<PAGE>
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
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(C) or (S)240.14a-12
------------------------------------------------
LABORATORY SPECIALISTS OF AMERICA, INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (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>
LABORATORY SPECIALISTS OF AMERICA, INC.
101 PARK AVENUE, SUITE 810
OKLAHOMA CITY, OKLAHOMA 73102
(405) 232-9800
Dear Stockholder:
The officers and directors of Laboratory Specialists of America, Inc.
cordially invite you to attend the Annual Meeting of Stockholders, Wednesday,
July 16, 1997, at 10:00 a.m., in the offices of Laboratory Specialists, Inc., at
1101 Neuton Street, Gretna, Louisiana.
Please review the important information enclosed with this Proxy. Your vote
counts, and you are strongly encouraged to exercise your right to vote your
shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
/s/ John Simonelli
John Simonelli
Chairman of the Board
and Chief Executive Officer
<PAGE>
LABORATORY SPECIALISTS OF AMERICA, INC.
101 PARK AVENUE, SUITE 810
OKLAHOMA CITY, OKLAHOMA 73102
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 16, 1997
The 1997 Annual Meeting of Stockholders (the "Annual Meeting") of
Laboratory Specialists of America, Inc., an Oklahoma corporation (the
"Company"), will be held on Wednesday, July 16, 1997, at 10:00 a.m., in the
offices of Laboratory Specialists, Inc., at 1101 Neuton Street, Gretna,
Louisiana, for the following purposes:
1. To elect six directors to the Board of Directors for a term expiring in
1998.
2. To approve the amendment and Restatement of the Laboratory Specialists
of America, Inc. 1974 Stock Option Plan to (a) make revisions to comply
with provisions of the recently adopted Section 16 rules (the "Rules")
under the Securities Exchange Act of 1934, as amended (the "1934 Act")
that do not require stockholder approval, and (b) remove the prohibition
on participation by non-employee directors.
3. To ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1997.
4. To transact such other business as may come before the meeting or any
adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on May 30, 1997, are entitled to notice of and to vote at the meeting.
All Stockholders are cordially invited to attend the meeting in person. To
assure your representation at the meeting, however, you are urged to mark, sign,
date and return the enclosed proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she previously has returned a proxy.
Sincerely,
John Simonelli
Secretary
Oklahoma City, Oklahoma
May 30, 1997
<PAGE>
LABORATORY SPECIALISTS OF AMERICA, INC.
101 PARK AVENUE, SUITE 810
OKLAHOMA CITY, OKLAHOMA 73102
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 16, 1997
VOTING AND OTHER MATTERS
GENERAL
The enclosed proxy is solicited on behalf of Laboratory Specialists of
America, Inc., an Oklahoma Corporation (the "Company"), by the Company's Board
of Directors for use at the Annual Meeting of Stockholders to be held in the
offices of Laboratory Specialists, Inc., at 1101 Neuton Street, Gretna,
Louisiana, on Wednesday, July 16, 1997 at 10:00 a.m., and at any adjournments
thereof, for the purposes set forth in this Proxy Statement and in the
accompanying Notice of Annual Meeting of Stockholders.
These proxy solicitation materials were first mailed on or about June 11,
1997, to all stockholders entitled to vote at the Meeting.
VOTING SECURITIES AND VOTING RIGHTS
Stockholders of record at the close of business on May 30, 1997 (the
"Record Date"), are entitled to notice of and to vote at the Meeting. On the
Record Date, there were issued and outstanding 3,313,405 of the Company's Common
Stock, $.001 par value per share (the "Common Stock"), of which 934,000 (28
percent) are held by the executive officers and directors of the Company.
The presence, in person or by proxy, of the holders of a majority of the
total number of shares of Common Stock outstanding constitutes a quorum for the
transaction of business at the Meeting. Each stockholder voting at the Meeting,
either in person or by proxy, may cast one vote per share of Common Stock held
on all matters to be voted on at the Meeting. Assuming that a quorum is present,
the affirmative vote of a majority of the shares of Common Stock of the Company
present in person or represented by proxy at the Meeting and entitled to vote is
required: (i) to elect six directors for terms expiring in 1998; (ii) to approve
the amendment and restatement of the Laboratory Specialists of America, Inc.
1974 Stock Option Plan to (a) make revisions to comply with provisions of the
recently adopted Section 16 rules (the "Rules") under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), that do not require stockholder
approval, and (b) remove the prohibition on participation by non-employee
directors; and (iii) to ratify the appointment of Arthur Andersen LLP as the
independent auditors of the Company for the fiscal year ending December 31,
1997.
Votes cast by proxy or in person at the Meeting will be tabulated by the
election inspector appointed for the Meeting and will determine whether a quorum
is present. The election inspectors will treat abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the shareholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
VOTING OF PROXIES
When a proxy is properly executed and returned, the shares it represents
will be voted at the Meeting as directed. If no specification is indicated, the
shares will be voted (i) "FOR" the election of the nominee as set forth in this
Proxy Statement, (ii) "FOR" the amendment and restatement of the Laboratory
Specialists of America, Inc. 1994 Stock Option Plan; and (iii) "FOR" the
ratification of the appointment of Arthur Andersen LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1997.
REVOCATION OF PROXIES
Any person giving a proxy may revoke the proxy at any time before its use
by delivering to the Company written notice of revocation or a duly executed
proxy bearing a later date or by attending the Meeting and voting in person.
<PAGE>
EXPENSES OF SOLICITATION
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock of the Company for their expenses
in forwarding proxy material to such beneficial owners. Solicitation of proxies
by mail may be supplemented by telephone, telegram, telex and personal
solicitation by the directors, officers or employees of the Company. No
additional compensation will be paid for such solicitation.
ANNUAL REPORT
The Company's 1997 Annual Report to Stockholders (the "Annual Report"),
which includes the Company's annual report on Form 10-KSB containing financial
and other information about the Company's activities for the fiscal year ended
December 31, 1996, is being mailed to stockholders with this Proxy Statement,
but is not incorporated into this Proxy Statement.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND OFFICERS
The following table sets forth certain information as to the beneficial
ownership of the Common Stock of the Company as of May 30, 1997, by (i) each
director, including each nominee for director, (ii) each executive officer named
in the Summary Compensation Table under the section entitled "EXECUTIVE
COMPENSATION," (iii) all current executive officers and directors of the Company
as a group, and (iv) each person known by the Company to be the beneficial owner
of more than five percent of the Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------
SHARES PERCENT OF
BENEFICIALLY SHARE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OWNERSHIP
- ------------------------------------- ------------ -----------
<S> <C> <C>
Arthur R. Peterson, Jr.(1) ....................................... 490,000 14.8%
113 Jarrell Drive
Belle, Chasse, Louisiana 70037
Joan Peterson..................................................... 490,000 14.8%
3712 Fran Street
Metairie, Louisiana
John Simonelli(1)................................................. 200,000 6.0%
101 Park Avenue, Suite 810
Oklahoma City, Oklahoma 73102
Larry E. Howell(1)................................................ 200,000 6.0%
101 Park Avenue, Suite 810
Oklahoma City, Oklahoma 73102
Robert A. Gardebled, Jr.(1)....................................... 25,000 .8%
Jerome P. Welch(2)................................................ 19,000 .6%
Michael E. Dunn(2)................................................ -- -- %
Harry Gray Browne, M.D.(2)........................................ -- -- %
Executive Officers and Directors as a group (seven persons)....... 934,000 28.2%
</TABLE>
(1) The number and percent of shares do not include options for the purchase of
10,000 shares which were re-granted on March 28, 1997, in replacement of
previously granted options that were then exercisable.
(2) The number and percent of shares do not include options for the purchase of
5,000 shares which were re-granted on March 28, 1997, in replacement of
previously granted options that were then exercisable.
PROPOSAL TO ELECT DIRECTORS
NOMINEES
The Company's Certificate of Incorporation provides that the number of
directors shall be fixed from time to time by resolution of the Board of
Directors or stockholders. Currently, the number of directors is fixed at
seven. The Board of Directors has nominated each of John Simonelli, Larry E.
Howell, Arthur R. Peterson, Jr., Robert A. Gardebled, Jr., Jerome P. Welch, and
Michael E. Dunn (collectively the "nominees") for re-election as a director for
a term expiring in 1998 or until his successor is elected and qualified. Upon
re-election of the directors, the number of directors will be fixed at six. The
Board of Directors, as with any vacancy, may fill any vacancy by a vote of a
majority of the directors then in office.
-2-
<PAGE>
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the nominees. In the event that any of the nominees is
unable or declines to serve as a director at the time of the Meeting, the
proxies will be voted for a nominee, if any, designated by the current Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director.
The Board of Directors recommends a vote "FOR" each of the nominees named
herein.
The following table sets forth information regarding the directors and
nominees for directors of the Company:
<TABLE>
<CAPTION>
TERM
NAME AGE POSITION EXPIRES
- ---- --- -------- -------
<S> <C> <C> <C>
John Simonelli.............. 50 Chairman of the Board, Chief 1997
Executive Officer, Secretary, Director
Larry E. Howell............. 50 President, Chief Executive Officer 1997
Director
Arthur R. Peterson, Jr...... 51 Treasurer, Directors 1997
Robert A. Gardebled, Jr..... 32 Director 1997
Jerome P. Welch(1).......... 59 Director 1997
Michael E. Dunn(1).......... 50 Director 1997
</TABLE>
- ------------
(1) Member of Stock Option Committee of the Laboratory Specialists of America,
Inc. 1994 1995 Stock Option Plan.
The following is a brief description of the business background of the
directors, executive officers and nominees for directors of the Company:
JOHN SIMONELLI is Chairman of the Board, Chief Executive Officer, Secretary
and a Director of the Company. Mr. Simonelli served as a Director, Chief
Executive Officer and Secretary of Vantage Capital Resources, Inc. from March
1996 until its merger with Applied Intelligence Group, Inc. and thereafter
served as a Director and Vice President of Applied Intelligence Group, Inc.
until October 14, 1996. He served as Chairman of the Board and Chief Executive
Officer of MBf USA, Inc. (formerly American Drug Screens, Inc.), a publicly-held
company engaged in the medical products and services industry, from February
1988 through June 1992. He served as Chief Executive Officer of Unico, Inc.
(formerly CMS Advertising, Inc.), a publicly-held company engaged in the
franchising of cooperative direct mail advertising businesses, from June 1986 to
June 1988. From July 1981 through June 1985, he served in various capacities,
including President and Director, with Moto Photo, Inc., a publicly-held company
engaged in the business of franchising one-hour, photo development laboratories.
Mr. Simonelli served as President and CEO, from May 1985 until November 1985,
and a Director, from May 1985 through 1988, of TM Communications, Inc. (formerly
Video Image, Inc. and TM Century, Inc.), a publicly-held company engaged in
radio broadcasting and corporate communications.
LARRY E. HOWELL is President and Chief Operating Officer, and a Director of
the Company. Mr. Howell served as a Director, President and Treasurer of Vantage
Capital Resources, Inc. from March 1996 until its merger with Applied
Intelligence Group, Inc. and thereafter served as a Director and Vice President
of Applied Intelligence Group, Inc. until October 14, 1996. He served as
President and Chief Operating Officer of MBf USA, Inc. (formerly American Drug
Screens, Inc.), a publicly-held company engaged in the medical products and
services industry, from February 1988 through June 1992. From June 1986 to April
1988, Mr. Howell served first as Vice President and than as President and Chief
Operating Officer of Unico, Inc. (formerly CMS Advertising, Inc.), a publicly-
held company engaged in the franchising of cooperative direct mail advertising
businesses. Since January 1982, Mr. Howell as the sole proprietor of Howell and
Associates, Inc. provides consulting services principally related to corporate
acquisitions and mergers.
ARTHUR R. PETERSON, JR. was elected Treasurer and a Director of the Company
in July 1994. Mr. Peterson founded Laboratory Specialists, Inc., the Company's
wholly owned subsidiary ("LSI"), in 1978 and served as its President and Chief
Executive Officer and a Director from inception. From March 1989 until April
1994, he served as a Director of MBf USA, Inc. (formerly American Drug Screens,
Inc.), a publicly held company in the medical products and services industry and
former parent of LSI. Prior to 1978, Mr. Peterson was Chairman of the Board and
-3-
<PAGE>
Chief Executive Officer of Clinical Laboratories of La., Inc., a company he
founded which served the medical community in clinical studies.
ROBERT A. GARDEBLED, JR. was elected a Director of the Company in July
1994. Since July 1989, he has served as an assistant to the President and was
elected Controller of LSI, and since in July 1994, he has served as Secretary of
LSI. From July 1991 until April 1994, Mr. Gardebled served as a Director of MBf
USA, Inc. (formerly American Drug Screens, Inc.), a publicly held company in the
medical products and services industry and former parent of LSI.
JEROME P. WELCH was elected a Director of the Company in August 1994. Mr.
Welch is President of Prospect Publishers, Inc., a publisher of literary
hardback anthologies and newsletters. From May 1990 through June 1992, he served
as a Director and in July 1990 was elected Secretary of MBf USA, Inc. (formerly
American Drug Screens, Inc.), a publicly-held company engaged in the medical
products and services industry. From July 1988 to January 1990, Mr. Welch served
as President of Simon & Schuster Supplementary Publishers, a subsidiary of
Paramount Communications, Inc. and was Senior Vice President and Publisher of
McGraw Hill Educational Publishing from July 1987 to July 1988.
MICHAEL E. DUNN was elected a Director of the Company in August 1994. Since
April 1980 to January 1995, he was a member, shareholder and director of the law
firm of Zrenda Dunn & Swan, A Professional Corporation (formerly Bright Zrenda &
Dunn), in Oklahoma City, Oklahoma, and President from April 1992 until January
1995. Mr. Dunn has been a member, shareholder and President of Dunn Swan &
Cunningham, A Professional Corporation, since February 28, 1995. He has been the
owner of the Woodlake Racquet Club, a recreational athletic club, since 1981.
From November 1991 to November 1992, he served as a director of Tide West Oil
Company, a publicly-held, independent oil and gas exploration and production
company. Mr. Dunn was graduated from the University of Oklahoma College of Law
in 1972, and holds a Bachelor of Science in Accounting and pursued graduate
studies at the University of Oklahoma.
HARRY GRAY BROWNE, M.D. was elected a Director of the Company in December
1994. Dr. Browne is President and Chairman of the Board of NDA Corporation and
held the same positions with National Drug Assessment Corporation until their
merger on December 19, 1994. Further, he is Vice Chairman and Senior Vice
President of Scientific Affairs of Therapeutic Antibodies, Inc., and a Director
of Therapeutic Antibodies London, Ltd. (both are international biopharmaceutical
companies), Chairman of the Board of Winchester Research Laboratories (a
development stage, genetic research company), a Director of Harley Screen PLC (a
clinical laboratory in London, England), and a member of the Board of Governors
of St. Thomas Aquinas College (a liberal arts college in Santa Paula,
California). Until December 1, 1994, National Drug Assessment Corporation was
engaged in the providing of drug testing services. Dr. Browne received a
Bachelor of Arts from Yale University in 1951 and a Medicinae Doctorate from
Cornell University Medical College in 1956 and a Diploma of Tropical Medicine
and Parasitology from the University of Havana in 1953.
Directors hold office until their successors have been elected and
qualified. All officers serve at the pleasure of the Board of Directors. There
are no family relationships among any of the Company's directors or executive
officers of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's bylaws authorize the Board of Directors to appoint among its
members one or more committees composed in whole or in part of one or more
directors. As of May 30, 1997, the Board of Directors had appointed the
Compensation Committee and Stock Option Committee. Other than the Compensation
Committee and Stock Option Committee, the Board of Directors does not have any
other standing committees.
Compensation Committee. Messrs. Welch, Dunn and Browne serve on the
Compensation Committee at the pleasure of the Board of Directors. The
Compensation Committee reviews and acts on matters relating to compensation
levels and benefit plans for the executive officers and employees of the
Company. The Compensation Committee also reviews the succession planning for key
executive personnel, monitors employee relations, issues and oversees senior
management structure. The Compensation Committee did not have any meetings
during the year ended December 31, 1996, all actions taken regarding the
functions of this Committee were taken by the Board.
Stock Option Committee. Messrs. Welch, Dunn and Browne serve on the Stock
Option Committee at the pleasure of the Board of Directors. The Stock Option
Committee's principal functions are to determine individuals to whom stock
options will be granted under the Company's Stock Option Plan, the terms on
which such options will
-4-
<PAGE>
be granted, and to administer and interpret the Plan. The Stock Option Committee
did not have any meetings during the year ended December 31, 1996.
The Board of Directors of the Company did not hold any meetings during the
fiscal year ended December 31, 1996.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth the total compensation received for services
rendered in all capacities to the Company for the years ended December 31, 1994,
1995 and 1996, by the Company's President and it executive officers whose
aggregate cash compensation exceeded $100,000 (together the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3)
- --------------------------- ---- --------- -------- ---------------
<S> <C> <C> <C> <C>
John Simonelli...................................... 1996 $100,000 $ -- $12,600
Chief Executive Officer 1995 $ 75,000 $ -- $12,000
1994 $ 75,000 $ -- $ 8,592
Larry E. Howell .................................... 1996 $100,000 $ -- $14,100
President and Chief Operating 1995 $ 75,000 $ -- $12,000
Officer 1994 $ 75,000 $ -- $ 8,592
Arthur R. Peterson, Jr. ............................ 1996 $120,133 $50,000 $21,700
Treasurer of the Company and Chief 1995 $100,000 $50,000 $16,000
Executive Officer of Laboratory Specialists, Inc. 1994 $100,000 $76,956 $16,000
</TABLE>
- ------------------------
(1) Dollar value of base salary (both cash and non-cash) earned during the
year.
(2) Dollar value of bonus (both cash and non-cash) earned during the year.
(3) The amounts reflected are for an automobile allowance, and life and
disability insurance premiums paid by the Company.
AGGREGATE OPTION GRANTS AND EXERCISES IN 1996 AND YEAR-END OPTION VALUES
Stock Options and Option Values. The following table sets forth information
related to options granted to the Named Executive Officers during 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
ASSUMED RATES OF STOCK
PERCENT OF TOTAL PRICE APPRECIATION
NUMBER OPTIONS GRANTED EXERCISE OR FOR OPTION TERM(1)
OF OPTIONS TO EMPLOYEES IN BASE PRICE -----------------------
NAME GRANTED 1996 PER SHARE EXPIRATION DATE FIVE PERCENT TEN PERCENT
- ---- ---------- ----------------- ----------- --------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
John Simonelli................ 50,000 27% $2.75 October 30, 2006 $223,973 $356,640
Larry E. Howell............... 50,000 27% $2.75 October 30, 2006 $223,973 $356,640
Arthur R. Peterson, Jr........ 50,000 27% $2.75 October 30, 2006 $223,973 $356,640
</TABLE>
(1) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compound
rates of appreciation of the Company's Common Stock over the term of the
options. These amounts do not take into consideration provisions
restricting transferability and represent certain assumed rates of
appreciation only. Actual gains on stock option exercises are dependent on
the future performance of the Company's Common Stock and overall stock
market conditions. There can be no assurance that the potential values
reflected in this table will be achieved. All amounts have been rounded to
the nearest whole dollar amount.
Aggregate Stock Option Exercise and Year-End and Option Values. The
following table sets forth information related to the number of options
exercised in 1996 and the value realized by the Named Executive Officers, as
well as, information related to the number and value of options held by the
Named Executive Officers at the end of 1996. During 1996, there were no options
to purchase the Company's Common Stock exercised by the named executive
officers.
-5-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
AS OF DECEMBER 31, 1996 OPTIONS AS OF DECEMBER 31, 1996 (1)
----------------------------- -----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
John Simonelli................. 10,000 50,000 $-- $12,500
Larry E. Howell ............... 10,000 50,000 $-- $12,500
Arthur R. Peterson, Jr......... 10,000 50,000 $-- $12,500
- ------------------------
</TABLE>
(1) The closing sale price of the Common Stock as quoted on Nasdaq SmallCap
Market on December 31, 1996, was $3.00. Because the closing highest bid
price of the Common Stock on December 31, 1996, was equal to the exercise
price, exercisable options were not in the money on such date.
COMPENSATION OF DIRECTORS
The directors of the Company that are employees of the Company or its
subsidiary are not currently compensated for attending meetings of directors and
committees of the Board of Directors, but are reimbursed out-of-pocket expenses.
The compensation of non-employee directors has not been determined by the Board
of Directors, but non-employee directors are reimbursed out-of-pocket expenses
incurred in attending meetings of directors and committees on which they serve.
During 1996, the Board of Directors of the Company did not have any meetings and
the directors of the Company were not paid any compensation nor was any
compensation accrued.
EMPLOYMENT ARRANGEMENTS
The Company has employment agreements with Messrs. Simonelli and Howell,
which were amended on April 15, 1996, and expire on April 15, 2000, each of
which provides, among other things, (i) an annual base salary of $112,500, (ii)
bonuses at the discretion of the Board of Directors, but not in excess of 10
percent of the net income of the Company, (iii) eligibility for stock options
under the Company's Stock Option Plan, (iv) health and disability insurance
benefits and life insurance, (v) an automobile allowance, and (vi) benefits
consistent with similar executive employment agreements. The agreements require
Messrs. Simonelli and Howell to devote not less than 50 percent of their time
and attention to the business and affairs of the Company. The agreements also
restrict the employee's right to participate in other activities outside of the
Company to the extent such activities conflict with the employee's ability to
perform his duties and that would violate his duty and loyalty to the Company.
The Board of Directors has delegated to the Compensation Committee, which is
comprised of Messrs. Peterson, Welch and Dunn, the responsibility of determining
the bonus compensation to be paid to the officers of the Company.
Furthermore, Laboratory Specialists, Inc., the Company's wholly owned
subsidiary, has an employment agreement with Mr. Peterson which expires April
15, 2000, and which provides, among other things, (i) an annual base salary of
$125,000, (ii) annual bonuses equal to the lesser of $50,000 or 10 percent of
the net income of the Company before provision for income taxes, (iii)
eligibility for stock options under the Company's Stock Option Plan, (iv) health
and disability insurance benefits and life insurance, maintained at the
Company's cost and expense, covering the life of Mr. Peterson in the face amount
of $1,000,000, (v) an automobile allowance, and (vi) benefits consistent with
similar executive employment agreements. The agreement requires Mr. Peterson
to devote his full time and attention to the business and affairs of Laboratory
Specialists, Inc.
Each of the employment agreements with the officers of the Company and
Laboratory Specialists, Inc. may be terminated by the Company or Laboratory
Specialists, Inc. in the event the Board of Directors determines in good faith
that the officer is guilty of gross negligence or fraud materially injurious to
the Company or Laboratory Specialists, Inc.
STOCK OPTION PLAN
The Company established the Laboratory Specialists of America, Inc. 1994
Stock Option Plan (the "Stock Option Plan" or the "Plan") in May 1994. The Plan
provides for the issuance of stock options and stock appreciation rights to
employees and consultants of the Company, including employees who also serve as
directors of the Company. On October 30, 1996, the Board of Directors adopted an
amendment and a restatement of the Plan, which will not become effective unless
and until approved by the shareholders of the Company. The Stock Option Plan as
described below does not reflect or give effect to the amendment and
restatement. The amendment and restatement of the Stock Option Plan is more
fully discussed at "PROPOSAL TO AMEND AND RESTATE THE COMPANY'S 1994 STOCK
OPTION PLAN."
-6-
<PAGE>
The Plan provides for the issuance of incentive stock options ("ISO
Options") with or without stock appreciation rights ("SARs") and nonincentive
stock options ("NSO Options") with or without SARs to employees and consultants
of the Company, including employees who also serve as directors of the Company.
The total number of shares of Common Stock authorized and reserved for issuance
under the Plan is 225,000. As of December 31, 1996, NSO Options to purchase
50,000 (exercisable on or before July 20, 2005), and 185,000 shares (exercisable
after April 30, 1997 and on or before October 30, 2006) of Common Stock at an
exercise price of $3.00 and $2.75 per share, respectively, were outstanding. In
the event the Plan as amended and restated is not approved by the shareholders,
10,000 of the NSO Options granted under the Plan will be canceled. No options
have been exercised and no SARs have been granted.
The Stock Option Committee, which is currently comprised of Messrs. Browne,
Welch and Dunn, administers and interprets the Plan and has authority to grant
options to all eligible employees and determine the types of options granted,
with or without SARs, the terms, restrictions and conditions of the options at
the time of grant, and whether SARs, if granted, are exercisable at the time of
exercise of the Option to which the SAR is attached.
The option price of the Common Stock is determined by the Stock Option
Committee, provided such price may not be less than the fair market value of the
shares on the date of grant of the option. The fair market value of a share of
the Common Stock is determined by averaging the closing high bid and low asked
quotations for such share on the date of grant of the option as reported by
Nasdaq or, if not quoted on Nasdaq, by the Stock Option Committee. Upon the
exercise of an option, the option price must be paid in full, in cash or with an
SAR. Subject to the Stock Option Committee's approval, upon exercise of an
option with an SAR attached, a participant may receive cash, shares of Common
Stock or a combination of both in an amount or having a fair market value equal
to the excess of the fair market value, on the date of exercise, of the shares
for which the option and SAR are exercised over the option exercise price.
Options granted under the Plan may not be exercised until six months after
the date of the grant and rights under an SAR may not be exercised until six
months after the SAR is attached to an option, if not attached at the time of
the grant of the option, except in the event of death or disability of the
participant. ISO Options and any SARs are exercisable only by participants while
actively employed as an employee or a consultant by the Company or a subsidiary
of the Company, except in the case of death, retirement or disability. Options
may be exercised at any time within three months after the participant's
retirement or within one year after the participant's disability or death, but
not beyond the expiration date of the option. No option may be granted after
April 30, 2004. Options are not transferable except by will or by the laws of
descent and distribution.
OFFICER AND DIRECTOR LIABILITY
As permitted by the provisions of the Oklahoma General Corporation Act, the
Certificate of Incorporation (the "Certificate") eliminates in certain
circumstances the monetary liability of directors of the Company for a breach of
their fiduciary duty as directors. These provisions do not eliminate the
liability of a director for (i) a breach of the director's duty of loyalty to
the Company or its shareholders, (ii) acts or omissions by a director not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) liability arising under Section 1053 of the Oklahoma General
Corporation Act (relating to the declaration of dividends and purchase or
redemption of shares in violation of the Oklahoma General Corporation Act), or
(iv) any transaction from which the director derived an improper personal
benefit. In addition, these provisions do not eliminate liability of a director
for violations of federal securities laws, nor do they limit the rights of the
Company or its shareholders, in appropriate circumstances, to seek equitable
remedies such as injunctive or other forms of non-monetary relief. Such remedies
may not be effective in all cases.
The Certificate and Bylaws of the Company provide that the Company shall
indemnify all directors and officers of the Company to the full extent permitted
by the Oklahoma General Corporation Act. Under such provisions, any director or
officer, who in his capacity as such, is made or threatened to be made, a party
to any suit or proceeding, may be indemnified if the Board of Directors
determines such director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the Company.
The Certificate and Bylaws of the Company and the Oklahoma General Corporation
Act further provide that such indemnification is not exclusive of any other
rights to which such individuals may be entitled under the Certificate, the
Bylaws, an agreement, vote of shareholders or disinterested directors or
otherwise. Insofar as indemnification for liabilities arising under the Act may
be permitted to directors and officers of the Company pursuant to the foregoing
provisions, or otherwise, the Company
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has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933, as amended, and is, therefore, unenforceable.
COMPLIANCE WITH SECTION 16 OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the company's directors and officers, and persons who own more than 10 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 10 percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on the Company's review of the copies of such forms received
by it during the year ended December 31, 1996, and written representations that
no other reports were required, the Company believes that each person who, at
any time during such year, was a director, officer or beneficial owner of more
than 10 percent of the Company's Common Stock complied with all Section 16(a)
filing requirements during such fiscal year, except that one report covering a
purchase transaction was filed late by Jerome P. Welch.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is a description of transactions entered into between
Laboratory Specialists, Inc. and the Company and certain of its officers,
directors and shareholders during the last two years. Certain of these
transactions will continue in effect and may result in conflicts of interest
between the Company and such individuals. Although these persons have fiduciary
duties to the Company and its shareholders, there can be no assurance that
conflicts of interest will always be resolved in favor of the Company.
In connection with the Company's acquisition of Laboratory Specialists,
Inc. ("LSI") in 1994, Arthur R. Peterson, Jr. exchanged all outstanding common
stock of LSI for 1,000,000 shares of Common Stock and 300,000 shares of Series I
Cumulative Convertible Preferred Stock ("Series I Preferred Stock") of the
Company. The Series I Preferred Stock was fully redeemed on July 10, 1995, at
the aggregate stated value of $300,000 and cumulative dividends of $24,748 were
paid in full.
Until June 1996, the Company's offices located at 1101-A Sovereign Row in
Oklahoma City were subleased from Unico, Inc. ("Unico") on a month-to-month
basis currently for $1,500 per month, and the lessors of such premises to Unico
include Messrs. Simonelli and Howell, who are officers and directors of the
Company. Messrs Simonelli and Howell own, in the aggregate, a 50 percent
undivided interest in such premises, and are former directors of Unico. During
1996 and 1995, the Company paid Unico, pursuant to the sublease, aggregate
monthly rent of $6,000 and $21,000, respectively.
During 1995, the law firm of Zrenda Dunn & Swan, A Professional
Corporation, performed legal services as counsel to the Company. During 1994,
Michael E. Dunn, a Director of the Company, was President, a Director and a
shareholder of Zrenda Dunn & Swan. During 1995, the Company paid Zrenda Dunn &
Swan $8,520 for services rendered and $992.95 in reimbursement of expenses
advanced on behalf of the Company. During 1996 and 1995, the Company paid Dunn
Swan & Cunningham, A Professional Corporation, $27,525 and $112,530.42,
respectively, for services rendered and $3,576.91 and $5,576.91, respectively,
in reimbursement of expenses advanced on behalf of the Company. During 1996 and
1995, Michael E. Dunn, a Director of the Company, was President, a Director and
a shareholder of Zrenda Dunn & Swan and Dunn Swan & Cunningham.
On July 20, 1995, Jerome P. Welch, Michael E. Dunn and Harry Gray Browne,
M.D., were each granted option to purchase 5,000 shares of the Company's Common
Stock at $3.00 per share, which became exercisable on January 20, 1996, and
remain exercisable until July 20, 2005.
The Board of Directors of the Company believes that the terms of the
transactions described above were at least as favorable as could be obtained
from unaffiliated third parties. The Company has adopted policies that any loans
to officers, directors and five percent or more shareholders ("affiliates") are
subject to approval by a majority of the disinterested independent directors of
the Company and that further transactions with affiliates will be on terms no
less favorable than could be obtained from unaffiliated parties and approved by
a majority of the disinterested independent directors.
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PROPOSAL TO AMEND AND RESTATE THE COMPANY'S 1994 STOCK OPTION PLAN
In October 1996, the Company approved the amendment and restatement of the
Laboratory Specialists of America, Inc. 1994 Stock Option Plan (the "Plan"),
subject to approval by the Company's stockholders. The amendments to the Plan
will (a) remove the prohibition on participation by non-employee members of the
Board of Directors as permitted by the recently amended and adopted rules under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Rules"), (b)
increase in the number of shares of Common Stock of the Company reserved and
available for granting of options to purchase pursuant to the Plan, and (c) make
other revisions to comply with the provisions of the recently adopted Rules that
do not require stockholder approval. A copy of the Plan is attached as Appendix
A to this Proxy Statement.
The Board of Directors recommends a vote "FOR" the amended and restated
Plan.
The purpose of the Plan is to promote the interests of the Company by
providing key employees, non-employee members of the Board of Directors,
consultants and other independent contractors who provide valuable services to
the Company with the opportunity to acquire, or otherwise increase, their
proprietary interest in the Company as an incentive to remain in service to the
Company. Currently, the number of shares of Common Stock with respect to which
options may be granted under the Plan is 225,000. Through March 31, 1997, the
Company has granted options exercisable for the purchase of 235,000 shares of
Common Stock of which 10,000 will be canceled unless the amended and restated
Plan is not approved by the stockholders.
AMENDED AND RESTATED STOCK OPTION PLAN
The Plan provides for the grant of stock options ("Options"), including
incentive stock options ("ISO Options") and nonincentive stock options ("NSO
Options"), with or without stock appreciation rights ("SARs") to employees,
independent contractors and consultants of the Company, including employees who
also serve as Directors of the Company. Under the provisions of the Plan, it
is intended that ISO Options (with or without SARs) qualify as options granted
pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and are entitled to the favorable tax consequences thereunder upon the
grant and exercise of such Options. The total number of shares of Common Stock
authorized and reserved for issuance under the Plan is 425,000.
GENERAL
Eligibility and Administration. Options under the Plan may be granted only
to persons ("Eligible Persons") who at the time of grant are directors,
executive officers, key employees and independent contractors and consultants of
the Company and its subsidiaries. Non-Employee Directors are not eligible to be
granted ISO Options.
Eligible Persons under the Plan are divided into two groups, and there is
to be a separate administrator for each group. One group will be comprised of
Participants that are Affiliates. For purposes of the Plan, "Affiliates" is
defined as all "officers" (as defined in Rule 16a-1(f) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), directors of
the Company and all persons who own 10 percent or more of the Company's issued
and outstanding equity securities. Initially, the power to administer the Plan
with respect to Participants who are Affiliates is vested with the Board of
Directors. At any time the Board of Directors may vest the power to administer
the Plan with respect to Eligible Persons who are Affiliates exclusively with a
committee (the "Senior Committee") comprised of two or more Non-Employee
Directors (as defined in Rule 16b-3(3)(i) promulgated under the Exchange Act)
which are appointed by the Board of Directors. The Senior Committee, in its sole
discretion, may require approval of the Board of Directors for specific grants
of Options. The administrator of all Eligible Persons who are not Affiliates
("Non-Affiliates") is vested exclusively with the Board of Directors. The Board
of Directors may at any time, however, appoint a committee (the "Employee
Committee") of two or more members of the Board of Directors and delegate to
such Employee Committee the power to administer the Plan with respect to Non-
Affiliates. In addition, the Board of Directors may establish an additional
committee or committees of persons who are members of the Board of Directors and
delegate to such other committee or committees the power to administer all or
any portion of the Plan with respect to all or a portion of the Eligible
Persons. Members of each and all committees administering all or any portion of
the plan serve for such period of time as the Board of Directors may determine
and shall be subject to removal by the Board of Directors at any time. The Board
of Directors may at any time terminate all or a portion of the functions of the
Senior Committee, the Employee committee, or any other committee allowed under
the Plan and reassume all or a portion of the powers and authority previously
delegated to such committee. The Board of Directors, Employee
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<PAGE>
Committee, Senior Committee, and /or any other committee allowed under the Plan,
whichever is applicable, is referred to as the Plan Administrator.
To the extent that granted Options are incentive stock options, the terms
and conditions of those Options must be consistent with the qualification
requirements set forth in the Internal Revenue Code of 1986, as amended. The
maximum number of shares of stock for which Employee-Directors may be granted
Options in any calendar year shall not exceed 25 percent of the aggregate number
of share of stock with respect to which Options may be granted under the Plan.
Grant and Exercise of Options. Stock Options may be granted by the Plan
Administrator on the following terms and conditions: No Stock Option shall be
exercisable more than 10 years after the date of grant. Subject to such
limitation, the Plan Administrator has the discretion to fix the period during
which any Option may be exercised. Options granted are non-transferable except
by will or by the laws of descent and distribution. Options are exercisable
only by Eligible Persons while serving as a Non-Employee Director of the Company
or a subsidiary or while actively employed as an employee, an independent
contractor or a consultant by the Company or a subsidiary, except that (i) any
Option granted and which is otherwise exercisable, may be exercised by the
personal representative of a deceased Eligible Person within 12 months after the
death of such Eligible Person (but not beyond the option period of such Option),
(ii) if any Eligible Person is terminated as a Non-Employee Director, an
employee, an independent contractor or any consultant of the Company or a
subsidiary on account of Retirement, such Eligible Persons may exercise any
Option which is otherwise exercisable at any time within three months of such
date of termination, or (iii) if an Eligible Person is terminated as a Non-
Employee Director, as an employee, an independent contractor or a consultant of
the Company or a subsidiary on account of incurring a Disability, such Eligible
Person may exercise any Option which is otherwise exercisable at any time within
12 months of such date of termination.
The Board of Directors, in its sole discretion, may permit an Eligible
Person who is terminated as a Non-Employee Director, an employee, an independent
contractor or a consultant due to retirement or disability, or upon the
occurrence of special circumstances (as determined by the Board), or the
personal representative of a deceased Eligible Person to exercise and purchase
(within three years of such termination) all or any part of the shares subject
to Option on the date of termination.
The exercise prices of Options are determined by the Plan Administrator,
but in no event may such price be less than 85 percent of the fair market value
of the stock on the date of grant.
STOCK APPRECIATION RIGHTS
Grant and Exercise of SARs. The Plan Administrator of each administrative
group may also grant SARs to Eligible Persons in connection with Options granted
under the Plan. SARs terminate at such time as the Plan Administrator
determines and are exercisable only upon the exercise of the related Option.
Form of Payment of SARs. Upon the exercise of a SAR, the holder is entitled
to receive the excess amount of the fair market value of the Stock, as of the
date of exercise, for which the SAR is exercised over the option price. The
Eligible Person may request the method and combination of payment upon the
exercise of a SAR; however, the Board has the final authority to determine
whether the SAR shall be paid in cash or shares of stock or both. An amount
equal to the income tax resulting to the Company on the exercise of the SAR is
required to be paid to the Company at the time of exercise by the Eligible
Person who exercises.
INCENTIVE STOCK OPTIONS
Grant and Exercise. The Plan Administrators may also grant ISO Options to
employees of the Company and any of its subsidiaries. The option price for
shares subject to an ISO Option is determined by the Plan Administrator, but in
no event shall the ISO Option price be less than the fair market value of the
stock on the date of grant of the ISO Option. ISO Options will not be granted to
any management employee, if immediately before the grant of an ISO Option, such
employee owns 10% of the total combined voting power of all classes of stock of
the Company or its subsidiaries, unless the ISO Option price is at least 110% of
the 'fair market value' of the stock subject to the ISO Option, and such ISO
Option is not exercisable after the expiration of five years from the date such
ISO Option is granted.
Options granted under the Plan are exercisable in such amounts, at such
intervals and upon such terms as the Option grant provides. The Option price of
the Common Stock is determined by the Plan Administrator, provided
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such price may not be less than 85 percent (100 percent for ISO Options) of the
fair market value of the shares on the date of grant of the Option. However, if
a participant owns more than 10 percent of the total combined voting power of
all classes of capital stock of the Company, the exercise price of ISO Options
may not be less than 110 percent of the fair market value of the Common Stock on
the date of the grant, and such ISO Options cannot be exercised for five years
after the grant. The aggregate fair market value of the Common Stock with
respect to which ISO Options are initially exercisable by any participant in any
calendar year may not exceed $100,000. The fair market value of a share of the
Common Stock is determined by averaging the closing high bid and low asked
quotations for such share on the date of grant of the option. Upon the exercise
of an Option, the Option price must be paid in full, in cash or in Common Stock
or a combination of cash and Common Stock in the event that the purchase is
pursuant to exercise of rights under an SAR which is attached to an Option and
which is exercisable on the date of exercise of the Option. Subject to the Plan
Administrator's approval, upon exercise of an Option with an SAR attached, a
participant may receive cash, shares of Common Stock or a combination of both in
an amount or having a fair market value equal to the excess of the fair market
value, on the date of exercise, of the shares for which the Option and SAR are
exercised over the Option exercise price.
Options granted under the Plan may not be exercised under any circumstances
10 years from the date of grant. Subject to the foregoing, Options are
exercisable only by participants who are actively employed as employees,
independent contractors or consultants by the Company or a subsidiary of the
Company (employees only for ISO Options), except that Options may, with the
consent of the Plan Administrator, be exercised at any time within three years
after the participant's retirement, death, disability or the occurrence of other
special circumstances as determined by the Plan Administrator, but in no event
beyond the expiration date of the Option. If a participant's employment as an
employee, independent contractor or a consultant by the Company or its
subsidiary terminates for any reason other than death, disability or retirement,
any Option granted to such participant immediately terminates, unless permitted
to be exercised by the Plan Administrator in its sole discretion. No Option
under the Plan may be exercised after June 30, 2005. Options are not
transferable except by will or by the laws of descent and distribution.
Termination and Amendment. The Plan will terminate on June 30, 2005. The
Plan may be altered, changed, modified, amended or terminated by written
amendment approved by the Board of Directors of the Company; provided, that no
action of the Board of Directors may, without the approval of the Shareholders,
increase the total amount of Common Stock which may be purchased under Options
granted under the Plan; withdraw the administration of the Plan from the Plan
Administrator; amend or alter the Option price of Common Stock under the Plan;
change the manner of computing the spread payable by the Company to a
participant upon the exercise of an SAR; or amend the Plan in any other manner
which would impair the applicability of the exemption afforded by Exchange Act
Rule 16b-3 to the Plan. No amendment, modification or termination of the Plan
may in any manner adversely affect any Option theretofore granted under the Plan
without the consent of the participant.
FEDERAL INCOME TAX CONSEQUENCES
No tax obligation will arise for the optionee or the Company upon the
granting of Options under the Plan. Upon exercise of a NSO Option, an optionee
will recognize ordinary income in an amount equal to the excess, if any, of the
fair market value, on the date of exercise, of the shares of Common Stock
acquired over the exercise price of the Option. Thereupon, the Company will be
entitled to a tax deduction in an amount equal to the ordinary income recognized
by the optionee if, only in the case of employees, the Company deducts and
withholds appropriate income taxes. Any additional gain or loss realized by an
optionee on disposition of such Option shares generally will be capital gain or
loss to the optionee and will not result in any additional tax deduction to the
Company.
Upon the exercise of an ISO Option, an optionee will not recognize taxable
income. The recognition of income and gain is deferred until the optionee sells
the Option shares. If the optionee does not dispose of the Option shares within
two years from the date the Option was granted and within one year after the
exercise of the Option, and the Option is exercised no later than three months
after the termination of the optionee's employment, the gain on sale will be
treated as long-term capital gain. The Company is not entitled to any tax
deduction in respect of the exercise of an ISO Option, however, if the Option
shares are not held for the full term of the holding period described above, the
Options will retroactively lose their qualification as ISO Options (i.e., become
NSO Options), the gain on the sale of such shares, being the lesser of (a) the
fair market value of the shares on the date of exercise minus the Option price,
or (b) the amount realized on disposition minus the Option price, will be taxed
to the optionee as ordinary income and the Company may be entitled to a
deduction in the same amount. Any additional gain or loss realized by an
optionee upon disposition of Option shares prior to the expiration of the full
term of the holding period
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described above, generally will be capital gain or loss to the optionee and will
not result in a tax deduction to the Company. The "spread" upon exercise of an
ISO Option constitutes a tax preference item for purposes of the "alternative
minimum tax" under the Code. The tax benefits which might otherwise accrue to an
optionee may be affected by the imposition of such tax if applicable to the
optionee's individual circumstances.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 1997. Arthur Andersen LLP has served the Company in such
capacity since 1994. The Board of Directors recommend that stockholders vote in
favor of the ratification of such appointment. The Board of Directors
anticipates that representatives Arthur Andersen LLP will be present at the
Meeting, will have the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
In the event that ratification of the appointment of Arthur Andersen LLP as
the Company's independent accountants is not obtained at the Meeting, the Board
will reconsider its appointment.
OTHER MATTERS
The Board of Directors knows of no other matters, other than those
described in this Proxy Statement, to be submitted to the Meeting. If any other
matters properly come before the Meeting, it is the intention of the persons
named in the enclosed proxy card to vote the shares they represent as the Board
of Directors may recommend.
STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented by stockholders at
the annual meeting of stockholders of the Company for the fiscal year ending
December 31, 1997, pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to be included in the proxy statement and
form of proxy relating to such meeting, must be received by the Company no later
than March 31, 1998. Any stockholder proposals intended to be presented at the
Company's 1998 Annual Meeting, other than a stockholder proposal submitted
pursuant to Exchange Act Rule 14a-8, must be received in writing by the
Secretary of the Company at the principal executive office of the Company no
later than the close of business on April 2, 1998, nor prior to January 30,
1998, together with all supporting documentation required by the Company's
Bylaws.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR FISCAL 1996
(INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO), AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND INCLUDED WITH THIS PROXY STATEMENT, WILL
BE PROVIDED WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROXY STATEMENT IS MAILED
UPON THE WRITTEN REQUEST OF ANY SUCH PERSON TO LARRY E. HOWELL, PRESIDENT AND
CHIEF OPERATING OFFICER, LABORATORY SPECIALISTS OF AMERICA, INC., 101 PARK
AVENUE, SUITE 810, OKLAHOMA CITY, OKLAHOMA 73102.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
By order of the Board of Directors:
John Simonelli
Secretary
Oklahoma City, Oklahoma
May 30, 1997
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APPENDIX A
LABORATORY SPECIALISTS OF AMERICA, INC.
1994 STOCK OPTION PLAN
(AS AMENDED THROUGH OCTOBER 31, 1996)
ARTICLE I
GENERAL PROVISIONS
On May 10, 1994, Laboratory Specialists of America, Inc.(the "Company")
adopted the Laboratory Specialists of America, Inc. 1994 Stock Option Plan (the
"Original Plan"). On October 30, 1996, the Board of Directors of the Company
(the "Board") approved certain amendments of the Original Plan (including an
increase in the shares of stock authorized to be issued under the Original Plan
and certain other technical changes) and readopted the 1994 Stock Option Plan
(the "Revised 1996 Plan"). The Revised 1996 Plan must be approved by the
shareholders of the Company within one year of the date of its adoption by the
Board. If the Revised 1996 Plan is not timely approved by the shareholders, (i)
the Original Plan will continue in effect and (ii) any Options issued under the
Revised 1996 Plan shall remain valid and unchanged to the extent that such
Options contain terms which could have been granted under the Original Plan.
The Revised 1996 Plan shall be known as the Laboratory Specialists of America,
Inc. 1994 Stock Option Plan (the "Plan"). Any Options outstanding prior to the
adoption by the Board of the Revised 1996 Plan shall remain valid and unchanged.
1.1 PURPOSE. The purpose of the Plan shall be to attract, retain and
motivate directors, executive officers, key employees and independent
contractors and consultants of the Company and its subsidiaries ("Eligible
Persons") by way of granting (i) non-qualified stock options ("Stock Options"),
(ii) non-qualified stock options with stock appreciation rights attached ("Stock
Option SARs"), (iii) incentive stock options ("ISO Options"), and (iv) ISO
Options with stock appreciation rights attached ("ISO Option SARs"). For the
purpose of this Plan, Stock Option SARs and ISO Option SARs are sometimes
collectively herein called "SARs;" and Stock Options and ISO Options are
sometimes collectively herein called "Options." The ISO Options to be granted
under the Plan are intended to be qualified pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Stock Options to
be granted are intended to be "non-qualified stock options" as described in
Sections 83 and 421 of the Code. Furthermore, under the Plan, the terms "parent"
and "subsidiary" shall have the same meaning as set forth in Subsections (e) and
(f) of Section 425 of the Code unless the context herein clearly indicates to
the contrary.
1.2 GENERAL. The terms and provisions of this Article I shall be applicable
to Stock Options, SARs and ISO Options unless the context herein clearly
indicates to the contrary.
1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board
and/or committees established by the Board.
1.3.1 DIVISION OF PARTICIPANTS AND ESTABLISHMENT OF COMMITTEES. The
Eligible Persons under the Plan ("Participants") shall be divided into two
groups and there shall be a separate administrator for each group. One group
will be comprised of Participants that are Affiliates. For purposes of this
Plan, "Affiliate" shall mean all "officers" (as defined in Rule 16a-1(f)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) and directors of the Company and all persons who own 10 percent or more
of the Company's issued and outstanding equity securities. Initially, the power
to administer the Plan with respect to Participants who are Affiliates shall be
vested with the Board. At any time the Board may vest the power to administer
the Plan with respect to Participants who are Affiliates exclusively with a
committee (the "Senior Committee") comprised of two or more Non-Employee
Directors (as defined in Rule 16b-3(3)(i) promulgated under the Exchange Act)
which are appointed by the Board. The Senior Committee, in its sole discretion,
may require approval of the Board for specific grants of Options. The
administration of all Participants that are not Affiliates ("Non-Affiliates")
shall be vested exclusively with the Board. The Board, however, may at any time
appoint a committee (the "Employee Committee") of two or more members of the
Board and delegate to such Employee Committee the power to administer the Plan
with respect to Non-Affiliates. In addition, the Board may establish an
additional committee or committees of persons who are members of the Board and
delegate to such other committee or committees the power to administer all or
any portion of the Plan with respect to all or a portion of the Participants.
Members of each and all committees
<PAGE>
administering all or any portion of the Plan shall serve for such period of time
as the Board may determine and shall be subject to removal by the Board at any
time. The Board may at any time terminate all or a portion of the functions of
the Senior Committee, the Employee Committee, or any other committee allowed
under this Plan and reassume all or a portion of the powers and authority
previously delegated to such committee. The Board in its discretion may also
require the members of any committee allowed under this Plan to be "outside
directors" as defined in any applicable regulations promulgated under Section
162(m) of the Code.
1.3.2 PLAN ADMINISTRATOR. The Board, the Employee Committee, Senior
Committee, and/or any other committee allowed under this Plan, whichever is
applicable, shall be each referred to herein as a "Plan Administrator." Unless
otherwise provided in the Plan, each Plan Administrator shall have, with respect
to its administered group, the power where consistent with the general purpose
and intent of the Plan to (i) modify the requirements of the Plan to conform
with the law or to meet special circumstances not anticipated or covered in the
Plan, (ii) suspend or discontinue the Plan, (iii) establish policies and (iv)
adopt rules and regulations and prescribe forms for carrying out the purposes
and provisions of the Plan including the form of any "stock option agreements"
("Stock Option Agreements"). A majority of the members of a Plan Administrator
shall constitute a quorum, and an act of the majority of the members present at
any meeting at which a quorum is present shall be the act of such Plan
Administrator.
1.3.3 PLAN INTERPRETATION. Unless otherwise provided in the Plan, the
Board shall have the authority to interpret and construe the Plan, and determine
all questions arising under the Plan and any agreement made pursuant to the
Plan. Any interpretation, decision or determination made by the Board shall be
final, binding and conclusive.
1.3.4 SELECTION OF PARTICIPANTS. In designating and selecting
Eligible Persons for participation in the Plan, a Plan Administrator shall
consult with and give consideration to the recommendations and criticisms
submitted by appropriate managerial and executive officers of the Company. A
Plan Administrator also shall take into account the duties and responsibilities
of the Eligible Persons, their past, present and potential contributions to the
success of the Company and such other factors as a Plan Administrator shall deem
relevant in connection with accomplishing the purpose of the Plan.
1.4 SHARES SUBJECT TO THE PLAN. Shares of stock ("Stock") covered by Stock
Options, SARs and ISO Options shall consist of 425,000 shares of the Common
Stock, $.001 par value, of the Company, subject to adjustment pursuant to
Section 1.7 of the Plan, which may be either authorized and unissued shares or
treasury shares, as determined in the sole discretion of the Board. If any
Option for shares of Stock, granted to a Participant lapses, or is otherwise
terminated, the Plan Administrator may grant Stock Options, SARs or ISO Options
for such shares of Stock to other Participants. However, Stock Options, SARs and
ISO Options shall not be granted again for shares of Stock which have been (i)
subject to SARs which are surrendered in exchange for cash or shares of Stock
issued pursuant to the exercise of SARs as provided in Article II hereof and
(ii) shares withheld for tax withholding requirements.
1.5 PARTICIPATION IN THE PLAN. A Plan Administrator shall determine from
time to time those Eligible Persons within the group of Eligible Persons
administered by such Plan Administrator, who are to be granted Stock Options,
SARs and ISO Options and the number of shares of Stock covered thereby. Non-
Employee Directors shall not be eligible to be granted ISO Options. The maximum
number of shares of Stock for which employee-Directors may be granted Options in
any calendar year shall not exceed 25 percent of the aggregate number of shares
of Stock with respect to which Options may be granted under the Plan.
1.6 DETERMINATION OF FAIR MARKET VALUE. As used in the Plan, "fair market
value" shall mean on any particular day (i) if the Stock is listed or admitted
for trading on any national securities exchange or the SmallCap Market System or
the National Market System of Nasdaq Stock Market, Inc. ("Nasdaq"), the last
sale price, or if no sale occurred, the mean between the closing high bid and
low asked quotations, for such day of the Stock, (ii) if Stock is not traded on
any national securities exchange but is quoted on an automated quotation system
or any similar system of automated dissemination of quotations or securities
prices in common use, the mean between the closing high bid and low asked
quotations for such day of the Stock on such system, (iii) if neither clause (i)
nor (ii) is applicable, the mean between the high bid and low asked quotations
for the Stock as reported by the National Daily Quotation Bureau,
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Incorporated if at least two securities dealers have inserted both bid and asked
quotations for shares of the Stock on at least five (5) of the ten (10)
preceding days, (iv) in lieu of the above, if actual transactions in the shares
of Stock are reported on a consolidated transaction reporting system, the last
sale price of the shares of Stock on such system or, (v) if none of the
conditions set forth above is met, the fair market value of shares of Stock as
determined by the Board. Provided, however, for purposes of determining "fair
market value" of the Common Stock of the Company, such value shall be determined
without regard to any restriction other than a restriction which will never
lapse.
1.7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The grants of Options shall
in no way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its assets or
business. The aggregate number of shares of Stock under Options granted under
the Plan, the Option Price and the ISO Price and the total number of shares of
Stock which may be purchased by a Participant on exercise of an Option shall be
appropriately adjusted by the Board to reflect any recapitalization, stock
split, merger, consolidation, reorganization, combination, liquidation, stock
dividend or similar transaction involving the Company. Provided, however, and
notwithstanding the foregoing, (i) a dissolution or liquidation of the Company,
(ii) a merger or consolidation in which the Company is not the surviving or the
resulting corporation or (iii) a reverse merger in which the Company is the
surviving entity but in which the securities possessing more than 50 percent of
the total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to the merger (collectively referred to herein as a "Corporate
Transaction"), shall cause the Plan and any Stock Option, SAR or ISO Option
granted thereunder, to terminate upon the effective date of such dissolution,
liquidation, merger or consolidation, subject to Section 1.21 of the Plan.
Provided, further, that for the purposes of this Section 1.7, if any merger,
consolidation or combination occurs in which the Company is not the surviving
corporation and is the result of a mere change in the identity, form or place of
organization of the Company accomplished in accordance with Section 368(a)(1)(F)
of the Code, then, such event will not cause a termination of the Plan.
Appropriate adjustment may also be made by the Board in the terms of a SAR to
reflect any of the foregoing changes.
1.8 AMENDMENT AND TERMINATION OF THE PLAN. The Plan shall terminate at
midnight, June 30, 2005, but prior thereto may be altered, changed, modified,
amended or terminated by written amendment approved by the Board. Provided, that
no action of the Board may (A) without the approval of the shareholders of the
Company, (i) increase the aggregate number of shares of Stock which may be
purchased under Stock Options, SARs or ISO Options granted under the Plan, (ii)
withdraw the administration of the Plan from the Plan Administrator, (iii) amend
or alter the Option Price or ISO Price, as applicable, (iv) change the manner of
computing the spread upon the exercise of a SAR, (v) amend the Plan in any
manner which would impair the applicability of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, to the Plan or (B) without the consent of the
holder of ISO Options, disqualify any ISO Options previously granted under the
Plan from treatment as incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Except as provided in this
Article I, no amendment, modification or termination of the Plan shall in any
manner adversely affect any Stock Option, SAR or ISO Option theretofore granted
under the Plan without the consent of the affected Participant. Notwithstanding
the foregoing, Options may be granted under the Plan to purchase shares of Stock
in excess of the number of shares then available for issuance under the Plan if
(i) an amendment to increase the maximum number of shares issuable under the
Plan is adopted by the Board prior to the initial grant of any such Option and
within one year thereafter such amendment is approved by the Company's
shareholders and (ii) each such Option granted is not to become exercisable or
vested, in whole or in part, at any time prior to the obtaining of such
shareholder approval.
1.9 EFFECTIVE DATE. The Plan shall be effective May 10, 1994, subject to
approval by the holders of a majority of the outstanding Common Stock of the
Company present, or represented, and entitled to vote at a meeting called for
such purpose or pursuant to a consent in lieu of meeting executed by a majority
of the holders of the outstanding Common Stock of the Company, and upon the
issuance of a favorable opinion of counsel with respect to certain tax
consequences of the Plan as it affects Stock Options, ISO Options and SARs. The
Revised 1996 Plan shall be submitted to the shareholders of the Company for
their approval at a regular or special meeting to be held within 12 months after
the adoption of the Revised 1996 Plan by the Board. Shareholder approval shall
be evidenced by the affirmative vote of the holders of a majority of the shares
of the Company's Common Stock present in person or by proxy and voting
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at the meeting. The date such shareholder approval has been obtained shall be
referred to in this Plan as the Revised 1996 Plan Effective Date.
1.10 SECURITIES LAW REQUIREMENTS. The Company shall have the right, but not
the obligation to cause the shares of Stock issuable upon exercise of the
Options to be registered under the Securities Act of 1933, as amended (the
"Securities Act") or the securities laws of any state or jurisdiction.
1.10.1 RESTRICTIONS ON TRANSFERABILITY AND LEGEND ON CERTIFICATES. As
a condition precedent to the grant of any Stock Option or the issuance or
transfer of shares pursuant to the exercise of any Stock Option, the
Company may require the Participant or holder to take any reasonable action
to meet such requirements or to obtain such approvals. The Company shall
have the right to restrict the transferability of shares of Stock issued or
transferred upon exercise of the Stock Options in such manner as it deems
necessary or appropriate to insure the availability of any exemption from
registration under the Securities Act and any other applicable securities
laws or regulations that may be available, including the endorsement with a
legend reading as follows:
The shares of Common Stock evidenced by this certificate have been
issued to the registered owner in reliance upon written
representations that these shares have been purchased solely for
investment purposes. These shares may not be sold, transferred or
assigned unless in the opinion of the Company and its legal counsel
such sale, transfer or assignment will not be in violation of the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.
1.10.2 REGISTRATION STATEMENT. If a registration statement covering
the shares of Stock issuable upon exercise of the Options granted under the
Plan is filed under the Securities Act, and is declared effective by the
Securities and Exchange Commission, the provisions of Section 1.10.1 shall
terminate during the period of time that such registration statement, as
periodically amended, remains effective.
1.11 SEPARATE CERTIFICATES. Separate certificates representing the Common
Stock of the Company to be delivered to a Participant upon the exercise of any
Stock Option, SAR, or ISO Option will be issued to such Participant.
1.12 PAYMENT FOR STOCK; RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT.
1.12.1 PAYMENT FOR STOCK. Payment for shares of Stock purchased under
this Plan shall be made (i) in full and in cash or check made payable to
the Company or (ii) may also be made in Common Stock of the Company held
for the requisite period necessary to avoid a charge to the Company's
reported earnings and valued at fair market value on the date of exercise
of the Option, or (iii) a combination of cash and Common Stock of the
Company. In the event that Common Stock of the Company is utilized in
consideration for the purchase of Stock upon the exercise of an Option,
such Common Stock shall be valued at the "fair market value" as defined in
Section 1.6 of the Plan.
1.12.2 RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT. Furthermore, a
Participant may exercise an Option without payment of the Option Price or
ISO Price in the event that the exercise is pursuant to rights under an SAR
attached to the Option and such SAR is exercisable on the date of exercise
of the Option to which it is attached. In the event an Option with an SAR
attached is exercised without payment of the Option Price or ISO Price in
cash or by check, the Participant shall be entitled to receive either (i) a
cash payment from the Company equal to the excess of the total fair market
value of the shares of Stock on such date as determined with respect to
which the Option is being exercised over the total cash Option Price or ISO
Price of such shares of Stock as set forth in the Option or (ii) that
number of whole shares of Stock as is determined by dividing (A) an amount
equal to the fair market value per share of Stock on the date of exercise
into (B) an amount equal to the excess of the total fair market value of
the shares of Stock on such date with respect to which the Option is being
exercised over the total cash Option Price or ISO Price of such shares of
Stock as set forth in the Option, and fractional shares will be rounded to
the next lowest number and the Participant will receive cash in lieu
thereof.
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1.13 INCURRENCE OF DISABILITY AND RETIREMENT. A Participant shall be deemed
to have terminated his employment as an employee, his independent contractor
arrangement or consulting arrangement with the Company and incurred a disability
("Disability") if such Participant suffers a physical or mental condition which,
in the judgment of the Board, totally and permanently prevents a Participant
from engaging in any substantial gainful employment with or the providing of
services or consulting for the Company or a subsidiary. A Participant shall be
deemed to have terminated employment as an employee, independent contractor or a
consultant due to retirement ("Retirement") if such Participant ceases to be an
employee, independent contractor or a consultant of the Company or its
subsidiary, without cause, after attaining the age of 55.
1.14 STOCK OPTIONS AND ISO OPTIONS GRANTED SEPARATELY. Because the Plan
Administrator is authorized to grant Stock Options, SARs and ISO Options to
Participants, the grant thereof and Stock Option Agreements relating thereto
will be made separately and totally independent of each other. Except as it
relates to the total number of shares of Stock which may be issued under the
Plan, the grant or exercise of a Stock Option or SARs shall in no manner affect
the grant and exercise of any ISO Options. Similarly, the grant and exercise of
any ISO Option shall in no manner affect the grant and exercise of any Stock
Option or SARs.
1.15 GRANTS OF OPTIONS AND STOCK OPTION AGREEMENT. Each Stock Option, ISO
Option and/or SAR granted under this Plan shall be evidenced by the minutes of a
meeting of the Plan Administrator or by the written consent of the Plan
Administrator and by a written Stock Option Agreement effective on the date of
grant and executed by the Company and the Participant. Each Option granted
hereunder shall contain such terms, restrictions and conditions as the Plan
Administrator may determine, which terms, restrictions and conditions may or may
not be the same in each case.
1.16 USE OF PROCEEDS. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options granted under the Plan shall be added
to the Company's general funds and used for general corporate purposes.
1.17 NON-TRANSFERABILITY OF OPTIONS. Except as otherwise herein provided,
any Option or SAR granted shall not be transferable otherwise than by will or
the laws of descent and distribution, and the Option may be exercised, during
the lifetime of the Participant, only by him. More particularly (but without
limiting the generality of the foregoing), the Option and/or SAR may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option and/or SAR contrary to
the provisions hereof shall be null and void and without effect.
1.18 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT. No transfer of an Option
and/or SAR by the Participant by will or the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice and an unauthenticated copy of the will and/or
such other evidence as the Plan Administrator may deem necessary to establish
the validity of the transfer and the acceptance by the successor to the Option
and/or SAR of the terms and conditions of such Option and/or SAR.
1.19 CHANGES IN EMPLOYMENT. So long as the Participant shall continue to be
a director, an employee, an independent contractor or a consultant of the
Company or any one of its subsidiaries, any Option granted to such Participant
shall not be affected by any change of duties or position. Nothing in the Plan
or in any Stock Option Agreement which relates to the Plan shall confer upon any
Participant any right to continue as a director or in the employ as an employee,
independent contractor or consultant of the Company or of any of its
subsidiaries, or interfere in any way with the right of the Company or any of
its subsidiaries to terminate such Participant as a director, employee or
independent contractor or consultant at any time.
1.20 SHAREHOLDER RIGHTS. No Participant shall have a right as a shareholder
with respect to any shares of Stock subject to an Option prior to the purchase
of such shares of Stock by exercise of the Option.
1.21 RIGHT TO EXERCISE UPON COMPANY CEASING TO EXIST. In the event of a
Corporate Transaction, the Participant shall have the right immediately prior to
consummation of the Corporate Transaction to exercise, in whole or in part, such
Participant's then remaining Options whether or not then exercisable, but
limited to that number of
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shares that can be acquired without causing the Participant to have an "excess
parachute payment" as determined under Section 280G of the Code determined by
taking into account all of Participant's "parachute payments" determined under
Section 280G of the Code. Provided, the foregoing notwithstanding, after the
Participant has been afforded the opportunity to exercise the Participant's then
remaining Options as provided in this Section 1.21, and to the extent such
Options are not timely exercised as provided in this Section 1.21, then, the
terms and provisions of this Plan and any Stock Option Agreement will thereafter
continue in effect, and the Participant will be entitled to exercise any such
remaining and unexercised Options in accordance with the terms and provisions of
this Plan and such Stock Option Agreement as such Options thereafter become
exercisable. Provided further, that for the purposes of this Section 1.21, if
any merger, consolidation or combination occurs in which the Company is not the
surviving corporation and is the result of a mere change in the identity, form,
or place of organization of the Company accomplished in accordance with Section
368(a)(1)(F) of the Code, then, such event shall not cause an acceleration of
the exercisability of any such Options granted hereunder.
1.22 ASSUMPTION OF OUTSTANDING OPTIONS AND SARS. To the extent permitted by
the then applicable provisions of the Code, any successor to the Company
succeeding to, or assigned the business of, the Company as the result of or in
connection with a corporate merger, consolidation, combination, reorganization,
dissolution or liquidation transaction shall assume Options and SARs outstanding
under the Plan or issue new Options and/or SARs in place of outstanding Options
and/or SARs under the Plan.
1.23 TAX WITHHOLDINGS. The Company's obligation to deliver Stock upon the
exercise of Options under the Plan shall be subject to the satisfaction of all
applicable federal, state and local income tax withholding requirements. The
Board may in its discretion and in accordance with the provisions of Section
1.23 and such supplemental rules as the Board may from time to time adopt,
provide any or all holders of Options with the right to use shares of Stock in
satisfaction of all or part of the federal, state and local income tax
liabilities incurred by such holders in connection with the exercise of their
Options ("Taxes"). Such right may be provided to any such holders of Options in
either or both of the following methods: (i) the holder of an Option may be
provided with the election, which may be subject to approval by the Plan
Administrator, to have the Company withhold, from the Stock otherwise issuable
upon exercise of such Option, a portion of those shares of Stock with an
aggregate fair market value equal to the percentage (not to exceed 100 percent)
of the applicable Taxes designated by the holder of the Options, and/or (ii) the
Board may, in its discretion, provide the holder of the Options with the
election to deliver to the Company, at the time the Option is exercised, one or
more shares of Stock previously acquired by such holder (other than pursuant to
the transaction triggering the Taxes) with an aggregate fair market value equal
to the percentage (not to exceed 100 percent) of the Taxes incurred in
connection with such Option exercise designated by such holder.
1.24 GOVERNING LAW. The Plan shall be governed by and all questions
hereunder shall be determined in accordance with the laws of the State of
Oklahoma.
ARTICLE II
TERMS OF STOCK OPTIONS AND EXERCISE
2.1 GENERAL TERMS.
2.1.1 GRANT AND TERMS FOR STOCK OPTIONS. Stock Options shall be
granted by the Plan Administrator on the following terms and conditions: No
Stock Option shall be exercisable more than 10 years after the date of
grant. Subject to such limitation, the Plan Administrator shall have the
discretion to fix the period (the "Option Period") during which any Stock
Option may be exercised. Stock Options granted shall not be transferable
except by will or by the laws of descent and distribution. Stock Options
shall be exercisable only by the Participant while serving as a Non-
Employee Director of the Company or a subsidiary or while actively employed
as an employee, an independent contractor or a consultant by the Company or
a subsidiary, except that (i) any such Stock Option granted and which is
otherwise exercisable, may be exercised by the personal representative of a
deceased Participant within 12 months after the death of such Participant
(but not beyond the Option Period of such Stock Option), (ii) if a
Participant is terminated as a Non-Employee Director, an employee, an
independent contractor or a consultant of the Company or a subsidiary on
account of Retirement,
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such Participant may exercise any Stock Option which is otherwise
exercisable at any time within three months of such date of termination, or
(iii) if a Participant is terminated as a Non-Employee Director, as an
employee, an independent contractor or a consultant of the Company or a
subsidiary on account of incurring a Disability, such Participant may
exercise any Stock Option which is otherwise exercisable at any time within
12 months of such date of termination. If a Participant should die during
the applicable three-month or 12-month period following the date of such
Participant's Retirement or termination on account of Disability, the
rights of the personal representative of such deceased Participant as such
relate to any Stock Options granted to such deceased Participant shall be
governed in accordance with Subsection 2.1.1(i) of this Article II.
2.1.2 OPTION PRICE. The option price ("Option Price") for shares of
Stock subject to Stock Option shall be determined by the Plan
Administrator, but in no event shall such Option Price be less than 85
percent of the fair market value of the Stock on the date of grant.
2.1.3 ACCELERATION OF OTHERWISE UNEXERCISABLE STOCK OPTION ON
RETIREMENT, DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Board, in
its sole discretion, may permit (i) a Participant who is terminated as a
Non-Employee Director, an employee, an independent contractor or a
consultant due to Retirement or Disability, (ii) the personal
representative of a deceased Participant, or (iii) any other Participant
who is terminated as a Non-Employee Director, an employee, an independent
contractor or a consultant upon the occurrence of special circumstances (as
determined by the Board), to exercise and purchase (within three years of
such date of such Participant's termination) all or any part of the shares
subject to Stock Option on the date of the Participant's termination,
Retirement, Disability, death, or as the Board otherwise so determines,
notwithstanding that all installments, if any, with respect to such Stock
Option, had not accrued on such termination date.
2.1.4 NUMBER OF STOCK OPTIONS GRANTED. Participants may be granted
more than one Stock Option. In making any such determination, the Plan
Administrator shall obtain the advice and recommendation of the officers of
the Company or a subsidiary which have supervisory authority over such
Participants. The granting of a Stock Option under the Plan shall not
affect any outstanding Stock Option previously granted to a Participant
under the Plan.
2.1.5 NOTICE OF EXERCISE STOCK OPTION. Upon exercise of a Stock
Option, a Participant shall give written notice to the Secretary of the
Company, or other officer designated by the Plan Administrator, at the
Company's main office in Oklahoma City, Oklahoma. No Stock shall be issued
to any Participant until the Company receives full payment for the Stock
purchased, if applicable, and any required Taxes.
ARTICLE III
SARS
3.1 GENERAL TERMS.
3.1.1 GRANT AND TERMS OF SARS. The Plan Administrator of each
administered group may grant SARs to Participants in connection with Stock
Options or ISO Options granted under the Plan. SARs shall terminate at such
time as the Plan Administrator determines and shall be exercised only upon
surrender of the related Stock Option or ISO Option and only to the extent
that the related Stock Option or ISO Option (or the portion thereof as to
which the SAR is exercisable) is exercised. SARs may be exercised only by
the Participant while a Non-Employee Director, an employee, an independent
contractor or a consultant of the Company or a subsidiary except that (i)
any SARs previously granted to a Participant which are otherwise
exercisable may be exercised, with the approval of the Plan Administrator,
by the personal representative of a deceased Participant (but not beyond
the expiration date of such SAR), and (ii) if a Participant is terminated
as a Non-Employee Director, an employee, an independent contractor or a
consultant of the Company or a subsidiary, as the case may be, on account
of Retirement or Disability, such Participant may exercise any SARs which
are otherwise exercisable, with the approval of the Plan Administrator,
anytime within three months of the date of the termination by Retirement or
within 12 months of termination by Disability. If a Participant
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should die during the applicable three-month period following the date of
such Participant's Retirement or during the applicable 12 month period
following the date of termination on account of Disability, the rights of
the personal representative of such deceased Participant as such relate to
any SARs granted to such deceased Participant shall be governed in
accordance with (i) of the second sentence of this Subsection 3.1.1. The
applicable SAR shall (i) terminate upon the termination of the underlying
Stock Option or ISO Option, as the case may be, (ii) only be transferable
at the same time and under the same conditions as the underlying Stock
Option or ISO Option is transferable, (iii) only be exercised when the
underlying Stock Option or ISO Option is exercised, and (iv) may be
exercised only if there is a positive spread between the Option Price or
ISO Price, as applicable and the fair market value of the Stock for which
the SAR is exercised.
3.1.2 ACCELERATION OF OTHERWISE UNEXERCISABLE SARS ON RETIREMENT,
DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Board, in its sole
discretion, may permit (i) a Participant is terminated as a Non-Employee
Director, an employee, an independent contractor, or a consultant with the
Company or a subsidiary due to Retirement or Disability, (ii) the personal
representative of such deceased Participant, or (iii) any other Participant
who is terminated as a Non-Employee Director, an employee, an independent
contractor or a consultant with the Company or a subsidiary upon the
occurrence of special circumstances (as determined by the Board) to
exercise (within three years of such date of such termination) all or any
part of any such SARs previously granted to such Participant as of the date
of such Participant's termination, Retirement, Disability, death, or as the
Board otherwise so determines, notwithstanding that all installments, if
any with respect to such SARs, had not accrued on such date.
3.1.3 FORM OF PAYMENT OF SARS. The Participant may request the method
and combination of payment upon the exercise of a SAR; however, the Board
has the final authority to determine whether the value of the SAR shall be
paid in cash or shares of Stock or both. Upon exercise of a SAR, the holder
is entitled to receive the excess amount of the fair market value of the
Stock (as of the date of exercise) for which the SAR is exercised over the
Option Price or ISO Price, as applicable, under the related Stock Option or
ISO Option, as the case may be. All applicable Taxes will be paid by the
Participant to the Company upon the exercise of a SAR because the excess
amount described above will be required to be included within taxable
income in accordance with Sections 61 and 83 of the Code.
ARTICLE IV
GRANTING OF ISO OPTIONS
4.1 GENERAL. With respect to ISO Options granted on or after the effective
date of the Plan the following provisions in this Article IV shall apply to the
exclusion of any inconsistent provision in any other Article in the Plan because
the ISO Options to be granted under the Plan are intended to qualify as
"incentive stock options" as defined in Section 422 of the Code.
4.2 GRANT AND TERMS OF ISO OPTIONS. ISO Options may be granted only to
employees of the Company and any of its subsidiaries. No ISO Options shall be
granted to any person who is not eligible to receive "incentive stock options"
as provided in Section 422 of the Code. No ISO Options shall be granted to any
management employee if, immediately before the grant of an ISO Option, such
employee owns more than 10 percent of the total combined voting power of all
classes of stock of the Company or its subsidiaries (as determined in accordance
with the stock attribution rules contained in Section 425(d) of the Code).
Provided, the preceding sentence shall not apply if, at the time the ISO Option
is granted, the ISO Price is at least 110 percent of the "fair market value" of
the Stock subject to the ISO Option, and such ISO Option by its terms is not
exercisable after the expiration of five years from the date such ISO Option is
granted.
4.2.1 ISO OPTION PRICE. The option price for shares of Stock subject
to an ISO Option ("ISO Price") shall be determined by the Plan
Administrator, but in no event shall such ISO Price be less than the fair
market value of the Stock on the date of grant.
4.2.2 ANNUAL ISO OPTION LIMITATION. The aggregate "fair market value"
(determined as of the time the ISO Option is granted) of the Stock with
respect to which ISO Options are exercisable for the first time
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by any Participant during in any calendar year (under all "incentive stock
option" plans qualified under Section 422 of the Code sponsored by the Company
and its subsidiary corporations) shall not exceed $100,000.
4.2.3 TERMS OF ISO OPTIONS. ISO Options shall be granted on the
following terms and conditions: (i) no ISO Option shall be exercisable more
than 10 years after the date of grant (five years if the ISO Option is
granted to a Participant who at the time of the grant owns or is deemed to
own stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or a subsidiary); (ii) the
Plan Administrator shall have the discretion to fix the period (the "ISO
Period") during which any ISO Option may be exercised; (iii) ISO Options
granted shall not be transferable except by will or by the laws of descent
and distribution; (iv) ISO Options shall be exercisable only by the
Participant while actively employed by the Company or a subsidiary, except
that (A) any such ISO Option granted and which is otherwise exercisable,
may be exercised by the personal representative of a deceased Participant
within 12 months after the death of such Participant (but not beyond the
expiration date of such ISO Option), (B) if a Participant terminates his
employment as an employee with the Company or a subsidiary on account of
Retirement, such Participant may exercise any ISO Option which is otherwise
exercisable at any time within three months of such date of termination and
(C) if a Participant terminates his employment with the Company or a
subsidiary on account of incurring a Disability, such Participant may
exercise any ISO Option which is otherwise exercisable at any time within
12 months of such date of termination. If a Participant should die during
the applicable three-month or 12 month period following the date of such
Participant's Retirement or Disability, then in such event, the rights of
the personal representative of such deceased Participant as such relate to
any ISO Options granted to such deceased Participant shall be governed in
accordance with this Subsection 4.2.3.
4.2.4 ACCELERATION OF OTHERWISE UNEXERCISABLE ISO OPTION ON
RETIREMENT, DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Board, in
its sole discretion, may permit (i) a Participant who terminates employment
as an employee with the Company or a subsidiary due to Retirement or a
Disability, (ii) the personal representative of a deceased Participant, or
(iii) any other Participant who terminates employment as an employee with
the Company or a subsidiary upon the occurrence of special circumstances
(as determined by the Board) to exercise and purchase (within three months
of such date of termination of employment as an employee or 12 months in
the case of a disabled or deceased Participant) all or any part of the
shares of Stock subject to ISO Option on the date of the Participant's
Retirement, Disability, death, or as the Board otherwise so determines,
notwithstanding that all installments, if any, had not accrued on such
date.
4.2.5 NUMBER OF ISO OPTIONS GRANTED. Subject to the applicable
limitations contained in the Plan with respect to ISO Options, Participants
may be granted more than one ISO Option. In making any such determination,
the Plan Administrator shall obtain the advice and recommendation of the
officers of the Company or a subsidiary which have supervisory authority
over such Participants. The granting of an ISO Option under the Plan shall
not affect any outstanding ISO Option previously granted to a Participant
under the Plan.
4.2.6 NOTICE TO EXERCISE ISO OPTION. Upon exercise of an ISO Option,
a Participant shall give written notice to the Secretary of the Company, or
other officer designated by the Plan Administrator, at the Company's main
office in Oklahoma City, Oklahoma.
ARTICLE V
OPTIONS NOT QUALIFYING AS
INCENTIVE STOCK OPTIONS
5.1 NON-QUALIFYING OPTIONS. With respect to all or any portion of any
option granted under the Plan not qualifying as an "incentive stock option"
under Section 422 of the Code, such option shall be considered as a Stock Option
granted under this Plan for all purposes.
-9-
<PAGE>
PROXY LABORATORY SPECIALISTS OF AMERICA, INC. PROXY
101 PARK AVENUE, SUITE 810
OKLAHOMA CITY, OKLAHOMA 73102
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF LABORATORY SPECIALISTS OF AMERICA, INC.
The undersigned stockholder hereby constitutes and appoints John Simonelli
and Larry E. Howell, and each or either of them, as proxies of the undersigned
(the "Proxies"), with full power to substitute, and authorizes each of them to
represent and to vote all shares of common stock, par value $.001 per share, of
Laboratory Specialists of America, Inc. (the "Company") held by the undersigned
at the close of business on May 30, 1997, at the 1997 Annual Meeting of
Stockholders (the "Annual Meeting") of the Company to be held in the offices of
Laboratory Specialists, Inc., at 1101 Neuton Street, Gretna, Louisiana, on
Wednesday, July 16, 1997 at 10:00 a.m., and at any adjournments or postponements
thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS IN PARAGRAPHS 1, 2, AND 3, AND IN THE DISCRETION OF THE
PROXIES, FOR ANY MATTER DESCRIBED IN PARAGRAPH 4. A stockholder wishing to vote
in accordance with the recommendation of the Board of Directors of the Company
need only sign and date this Proxy and return it to the Company.
1. To consider and act upon a proposal to re-elect John Simonelli, Larry E.
Howell, Arthur R. Peterson, Jr., Robert A. Gardebled, Jr., Jerome P. Welch and
Michael E. Dunn as members to the Board of Directors to hold office until the
1998 Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified. A vote "FOR" will represent a vote for the nominee
director.
John Simonelli [ ] FOR [ ] AGAINST [ ] ABSTAIN
Larry E. Howell [ ] FOR [ ] AGAINST [ ] ABSTAIN
Arthur R. Peterson, Jr. [ ] FOR [ ] AGAINST [ ] ABSTAIN
Robert A. Gardebled, Jr. [ ] FOR [ ] AGAINST [ ] ABSTAIN
Jerome P. Welch [ ] FOR [ ] AGAINST [ ] ABSTAIN
Michael E. Dunn [ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To consider and act upon a proposal to approve the amendment and
restatement of the Laboratory Specialists of America, Inc. 1994 Stock
Option Plan. A vote "FOR" will represent a vote for approval of the amended
and restated Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year
ending December 31, 1997. A vote "FOR" will represent a vote ratifying the
appointment.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon any other
matters that may be properly brought before the Annual Meeting and at any
adjournments or postponements thereof.
The undersigned hereby acknowledge(s) receipt of a copy of the Notice of
Annual Meeting of Stockholders, and hereby revoke(s) any proxy or proxies
heretofore given. This Proxy may be revoked at any time before it is exercised.
Please sign exactly as the name appears to left. When
shares are held by joint tenants, both should sign.
When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
Date: , 1997
-----------------------
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
