC Investments, LDC, an institutional investor
(the "Investor"), for an aggregate purchase price of $2,500,000. The Company
issued to the placement agent in the transaction a Warrant to purchase 7,335
Common Shares of the Company. The Warrants issued to the Investor and the
placement agent have an exercise price of $4.81 per share.
TERMS OF THE SERIES D STOCK AND WARRANTS
Series D Stock
The Company issued 2,500 shares of Series D Stock, of which 1,093
shares of Series D Stock have been converted into 599,201 Common Shares and
1,407 shares of Series D Stock are outstanding and are convertible into Common
Shares as of July 15, 1999. The Company has issued an additional 158 shares of
Series D Stock in payment of dividends on the Series D Stock since April 27,
1998. Each share of Series D Stock is convertible into a number of Common Shares
equal to $1,000 divided by a conversion price which is the lesser of (a) 95% of
the "Market Price" (the average of the closing bid prices of the Common Shares
over any three trading days, selected by the holder of the Series D Stock in the
20 trading days immediately preceding the date of conversion) or (b) $4.625.
Under the applicable conversion formulas of the Series D Stock, the number of
Common Shares issuable upon conversion is inversely proportional to the market
price of the Common Shares at the time of conversion (i.e.,
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<PAGE> 15
the number of shares increases as the market price of the Common Shares
decreases); and except with respect to certain redemption rights of the Company
for the Series D Stock and the limitation under Nasdaq SmallCap regulations
which limit the aggregate amount of Common Shares which the Company may issue at
a discount from market price upon conversion of the Series D Stock and Warrants
without shareholder approval, there is no cap on the number of shares of Common
Shares which may be issued. In addition, the number of Common Shares issuable
upon the conversion of the Series D Stock and the exercise of Warrants is
subject to adjustment upon the occurrence of certain dilutive events.
The Series D Stock bears cumulative dividends at the rate of 8% of the
face amount of the outstanding shares of Series D Stock ($1,000 per share), has
a liquidation preference per share equal to $1,000 plus any other amounts that
may be due from the Company through the date of final distribution, and does not
have any voting privileges except as are required by law. The Series D Stock is
redeemable at the option of the holder at a premium in the event that a
"Redemption Event" occurs. A "Redemption Event" includes, but is not limited to:
(i) the Common Shares are suspended from trading on any of, or is not listed
(and authorized) for trading on any of, the Nasdaq National Market System, the
Nasdaq SmallCap Market, the American Stock Exchange, or the New York Stock
Exchange; (ii) failure by the Company of its obligation to remove any
restrictive legends on any certificate for any Common Shares issued to the
holders of Series D Stock or Warrants upon conversion of the Series D Stock or
Warrants; (iii) the Company's failure to deliver Common Shares upon conversion
of the Series D Stock when required; (iv) the breach by the Company of any
material covenant or other material term of its agreements governing the terms
of the Series D Stock and Warrants; (v) any representation or warranty of the
Company made in any agreement, statement or certificate given in writing in
connection with the issuance of the Series D Stock shall be false or misleading
in any material respect when made and the breach of which has had or could
reasonably be expected to have a material adverse effect; (vi) the Registration
Statement required to be filed by the Company with respect to the Common Shares
underlying the Series D Stock and Warrants has not been timely filed or declared
effective; (vii) the Company fails to increase the number of Common Shares
reserved for issuance upon conversion of the Series D Stock when required;
(viii) the Company fails to obtain shareholder approval of this Proposal 2 and
thereafter the holders of Series D Stock cannot convert all of their shares of
Series D Stock to Common Shares; or (ix) the Company fails to meet certain
continuing registration requirements.
The Company shall not, without first obtaining the approval of the
holders of the Series D Stock: (a) alter or change the rights, preferences or
privileges of the Series D Stock; (b) alter or change the rights, preferences or
privileges of any capital stock of the Company so as to affect adversely the
Series D Stock; (c) create any securities senior to or pari passu with the
Series D Stock; (d) increase the authorized number of shares of Series D Stock;
(e) redeem, or declare or pay any cash dividend or distribution on, any junior
securities; or (f) take certain actions which would result in any taxation with
respect to the Series D Stock.
Pursuant to the terms of the Series D Stock, no holder may convert the
Series D Stock it owns for any Common Shares that will cause it to own following
such conversion in excess of 4.9% of the Common Shares then outstanding. The
Series D
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<PAGE> 16
Stock is subject to further limitation on conversion as set forth under
"Shareholder Approval" below. The Series D Stock will automatically convert to
Common Shares if on or after March 17, 1999 the average closing bid price per
Common Share over any 20 consecutive trading days is equal to or greater than
$14.43 and certain conditions are met, including the approval of this Proposal
2.
Warrants
The warrants issued to the Investor and the placement agent are
exercisable for Common Shares at $4.81 per share. The Warrants are exercisable
through April 24, 2001, and provide antidilution protection in the event of the
issuance or deemed issuance of Common Shares at a price less than the fair
market value of the Common Shares subject to certain exceptions.
Pursuant to the terms of the Warrants, no holder may exercise the
Warrants it owns for any Common Shares that will cause it to own following such
exercise in excess of 4.9% of the Common Shares then outstanding. The Warrants
are subject to further limitation on exercise as set forth under "Shareholder
Approval" below.
The Warrants provide that the holder may effect a "cashless" exercise
of the Warrants. Upon effecting a cashless exercise, the Company would issue to
the holder of the Warrant, without receipt of payment of any kind, the number of
shares as would equal the number of shares as would have been issued upon full
exercise of the Warrant had the exercise price been paid in full, multiplied by
the fraction equal to (i) the difference between the exercise price and the fair
market value of the Common Shares on the date of the cashless exercise, divided
by (ii) the fair market value of the Common Shares on the date of the cashless
exercise.
GENERAL
Except with respect to certain redemption rights of the Company for the
Series D Stock and the limitation under Nasdaq regulations which limits the
aggregate amount of Common Shares which the Company may issue at a discount from
market price upon conversion of the Series D Stock and exercise of Warrants
without shareholder approval (which shareholder approval the Company is
requesting in this Proposal 2), there is no cap on the number of Common Shares
which may be issued. In addition, the number of shares of Common Stock issuable
upon the conversion of the Series D Stock and the exercise of Warrants is
subject to adjustment upon the occurrence of certain dilutive events.
In connection with the issuance of the Series D Stock and Warrants, the
Company granted to the purchasers thereof certain rights to have the Company
register for resale the Common Shares issuable upon conversion or exercise
thereof under the Securities Act of 1933, as amended. A Form S-3 Registration
Statement registering these Common Shares was filed with the Securities and
Exchange Commission and became effective on March 17, 1999.
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<PAGE> 17
SHAREHOLDER APPROVAL
The issuance of the Company's Common Shares upon conversion of the
Series D Stock and upon exercise of all the Warrants issued in excess of
2,745,000 shares is subject to shareholder approval pursuant to the Rules of the
Nasdaq SmallCap Market. Rule 4460(i)(1)(D) of the National Association of
Securities Dealers (the "20% Rule") sets forth designation criteria for
continued inclusion of the Common Stock on the Nasdaq SmallCap Market. The 20%
Rule requires companies that are listed on the Nasdaq SmallCap Market to obtain
shareholder approval prior, among other things, to issuing common stock (or
securities convertible into or exercisable for common stock) in a private
financing at a price less than the market value of the common stock, where the
amount of common stock to be issued exceeds 20% of the common stock or voting
power of the company outstanding prior to the issuance.
Because the conversion rate of the Series D Stock will vary based upon
the date of conversion, and may further vary with the trading price of the
Company's Common Shares, the number of shares of Common Shares issuable upon
conversion of all of the Series D Stock now outstanding, and upon exercise of
all of the Warrants now outstanding, may exceed 2,745,000 shares. Therefore, it
may be a condition to the conversion of all of the Series D Stock and sale and
issuance of the Common Shares upon exercise of the Warrants that the Company's
shareholders approve such issuance. On August 4, 1999, using a conversion price
of $1.3656 per share, assuming no limitations on the conversion of the Series D
Stock and exercise of the Warrants, the 1,565 shares of Series D Stock will be
convertible into approximately 1,146,016 shares of Common Shares, and the
Warrants will be exercisable for 107,355 Common Shares. Further, 599,201 Common
Shares have been issued with respect to the 1,093 shares of Series D Stock which
has been previously converted.
CONSEQUENCES OF NON-APPROVAL
In the event that the shareholders do not approve the issuance as they
are being requested to do in this Proposal 2 and the holders of the Series D
Stock and Warrants are not able to convert the Series D Stock and exercise the
Warrants as they desire resulting from this failure to approve Proposal 2, then
the holders of the Series D Stock will be entitled to demand redemption of the
Series D Stock at a premium.
In addition, in consideration for the Investor's agreement to purchase
the Series D Stock and Warrants, the Company agreed to use its best efforts to
obtain shareholder approval of the conversion and exercise of those securities.
Therefore, if Proposal 2 is not approved, that agreement could require the
Company to continue to seek shareholder approval of the conversion and exercise
of those securities, which could be expensive for the Company.
REASONS FOR THE FINANCINGS AND USE OF PROCEEDS
The Company entered into the private financing to raise capital for
marketing and product development as well as for working capital and other
general corporate purposes.
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<PAGE> 18
FURTHER INFORMATION
The terms of the Series D Stock and Warrants are complex and are only
briefly summarized in this Proxy Statement. Shareholders wishing further
information concerning the rights, preferences and terms of the Series D Stock
and Warrants are referred to the full description thereof contained in the
Company's Current Reports on Form 8-K and exhibits thereto filed with the
Securities and Exchange Commission on April 30, 1998 and June 4, 1999, which can
be inspected and copied at the public reference facility maintained by the
Securities and Exchange Commission located at 450 Fifth Street, NW, Washington,
DC. The Company's Current Reports on Form 8-K may also be viewed on the web site
maintained by the Securities and Exchange Commission at http://www.sec.gov. The
description of terms, preferences and rights of the Company and holders of
Series D Stock with respect to the outstanding Series D Stock and of the
Warrants contained herein is qualified in its entirety by reference to the
complete description of these preferences.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2.
PROPOSAL 3 - APPROVAL OF THE FISCAL 2000
NON-QUALIFIED STOCK OPTION PLAN
BACKGROUND
The Board of Directors wishes to provide for additional Common Shares
to be available for grants of options to directors, officers and employees of
the Company and consultants and other parties who make significant contributions
to the business and success of the Company. Therefore, on January 11, 1999, the
Board of Directors adopted, subject to stockholder approval, the American Bio
Medica Corporation Fiscal 2000 Non-Qualified Stock Option Plan ("Fiscal 2000
NQSO Plan") and reserved 1,000,000 Common Shares for issuance pursuant to stock
options.
SUMMARY OF THE FISCAL 2000 NQSO PLAN FEATURES
The following summary of the Fiscal 2000 NQSO Plan is qualified in its
entirety by reference to the text of the Fiscal 2000 NQSO Plan which is set
forth in Exhibit A to this Proxy Statement.
(1) The purpose of the Fiscal 2000 NQSO Plan is to provide an incentive to
selected individuals who contribute significantly to the business and
success of the Company.
(2) The Fiscal 2000 NQSO Plan will be administered by the Board of
Directors of the Company or the Compensation/Option Committee (the
Board of Directors or Compensation/Option Committee is referred to as
the "Committee" herein). The Committee shall have the power to select
the individuals to whom options will be granted, and will interpret the
provisions of the Fiscal 2000 NQSO Plan. Presently, two of the three
members of the Committee are "nonemployee
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<PAGE> 19
directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934.
(3) The number of Common Shares authorized for issuance under the Fiscal
2000 NQSO Plan is 1,000,000, subject to adjustment in the event of
stock splits, recapitalization or other similar events affecting the
Common Shares. Common Shares to be issued upon the exercise of options
may be original issue or treasury shares. Common Shares subject to
options which terminate without being exercised will again be available
for option grants.
(4) The Fiscal 2000 NQSO Plan will remain in effect until all options
granted under the Fiscal 2000 NQS Plan have been exercised or have
expired except that no options may be granted later than 10 years after
the effective date.
(5) The option price of each share purchasable under any option granted
under the Fiscal 2000 NQSO Plan shall be determined by the Committee
and may be more, equal to, or less than 100% of the current market
price thereof, at the time the option is granted. Approval of the Board
of Directors is required to grant an option with an option price of
less than 85% of the then current market price.
(6) Options may be granted under the Fiscal 2000 NQSO Plan for a period of
10 years from the date the Fiscal 2000 NQSO Plan is approved by the
shareholders, which date shall be the effective date. The term of each
option shall be determined by the Committee but shall not exceed 10
years. The period over which an option vests, if any, will be
determined by the Committee.
(7) The Committee will determine if outstanding options granted under the
Fiscal 2000 NQSO Plan that are not exercisable will become exercisable
upon a change of control of the Company.
(8) In the event the Common Shares are changed into or exchanged for a
different number or kind of shares or other securities of the Company
or another corporation by reason of merger, consolidation, exchange,
reorganization, recapitalization, reclassification, combination of
shares, stock split-ups, or stock dividends: (i) the number and kind of
shares subject to outstanding options granted under the Fiscal 2000
NQSO Plan shall be adjusted as may be appropriate; (ii) rights under
outstanding options both as to number of subject shares and option
price shall be adjusted as may be appropriate; (iii) where dissolution
or liquidation of the Company is involved, each outstanding option
granted under the Fiscal 2000 NQSO Plan shall terminate but the holder
of the option shall have the right prior to any such dissolution or
liquidation to exercise the option in full; and (iv) where merger,
consolidation or exchange of shares is involved, each holder of an
outstanding option granted under the Fiscal 2000 NQSO Plan shall be
entitled, upon exercise of the option, to receive such shares of stock
or other securities or consideration as the holders of Common Shares
received pursuant to the terms of the merger, consolidation or exchange
of shares.
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<PAGE> 20
(9) There are no federal income tax consequences to the optionee or the
Company by reason of the grant of a nonstatutory stock option. Upon
exercise of a nonstatutory stock option, the optionee normally will
recognize taxable ordinary income equal to the excess of the fair
market value of the Common Shares on the date of exercise over the
option exercise price. Generally, with respect to employees, the
Company is required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized. Subject to
the requirement of reasonableness and the provisions of Section 162(m)
of the Code, the Company generally will be entitled to a business
expense deduction equal to the taxable ordinary income realized by the
optionee. Upon disposition of the Common Shares, the optionee will
recognize a capital gain or loss equal to the difference between the
selling price and the sum of the amount paid for such Common Shares
plus any amount recognized as ordinary income upon exercise of the
option. Such gain or loss will be long or short-term depending on
whether the Common Shares were held for more than one year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 3.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the 1934 Act 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 ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors and greater than ten percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such forms furnished to the
Company during, and with respect to, fiscal 1999, the Company believes that
during fiscal 1999 all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were complied
with except that: (i) Stan Cipkowski filed a Form 5 for fiscal 1999 on a timely
basis reporting an aggregate of 14 transactions that should have been reported
on five separate reports that were inadvertently not filed; (ii) Edmund
Jaskiewicz filed a Form 5 for fiscal 1999 on a timely basis reporting an
aggregate of 11 transactions that should have been reported on six separate
reports that were inadvertently not filed; (iii) Jay Bendis filed a Form 5 for
fiscal 1999 on a timely basis reporting an aggregate of eight transactions that
should have been reported on four separate reports that were inadvertently not
filed; (iv) John F. Murray filed a Form 5 for fiscal 1999 late reporting an
aggregate of 17 transactions that should have been reported on 11 separate
reports that were inadvertently not filed; and (v) Stan Cipkowski, Edmund
Jaskiewicz, Jay Bendis, John F. Murray and Gerald Moore each inadvertently filed
a Form 3 (Initial Statement of Beneficial Ownership) late.
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<PAGE> 21
PROPOSALS OF SHAREHOLDERS
A proposal submitted by a shareholder in accordance with applicable
rules and regulations for presentation at the Company's Fiscal 2001 Annual
Meeting of Shareholders and received at the Company's executive offices no later
than June 30, 2000, will be included in the Company's Proxy Statement and form
of proxy relating to the Fiscal 2001 Annual Meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the Annual Meeting other than the matters set forth herein. Should any
other matter requiring a vote of shareholders arise, the proxies confer upon the
person or persons entitled to vote the shares represented by such proxies the
discretionary authority to vote the same in accordance with the proxy holders'
best judgment in the interest of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Edmund Jaskiewicz
----------------------------------------
Edmund Jaskiewicz,
Secretary to the Board of Directors
August ____, 1999
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<PAGE> 22
EXHIBIT A
AMERICAN BIO MEDICA CORPORATION
FISCAL 2000 NON-STATUTORY STOCK OPTION PLAN
1. PURPOSE
The purpose of the Fiscal 2000 Non-Statutory Stock Option Plan
(hereinafter referred to as the "Plan"), is to provide a special incentive to
selected individuals who have made significant contributions to the business and
success of AMERICAN BIO MEDICA CORPORATION (hereinafter referred to as tile
"Company"). The Plan is designed to accomplish this purpose by offering such
individuals options ("Options") to purchase the common shares of the Company
("Shares") so that they will share in the Company's success.
2. ADMINISTRATION
The Plan shall be administered by the board of directors of the Company
or by an option committee to be established by the board of directors of the
Company. If an option committee administers the Plan, it shall consist of three
or more members, at least one of whom shall be neither an officer nor an
employee of the Company. (The board of directors or an option committee shall be
referred to as the "Board" herein.)
The Board shall have authority, consistent with the Plan,
(a) to determine which individuals shall be granted Options;
(b) to determine the time or times when Options shall be granted
and the number of Shares to be subject to each Option;
(c) to determine the exercise price of the Shares subject to each
Option and the method of payment of such price;
(d) to determine the time or times when each Option becomes
exercisable and the duration of the exercise period, subject
to the limitations contained in Paragraph 6(b);
(e) to prescribe the form or forms of the instruments evidencing
any Options granted under the Plan and of any other
instruments required under the Plan and to change such forms
from time to time;
(f) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the Options and for its own
acts and proceedings; and
(g) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan. All
decisions, determinations and interpretations of the Board
shall be binding on all parties concerned.
<PAGE> 23
3. PARTICIPANTS
The participants in the Plan shall be employees, officers, directors,
consultants of the Company or any other parties who have made a significant
contribution to the business and success of the Company, as may be selected from
time to time by the Board in its discretion. In any grant of Options after the
initial grant, Participants who were previously granted Options or sold Shares
under the Plan may be included or excluded.
4. LIMITATIONS
No Option shall be granted under the Plan after September 22, 2009, but
Options theretofore granted may extend beyond that date. The Plan will remain in
effect until all Options granted under the Plan have been exercised or have
expired. Subject to adjustment as provided in Section 8 of the Plan, the number
of Shares which may be issued under the Plan shall not exceed one million
(1,000,000) in the aggregate. To the extent that any Option granted under the
Plan shall expire or terminate unexercised or for any reason become
unexercisable as to any Shares subject thereto, such Shares shall thereafter be
available for further grants under the Plan, within the limit specified above.
5. SHARES TO BE ISSUED
Shares to be issued under the Plan may constitute an original issue of
authorized Shares or may consist of previously issued Shares acquired by the
Company, as shall be determined by the Board. The Board and the proper officers
of the Company shall take any appropriate action required for such issuance. The
maximum number of Shares which may be issued under the Plan is one million
(1,000,000) Shares.
6. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall be subject to the following
terms and conditions (except as provided in Section 7) and to such other terms
and conditions as the Board shall determine to be appropriate to accomplish the
purposes of the Plan:
(a) Exercise price. The exercise price under each Option shall be
determined by the Board and may be more, equal to or less than
the then current market price of the Shares as the Board may
deem to be appropriate: provided, however, that in the event
an option committee shall determine to grant an Option at less
than 85% of the then current market price of the Shares, such
Option shall not be granted by the option committee without
the prior approval of the Board of Directors.
(b) Period of Options. The period of an Option shall be determined
by the Board but shall not exceed ten years from the date of
grant.
Fiscal 2000 Non-Statutory Stock Option Plan
<PAGE> 24
(c) Exercise of Options.
(i) Each Option shall be made exercisable at such time or
times, whether or not in installments, as the Board
shall prescribe at the time the Option is granted.
(ii) A person electing to exercise an Option shall give
written notice to the Company, as specified by the
Board, of his/her election and of the number of
Shares he/she has elected to purchase, such notice to
be accompanied by such instruments or documents as
may be required by the Board, and shall at the time
of such exercise tender the purchase price of the
Shares he/she has elected to purchase.
(d) Payment for Issuance of Shares. Upon exercise of any Option
granted hereunder, payment in full shall be made at the time
of such exercise for all such Shares then being purchased.
Payment may be made by any means acceptable to the Board
The Company shall not be obligated to issue any Shares unless
and until, in the opinion of the Company's counsel, all
applicable laws and regulations have been complied with, nor,
in the event the Shares at the time are not listed upon any
stock exchange, unless and until the, Shares to be issued have
been listed or authorized to be added to the list upon
official notice of issuance upon such exchange, nor unless or
until all other legal matters in connection with the issuance
and delivery of Shares have been approved by the Company's
counsel. Without limiting the generality of the foregoing, the
Company may require from the Participant such investment
representation or such agreement, if any, as counsel for the
Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that
the Participant agree that any sale of the Shares will be made
only in such manner as is permitted by the Board and that a
Participant will notify the Company when he/she intends to
make any disposition of the Shares whether by sale, gift or
otherwise. The Participant shall take any action reasonably
requested by the Company in such connection. A Participant
shall have the rights of a stockholder only as to Shares
actually acquired by him/her under the Plan.
(e) Transferability of Options. No Option may be transferred by
the Participant otherwise than by will or by the laws of
descent and distribution, and during the Participant's
lifetime the Option may be exercised only by the Participant
unless otherwise determined by the Board.
(f) Termination of Employment. If the Participant is an employee
and his/her employment terminates for any reason other than
his/her death, the Participant may, unless discharged for
cause, thereafter exercise his/her Option as provided below,
but only to the extent the
Fiscal 2000 Non-Statutory Stock Option Plan
<PAGE> 25
Participant was entitled to exercise the Option on the date
when his/her employment terminated. If such termination of
employment is voluntary on the part of the Participant, he/she
may exercise his/her Option only within ten days after the
date of termination of employment (unless a longer period not
in excess of three months is allowed by the Board). If such
termination of employment is involuntary on the part of the
Participant, he/she may exercise his/her Option only within
three months after the date of termination of employment. In
no event, however, may such Participant exercise his/her
Option at a time when the Option would not be exercisable had
the Participant remained an employee or when the termination
was for cause. For purposes of this subsection (f), a
Participant's employment shall not be considered terminated in
the case of sick leave or other bona fide leave of absence
approved by the Company or a subsidiary, or in the case of a
transfer to the employment of a subsidiary or to the
employment of the Company. Anything herein to the contrary
notwithstanding, an Option may be exercised only to the extent
exercisable on the date of termination of employment by death
or otherwise.
(g) Retirement or Resignation. If prior to the expiration date of
a Participant's Option a Participant shall retire or resign
with the Company's consent, such Option may be exercised in
the same manner as if the Participant had continued in the
Company's employ; provided, however, the Board may terminate,
at any time prior to exercise, all unexercised Options if it
shall determine that the retired or resigning Participant
Optionee has engaged in any activity detrimental to the
Company's interest.
(h) Death. If a Participant dies at a time when he/she is entitled
to exercise an Option, then at any time or times within one
(1) year after his/her death (or such further period as the
Board may allow) such Option may be exercised, as to all or
any of the Shares which the Participant was entitled to
purchase immediately prior to his/her death, by his/her
designated beneficiary or his/her executor or administrator or
the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, and
except as so exercised such Option shall expire at the end of
such period. In no event, however, may an Option be exercised
after the expiration of the Option period.
7. SUBSTITUTE OPTIONS
The Company may grant Options under the Plan on terms differing from
those provided for in Section 6 where such Options are granted in substitution
for Options held by employees of other corporations who concurrently become
employees of the Company or a subsidiary as the result of a merger,
consolidation or other reorganization of the employing corporation with the
Company or subsidiary, or the acquisition by the Company or a subsidiary of the
business, property or stock of the employing corporation. The Board may direct
that the substitute Options be granted on such terms and conditions as the Board
considers appropriate in the circumstances.
Fiscal 2000 Non-Statutory Stock Option Plan
<PAGE> 26
8. CHANGES IN STOCK
In the event of a stock dividend, stock split or recapitalization or
merger in which the Company is the surviving corporation, or other similar
capital change, the number and kind of Shares or securities of the Company to be
subject to the Plan and to Options then outstanding or to be granted thereunder,
the maximum number of Shares or securities which may be issued or sold under the
Plan, the exercise price and other relevant provisions shall be appropriately
adjusted by the Board, the determination of which shall be binding on all
persons.
In the event of a change of control of the Company as reasonably
determined by the Board, the Board will determine in its sole discretion whether
Options that are not exercisable prior to the date of the change of control will
become exercisable prior to such date.
9. EMPLOYMENT RIGHTS
The adoption of the Plan or the granting of an Option does not confer
upon any individual any right to employment or continued employment with the
Company or a subsidiary, as the case may be, nor does it interfere in any way
with the right of the Company or a subsidiary to terminate the employment of any
of its employees at any time.
10. AMENDMENT
The Board may at any time discontinue granting Options under the Plan.
The Board of the Company may at any time or times amend the Plan or amend any
outstanding Option or Options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law provided, however, that, except to the extent
required or permitted under Section 8, no such amendment shall void or diminish
Options previously granted without the consent of the Participant, nor shall any
amendment increase or accelerate the conditions and actions required for the
exercise of an Option unless the Participant shall have been discharged from the
Company's employment for cause.
Adopted by the Board of Directors
on _______, 1999
Fiscal 2000 Non-Statutory Stock Option Plan
<PAGE> 27
PROXY
FISCAL 2000 ANNUAL MEETING OF SHAREHOLDERS
AMERICAN BIO MEDICA CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE CORPORATION
The undersigned shareholder of American Bio Medica Corporation, having
received the Notice dated August ___, 1999, of the Fiscal 2000 Annual Meeting of
Shareholders, hereby nominates, constitutes, appoints and authorizes Stan
Cipkowski and Edmund Jaskiewicz, and each of them with full power to act alone,
as proxies with full power of substitution, for me and in my name, place and
stead, to vote all the Common Shares of said corporation standing in my name on
its books on August 2, 1999, at the Fiscal 2000 Annual Meeting of Shareholders
to be held at 10:00 A.M. on Wednesday, September 22, 1999 at the Company's
Corporate Headquarters located at 122 Smith Road, Kinderhook, New York or at any
adjournments thereof, with all the power the undersigned would possess if
personally present, as follows:
1. The election of the six (6) nominees listed in the Proxy Statement for
the Fiscal 2000 Annual Meeting as directors to serve until the Fiscal
2001 Annual Meeting and until their successors are elected.
IF YOU WISH YOUR VOTES TO BE CAST FOR ALL OF THE SIX (6) NOMINEES
LISTED BELOW, PLACE AN "X" IN THIS BOX [ ]
IF YOU DO NOT WISH TO VOTE FOR ALL OF THE NOMINEES, LINE OUT THE NAMES
OF PERSONS FOR WHOM YOU DO NOT CHOOSE TO VOTE:
DIRECTORS: Stan Cipkowski
Edmund Jaskiewicz
Jay Bendis
John F. Murray
Karen Russo
Gerald Moore
2. The issuance of common shares in connection with the conversion and
exercise of outstanding preferred stock and warrants issued in a
private financing transaction.
FOR / / AGAINST / / ABSTAIN / /
3. The adoption by the Board of Directors of the Fiscal 2000 Non-Qualified
Stock Option Plan; and
FOR / / AGAINST / / ABSTAIN / /
4. Upon such other business as may properly come before the Annual Meeting
or any adjournments thereof.
THIS PROXY CONFERS AUTHORITY TO VOTE FOR ALL OF THE SIX NOMINEES LISTED
EVEN THOUGH THE BLOCK IN ITEM 1 IS NOT MARKED UNLESS THE NAMES OF ONE OR MORE
PERSONS ARE LINED OUT. THIS PROXY WILL BE VOTED "FOR" PROPOSALS 2 AND 3 ABOVE
UNLESS "AGAINST" OR "ABSTAIN" IS INDICATED. IF ANY OTHER BUSINESS IS PRESENTED
AT THE ANNUAL MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT.
<PAGE> 28
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND THE
COST OF SAME IS BORNE BY THE CORPORATION. THIS PROXY MAY BE REVOKED BY WRITING
TO THE SECRETARY TO THE BOARD, AMERICAN BIO MEDICA CORPORATION, 122 SMITH ROAD,
KINDERHOOK, NEW YORK 12106 OR IN PERSON AT THE FISCAL 2000 ANNUAL MEETING OF
SHAREHOLDERS AT ANY TIME PRIOR TO ITS EXERCISE.
Date:
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Name:
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Beneficial Shareholder (Please Print)
Address:
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Signature(s)
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(All Shareholders must sign)
NUMBER OF SHAREHOLDERS VOTING _________________________
IF SHARES ARE NOT REGISTERED IN YOUR NAME, PLEASE GIVE THE NAME AND
ADDRESS OF THE PERSON OR ENTITY IN WHOSE NAME THEY ARE REGISTERED.
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(This must be completed if applicable)
Please date, fill in your complete name and address and sign above
exactly as your name or names appear hereon, and return this proxy promptly in
the enclosed envelope. When signing as attorney, executor, administrator,
trustee or guardian, please give full title. If there is more than one
fiduciary, all should sign. All joint owners must sign.
