-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qje8oDpNXyTWwkcWgebKC8SVDGylFpPlhEH2un5RIpPyYuKuX6Fv5G0+dKuL85Yc r25YBzObWuxekS79s7C/0g== 0001042910-99-000700.txt : 19990624 0001042910-99-000700.hdr.sgml : 19990624 ACCESSION NUMBER: 0001042910-99-000700 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990804 FILED AS OF DATE: 19990527 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOSPECIFICS TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000875622 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 113054851 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-19879 FILM NUMBER: 99635862 BUSINESS ADDRESS: STREET 1: 35 WILBUR ST CITY: LYNBROOK STATE: NY ZIP: 11563 BUSINESS PHONE: 5165937000 MAIL ADDRESS: STREET 1: 35 WILBUR STREET CITY: LYNBROOK STATE: NY ZIP: 11563 DEF 14A 1 DEFINITIVE PROXY STATEMENT 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 Rule 14a-11(c) or Rule 14a-12 BIOSPECIFICS TECHNOLOGIES CORP. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): |X| No fee required. |_| Fee computed on table below per Exchange Act Rules 14a-6(i)(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: BIOSPECIFICS TECHNOLOGIES CORP. 35 Wilbur Street Lynbrook, New York 11563 July 2, 1999 TO THE STOCKHOLDERS: You are cordially invited to attend the 1999 Annual Meeting of Stockholders of BioSpecifics Technologies Corp., which will be held at the Holiday Inn Crowne Plaza, 104-04 Ditmars Boulevard, East Elmhurst, New York 11369 on August 4, 1999 at 11:30 A.M. local time. The Notice of the 1999 Annual Meeting and Proxy Statement, which are attached, provide information concerning the matters to be considered at the meeting. In addition, the general operations of the Company will be discussed and stockholders will be afforded the opportunity to ask questions. We would appreciate your signing and returning your proxy in the enclosed envelope as soon as possible, whether or not you plan to attend the meeting. Please sign, date and return the enclosed proxy in the self-addressed, postage prepaid envelope. If you do not return the signed proxy, your vote cannot be counted. We value your opinion and encourage you to participate in this year's annual meeting by voting your proxy. Your vote is important. Accordingly, you are urged to mark, sign and return the accompanying proxy card whether or not you plan to attend the meeting. Very truly yours, Edwin H. Wegman Chairman of the Board BIOSPECIFICS TECHNOLOGIES CORP. 35 Wilbur Street Lynbrook, New York 11563 -------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 4, 1999 -------------------- NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BioSpecifics Technologies Corp. (the "Company") will be held at the Holiday Inn Crowne Plaza, 104-04 Ditmars Boulevard, East Elmhurst, New York 11369 on August 4, 1999 at 11:30 A.M. local time, for the following purposes: 1. To elect two directors of the Company for the ensuing three years, and until their successors shall be duly elected and qualified; and 2. To transact such other business as may properly come before the meeting, or any or all adjournments thereof. The transfer books will not be closed for the Annual Meeting. Only stockholders of record at the close of business on June 17, 1999 will be entitled to notice of, and to vote at, the meeting and any adjournments thereof. YOU ARE URGED TO READ THE ATTACHED PROXY STATEMENT, WHICH CONTAINS INFORMATION RELEVANT TO THE ACTION TO BE TAKEN AT THE MEETING. YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE MARK, SIGN AND DATE THE ACCOMPANYING PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ADDRESSED, POSTAGE PREPAID ENVELOPE (FOR USE IN THE UNITED STATES). YOU MAY REVOKE YOUR PROXY IF YOU SO DESIRE AT ANY TIME BEFORE IT IS VOTED AND MAY VOTE IN PERSON AT THE MEETING EVEN THOUGH YOU HAVE RETURNED A PROXY CARD. By Order of the Board of Directors, Albert Horcher Secretary Lynbrook, New York July 2, 1999 BIOSPECIFICS TECHNOLOGIES CORP. 35 Wilbur Street Lynbrook, New York 11563 ------------------- PROXY STATEMENT ------------------- Annual Meeting of Stockholders to be held August 4, 1999 This Proxy Statement and the enclosed form of proxy are furnished in connection with solicitation of proxies by the Board of Directors of BioSpecifics Technologies Corp. (the "Company") to be used at the Annual Meeting of Stockholders of the Company to be held at the Holiday Inn Crowne Plaza, 104-04 Ditmars Boulevard, East Elmhurst, New York 11369 on August 4, 1999 and any adjournments thereof ("Annual Meeting"). The matters to be considered at the meeting are set forth in the attached Notice of Meeting. The Company intends to send the proxy materials and the 1999 Annual Report to Stockholders on or about July 9, 1999. INFORMATION CONCERNING SOLICITATION AND VOTING Outstanding Shares Entitled to Vote On May 26, 1999, there were outstanding 4,550,866 shares of common stock, $.001 par value per share, of the Company ("Common Stock"). Record holders of shares of Common Stock on June 17, 1999, the record date, will be entitled to one vote for each share of such stock. Solicitation of Proxies The solicitation of proxies in the enclosed form is made on behalf of the Company and the cost of this solicitation is being paid by the Company. In addition to the use of the mails, proxies may be solicited personally or by direct communication using the services of directors, officers and regular employees of the Company at nominal cost. Banks, brokerage firms and other custodians, nominees and fiduciaries will be reimbursed by the Company for expenses incurred in sending proxy material to beneficial owners of the Common Stock. Record Date; Revocability of Proxies The Board of Directors has fixed the close of business on June 17, 1999 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting. The proxy will be voted (or withheld from voting) in accordance with any specifications made. Unless otherwise specified in the proxy, shares represented by proxy will be voted "FOR" election of the nominees listed herein. A proxy may be revoked by giving notice to the Secretary of the Company in person, or by written notification actually received by the Secretary, at any time prior to its being exercised or by attending the meeting and voting in person. Quorum; Voting The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the outstanding shares of the Common Stock authorized to vote constitutes a quorum for the transaction of business at the Annual Meeting. If a quorum should not be present, the Annual Meeting may be adjourned from time to time until a quorum is obtained. Each unrevoked proxy card properly signed and received prior to the close of the meeting will be voted as indicated. Unless otherwise specified on the proxy, the shares represented by a signed proxy card will be voted "FOR" Item 1 on the proxy card and will be voted at the discretion of the persons named as proxies on other business that may properly come before the meeting. Concerning the election of directors, by checking the appropriate box on your proxy card, you may: (a) vote "FOR" each of the director nominees; or (b) withhold authority to vote for any of the director nominees. Stockholders may vote by either completing and returning a signed proxy card prior to the meeting, voting in person at the meeting or submitting a signed proxy card at the meeting. If a proxy card indicates an abstention or a broker non-vote on a particular matter, the shares represented by such proxy will be counted as present for quorum purposes. If a quorum is present, an abstention will have the effect of a vote against the matter and broker non-votes will have no effect. The election of directors requires a plurality vote of those shares voted at the meeting with respect to the election of directors. "Plurality" means that the individuals who receive the largest number of votes cast "FOR" are elected as directors. Consequently, any shares not voted "FOR" a particular nominee (whether as a result of a direction to withhold authority or a broker non-vote) will not be counted in such nominee's favor. All other matters to be voted on will be decided by the affirmative vote of a majority of the shares present or represented at the meeting and entitled to vote. On any such matter, an abstention will have the same effect as a negative vote, but because shares held by brokers will not be considered entitled to vote on matters as to which the brokers withhold authority, a broker non-vote will have no effect on the vote. Ownership of Equity Securities To the Company's knowledge, the table that follows sets forth the beneficial ownership of shares of Common Stock as of May 26, 1999 of (i) those persons or groups known to the Company to beneficially own more than 5% of the Common Stock, (ii) each director and nominee of the Company, (iii) each executive officer whose compensation exceeded $100,000 (each, a "named executive officer") in fiscal 1999, and (iv) all directors and executive officers of the Company as a group. The information is determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), based on information furnished by the persons listed or contained in filings made by them with the Securities and Exchange Commission. Unless indicated below, the stockholders listed possess sole voting and investment power with respect to their shares and the business address of each stockholder is c/o BioSpecifics Technologies Corp., 35 Wilbur St., Lynbrook, New York 11563. 2
Number of Shares Name of of Common Stock Percent of Beneficial Owner Beneficially Owned Class - ---------------- ------------------ ----- Edwin H. Wegman (1) 2,334,142 50.7% Thomas L. Wegman (2) 75,544 1.6% Paul A. Gitman, MD. (3) 55,500 1.2% Henry Morgan (4) 53,528 1.2% Sherman C. Vogel (5) 18,528 * Rainer Friedel (6) 57,500 * Albert Horcher(7) 32,900 * Directors and executive officers as a 2,627,642 55.3% group (7 persons)
- ------------------------------------ (*) Less than 1%. (1) Includes 1,843,327 shares of Common Stock owned by The S.J. Wegman Company, a partnership of which Edwin H. Wegman is the sole general partner. Includes 120,000 shares beneficially owned by The Isabel H. Wegman Rev. Trust. Includes options to purchase 54,850 shares of Common Stock which are currently exercisable. Does not include options to purchase 47,450 shares of Common Stock which are not currently exercisable. Edwin H. Wegman is the father of Thomas L. Wegman. (2) Includes 7,300 shares of Common Stock held by Thomas L. Wegman's wife and child. Includes options to purchase 40,800 shares of Common Stock which are currently exercisable. Thomas L. Wegman is a son of Edwin H. Wegman. (3) Includes 16,500 shares of Common Stock held by Dr. Gitman's wife and children. Includes options to purchase 10,000 shares of Common Stock which are currently exercisable. Dr. Gitman's business address is c/o Long Island Jewish Medical Center, 270-05 76th Ave., New Hyde Park, New York 11040. (4) Includes 8,000 shares of Common Stock held by Garrubbo and Morgan, a partnership of which Mr. Morgan is a general partner owning a 50% equity position. Mr. Morgan disclaims beneficial ownership of 4,000 of such shares. Includes options to purchase 10,000 shares of Common Stock which are currently exercisable. Mr. Morgan's business address is c/o Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, 651 West Mt. Pleasant Avenue, Livingston, New Jersey 07039-1873. (5) Includes 8,528 shares of Common Stock held by S&J Investments, a partnership of which Mr. Vogel is a general partner owning a 25% equity position. Mr. Vogel disclaims beneficial ownership of 6,396 of such shares. Includes options to purchase 10,000 shares of Common Stock which are currently exercisable. Mr. Vogel's business address is 700 Park Avenue, New York, New York 10021. (6) Includes options to purchase 57,500 shares of Common Stock which are currently exercisable. (7) Includes options to purchase 18,000 shares of Common Stock which are currently exercisable. 3 ELECTION OF DIRECTORS The Board of Directors is divided into three classes, each of which currently serves for a term of three years, with only one class of directors being elected in each year. The term of office of the third class of directors, presently consisting of Edwin H. Wegman and Dr. Rainer Friedel, will expire on the date of this year's annual meeting, the term of office of the first class of directors, presently consisting of Thomas L. Wegman and Dr. Paul A. Gitman, will expire in 2000, and the term of the second class of directors, presently consisting of Sherman C. Vogel and Henry Morgan, will expire in 2001. In each case, barring death, resignation or removal, each director serves from the date of his election until the end of his term and until his successor is elected and qualified. Two persons will be elected at the Annual Meeting to serve as director for a term of three years. The Company has nominated Edwin H. Wegman and Dr. Rainer Friedel as candidates for election. Unless authority is withheld, the proxies solicited by management will be voted "FOR" the election of these nominees. In case a nominee becomes unavailable for election to the Board of Directors, an event which is not expected, the persons named as proxies, or their substitutes, shall have full discretion and authority to vote or refrain from voting for any other candidate in accordance with their judgment. The election of directors requires a plurality vote of those shares voted at the meeting. Each nominee has informed the Company that he will serve if elected. The Board of Directors recommends that the stockholders vote "FOR" each nominee for election to the Board of Directors. Information Concerning Nominees for Director The nominees for director have the positions with the Company and principal occupations set forth in the table below.
Age at Position With the Company Term Name May 26, 1999 and Principal Occupation Director Since Expires ---- ------------ ------------------------ -------------- ------- Edwin H. Wegman 79 Chairman of the Board and President 1990 1999 Dr. Rainer Friedel 57 Director; Managing Director of 1995 1999 Biospecifics Pharma GmbH, the Company's German subsidiary ("Pharma")
Edwin H. Wegman has had the positions with the Company, principal occupation and certain directorships set forth in the table above for the past five years, and has held similar positions with the Company's subsidiaries, Advance Biofactures Corporation ("ABC-New York") and Advance Biofactures of Curacao ("ABC-Curacao"), for the past five years. Dr. Rainer Friedel has been a director of the Company since November 1995 and managing director of BioSpecifics Pharma since January 1, 1996. Since January 1994, Dr. Friedel has served as Chief Executive Officer of GBM Technology Transfer and Technology Risk Assessment, GmbH and, since June 1993, has served as an independent pharmaceutical management consultant. Prior to May 1993, Dr. Friedel was the Chief Executive Officer of Lichtwer Pharma GmbH. The Company and Dr. Friedel have entered into an employment agreement effective January 1, 1999 pursuant to which Dr. Friedel has agreed to devote all of his working capacity to the Company and its subsidiaries in Germany and the United States. Dr. Friedel is to receive a salary of $192,500 and options to purchase up to 15,000 shares of Common Stock per annum. Dr. Friedel is entitled to one year's notice of the Company's termination of the employment agreement. Information Concerning Continuing Directors Each of the directors named in the following table will continue in office after the Annual Meeting and until his term expires in the year indicated and his successor is elected and qualified. 4
Age at Position With the Company Term Name May 26 1999 and Principal Occupation Director Since Expires ---- ----------- ------------------------ -------------- ------- Thomas L. Wegman 44 Director, Executive Vice President 1994 2000 Dr. Paul A. Gitman 58 Director; Director, Quality and Resource 1990 2000 Management, Long Island Jewish Medical Center Henry Morgan 78 Director; Senior partner of the law firm 1990 2001 Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski Sherman C. Vogel 75 Director; Private investor 1990 2001
Thomas L. Wegman was Secretary and Treasurer of the Company from inception to July 1997, at which time he assumed his current position. In addition, he has held for the past five years similar positions with the Company's subsidiaries, ABC-New York and ABC-Curacao. Dr. Gitman has been Vice President, Clinical Care and Resource Management at Long Island Jewish Medical Center since January 1, 1995 and prior thereto was an independent physician engaged in the practice of internal medicine with Spellman Mykoff & Gitman, MD., P.C. Henry Morgan has had the positions with the Company, principal occupation and certain directorships set forth in the table above for the past five years. Sherman Vogel has held the position with the Company for the past five years and was Chairman of the Board of Synergy Group Inc. prior to August 1995. Executive Officers In addition to the officers named above, the Company employs Albert Horcher as its Secretary, Treasurer, and Principal Financial and Chief Accounting Officer. Mr. Horcher, a certified public accountant, has served in these positions since July 1997 and is 39 years old. From February 1991 to July 1997, he served as the Company's Controller and Principal Financial and Chief Accounting Officer. In addition, he has held for the past five years similar positions with the Company's subsidiaries, ABC-New York and ABC-Curacao. Executive officers are elected annually by the Board of Directors and serve at the discretion of the Board. Board Meetings and Committees The Board held six meetings during the last fiscal year. All directors attended each meeting. The Board does not have nominating or compensation committees. The Board has established an Audit Committee consisting of Sherman Vogel and Henry Morgan, a Stock Option Committee consisting of Dr. Paul A. Gitman and Henry Morgan which administers the Company's 1991 Stock Option Plan (the "1991 Plan"), the Company's 1993 Stock Option Plan (the "1993 Plan"), and the Company's 1997 Stock Option Plan (the "1997 Plan"), and an Executive Committee consisting of Edwin H. Wegman and Thomas L. Wegman. The function of the Audit Committee is to (i) recommend selection of the Company's independent accountants, (ii) review with the independent accountants the results of their audits, (iii) review with the independent accountants and management the Company's financial reporting and operating controls and the scope of audits, (iv) review all budgets of the Company and its subsidiaries and (v) make recommendations concerning the Company's financial reporting, accounting practices and policies and financial, accounting and operating controls and safeguards and review matters relating to the relationship between the Company and its auditors. The function of the Executive Committee is, except for certain matters reserved to the Board, to exercise all of the powers of the Board in the management of the business of the Company during intervals between Board meetings, if necessary. The Audit Committee met once during the 1999 fiscal year. The Stock Option and Executive Committees did not meet during the 1999 fiscal year. 5 Executive Compensation Officers The following table sets forth information concerning compensation for services in all capacities awarded to, earned by or paid to the Company's named executive officers for the fiscal years indicated. There are no other officers who received in excess of $100,000 during the fiscal year ended January 31, 1999. The Company's executive officers also serve in the same capacities in ABC-New York, except for Rainer Friedel. Salaries of the executive officers are paid by the Company's subsidiary, ABC-New York, except for Rainer Friedel. The officers serve in their respective capacities until the annual board of directors meeting to be held immediately following the Annual Meeting.
- ------------------------------------------------------------------------------------------------------------------------------------ SUMMARY COMPENSATION TABLE - ------------------------------------------------------------------------------------------------------------------------------------ Annual Compensation Long-Term Compensation - ------------------------------------------------------------------------------------------------------------------------------------ Number of Securities All Other Name and Principal Salary Bonus Other Annual Underlying Compensation ($) Position Fiscal Year ($) ($) Compensation (1) Options - ------------------------------------------------------------------------------------------------------------------------------------ Edwin H. Wegman 1999 397,006 - - 7,000 - President 1998 373,861 - - 83,500 - 1997 356,375 - - 1,800 - - ------------------------------------------------------------------------------------------------------------------------------------ Thomas L. Wegman 1999 175,092 - - 4,300 - Executive 1998 157,028 - - 4,000 - Vice President 1997 130,893 - - 700 - - ------------------------------------------------------------------------------------------------------------------------------------ Rainer Friedel 1999 176,458 - - 15,000 - Managing Director 1998 151,226 - - 17,500 - 1997 116,886 - - 15,000 - - ------------------------------------------------------------------------------------------------------------------------------------ Albert Horcher 1999 114,593 - - 2,000 - Secretary and 1998 105,436 - - 2,000 - Treasurer 1997 97,395 - - 500 - - ------------------------------------------------------------------------------------------------------------------------------------
(1) Excludes perquisites and other personal benefits aggregating less than the lesser of $50,000 or 10% of the total annual salary and bonus reported for such person. 6 The following table contains information concerning the grants of stock options to the named executive officers of the Company during the fiscal year ended January 31, 1999.
- ----------------------------------------------------------------------------------------------------------------------------------- OPTIONS/SAR GRANTS IN LAST FISCAL YEAR - ----------------------------------------------------------------------------------------------------------------------------------- Number of Securities Underlying Options/SARs Percentage of Total Granted Options/SARs Granted to Name (#)(1)(2) Employees in Fiscal Year Exercise or Base Price (%) Per Share Expiration Date - ----------------------------------------------------------------------------------------------------------------------------------- Edwin H. Wegman 4,000 7.5% $4.68 10/13/03 3,000 5.6% $4.40 12/15/03 - ----------------------------------------------------------------------------------------------------------------------------------- Thomas L. Wegman 1,800 3.3% $4.25 10/13/08 2,500 4.7% $4.00 12/15/08 - ----------------------------------------------------------------------------------------------------------------------------------- Rainer Friedel 15,000 28.0% $4.00 12/31/08 - ----------------------------------------------------------------------------------------------------------------------------------- Albert Horcher 1,000 1.8% $4.25 10/13/08 1,000 1.8% $4.00 12/15/08 - -----------------------------------------------------------------------------------------------------------------------------------
(1) All outstanding options are currently exercisable, except Edwin H. Wegman's, which are exercisable in four equal annual installments. (2) Granted for service as an employee. The 1991 Plan was ratified at the annual meeting of stockholders in July 1992, the 1993 Plan was ratified at the annual meeting of stockholders in July 1994, and the 1997 Plan was ratified at the annual meeting of stockholders in July 1997. The following table sets forth information concerning each exercise of stock options during the 1999 fiscal year by each of the named executive officers, along with the year-end value of unexercised options.
- ------------------------------------------------------------------------------------------------------------------------------------ AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES - ------------------------------------------------------------------------------------------------------------------------------------ Number of Securities Underlying Value of Unexercised In-the-Money Unexercised Options at Fiscal Options at Fiscal Year-End ($) Year End (#) - ------------------------------------------------------------------------------------------------------------------------------------ Name Shares Value Acquired on Realized ($) Exercise (#) Exercisable Unexercisable Exercisable Unexercisable - ------------------------------------------------------------------------------------------------------------------------------------ Edwin H. Wegman(1) - - 54,850 47,450 600 1,700 - ------------------------------------------------------------------------------------------------------------------------------------ Thomas L. Wegman - - 40,800 - 43,600 - - ------------------------------------------------------------------------------------------------------------------------------------ Rainer Friedel - - 57,500 - 31,200 - - ------------------------------------------------------------------------------------------------------------------------------------ Albert Horcher - - 18,000 - 13,500 - - ------------------------------------------------------------------------------------------------------------------------------------
Directors Each of the three outside directors received $4,500 for attending the Board meetings in fiscal 1999. 7 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires the Company's officers, directors and persons who beneficially own more than ten percent of the Common Stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. These reporting persons also are required to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on its review of the copies of such forms furnished to it, the Company believes that all Section 16(a) reporting requirements were complied with during the fiscal year ended January 31, 1999. CERTAIN TRANSACTIONS The S.J. Wegman Company owns Wilbur Street Corporation ("WSC"), which has leased to ABC-New York a building serving as a manufacturing facility and headquarters in Lynbrook, New York for over 30 years. The building also serves as the Company's administrative headquarters. Edwin H. Wegman, the Company's Chairman of the Board and President, is the President of WSC and the sole general partner of The S.J. Wegman Company, a partnership. The lease ran month to month at an annual rate of $90,000 during the fiscal year ended January 31, 1998. On January 30, 1998, WSC and the Company entered into a triple net lease agreement which provides for an annual rent starting at $125,000, which can increase annually by the amount of annual increase in the Consumer Price Index for the greater New York metropolitan region. The lease term is 7 years, expiring January 31, 2005. The Company believes that the terms of this lease are reasonable and the rent charged is no greater than that which would be charged by an unaffiliated landlord for comparable facilities, based on appraisals of the property. The Company subleases the remainder of the space subject to such lease, to an unaffiliated entity for $24,000 per year, pursuant to a verbal lease agreement. At January 31, 1999, the Company has advanced $30,675 to WSC, and has a 9% non-amortizing mortgage from WSC in the amount of $82,606. During fiscal 1999, Edwin H. Wegman borrowed a total of $410,114 and repaid $335,114 of this amount, and paid interest of $28,225. The remaining balance of $75,000 was repaid March 1999. On August 20, 1991, in order to evidence previous borrowings, Mr. Wegman executed a promissory note made payable to ABC-New York in the principal amount of $56,820. The note is payable upon demand and bears 9% interest that commenced to accrue on August 20, 1991. The Company entered into a one-year consulting agreement with Stephen A. Vogel (the "consultant") effective October 10, 1997. Mr. Vogel is a son of a member of the Company's Board of Directors. The agreement provided that the consultant provide the Company with such advice, service, consultation, and assistance as the Company would seek with respect to the Company's financial matters and provide such other services as the Board of Directors requests. The agreement provided for a consulting fee of $10,000 per month and an option to purchase 100,000 shares of the Company's common stock at $5.00 per share. The agreement also provided for the consultant to receive fees if certain events occurred as a result of the consultant's actions or recommendations. The Company reimbursed the consultant for out of pocket and other expenses incurred in connection with rendering services. The agreement expired on October 10, 1998. On January 10, 1999, the options expired without exercise. Mr. Vogel continues to be retained on a month to month basis and receives a consulting fee of $5,000 per month, and reimbursement for out of pocket expenses. During fiscal 1999, the Company recorded general and administrative expenses of $131,580 relating to this agreement, comprised of $101,580 of consulting fees and $30,000 for the estimated fair value of the options granted on October 10, 1997. During fiscal 1998, the Company recorded general and administrative expenses of $56,275 relating to this agreement, comprised of $36,275 in consulting fees and $20,000 for the estimated fair value of the options granted for the fiscal year. 8 INDEPENDENT ACCOUNTANTS The Company intends to use KPMG Peat Marwick LLP as its independent auditors for the 2000 fiscal year. A representative of KPMG Peat Marwick LLP is expected to be present at the meeting, will have the opportunity to make a statement if he or she chooses and is expected to be available to respond to appropriate questions. 2000 STOCKHOLDER PROPOSALS Proposals of stockholders intended to be presented at the Annual Meeting to be held following the end of 2000 fiscal year for inclusion in the proxy statement must be received at the Company's offices by March 3, 2000. The date after which notice of a shareholder proposal submitted outside the processes of Rule 14a-8 will be considered untimely is May 18, 2000. OTHER MATTERS The Board of Directors knows of no matter which will be presented for consideration at the meeting other than the matters referred to in this Proxy Statement. Should any other matter properly come before the meeting, it is the intention of the persons named in the accompanying proxy to vote such proxy in accordance with their best judgment. By Order of the Board of Directors, Albert Horcher Secretary Lynbrook, New York July 2, 1999 9 -----END PRIVACY-ENHANCED MESSAGE-----