SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the
|_| Definitive Proxy Statement Commission Only (as permitted
|X| Definitive Additional Materials by Rule 14a-6(e)(2))
|_| Soliciting Material Under Rule 14a-12
AMERICAN BIO MEDICA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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|_| 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.
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AMERICAN BIO MEDICA CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 15, 2004
TO THE SHAREHOLDERS OF AMERICAN BIO MEDICA CORPORATION:
NOTICE is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of American Bio Medica Corporation (the "Company") will be
held at 10:00 A.M. on Tuesday, June 15, 2004 at the Holiday Inn located at 3
Empire Drive, Rensselaer, New York 12144 for the following purposes:
1. To elect five directors to serve until the next Annual Meeting
and until their successors are duly elected; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on April 19, 2004
are entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete statement regarding matters proposed to be acted upon
at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, please
complete, sign, date and promptly return the enclosed proxy card in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy
card.
BY ORDER OF THE BOARD OF DIRECTORS
OF AMERICAN BIO MEDICA CORPORATION
/S/ MELISSA A. DECKER
----------------------------------
Melissa A. Decker
Corporate Secretary
Kinderhook, New York
May 12, 2004
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
AMERICAN BIO MEDICA CORPORATION
122 SMITH ROAD
KINDERHOOK, NEW YORK 12106
GENERAL
This Proxy Statement is being furnished to holders of common stock, par
value $0.01 per share ("Common Shares"), of American Bio Medica Corporation, a
New York corporation ("ABMC" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at 10:00 A.M.
on Tuesday, June 15, 2004, eastern standard time, and at any adjournment or
postponement thereof for the purpose of considering and acting upon the matters
set forth herein. The Annual Meeting will be held at the Holiday Inn located at
8 Empire Drive, Rensselaer, New York 12144. The Company's principal executive
offices are located at 122 Smith Road, Kinderhook, New York, 12106. The
Company's telephone number at that address is (518) 758-8158.
This Proxy Statement, the accompanying proxy and the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2003 are first
being mailed to shareholders entitled to vote at the meeting on or about May 18,
2004. Although the Company's Annual Report on Form 10-KSB (including audited
financial statements) for the fiscal year ended December 31, 2003 is included
with the proxy materials, it should not be considered proxy solicitation
material.
The holders of a majority of common shares entitled to vote and
represented in person or by proxy at the Annual Meeting will constitute a quorum
for the transaction of business at the Annual Meeting. In general, common shares
represented by a properly signed and returned proxy will be counted as common
shares present and entitled to vote at the Annual Meeting for purposes of
determining a quorum, without regard to whether the proxy reflects abstentions
(or is left blank) or reflects a "broker non-vote" on a matter (i.e. a proxy
returned by a broker because voting instructions have not been received and the
broker has no discretionary authority to vote). Holders of common shares are not
entitled to cumulative voting rights.
PROCEDURE FOR SUBMITTING SHAREHOLDER PROPOSALS
Shareholder nominations for directors and shareholder proposals for the
next Annual Meeting of Shareholders must be received by the Company in writing
on or before January 14, 2005 and must otherwise comply with the requirements of
Rule 14a-8 of the Securities Exchange Act of 1934 (the "Exchange Act"). The
Company has not received any shareholder proposals for this Annual Meeting.
REVOCABILITY OF PROXY.
Any proxy card given pursuant to this solicitation may be revoked by
the person giving it at any time before it is voted. A proxy card may be revoked
(1) by filing with the Secretary of the Company, at or before the taking of the
vote at the Annual Meeting, a written notice of revocation or a duly executed
proxy card, in either case later dated than the prior proxy card relating to the
same shares, or (2) by attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not of itself revoke a proxy).
Any written notice of revocation or subsequent proxy card must be received by
the Secretary of the Company prior to the taking of the vote at the Annual
Meeting. Such written notice of revocation or subsequent proxy card should be
hand delivered to the Secretary of the Company or should be sent so as to be
delivered to American Bio Medica Corporation, 122 Smith Road, Kinderhook, New
York 12106, Attention: Corporate Secretary.
VOTING
Voting by attending the meeting. A shareholder may vote his or her
shares in person at the Annual Meeting. A shareholder planning to attend the
meeting should bring proof of identification for entrance to the meeting.
Voting by proxy card. All shares entitled to vote and represented by
properly executed proxy cards received prior to the Annual Meeting, and not
revoked, will be voted at the Annual Meeting in accordance with the instructions
indicated on those proxy cards. If no instructions are indicated on a properly
executed proxy card, the shares represented by that proxy card will be voted as
recommended by the Board of Directors. If any other matters are properly
presented for consideration at the Annual Meeting, including, among other
things, consideration of a motion to adjourn the Annual Meeting to another time
or place (including, without limitation, for the purpose of soliciting
additional proxies), the persons named in the enclosed proxy card and acting
thereunder generally will have discretion to vote on those matters in accordance
with their best judgment. The Company does not currently anticipate that any
other matters will be raised at the Annual Meeting.
For the election of directors, the five nominees who receive the most votes will
be elected to the five available memberships on the Board. If you return a
signed proxy form or attend the Annual Meeting but choose to abstain from voting
on any proposal, you will be considered present at the Annual Meeting and not
voting in favor of the proposal. Since most proposals pass only if they receive
favorable votes from a majority of votes present at the Annual Meeting, the fact
that you are abstaining and not voting in favor of a proposal will have the same
effect as if you had voted against the proposal. (In contrast, a "broker
non-vote," where a broker withholds authority to cast a vote as to a certain
proposal, is deemed not present at the Annual Meeting with regard to that
proposal.)
EXPENSES OF SOLICITATION
The cost of the soliciting of proxies on behalf of the Board of
Directors will be borne by the Company. In addition to the use of the mails,
proxies may be solicited by the directors, officers and employees of the
Company, without additional compensation, by telephone, other electronic means
or in person. Arrangements may also be made with brokerage firms or other
custodians, nominees or fiduciaries for the forwarding of soliciting material to
the beneficial owners of common shares of the Company held of record by such
persons; and the Company will reimburse such respective brokers, custodians,
nominees and fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection therewith. ADP has been retained to assist in soliciting
proxies at a fee of $5,000 plus distribution costs and other costs and expenses.
SHAREHOLDERS ENTITLED TO VOTE; RECORD DATE
The Company has fixed the close of business on April 19, 2004 as the
record date for determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting or any adjournments thereof. As of the record date, the
Company had one class of voting shares outstanding - common shares, $.01 par
value per share ("common shares"). Each common share is entitled to one vote on
each matter to be voted on at the Annual Meeting. As of May 3, 2004, there were
21,282,268 outstanding common shares. No shares of preferred stock are
outstanding. For information regarding security ownership by management and by
the beneficial owners of more than 5% of the Company's Common Shares, see
"Security Ownership by Management and Certain Beneficial Owners."
2
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
As of May 3, 2004, there were 21,282,268 common shares outstanding of
which 21,282,268 common shares are entitled to vote at the Annual Meeting. Each
Common Share is entitled to one vote on each of the matters to be voted on at
the Annual Meeting. The following table sets forth, as of May 3, 2004, the
beneficial ownership of the Company's common shares by (i) each director, (ii)
each nominee for director, (iii) each of the executive officers named in the
Summary Compensation Table; (iv) all directors and executive officers of the
Company as a group; and (v) each shareholder, known to management of the
Company, to beneficially own more than five percent (5%) of the outstanding
common shares.
The number and percentage of shares beneficially owned is determined
under the rules of the U.S. Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days after May 3,
2004, through the exercise of any stock option, exchange of Exchangeable Shares
or other right. Unless otherwise indicated, each person has sole voting and
investment power (or shares such powers with his or her spouse) with respect to
the shares shown as beneficially owned.
NAME AND ADDRESS NUMBER OF SECURITIES
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIALLY OWNED* PERCENT OF CLASS
-------------- ------------------- ------------------- ----------------
Common Edmund Jaskiewicz
1730 M Street, NW, Suite 400
Washington, DC 20036 2,068,155(1) 9.7 %
Common Stan Cipkowski
122 Smith Road
Kinderhook, NY 12106 2,105,500(2) 9.6 %
Common Douglas Casterlin
122 Smith Road
Kinderhook, NY 12106 402,000(3) 1.9%
Common Martin R. Gould
122 Smith Road
Kinderhook, NY 12106 287,500(4) 1.3%
Common Donal V. Carroll
1 Palace Pier Court, Suite 303
Toronto, Ontario
Canada M8V 3W9 172,265(5) **
Common Keith E. Palmer
122 Smith Road
Kinderhook, NY 12106 125,000(6) **
Common Richard P. Koskey
502 Union Street
Hudson, NY 12534 10,000 **
Common Daniel W. Kollin
C/O 122 Smith Road
Kinderhook, NY 12106 19,750(7) **
Common Anthony G Costantino
C/O 122 Smith Road
Kinderhook, New York 12106 6,000(8) **
Common Directors and Executive Officers
as a group (11 persons) 5,196,170(9) 22.8%
----------------
* The number of shares noted for each individual is based upon information
obtained from their Section 16(a) filings with the United States
Securities and Exchange Commission.
** Less than one percent (1%).
3
(1) Includes 151,500 common shares subject to stock options exercisable within
60 days of May 3, 2004.
(2) Includes 612,500 common shares subject to stock options exercisable within
60 days of May 3, 2004.
(3) Includes 287,500 common shares subject to stock options exercisable within
60 days of May 3, 2004.
(4) Includes 282,500 common shares subject to stock options exercisable within
60 days of May 3, 2004.
(5) Includes 29,000 common shares subject to stock options exercisable within
60 days of May 3, 2004.
(6) Includes 87,500 common shares subject to stock options exercisable within
60 days of May 3, 2004 and 12,500 common shares subject to warrants
exercisable within 60 days of May 3, 2004.
(7) Includes 19,750 common shares subject to stock options exercisable within
60 days of May 3, 2004.
(8) Includes 6,000 common shares subject to stock options exercisable within
60 days of May 3, 2004.
(9) Includes an aggregate of 1,488,750 common shares subject to stock options
or warrants exercisable within 60 days of May 3, 2004.
DIRECTORS, EXECUTIVE OFFICERS AND SENIOR MANAGEMENT
The following table sets forth the names, ages, positions/offices held,
the term of the positions/offices held of our directors, executive officers, and
senior management.
NAME AGE POSITION/OFFICE SERVED SINCE
---- --- --------------- ------------
Stan Cipkowski(1) 55 Director 1986
Edmund Jaskiewicz(1),(2) 80 President/Director 1992
Martin R. Gould(3) 52 CSO, Exec Vice Pres., Technology 1998
Donal V. Carroll 56 Director 2003
Keith E. Palmer 43 CFO, Exec. Vice Pres. Finance, Treasurer 2000
Richard P. Koskey(1) 64 Director 2003
Daniel W. Kollin(1)(4) 62 Director 2004
Anthony Costantino(1)(5) 44 Director Nominated
Todd Bailey(6) 33 Vice President, Sales & Marketing 2001
Dr. Henry J. Wells, Ph.D. 73 Vice President, Product Development 1998
(1) Nominee for election to the Board of Directors. Biography can be
found under "Proposal No. 1 - Election of Directors; Nominees".
(2) Mr. Jaskiewicz was appointed President on September 5, 2003.
(3) Mr. Gould was appointed Executive Vice President on October 23,
2003.
(4) Mr. Kollin previously served on the Board of Directors from February
2003 until September 2003 and was reappointed in January 2004.
(5) Dr. Costantino previously served on the Company's Science Advisory
Board from April 1998 until November 2003.
(6) Mr. Bailey was appointed Vice President, Sales & Marketing on
September 29, 2003.
Information regarding those executive officers and directors that are
not nominees for election to the Board of Directors:
KEITH E. PALMER joined us in October 2000 as our Vice President,
Finance, Chief Financial Officer and Treasurer and will serve as a member of our
Board of Directors from October 2003 until June 2004. He is a Certified Public
Accountant with over 20 years experience in accounting, finance, strategic
planning, and merger and acquisitions. From 1998 until joining us, Mr. Palmer
was Director of Finance and Controller of Matthew Bender, a division of Lexis
Publishing, a legal publisher. At Matthew Bender he was responsible for
management of financial reporting and analysis, accounting and control,
strategic planning and numerous Finance and Operational integration efforts.
From 1993 until 1998, he was the Director of Finance & Controller for Matthew
Bender & Company, Inc., a wholly owned subsidiary of the Times Mirror Corp.
During that time he spearheaded the acquisition and/or integration, and assumed
responsibility for financial reporting and analysis, of four businesses,
including Shepard's, a legal citations publisher in Colorado Springs, Co.,
Capsoft, an electronic legal forms software firm in Provo, Utah, Mosby Medical
Publishing in St. Louis, Missouri, and Michie, a legal publisher in
Charlottesville, VA. In addition to integrating financial and operational
functions, Mr. Palmer assisted on the integration and implementations of several
financial, manufacturing and fulfillment systems, during this time. Prior to
joining Matthew Bender, he was a Vice President of Marine Midland Bank, a
commercial bank, and from 1983 until 1987, he was an auditor and senior
consultant at the public accounting firm of Ernst & Whinney. Palmer received his
MBA in Finance from Sage Colleges in 1995 and his BBA in Accounting from Siena
College in 1983.
4
MARTIN GOULD joined us in 1998. He was appointed our Executive Vice
President, Technology in 2003 and currently also services as our Chief Science
Officer (he was promoted to Chief Scientific Officer in 2002). Prior to becoming
our CSO, he was our Vice President of Technology. Mr. Gould is a biomedical
scientist with more than 30 years of experience in the diagnostic and chemical
fields. He has an extensive background in research and development,
manufacturing, quality control/assurance, as well as business development and
sales and marketing. His experience is in the areas of clinical chemistry,
serology, immunology, hematology, dyes and stains, chromatography, reagent
chemical and food diagnostics, specifically rapid microbiological testing. From
1973 to 1987, Mr. Gould worked for E. Merck, Inc. in various positions of
increasing responsibilities within the product management, research and
development, and quality assurance/control departments. In 1987, he founded
Ampcor Diagnostics, Inc., which he grew until 1994 when it was acquired by
Neogen Corp. (NASDAQ:NEOG). Mr. Gould continued to serve as Vice President and
General Manager of Neogen Corp. until 1997. Mr. Gould was an independent
consultant after leaving Neogen Corp. in 1997 until joining us in 1998. Mr.
Gould is an accomplished researcher with numerous publications in a variety of
fields, including rapid immunoassay tests to detect food pathogens such as
e-coli, salmonella, listeria, shigella, and campylobacter. Mr. Gould established
a patent in composition for stabilization of diagnostics reagents, three
separate patents for immunoassay diagnostics kits, as well as a patent
concerning a growth media that resuscitates injured bacteria, such as
salmonella, that was recently issued. Mr. Gould received a Masters in Biomedical
Science and Biomedical Engineering from Drexel University in 1982, and a BS
degree from Delaware Valley College in 1973.
DONAL V. CARROLL was appointed to our Board of Directors in June 2003
will serve as a member of the Board until June 2004. He was appointed CEO in
October 2003 and subsequently removed from the office in January 2004. Mr.
Carroll has founded and developed several finance and wholesale merchandising
companies during the past 30 years. Donal Carroll graduated from University
College of Dublin with a degree in law and established the largest civil rights
defense practice in Ireland. He also founded Celtic Marine Investments and
Family Homes Finance which was subsequently incorporated into the Irish
Permanent Building Society. He holds directorships in Redbrook Holdings,
Redbrook Management and Fortius Capital.
Information regarding members of senior management that are not
nominees for election to the Board of Directors:
TODD BAILEY joined us in April 2001 as a Director of Business
Development and subsequently promoted to Director of National Accounts. In
September 2003, he was appointed Vice President of Sales & Marketing. Prior to
joining us, Mr. Bailey was Substance Abuse Account Manager for Roche Diagnostics
Corporation where he was responsible for territory sales of point-of-collection
tests for drugs of abuse to Fortune 500 manufacturers and state agencies. From
March 1994 through July 1999, he held various sales and management positions
with Paxar, Hunt-Wesson, and Frito-Lay Inc. Mr. Bailey received a B.S. in
communications from St. Cloud University in 1994.
5
HENRY J. WELLS, PH.D. joined us as a contract chemist in 1995. In 1998
he became a full-time employee as our Vice President of Product Development.
From 1990 to 1998, Dr. Wells worked as a contract chemist with the title of Vice
President Science and Technology for New Horizons Diagnostics, Inc. where he
adapted immuno-chemical technologies for detection of infectious diseases. From
1989 to 1990, he was director of production for Espro, Inc., a producer of
in-vivo pesticides. From 1985 to 1989, Dr. Wells was Vice President Science and
Technology for Keystone Diagnostics, Inc. From 1984 to 1985, he was Director of
Research and Development for Hill-Wells Research Corporation, a developer of
diagnostics products. From 1981 to 1984, he was Vice President Research and
Development of Hematec Corporation. From 1979 to 1981, Dr. Wells was Director of
Biochemistry for Helena Laboratories. From 1973 to 1979, he was Manager of
Chemical Chemistry at Smith Kline Diagnostics. Dr. Wells earned his Ph.D. in
Biochemistry from the University of Pittsburgh in 1966, his M.A. from University
of Pennsylvania in 1972 (honorary) and his B.S. in Chemistry from the University
of Pittsburgh in 1958.
EXECUTIVE COMPENSATION
The following table sets forth for fiscal years ended December 31, 2003
and December 31, 2002, the compensation paid by the Company to its Chief
Executive Officer(s) and any other executive officers who earned in excess of
$100,000 (the "Named Officers") based on salary and bonus.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
Other Annual Securities Underlying
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options/SARs (#)
Keith E. Palmer 12/31/03 $135,000(1) $10,000 $ 0 50,000
Chief Financial Officer 12/31/02 $124,615(2) $ 0 $ 3,750(3) -----------
Executive Vice
President
Finance
Douglas Casterlin(4) 12/31/03 $145,384(5) $10,000 $ 0 -----------
Executive Vice-President 12/31/02 $140,000 $ 0 $ 5,250(3) -----------
Operations
Martin R. Gould(6) 12/31/03 $109,154(7) $ 0 $ 0 150,000
Chief Science Officer
Executive Vice President
Technology
Stan Cipkowski(8) 12/31/03 $186,923(9) $ 0 $ 0 -----------
Executive Vice President 12/31/02 $190,764 $ 0 $ 45,000(10) 300,000
Donal V. Carroll(11) 12/31/03 $ 32,000(12) $ 0 $ 3,000(13) 329,000
Chief Executive Officer
Gerald A. Moore(14) 12/31/03 $170,000(15) $10,000 $ 7,500(3) 75,000(16)
Chief Executive Officer 12/31/02 $165,000(17) $ 0 $ 18,000(18) 810,000(16)
Robert L. Aromando(19) 12/31/02 $ 17,294(20) $ 0 ----------- -----------
Chief Executive Officer
6
(1) Mr. Palmer's actual annual salary in 2003 was $130,000. The additional
amount in this figure is due to timing of pay periods within the year.
(2) In July 2002, Mr. Palmer's annual salary was increased to $130,000 from
$120,000.
(3) Car allowance.
(4) Mr. Casterlin subsequently resigned as the Company's Executive Vice
President in January 2004.
(5) Mr. Casterlin's actual annual salary in 2003 was $140,000. The additional
amount in this figure is due to timing of pay periods within the year.
(6) Mr. Gould was appointed Executive Vice President in October 2003.
(7) Mr. Gould's actual annual salary through August 2003 was $102,000. It was
increased in September 2003 to $114,000.
(8) Mr. Cipkowski resigned from his position of Executive Vice President in
July 2003.
(9) Mr. Cipkowski's actual annual salary is $180,000. The additional amount in
this figure is due to timing of pay periods within the year.
(10) Includes a car allowance of $3,000 and the forgiveness of accrued interest
on a loan provided to Mr. Cipkowski by the Company, of $42,000 (See
"Certain Relationships and Related Transactions").
(11) Mr. Carroll was appointed CEO in October 2003 and subsequently removed from
the position of CEO in January 2004.
(12) The Company has not yet paid this amount to Mr. Carroll however it has been
accrued on the books of the Company.
(13) This amount is for Mr. Carroll's attendance at meetings of the Board of
Directors as an independent board member, before he was appointed CEO.
(14) Mr. Moore resigned as the Company's Chairman, President and CEO in
September 2003 and was paid for his services through August 2003.
(15) Mr. Moore's actual annual salary in 2003 was $180,000. Mr. Moore was paid
through August 2003. This amount also includes $50,000 that was paid to Mr.
Moore in 2003 for a portion of his 2002 salary that was deferred.
(16) These option grants were subsequently cancelled by the company in September
2003.
(17) Mr. Moore's actual annual salary was $180,000 in 2002. $50,000 of Mr.
Moore's salary in 2002 was deferred upon mutual agreement with the Company.
(see footnote 15), therefore actual salary payments to Mr. Moore in 2002
were $115,000.
(18) Other compensation consists of $15,000 Mr. Moore received as compensation
for his services as interim President & CEO for the month of January 2002
and $3,000 in a car allowance.
(19) Mr. Aromando resigned as the Company's President & CEO in January 2002.
(20) Mr. Aromando was paid as the Company's President & CEO through January 2003
in connection with his severance agreement.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 2003
The following table sets forth information concerning the grant of
stock options to the named executive officers during the fiscal year ended
December 31, 2003.
7
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SHARES OPTIONS GRANTED EXERCISE APPRECIATION
UNDERLYING TO EMPLOYEES IN PRICE PER FOR OPTION TERM(1)
NAME OPTIONS GRANTED YEAR(2) SHARE EXPIRATION DATE 5% 10%
--------------------------------------------------------------------------------------------------------------------------------
Gerald A. Moore(3) 75,000(4) 7.0% $1.04 4/23/13(5) $ 48,750 $ 124,500
Stan Cipkowski(6) 0 0% ------- --------- ---------- ---------
Douglas Casterlin(7) 0 0% ------- ---------- ---------- ---------
Keith E. Palmer 50,000(8) 4.6% $1.04 4/23/13 $ 32,500 $ 83,000
Donal V. Carroll(9) 29,000(10) 2.7% $1.03 6/30/13 $ 18,850 $ 47,560
300,000(11) 27.8% $1.15 10/23/13 $ 216,000 $ 549,000
Martin R. Gould(12) 100,000) 9.3% $1.02 4/22/13 $ 64,000 $ 163,000
50,000[13] 4.6% $1.04 4/23/13 $ 32,500 $ 83,000
(1) Potential realizable value is based on an assumption that the price of the
common shares appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the option term. These numbers are
calculated based on the requirements of the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
performance.
(2) The Company granted options representing 1,078,500 common shares to
employees in the year end December 31, 2003.
(3) Mr. Moore resigned as the Company's Chairman, President & CEO on September
5, 2003.
(4) Option grants vested over 4 years (i.e. 25% each year on the anniversary
of the grant date of 4/24/03).
(5) Option grant was subsequently cancelled by the Company on 9/11/03.
(6) Mr. Cipkowski resigned as Executive Vice President on July 1, 2003.
(7) Mr. Casterlin resigned as Executive Vice President on January 30, 2004.
(8) Option grant vests over 4 years (i.e. 25% each anniversary of 4/23/03).
(9) Mr. Carroll was removed from the office of CEO on January 21, 2004.
(10) Option granted in connection with Mr. Carroll's services as a member of
the Board of Directors. Option grant vests 100% on the 1 year anniversary
of June 30, 2003.
(11) Entire option grant was subsequently cancelled by the Company upon Mr.
Carroll's removal as CEO.
(12) Mr. Gould was appointed Executive Vice President, Technology on 10/23/03.
(13) Option grant vests over 4 years (i.e. 25% each anniversary of 4/23/03).
AGGREGATED OPTION EXERCISE IN THE FISCAL YEAR ENDED DECEMBER 31, 2003 AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the exercise of
stock options during the fiscal year ended December 31, 2003 by the named
executive officers, and their options outstanding at fiscal year end.
8
AGGREGATE OPTION/SAR EXERCISES IN FISCAL YEAR AND TP-END OPTION/SAR VALUES
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options/SARs at In-the Money Options/SARs
Acquired on Value FY-End (#) at FY-End ($)(1)
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------------
Gerald A. Moore(2) 0 $ 0 -----------(3) -----------(3) --------- ---------
Stan Cipkowski(4) 0 $ 0 587,500 251,000 $ 77,850 $ 127,150
Douglas Casterlin(4) 0 $ 0 275,000 25,000 $ 15,000 $ 15,000
Keith E. Palmer 0 $ 0 50,000 100,000 $ 30,000 $ 55,000
Donal V. Carroll(6) 0 $ 0 0 329,000(7) $ 0 $ 131,790(8)
Martin R. Gould(9) 0 $ 0 145,000 215,000 $ 14,350 $ 113,250
(1) Value of Unexercised In-The-Money Options at Fiscal Year End is
calculated by using the high sale price of the common shares on December
31, 2003, which was $1.54, less the exercise price of the in-the-money
exercisable options which is then multiplied by the number of common
shares covered under the option(s).
(2) Mr. Moore resigned as Chairman, President & CEO on September 5, 2003.
(3) Any and all options previously granted to Mr. Moore in both his role
as a Director and Chairman, President & CEO were cancelled by the Company.
(i.e. 615,000 were cancelled on 9/11/03 and 473,000 were cancelled on
12/3/03).
(4) Mr. Cipkowski resigned as Executive Vice President on July 1, 2003.
(5) Mr. Casterlin resigned as Executive Vice President on January 30, 2004
(6) Mr. Carroll was removed from the office of CEO on January 21, 2004.
(7) Of this amount, 300,000 were subsequently cancelled by the Company on
January 30, 2004 as a result of Mr. Carroll's removal as CEO.
(8) Of this amount, $117,000 is related to the 300,000 options that were
cancelled by the Company on January 30, 2004 as a result of Mr. Carroll's
removal as CEO.
(9) Mr. Gould was appointed Executive Vice President, Technology on
October 23, 2003.
COMPENSATION OF DIRECTORS
Directors who are not employees or officers of the Company ("Outside
Directors") are granted an option to purchase 25,000 common shares at the time
of election (such initial option grant is pro-rated in consideration of the
amount of time a Director would serve until the next Annual Meeting of
Shareholders) and are granted an additional option to purchase 25,000 common
shares annually on the date of the Company's Annual Meeting of Shareholders. All
options granted to Outside Directors are issued with exercise prices based on
the fair market value of the Company's common shares on the date of issuance.
Outside Directors receive a fee of $1,500 for attending meetings of the Board in
person and $750 for attendance at telephonic meetings of the Board, and are
reimbursed for out-of-pocket expenses incurred in attending such meetings.
Special meetings are held from time to time to consider matters for
which approval of the Board of Directors is desirable or is required by law.
Four regular meetings of the Board of Directors and two special meetings were
held during the fiscal year ended December 31, 2003. Dr. Gerald W. Lynch
attended 66% of the meetings held during the period for which he was a director,
Denis M. O'Donnell, M.D. attended 60% of the meetings held, Gerald Moore
attended 80%of the meetings held during the period for which he was a director
and the remaining members attended 100% of all meetings held in the fiscal year
ended December 31, 2003.
9
Those outside directors who are members of the Company's Compensation
and/or Audit Committees of the Board of Directors are granted an option to
purchase 2,000 common shares upon their election to each Committee (such initial
option grant is pro-rated in consideration of the amount of time a Director
would serve until the next Annual Meeting of Shareholders and are granted an
additional option to purchase 2,000 common shares annually on the date of the
Company's Annual Meeting of Shareholders, for each committee on which they
serve.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company currently has an Audit Committee, Compensation Committee
and a Nominating Committee. The Company's Option Committee is a sub-committee of
the Compensation Committee.
NOMINATING COMMITTEE
The Nominating Committee currently consists of two members, both of
whom are independent. Members of the Nominating Committee are Richard P. Koskey
and Daniel W. Kollin. The nominating committee is governed by a charter it has
adopted, a copy of which is attached as Exhibit B to this proxy statement. The
purpose of the Nominating Committee is to review, and make recommendations
related to, qualified candidates for election to the Board of Directors.
Nominations may be made by any member of the Board of Directors, or by any
shareholder entitled to vote for the election of directors. Nominations made by
shareholders for the next Annual Meeting must be made in writing and received by
the Company by January 14, 2005. There was one meeting held by the Nominating
Committee in the fiscal year ended December 31, 2003 and action was taken with
unanimous consent on one occasion in fiscal 2003.
The following functions are among the key duties and responsibilities of the
nominating committee:
o evaluating candidates for membership on the Board;
o recommending to the full Board all nominees for election to the
Board by our shareholders; and
o recommending directors to be elected by the Board to fill vacancies
on the Board.
In carrying out its function to evaluate and recommend nominees for
election to the Board, the nominating committee considers a candidate's mix of
skills, experience, character, commitment and diversity of background, all in
the context of the requirements of the Board at that point in time. Each
candidate should be prepared to participate fully in Board activities, including
attendance at, and active participation in, meetings of the Board, and not have
other personal or professional commitments that would, in the nominating
committee's judgment, interfere with or limit such candidate's ability to do so.
Additionally, in determining whether to recommend a director for re-election,
the nominating committee also considers the director's past attendance at Board
and committee meetings and participation in and contributions to the activities
of the Board. The nominating committee has no stated specific, minimum
qualifications that must be met by a candidate for a position on our Board. The
nominating committee does, however, believe it appropriate for at least one
member of the Board to meet the criteria for an "audit committee financial
expert" as defined by SEC rules, and for a majority of the members of the Board
meet the definition of "independent director" within the meaning of applicable
Nasdaq listing standards.
The nominating committee's methods for identifying candidates for election
to the Board (other than those proposed by the Company's shareholders, as
discussed below) include the solicitation of ideas for possible candidates from
a number of sources, including: members of the Board; our executives;
individuals personally known to the members of the Board; and other research.
The nominating committee also has authority to select and compensate a
third-party search firm to help identify candidates, if it deems it advisable to
do so.
10
The nominating committee will consider nominees shareholders recommend.
Shareholders may submit nominations to the nominating committee in care of
Corporate Secretary, American Bio Medica Corporation, 122 Smith Road,
Kinderhook, NY 12106. To be timely for consideration at our next Annual Meeting
of Shareholder, our Corporate Secretary must receive a shareholder's nomination
notice at our principal executive offices, at the address set forth above, no
later than January 14, 2005.
The nominating committee will consider all candidates identified through
the processes described above, whether identified by the committee or by a
shareholder, and will evaluate each of them on the same basis.
AUDIT COMMITTEE
This Committee makes recommendations to the Board of Directors with
respect to the Company's financial statements and the appointment of independent
auditors, reviews significant audit and accounting policies and practices, meets
with the Company's independent public accountants concerning, among other
things, the scope of audits and reports, and reviews the performance of the
overall accounting and financial controls of the Company. The Audit Committee
formally met 2 times and informally met several times in the fiscal year ended
December 31, 2003. The Audit Committee charter requires four Audit Committee
meeting per fiscal year. All of the members attended 100% of the formal meetings
of the Audit Committee.
As of the date of this report, the Audit Committee is comprised of two
members, both of whom are independent directors, (as independence is defined in
Rule 4200(a)(15) of the National Association of Securities Dealers ("NASD")
listing standards, as applicable and as may be modified or supplemented), as
required by Rule 4350(d)(2) of the NASD listing standards. While the Company is
currently not in compliance with the requirements under Rule 4350(d)(2), the
Company is relying on Nasdaq Marketplace Rule 4350(d)(4)(b), which provides for
a cure period for the Company to regain compliance with the Audit Committee
composition requirements.
As of the date of this report, members of the Audit Committee were
Richard P. Koskey and Daniel W. Kollin. The Board of Directors has adopted an
Audit Committee charter, which was previously filed as an Exhibit to the
Company's Proxy Statement filed on August 27, 2001 with the Securities and
Exchange Commission. The Audit Committee Charter was amended in April 2004 and
the revised charter is attached to this Proxy Statement as Exhibit A.
AUDIT COMMITTEE FINANCIAL EXPERT
The Audit Committee is presently comprised of Messrs. Koskey and
Kollin, both of whom are independent as defined in the applicable rules of the
Nasdaq Small Cap Market. The Board has determined that Mr. Koskey is a financial
expert as the term is defined under Item 401(e)(1) of Regulation S-B.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial reporting process
on behalf of the Board. Management has the primary responsibility for the
financial statements and the reporting process. The Company's independent
auditors are responsible for expressing an opinion on the conformity of the
Company's audited financial statements to generally accepted accounting
principles upon completion of their audit.
11
In this context, the Audit Committee reviewed and discussed with
management and the independent auditors the audited financial statements for the
fiscal year ended December 31, 2003 (the "Audited Financial Statements"). The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards, AU ss. 380) as may be modified or
supplemented. In addition, the Audit Committee has received the written
disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No.1 (Independence Standards Board
Standard No.1, Independence Discussions with Audit Committees), as may be
modified and supplemented, and has discussed with the independent accountants
their independence from the Company and its management.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the Audited Financial
Statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2003, for filing with the Securities and Exchange
Commission.
The Audit Committee members do not serve as professional accountants or
auditors and their functions are not intended to duplicate or to certify the
activities of management and the independent auditors. The Committee serves a
board-level oversight role where it receives information from, consults with and
provides its views and directions to, management and the independent auditors on
the basis of the information it receives and the experience of its members in
business, financial and accounting matters.
The Audit Committee
Richard P. Koskey, Chairman
Daniel W. Kollin
COMPENSATION AND OPTION COMMITTEES
The Compensation Committee makes recommendations to the Board of
Directors relating to salaries, bonuses and other compensation and benefits of
executive officers, reviews and advises management regarding benefits and other
terms and conditions of compensation of management, and the Company's Option
Committee administers the Company's stock option plans. Both the Compensation
and Option Committees met one time in the fiscal year ended December 31, 2003.
All of the members attended 100% of the meetings held by the Compensation
Committee.
As of the date of this report, the Compensation and Option Committees
were comprised of independent board members Richard P. Koskey and Daniel W.
Kollin.
COMPENSATION COMMITTEE'S REPORT
The compensation of the Company's executive officers and key managers
("executives") is reviewed and approved annually by the Board of Directors. In
addition to reviewing and approving executives' salaries and bonus arrangements,
the Compensation Committee establishes policies and guidelines for other
benefits.
COMPENSATION POLICIES AND PROCEDURES APPLICABLE TO EXECUTIVES FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2003
General. Compensation of the Company's executives is intended to
attract, retain and reward persons who are essential to the corporate
enterprise. The fundamental policy of the Company's executive compensation
program is to offer competitive compensation to executives that appropriately
rewards the individual executive's contribution to corporate performance. The
Compensation Committee utilizes subjective criteria for evaluation of individual
performance and relies substantially on the executives in doing so. The
Committee focuses on two primary components of the Company's executive
compensation program, each of which is intended to reflect individual and
corporate performance: base salary compensation and long-term incentive
compensation.
12
Cash Compensation. Executives' base salaries are determined primarily
by reference to compensation packages for similarly situated executives of
companies of similar size or in comparable lines of business with which the
Company expects to compete for executive talent and with reference to the
revenues, gross profits and other financial criteria of the Company. The
Committee also assesses subjective qualitative factors to discern a particular
executive's relative value to the corporate enterprise in establishing base
salaries. During the fiscal year ended December 31, 2003, the salary of the
Chief Financial Officer was established in his employment agreement.
Long-Term Incentive Compensation. It is the Committee's philosophy that
significant stock ownership by management creates a powerful incentive for
executives to build long-term shareholder value. Accordingly, the Committee
believes that an integral component of executive compensation is the award of
equity-based compensation, which is intended to align executives' long-term
interests with those of the Company's shareholders. Awards of stock options to
executives have historically been at then-current market prices. The Committee
believes that option grants should be considered on an annual basis.
The Company's Fiscal 1997, 1998, 2000 and 2001 Nonstatutory Stock
Option Plans (the "Option Plans") authorize the Board, Compensation or Option
Committee to grant nonstatutory stock options to employees, directors and/or
consultants of the Company. The Committee will determine the prices and terms at
which such options are granted. The Committee uses stock options as a
significant element of the compensation package of executives, because it
believes options provide an incentive to executives to maximize shareholder
value and because they compensate executives only to the extent that the
Company's shareholders receive a return on their investment. In determining the
total number of common shares to be covered by option grants to executives in a
given year, the Committee will take into account the number of outstanding
common shares, the number of common shares reserved for issuance under the
Company's Option Plans, recommendations of management concerning option grants
to employees below executive level and the Company's projected hiring needs for
the coming year. In making individual stock option grants to executives, the
Committee will consider the same factors considered in the determination of base
salary levels, as well as the stock and option holdings of each executive and
the remaining vesting schedule of such executive's options.
Compensation of the CEO. In reviewing and approving Mr. Carroll's
compensation for the fiscal year ended December 31, 2003, the Board of Directors
considered the same criteria detailed herein with respect to executives in
general. Mr. Carroll's base annual salary was below the midpoint of base
compensation for CEOs of comparable companies. Mr. Carroll was granted stock
options covering 300,000 common shares that vest over time. Subsequent to the
fiscal year ended December 31, 2003, Mr. Carroll was removed from the office of
Chief Executive Officer in January 2004, and all options granted to him as Chief
Executive Officer were subsequently cancelled and returned to the option plan
under which they were issued.
Other Executive Management Compensation. Keith E. Palmer, the
Company's Chief Financial Officer and Executive Vice President of Finance, has
entered into an employment agreement with the Company dated January 10, 2001 and
ending April 30, 2002, and automatically renewed unless 60 days advance written
notice is given by either side. Pursuant to this agreement, Mr. Palmer
originally received an annual base salary of $100,000, a stock option grant
covering 100,000 common shares that vest over time and, is eligible for bonuses
based upon Company performance. Mr. Palmer's annual base salary was increased to
$130,000 in July of 2002 upon mutual agreement between the Company and Mr.
Palmer. Martin R. Gould, the Company's Chief Science Officer and Executive Vice
President of Technology is currently an at-will employee and receives an annual
salary of $114,000 (Mr. Gould's annual salary was increased in September 2003
from $102,000 to $114,000).
The Compensation Committee
Richard P. Koskey
Daniel W. Kollin
13
COMMUNICATIONS WITH DIRECTORS AND COMMITTEES
Shareholders may communicate with members of the Company's Board of
Directors and its Committees by writing to American Bio Medica Corporation, 122
Smith Road, Kinderhook, New York 12106, Attn: Corporate Secretary. The Corporate
Secretary will disseminate the communication(s) to the appropriate
individual(s).
INDEPENDENT ACCOUNTANTS
The Company has selected PricewaterhouseCoopers LLP to continue to be
its independent public accountants for the fiscal year ending December 31, 2003.
Representatives of PricewaterhouseCoopers LLP are expected to attend the Annual
Meeting and will have an opportunity to make a statement and/or to respond to
appropriate questions from shareholders.
AUDIT FEES
The aggregate fees billed by PricewaterhouseCoopers LLP to the Company
in the fiscal years ended December 31, 2003 and December 31, 2002, for
professional services rendered for the audit of the Company's annual financial
statements and review of financial statements included in the Company's Form
10-QSB, or services that were normally provided by PricewaterhouseCoopers LLP in
connection with statutory and regulatory filings or engagements for these fiscal
years, were $94,150and $106,550, respectively.
AUDIT RELATED FEES
There were no Audit Related Fees billed by PricewaterhouseCoopers LLP
to the Company in the fiscal years ended December 31, 2003 and December 31,
2002.
TAX FEES
The aggregate fees billed by PricewaterhouseCoopers LLP to the Company
in the fiscal years ended December 31, 2003 and December 31, 2002 for
professional services related to tax compliance, tax advice, and tax planning
were $19,011 and $11,705, respectively. These fees were for services related to
the preparation and filing of the Company's tax returns.
ALL OTHER FEES
There were no Other Fees billed by PricewaterhouseCoopers LLP in the
fiscal years ended December 31, 2003 and December 31, 2002.
There were no other fees billed by PricewaterhouseCoopers LLP for
services rendered to the Company other than the services described herein and
the Audit Committee has considered whether the provision of these services is
compatible with maintaining the independence of our public accountants. Pursuant
to Rule 2-01(c)(i), prior to the engagement of an independent public accountant
by the Company to render audit or non-audit services, the Company's Audit
Committee approves the engagement. All of such services performed by
PricewaterhouseCoopers LLC were so approved.
14
PERFORMANCE GRAPH
The following graph compares the cumulative total return for the
periods indicated for each of (a) the Company's common shares, (b) the Standard
& Poors 500 Stock Index (the "S&P 500") and (c) the NASDAQ Medical Device Index.
12/31/99 12/31/00 12/31/01 12/31/2002 12/31/2003
-------- -------- -------- ---------- ----------
S&P 500 $100.00 $ 91.11 $ 80.36 $ 62.55 $ 80.51
Nasdaq Medical Device Index $100.00 $103.16 $113.14 $ 91.70 $135.61
American Bio Medica Corporation $100.00 $ 38.93 $ 77.33 $108.44 $134.22
PROPOSAL 1 - ELECTION OF DIRECTORS
The Directors elected at the Annual Meeting will serve until the next
Annual Meeting of Shareholders and until their successors are elected and
qualified.
NOMINEES
EDMUND JASKIEWICZ has been one of our directors since 1992 and was
appointed President in September 2003. Mr. Jaskiewicz is a lawyer-engineer. He
has practiced international patent and corporate law as a sole practitioner
since 1963, and served as our Chairman of the Board of Directors from 1992 until
1999. From 1953 to 1963, Mr. Jaskiewicz was associated with Toulmin and Toulmin,
Attorneys-at-Law, Washington, D.C. From 1960 to 1962, he resided in Frankfurt,
Germany managing that firm's local office. From 1952 to 1953 he was with the
Patent Section of the Bureau of Ordinance of the Department of the Navy working
on patent infringement and licensing matters. He received his J.D. in 1952 from
George Washington University Law School and his B.S. in Engineering from the
University of Connecticut in 1947.
STAN CIPKOWSKI founded our predecessor in 1982. He has been a member of
our Board of Directors since our incorporation in April 1986 and was one of our
executive officers until July 2003, and is currently an employee of the Company.
He reorganized the Company as American Bio Medica Corporation in 1992 and is the
inventor of the Rapid Drug Screen(R). From 1982 to 1986, he was sole proprietor
of American Micro Media, our predecessor, which was acquired by the Company. In
addition, from 1983 to 1987, Mr. Cipkowski was a general partner of Florida
Micro Media, a Fort Lauderdale-based marketer of educational software and was a
principal shareholder and Chief Financial Officer of Southeast Communications
Group, Inc., a publisher of direct response media. In 1982, he was a consultant
to Dialogue Systems, Inc., a New York-based developer of training and
communications materials, where he served as Vice-President of Sales and
Marketing. From 1977 to 1982, Mr. Cipkowski was employed by Prentice-Hall
Publishing Company, reaching the position of National Sales Manager. Prior to
1977 he was employed as an accountant for the New Seabury Corporation and as
Mid-West Area Manager for the Howard Johnson Company. Mr. Cipkowski attended
Mater Christi Seminary and St. Louis University from 1965 to 1969. Mr. Cipkowski
is currently a member of the Board of Directors of Premier Mortgage Resources,
Inc. (OTCPK: PMRS.PK)
15
DANIEL W. KOLLIN was re-appointed to our Board of Directors in January
2004. He previously served on our Board of Directors from February 2003 until he
resigned in September 2003. Since 1990, Mr. Kollin has been Managing Director of
BioMed Capital Group, Ltd. He has over 20 years experience in investment
banking, venture capital and corporate management. Prior to joining BioMed
Capital Group, Mr. Kollin was Vice President, Health Care Group for
Prudential-Bache Capital Funding from 1987 to 1990. Prior to 1987, Mr. Kollin
was a partner of Whale Securities Corp. He received his MBA from The Wharton
School of The University of Pennsylvania. He currently serves on the Board of
Directors of IsoTis Orthobiologics (TORONTO:ISO).
RICHARD P. KOSKEY was appointed to our Board of Directors in October
2003. Mr. Koskey brings over 30 years of financial experience as a Certified
Public Accountant. Since, 1975, he has been a managing principal of Pattison,
Koskey, Howe & Bucci, P.C., a regional accounting firm. Mr. Koskey received his
B.A. from Duke University in 1963. He also serves on the Board of Directors of
Hudson River Bank & Trust (NASDAQ:HRBT).
ANTHONY G. COSTANTINO, PH.D. Since September 2002, he has served as
Vice President, Laboratory Operations for National Medical Services, Inc. From
September 1991 until August 2002, he held various positions within American
Medical Laboratories, Inc., with the most recent being Sr. Vice President and
Director until August 2002. Dr. Costantino received his Ph.D., in Forensic
Toxicology from the University of Maryland, School of Medicine in 1991, his M.S.
in Pharmacology/Toxicology, from Duquesne University in 1984 and his B.S. in
Pharmacy from Duquesne University in 1983. Dr. Costantino sits on the Board of
Directors of the Society of Forensic Toxicology. He has authored and co-authored
a number of publications, abstracts and presentations in the clinical chemistry
and toxicology fields since 1986 through the present.
It is the intention of the persons named as proxies in the accompanying
proxy, unless instructed otherwise, to vote for the persons nominated by the
Board of Directors. If any nominee should become unavailable to serve, the proxy
may be voted for the election of such substitute nominee as may be designated by
the Board of Directors. The Board of Directors has no reason to believe that any
of the nominees will be unable to serve if elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES FOR THE BOARD OF DIRECTORS.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
16
Based solely on a review of the copies of such forms furnished to the
Company as of the date of this report, in January 2004 Donal V. Carroll, the
Company's former CEO and a current Director, failed to file a Form 4, containing
one transaction, with the SEC on a timely basis. Based solely upon the copies of
such forms furnished to the Company, as of the date of this report, Mr. Carroll
has still failed to file this report.
Based upon this same review of copies of such forms furnished to the
Company, as of the date of this report, all other executive officers, directors
and greater than ten percent beneficial holders have complied with all Section
16(a) requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 2003, the Company paid an
aggregate of $63,000 in fees to Edmund Jaskiewicz, the Company's President and a
member of the Board of Directors, in consideration of his services as patent and
trademark counsel to the Company.
During fiscal 1999, 2000 and the first quarter of fiscal 2001, the
Company advanced funds to Stan Cipkowski, the Company's former President and one
of its directors. Mr. Cipkowski was the Company's Chairman of the Board and
Chief Executive Officer until January 2001 and an Executive Vice President of
the Company until July 2003. These advances were partially evidenced by a note
and beared interest at the rate of 11.5% per annum. The loan was payable on
demand. Each quarter, interest accrued on the loan was added to the outstanding
principal balance of the loan. Mr. Cipkowski pledged 1,000,000 of the Company's
common shares to the Company as collateral. On November 30, 2000, the Company's
Board of Directors and Mr. Cipkowski agreed to a structured repayment of this
loan through the regular periodic redemption by the Company of common shares
owned by Mr. Cipkowski. Under the program, Mr. Cipkowski redeemed at least
25,000 common shares, after the release of financial results each quarter, with
the value determined by the closing price of the common shares on the second
business day following the release of the quarterly or annual financial results.
Mr. Cipkowski also retained the right to redeem a greater number of common
shares each quarter. In October 2002, the Board of Directors agreed to accept
200,000 shares of stock from Mr. Cipkowski in full satisfaction of the then
outstanding loan balance of $248,000. The closing stock price on the date of
surrender was $1.03 resulting in the forgiveness of accrued interest totaling
$42,000, including $30,000 in 2002 and $12,000 from prior periods. During the
fiscal 2002 the Company sold 175,000 treasury shares for $235,000. The remaining
225,000 shares surrendered were sold in fiscal 2003 for $280,000. The Company
does not intend to make any additional loans to Mr. Cipkowski.
During the fiscal year ended December 31, 2003, the Company entered
into an agreement with Altius Marketing related to marketing services. The Chief
Financial Officer of Altius Marketing is the son of the Company's former Chief
Executive Officer, Donal V. Carroll. The Company paid an aggregate of $13, 300
in the fiscal year ended December 31, 2003.
17
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the Annual Meeting other than the matters set forth herein. Should any
other matter requiring a vote of shareholders arise, the proxies confer upon the
person or persons entitled to vote the shares represented by such proxies the
authority to vote the proxies in their discretion.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ MELISSA A. DECKER
Melissa A. Decker
Corporate Secretary
May 12, 2004
18
AMERICAN BIO MEDICA CORPORATION
EXHIBIT A
AUDIT COMMITTEE CHARTER
(As amended April 2004)
The Audit Committee ("the Committee"), of the Board of Directors ("the Board")
of American Bio Medica Corporation ("the Company"), will have the oversight
responsibility, authority and specific duties as described below.
COMPOSITION
The Committee will be comprised of three or more directors as determined by the
Board each of whom will:
(i) be independent as defined under Nasdaq Marketplace Rule 4200(a)(15),
except as provided in Nasdaq Marketplace Rule 4350)(d)(2)(B)(i);
(ii) meet the criteria for independence set forth in Rule 10A-3(b)(1)
under the Exchange Act (subject to the exemptions provided in Rule
10A-3(c);
(iii) not have participated in the preparation of the financial statements
of the Company or any current subsidiary of the Company at any time
during the last three years; and
(iv) be able to read and understand fundamental financial statements,
including the Company's balance sheet, income statement, and cash
flow statement.
Of the members of the Committee, one member will be a "financial expert" thereby
having past employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable experience or
background which results in the member's financial sophistication, including
being or having been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities. One of the members of
the Committee will be elected Committee Chair by the Board.
RESPONSIBILITY
The Committee is a part of the Board. The Committee is directly responsible for:
(a) the appointment, compensation, retention and oversight of the work
of the Company's independent public accounting firm (including resolution of
disagreements between management and the auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Company, and the Company's independent
public accounting firm reports directly to Committee;
(b) assisting the Board in fulfilling its oversight responsibilities
with respect to (i) the annual financial information to be provided to
shareholders and the Securities and Exchange Commission (SEC); (ii) the system
of internal controls that management has established; and (iii) the internal and
external audit process.
(c) providing an avenue for communication between internal audit, if
any, the independent auditors, financial management and the Board.
(d) pre-approving all auditing services and permitted non-audit
services (including the fees and terms thereof) to be performed for the Company
by its independent auditors, subject to the de minimus exceptions for non-audit
services described in Section 10A of the Exchange Act.
AUTHORITY
The Committee is granted the authority to investigate any matter or activity
involving financial accounting and financial reporting, as well as the internal
controls of the Company. In that regard, the Committee will have the authority
to establish procedures for:
(a) the receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or auditing matters;
and
(b) the confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing matters.
The Committee shall also have the authority to engage independent counsel and
other advisers, as it determines necessary to carry out its duties. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
FUNDING
The Company must provide appropriate funding for Audit Committee functions, as
determined by the Committee, for payment of:
(a) Compensation to any independent public accounting firm engaged for
the purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Company;
(b) Compensation to any advisers employed by the Committee; and
(c) Ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its duties.
MEETINGS
The Committee is to meet at least four times annually and as many additional
times as the Committee deems necessary. The Committee may meet in separate
executive sessions and in sessions with the chief financial officer, independent
auditors and internal auditors, if any, at other times when considered
appropriate. These meetings can be held via a telephone conference. The
Committee Chair shall keep minutes of each Audit Committee meeting.
ATTENDANCE
Committee members will strive to be present at all meetings. As necessary or
desirable, the Committee Chair may request that members of management and
representatives of the independent auditors and internal audit, if any, be
present at Committee meetings.
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SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will, to the
extent it deems necessary:
1. Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval. This should be done in
compliance with applicable NASD/AMEX Audit Committee Requirements.
2. Review with the Company's management, internal audit, if any, and
independent auditors the Company's accounting and financial reporting
controls.
3. Review with the Company's management, internal audit, if any, and
independent auditors significant accounting and reporting principles,
practices and procedures applied by the Company in preparing its financial
statements. Discuss with the independent auditors their judgments about
the quality, not just the acceptability, of the Company's accounting
principles used in financial reporting.
4. Review the scope of internal audit's, if any, work plan for the year and
receive a summary report of major findings by internal auditors and how
management is addressing the conditions reported.
5. Review the scope and general extent of the independent auditors' annual
audit. The Committee's review should include an explanation from the
independent auditors of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent auditors should confirm to the Committee that no limitations
have been placed on the scope or nature of their audit procedures. The
Committee will review annually with management the fee arrangement with
the independent auditors.
6. Inquire as to the independence of the independent auditors and obtain from
the independent auditors, at least annually, a formal written statement
delineating all relationships between the independent auditors and the
Company as contemplated by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees.
7. Have a predetermined arrangement with the independent auditors that they
will advise the Committee through its Chair and management of the Company
of any matters identified through procedures followed for interim
quarterly financial statements, and that such notification is to be made
prior to the related press release or, if not practicable, prior to filing
Forms 10-QSB.
8. At the completion of the annual audit, review with management, internal
audit, if any, and the independent auditors the following:
- The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to
shareholders and on Form 10-KSB.
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- Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the
year in accounting principles and their application.
- Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the
audit. Inquire about the cooperation received by the independent
auditors during their audit, including access to all requested
records, data and information. Inquire of the independent auditors
whether there have been any disagreements with management that, if
not satisfactorily resolved, would have caused them to issue a
nonstandard report on the Company's financial statements.
- Other communications as required to be communicated by the
independent auditors by Statement of Auditing Standards (SAS) 61 as
amended by SAS 90 relating to the conduct of the audit. Further,
receive a written communication provided by the independent auditors
concerning their judgment about the quality of the Company's
accounting principles, as outlined in SAS 61 as amended by SAS 90,
and that they concur with management's representation concerning
audit adjustments.
- If deemed appropriate after such review and discussion, recommend to
the Board that the financial statements be included in the Company's
annual report on Form 10-KSB.
9. After preparation by management and review by internal audit, if any, and
independent auditors, approve the report required under SEC rules to be
included in the Company's annual proxy statement. The charter is to be
published as an appendix to the proxy statement every three years.
10. Discuss with the independent auditors the quality of the Company's
financial and accounting personnel. Also, elicit the comments of
management regarding the responsiveness of the independent auditors to the
Company's needs.
11. Meet with management, internal audit,y, and the independent auditors to
discuss any relevant significant recommendations that the independent
auditors may have, particularly those characterized as `material' or
`serious'. Typically, such recommendations will be presented by the
independent auditors in the form of a Letter of Comments and
Recommendations to the Committee. The Committee should review responses of
management to the Letter of Comments and Recommendations from the
independent auditors and receive follow-up reports on action taken
concerning the aforementioned recommendations.
12. Review the appointment and replacement of the senior internal audit
executive, if any.
13. Review with management, internal audit, if any, and the independent
auditors the methods used to establish and monitor the Company's policies
with respect to unethical or illegal activities by Company employees that
may have a material impact on the financial statements.
14. Generally, as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company's general
counsel concerning legal and regulatory matters that may have a material
impact on the financial statements.
15. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to Audit Committee related rules of the NASD/AMEX, Statements on
Auditing Standards and other accounting, legal and regulatory provisions.
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AMERICAN BIO MEDICA CORPORATION
EXHIBIT B
Nominating Committee Charter
ROLE
The Nominating Committee's role is to determine director nominees for election
to the Company's Board of Directors and to identify and recommend candidates to
fill vacancies on the Board.
MEMBERSHIP
The membership of the Committee shall consist of at least two directors, each of
whom shall satisfy the independence requirements of The Nasdaq Stock Market;
provided, that if the Committee is comprised of at least three members, one
director who does not meet the independence criteria of Nasdaq may serve on the
Committee pursuant to any exception as provided under the rules of Nasdaq.
Members of the Committee shall be appointed by the Board. Such members shall
serve at the pleasure of the Board and for such term or terms as the Board may
determine.
OPERATIONS
The Committee shall meet as often as it deems appropriate, but not less
frequently than once each year to perform its duties under this Charter. The
Committee will cause to be kept adequate minutes of all its proceedings, and
will report its actions and other matters relevant to the Committee's
responsibilities to the next meeting of the Board. The Nominating Committee is
governed by the same rules regarding meetings (including meetings by conference
telephone or similar communications equipment), action without meetings, notice,
waiver of notice, and quorum and voting requirements as are applicable to the
Board. The Committee is authorized to adopt its own rules of procedure not
inconsistent with (a) any provision of this Charter, (b) any provision of the
Bylaws or Corporate Governance Guidelines of the Company, or (c) any applicable
law.
AUTHORITY
The Committee will have the resources and authority necessary to discharge its
duties and responsibilities, including the authority to retain outside counsel
or other experts or consultants, as it deems appropriate. Any communications
between the Committee and legal counsel in the course of obtaining legal advice
will be considered privileged communications of the Company and the Committee
will take all necessary steps to preserve the privileged nature of those
communications.
RESPONSIBILITIES
The principal responsibilities and functions of the Nominating Committee are as
follows:
o Determine criteria to be used in selecting, reviewing and screening
potential candidates to become Board members, taking into account all
factors the Committee deems appropriate.
o Assist in identifying, interviewing and recruiting candidates for the
Board.
o Before recommending an incumbent, replacement or additional director,
review his or her qualifications, including capability, availability to
serve and other relevant factors.
o Evaluate and recommend to the Board nominees for the election of
directors at each annual meeting of shareholders and any applicable
special meeting of shareholders. In addition, the Committee shall
recommend candidates to fill vacancies or new positions on the Board, as
necessary or advisable. However, if the Company is at any time legally
required by contract or otherwise to provide any third party with the
ability to nominate a director, the Committee need not evaluate or propose
such nomination, unless required by contract or requested by the Board.
o Consider any nominations of director candidates validly made by
shareholders.
o Form and delegate responsibilities to subcommittees of the Committee, as
may be necessary or appropriate.
o Annually evaluate the Committee's performance and this Charter.
This Charter is intended to provide a set of flexible guidelines for the
effective functioning of the Committee. The Committee may recommend to the Board
that the Board modify or amend this Charter and the authority and
responsibilities of the Committee set forth herein at any time.
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