-----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, WAvYsh7BpPpn9yaxOp+IUJ5Ehfh0Iw3zXvYU6MxkyngsdzwuSd3vjtfUWY/DKKGm hdfCrzm4Nr/6E2SRIg21Ow== 0000896747-97-000010.txt : 19970912 0000896747-97-000010.hdr.sgml : 19970912 ACCESSION NUMBER: 0000896747-97-000010 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960905 FILED AS OF DATE: 19970905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BIO MEDICA CORP CENTRAL INDEX KEY: 0000896747 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-28666 FILM NUMBER: 97675570 BUSINESS ADDRESS: STREET 1: 102 SIMMONS RD CITY: ANCRAMDALE STATE: NY ZIP: 12503 BUSINESS PHONE: 5183294485 DEF 14A 1 ANNUAL MEETING OF SHAREHOLDERS AMERICAN BIO MEDICA CORPORATION 102 Simons Road Ancramdale, New York 12503 800-227-1243 September 5, 1997 Dear Fellow Shareholder: The Fiscal 1998 Annual Shareholders' Meeting of American Bio Medica Corporation will be held at 10:00 a.m. on Tuesday, September 23, 1997 at Albany Marriott Hotel, 189 Wolf Road, Albany, New York 12205. Enclosed you will find formal Notice of Annual Meeting, Proxy and Proxy Statement, detailing the matters which will be acted upon. Directors and Officers of the Company will be present to help host the meeting and to respond to any questions from our shareholders. I hope you will be able to attend. Please sign, date and return the enclosed Proxy without delay in the enclosed envelope. If you attend the Meeting, you may vote in person even if you have previously mailed a Proxy by withdrawing your Proxy vote at the meeting. Any shareholder giving a proxy may revoke the same at any time prior to the voting of such proxy by giving written notice of revocation to the Secretary, by submitting a later dated proxy or by attending the Meeting and voting in person. The Company's Annual Report on Form 10-KSB (including audited financial statements) for the fiscal year ended April 30, 1997, accompanies this Proxy Statement. The Annual Report is not a part of the proxy soliciting material. All shares represented by proxies will be voted at the Meeting in accordance with the specifications marked thereon, or if no specifications are made, (a) as to Item 1, the Proxy confers authority to vote for all of the five persons listed as candidates for a position on the Board of Directors, (b) as to Items 2 and 3, the Proxy confers authority to vote "For", and (c) as to any other business which comes before the Meeting, the Proxy confers authority to vote in the proxy holder's discretion. The Company's Board of Directors believes that a favorable vote for each candidate for a position on the Board of Directors and for all other matters described in the attached Notice of Annual Meeting and Proxy Statement is in the best interests of the Company and its shareholders and unanimously recommends a vote "FOR" all candidates and all other matters. Accordingly, we urge you to review the accompanying material carefully and to return the enclosed Proxy promptly. Thank you for your investment and continued interest in American Bio Medica Corporation. Sincerely, /s/Stan Cipkowski Stan Cipkowski, President and NOTICE OF FISCAL 1998 ANNUAL MEETING OF SHAREHOLDERS TO THE SHAREHOLDERS OF AMERICAN BIO MEDICA CORPORATION: NOTICE is hereby given that the Fiscal 1998 Annual Meeting of Shareholders (the "Meeting") of American Bio Medica Corporation will be held at 10:00 a.m. on Tuesday, September 23, 1997 at Albany Marriott Hotel, 189 Wolf Road, Albany, New York 12205, for the following purposes: 1. Election of Directors for the ensuing year. 2. Approval of the appointment of independent auditors for fiscal year 1998. 3. Approval of the adoption by the Board of Directors of the Fiscal 1998 Nonstatutory Option Plan. 4. Transaction of such other business as may properly come before the Meeting, or any adjournments thereof. Only shareholders of record at the close of business on August 29, 1997 are entitled to notice of and to vote at the 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 meeting. TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY, FOR WHICH A RETURN ENVELOPE IS PROVIDED. YOUR PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS EXERCISE. BY ORDER OF THE BOARD OF DIRECTORS /s/Edmund Jaskiewicz Edmund Jaskiewicz, Secretary to the Board of Directors September 5, 1997 PROXY STATEMENT FOR FISCAL 1998 ANNUAL MEETING OF SHAREHOLDERS AMERICAN BIO MEDICA CORPORATION 102 Simons Road Ancramdale, New York 12503 Solicitation of the enclosed fiscal 1998 proxy is made by and on behalf of the Board of Directors (the "Board of Directors") of American Bio Medica Corporation (the "Company") to be used at the Fiscal 1998 Annual Meeting of Shareholders to be held at 10:00 a.m. on Tuesday, September 23, 1997 at Albany Marriott Hotel, 189 Wolf Road, Albany, New York 12205 and at any adjournments thereof. The mailing date of this Proxy Statement and the accompanying Proxy is September 5, 1997. All properly executed proxies delivered pursuant to this solicitation will be voted at the Annual Meeting in accordance with any instructions thereupon. Any person signing and mailing the enclosed proxy may, nevertheless, revoke the proxy at any time prior to the actual voting thereof by attending the Annual Meeting and voting in person, by providing written notice of revocation of the proxy or by submitting a signed proxy bearing a later date. Any written notice of revocation should be sent to the attention of the Secretary of the Board at the address above. A copy of the Company's Annual Report for the fiscal year ended April 30, 1997 is enclosed with these materials, but should not be considered proxy solicitation material. Shareholder nominations for Directors and shareholder proposals for the Fiscal 1999 Annual Meeting should be sent to the Company in writing on or before June 30, 1998. The Company has received no shareholder nominations or proposals for the Fiscal 1998 Annual Meeting. The Company has fixed the close of business on August 29, 1997 as the record date for determination of shareholders entitled to notice of and to vote at the meeting or any adjournments thereof. As of the record date, the Company had one class of shares outstanding - common shares, $.01 par value per share ("Common Shares"). As of August 29, 1997, there were 13,680,627 outstanding Common Shares, each share entitled to one vote on each matter to be voted on at the Annual Meeting. The holders of a majority of 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 card will be counted as Common Shares present and entitled to vote at the meeting for purposes of determining a quorum, without regard to whether the card reflects abstentions (or is left blank) or reflects a "broker non-vote" on a matter (i.e., a card 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. The election of a nominee for director requires approval of such nominee by a plurality of the Common Shares present and entitled to vote in person or by proxy; and the approval of each of the other proposals described in the Proxy Statement requires the approval of a majority of the Common Shares present and entitled to vote in person or by proxy on that matter (and at least a majority of the minimum number of votes necessary for a quorum to transact business at the Annual Meeting). SOLICITATION OF PROXIES The cost of the proxy solicitations 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 personal interview, telephone, telegram or otherwise. Arrangements may 1 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. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS As of August 29, 1997, there were 13,680,627 Common Shares outstanding and entitled to vote at the Annual Meeting. Each Common Share is entitled to one vote on each of the matters to be voted on at the Annual Meeting. The table on the following page sets forth, as of August 29, 1997, the beneficial ownership of each current director, each of the executive officers named in the Summary Compensation Table, the executive officers and directors as a group and each shareholder, known to management of the Company, to own beneficially more than 5% of the outstanding Common Shares. Unless otherwise indicated, the Company believes that the beneficial owner set forth in the table has sole voting and investment power. Title of Name of Amount and Nature Percent of Class Beneficial Owner of Beneficial Ownership(1) Class(1) -------- ---------------- -------------------------- ----------- Common Stan Cipkowski (2) 3,045,998 (3) 21.8% Shares 102 Simons Road Ancramdale, NY 12603 Common Edmund Jaskiewicz (2) 3,171,372 (4) 23.0% Shares 1730 M Street, NW Washington, DC 20036 Common Jay Bendis (2) 818,999 (5) 5.9% Shares 71 Springcrest Drive Akron, Ohio 44333 Common Jasper R. Clay, Jr. 10,000 (6) 0.1% Shares 4964 Moonfall Way Columbia, Maryland 21044 Common John F. Murray 10,000 (7) 0.1% Shares 1821 Lyons Road Pompano Beach, Florida 33063 Common Henry J. Wells, Ph.D. (2) 73,584 (8) 0.5% Shares 9421 Book Row Columbia, Maryland 21046 Common Douglas Casterlin (2) 187,500 (9) 1.4% Shares 65 Malloy Road Ghent, New York 12065 Common Thomas P. Monahan (2) Shares 208 Lexington Avenue -0- 0.0% Paterson, New Jersey 07502 Common Directors and executive 7,317,453 50.4% Shares officers as a group (8 persons) --------------------------- 2 1. Pursuant to the rules of the Securities and Exchange Commission, Common Shares which are not outstanding but which a person has the right to acquire within 60 days of August 29, 1997 are considered as shares outstanding for purposes of computing the percentage of Common Shares owned by such person, but such shares are not deemed outstanding for the purposes of computing the percentage of Common Shares owned by any other person. 2. Named executive officer. 3. Includes 303,250 shares issuable upon the exercise of nonstatutory options granted pursuant to the 1996 Nonstatutory Option Plan. 4. Includes 123,417 shares issuable upon the exercise of nonstatutory options granted pursuant to the 1996 Nonstatutory Option Plan. 5. Includes 173,000 shares issuable upon the exercise of nonstatutory options granted pursuant to the 1996 Nonstatutory Option Plan. 6. Includes 10,000 shares issuable upon the exercise of nonstatutory options granted pursuant to the 1996 Nonstatutory Option Plan. 7. Includes 10,000 shares issuable upon the exercise of nonstatutory options granted pursuant to the 1996 Nonstatutory Option Plan. 8. Includes 73,584 shares issuable upon the exercise of nonstatutory options granted pursuant to the 1996 Nonstatutory Option Plan. 9. Includes 150,000 shares issuable upon the exercise of nonstatutory options pursuant to the 1996 Nonstatutory Option Plan. SUMMARY COMPENSATION TABLE The following table provides information as to annual, long-term and other compensation paid by the Company to its Chief Executive Officer and to each of the other named executive officers of the Company who earned in excess of $100,000 per year for services rendered in all capacities to the Company. - -------------------------------------------------------------------------------- Long Term Compensation Annual Compensation Awards Payouts ------------------------------------------------------------------------------- (a) (b) (c) (d) (e) (f) (g) (h) (i) Other Restricted All Name and Annual Stock Options LTIP Other Principal Fiscal Salary Bonus Compen- Awards SARs Payouts Compen- Position Year ($) ($) sation ($) (#) ($) sation - ---------- Stan 1997 $99,068 $5,232 Cipkowski 1996 $44,000 $5,371 President 1995 $50,000 $4,339 3 Option/SAR Grants in Last Fiscal Year Table The following table provides information as to options granted to the named executive officers during fiscal 1997. No separate stock appreciation rights ("SARs") were granted in fiscal 1997. Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation For Option Term Individual Grants Number of Percent of Securities Total underlying Options Options Granted to Exercise or Granted Employees in Base Price Expiration Name Fiscal Year ($/share) Date 5% 10% ---- ----------- ------------ ------------ --------- -------- -------- Stan Cipkowski 550,000 36.7% $3.00 6/27/99 $680,299 $930,351 Aggregated Options Granted and Exercised in Last Fiscal Year and Fiscal Year End Option/SAR Values The following tables sets forth certain information concerning the number of stock options held by the named Officers as of April 30, 1997. Number of Shares Dollar value of underlying unexercised unexercised (in-the-money) options/ options/warrants on warrants on 04/30/97 04/30/97 Shares Acquired on Value Exercise Realized Non- Non- (*) ($) Exercisable Exercisable Exercisable Exercisable Stan Cipkowski 181,500 $95,250 303,250 -0- $246,391 -0- Compensation of Directors Directors who are not employees nor officers of the Company ("Outside Directors") are awarded 10,000 options at the time of appointment. Outside Directors receive a fee of $500 for attending meetings of the Board, and are reimbursed for their out-of pocket expenses in connection therewith. Board of Directors' Report on Executive Compensation The compensation of the Company's executive officers and key managers, ("executives") is reviewed and approved annually by the Board of Directors. The Board of Directors has established a Compensation/Option Committee. In addition to reviewing and approving executive officers' salary and bonus arrangements, the Board of Directors establishes policies and guidelines for other benefits and administers the awards of stock options pursuant to the Company's stock option plans. 4 Compensation Policies and Procedures Applicable to Executives for Fiscal 1997 General. Compensation of the Company's executives is intended to attract, retain and award persons who are essential to the corporate enterprise. The fundamental policy of the Company's executive compensation program is to offer competitive compensation to executives that appropriately rewards the individual executive's contribution to corporate performance. The Board of Directors utilizes subjective criteria for evaluation of individual performance and relies substantially on the executives in doing so. The Board focuses on two primary components of the Company's executive compensation program, each of which is intended to reflect individual and corporate performance: base salary compensation and long-term incentive compensation. The Company has not paid cash incentive bonuses during fiscal 1997. Base Salary Compensation. Executives' base salaries are determined primarily by reference to compensation packages for similarly situated executives of companies of similar size or in comparable lines of business with whom the Company expects to compete for executive talent and with reference to the revenues, gross profits and other financial criteria of the Company. The Board also assesses subjective qualitative factors to discern a particular executive's relative value to the corporate enterprise in establishing base salaries. The salaries of the four executive officers have been determined by employment agreements. No bonuses were awarded to executives in fiscal 1997. The Board intends to award year-end bonuses to executives, pursuant to their employment contracts, based on the gross revenues of the Company. Long-Term Incentive Compensation. It is the Board's philosophy that significant stock ownership by management creates a powerful incentive for executives to build long-term shareholder value. Accordingly, the Board believes that an integral component of executive compensation is the award of equity-based compensation, which is intended to align executives' long-term interests with those of the Company's shareholders. Awards of stock options to executives have historically been at then-current market prices. The Board believes that option grants should be considered on an annual basis. The Company's proposed Fiscal 1998 Nonstatutory Stock Option Plan (the "Fiscal 1998 Plan") authorizes the Board or the Option Committee to grant nonstatutory stock options to employees of the Company. The Committee will determine the prices and terms at which such options are granted. The Committee uses stock options as a significant element of the compensation package of executive officers, because it believes options provide an incentive to executives to maximize stockholder value and because they compensate executives only to the extent that the Company's stockholders receive a return on their investment. In determining the total number of shares of Common Shares to be covered by option grants to executive officers in a given year, the Committee will take into account the number of outstanding Common Shares, the number of shares reserved for issuance under the Company's Fiscal 1997 Nonstatutory Stock Option Plan and Fiscal 1998 Plan, 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. CEO Stan Cipkowski's Compensation. In reviewing and approving Mr. Cipkowski's fiscal 1997 compensation, the Board of Directors considered the same criteria detailed herein with respect to executives in general. Mr. Cipkowski's base salary for fiscal 1997 was established at $99,000 which is below the midpoint of base compensation for CEOs of comparable companies. This amount represented a 125% increase over the base salary which was awarded to Mr. Cipkowski in fiscal 1996. 5 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 Committee was established in July, 1997. Members of the Audit Committee are Stan Cipkowski, Jasper R. Clay, Jr. and John F. Murray. Compensation/Option Committee. This committee makes recommendations to the Board of Directors relating to salaries, bonuses and other compensation and benefits of executive officers, reviews and advises management regarding benefits and other terms and conditions of compensation of management and administers the Company's stock option plans. The Committee was established in July, 1997. Members of the Compensation/Option Committee are Stan Cipkowski, Jasper R. Clay, Jr. and John F. Murray. The Board of Directors does not have a standing nominating committee. Nominations for election to the Board of Directors may be made by the Board of Directors, or by any shareholder entitled to vote for the election of directors. Nominations made by shareholders must be made by written notice received by the Secretary of the Company by June 30 of the year preceding the annual meeting or within ten days of the date on which notice of a special meeting for the election of directors is first given to shareholders. Special meetings are held from time to time to consider matters for which approval of the Board of Directors is desirable or is required by law. One meeting of the Board of Directors was held during fiscal 1997. The Audit and Compensation/Option Committees were not estabished until the first quarter of Fiscal 1997; the Audit Committee has met once, but the Compensation/Option Committee has not yet met. PERFORMANCE TABLE The following graph compares the cumulative returns of $100 invested on May 1, 1993 in (a) the Company, (b) the S&P 500 and (c) the American Stock Exchange Biotech Index. 5/1/93* 5/1/94* 5/1/95* 5/1/96* 5/1/97* ------- ------- ------- ------- ------- American Bio Medica Corporation $100.00 $101.33 $34.66 $541.33 $1,024.00 S&P 500 $100.00 $102.43 $116.83 $148.70 $181.40 AMEX Biotech Index $100.00 $77.42 $70.62 $132.83 $115.35 - ----------------- *or the next trading day if the date fell on a weekend or holiday. 6 PROPOSAL NO. 1 - ELECTION OF DIRECTORS The Directors elected at the Annual Meeting will serve until the next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board of Directors of the Company has nominated Stan Cipkowski, Edmund Jaskiewicz, Jay Bendis, Jasper R. Clay, Jr. and John F. Murray. Stan Cipkowski (49 years old) founded the predecessor of the Company in 1982 and has been an officer and director of the Company since its incorporation in April 1986. From 1982 to 1986, he was sole proprietor of American Micro Media, the Company's predecessor, which was acquired by the Company. In addition, from 1983 to 1987, Mr. Cipkowski was a general partner of Florida Micro Media, a Fort Lauderdale-based marketer of educational software and was a principal shareholder and Chief Financial Officer of Southeast Communications Group, Inc., a publisher of direct response media. In 1982, he became a consultant to Dialogue Systems, Inc., a New York-based developer of training and communications materials, where he served as Vice-President of Sales and Marketing. From 1977 to 1982, he was employed by Prentice-Hall Publishing Company, reaching the position of National Sales Manager. Prior to 1977 he was employed as an accountant for the New Seabury Corporation and as Mid-West Area Manager for the Howard Johnson Company. Edmund Jaskiewicz (74 years old) is a lawyer-engineer. He has practiced international patent and corporate law as a sole practitioner since 1963 and has served as Chairman of the Board of Directors since 1992. From 1953 to 1963 Mr. Jaskiewicz was associated with Toulmin and Toulmin, Esqs., Washington, D.C. From 1960 to 1962, he resided in Frankfurt, Germany managing that firm's local office. From 1952 to 1953 he was with the Patent Section of the Bureau of Ordinance of the Department of the Navy working on patent infringement and licensing matters. He received his J.D. in 1952 from George Washington University Law School and his B.S. in Engineering from the University of Connecticut in 1947. Jay Bendis (50 years old) has been an independent consultant to biomedical companies since 1990, specializing in commercializing new concept products in both domestic and international markets. From 1990 to 1992, he served as Vice-President of Sales and Marketing for Scientific Imaging Instruments where he was a principal shareholder . From 1985 to 1990, Mr. Bendis served as National Sales Manager of the XANAR Laser Corp., a division of Johnson & Johnson, where he directed its national sales force and developed its marketing strategy for integrating high power lasers into the hospital market. From 1979 to 1984, he was the Eastern Area Sales and Marketing Manager for the IVAC Corp., a division of Eli Lilly. Prior to 1979, Mr. Bendis held sales management positions with Xerox Corporation and A.M. International. Mr. Bendis earned his B.A. in Marketing/Management from Kent State University and is currently a member of the Edison BioTechnology Center Advisory Council for the State of Ohio. John F. Murray (64 years old) has served as Chief Financial Officer of Federal Supply, Inc., Pompano Beach, Florida since April, 1994. From 1988 to 1994, Mr. Murray served as Controller for Bio Therapeutics, Inc., Woodbridge, New Jersey. He also was Controller of Shortline, a group of transportation companies, from 1982 to 1988 and, from 1974 to 1982, of Kleber Tire & Rubber Corp. Mr. Murray was Director of Accounting for Western Union Telegraph Company from 1972 to 1974 and Senior Accountant for S.D. Leidesdorf & Co (now 7 Ernst & Young) from 1969 to 1972. Mr. Murray received his B.B.A. in Accounting from the Baruch School of the City University of New York in 1968 and became a Certified Public Accountant in the State of New York in 1974. Jasper R. Clay, Jr. (52 years old) served as a United States Parole Commissioner from 1984 to 1996 and from 1991 to 1996, as Vice-Chairman of the United States Parole Commission and Chairman of the National Appeals Board. He served as final authority for all decisions relating to parole, revocation, imposition or modification of parole conditions, or denial of discharge from supervision. From 1976 to 1984, Mr. Clay was State of Maryland Parole Commissioner and from 1969 to 1976, he was an Associate Member of the State of Maryland Board of Parole. Mr. Clay served as an Associate Member of the State of Maryland Board of Parole from 1969 to 1976, District Supervisor of the Baltimore City District Office in 1968, Staff Specialist-Training and Development for the Maryland Division of Parole and Probation from 1966 to 1968, Parole and Probation Agent I and II, Baltimore District, Office of the Maryland Division of Parole and Probation from 1958 to 1966 and as a Psychiatric Aide at the Spring Grove State Hospital from 1957 to 1958. He received an Honorable Discharge from the United States Army Infantry as a First Lieutenant in 1956. He is active in a number of professional organizations including the American Correctional Association (where he is presently a member of the Awards Committee), the Association of Paroling Authorities International (where he serves as an officer) and the National Council of Crime and Delinquency. Mr. Clay earned his B.A. in Psychology from Morgan State University in 1954 and attended the graduate school at Loyola College in the areas of Guidance, Counseling and Psychology. 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. 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. The Board has no reason to believe that any of the nominees will be unable to serve if elected. Any proposals to nominate a director or directors, other than those persons nominated by the Board, must be made in person at the meeting. The Board is not aware of any other proposals or nominations. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE-NAMED NOMINEES. PROPOSAL NO. 2 - APPROVING THE APPOINTMENT OF RICHARD A. EISNER & COMPANY, LLP AS INDEPENDENT AUDITORS FOR FISCAL 1997 The Board of Directors appointed Richard A. Eisner & Company, LLP as independent public accountant to audit the financial statements for Fiscal 1998 and has determined that it would be desirable to request that the shareholders approve such appointment. A representative of Richard A. Eisner & Company, LLP is expected to attend the meeting with the opportunity to make a statement and/or to respond to appropriate questions from shareholders. Shareholder approval is not required for the appointment of Richard A. Eisner & 8 Company, LPL since the Board of Directors has the responsibility for selecting auditors. However, the appointment is being submitted for the approval at the Annual Meeting. No determination has been made as to what action the Board would take if shareholders do not approve the appointment. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF RICHARD A. EISNER & COMPANY, LLP AS INDEPENDENT AUDITORS. PROPOSAL NO. 3 - APPROVING THE ADOPTION OF THE COMPANY'S FISCAL 1998 NONSTATUTORY STOCK OPTION PLAN. The Board of Directors has adopted the Company's Fiscal 1998 Nonstatutory Stock Option Plan (the "Plan"). 1,000,000 Common Shares were reserved under the Plan. The Plan is administered by the Compensation/Option Committee of the Board of Directors. Stock options under the Plan ("Plan Options") may be granted to employees, officers, directors, consultants of the Company or any other parties who have made a significant contribution to the business and success of the Company. The exercise price of Plan Options under the Plan may be more, equal to or less than the then current market price of the Common Shares as deemed to be appropriate. Options granted under the Plan will not qualify as "incentive stock options" under Section 422 of the Code. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADOPTION OF THE FISCAL 1998 NONSTATUTORY STOCK OPTION PLAN. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("SEC"). Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company, the Company believes that during fiscal 1997 all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with. REVOCABILITY OF PROXY Shares represented by valid proxies will be voted in accordance with instructions contained therein, or, in the absence of such instructions, in accordance with the Board of Directors' recommendations. Any shareholder of the Company has the unconditional right to revoke his or her proxy at any time prior to the voting thereof by any action inconsistent with the proxy, including notifying the Secretary of the Company in writing, executing a subsequent proxy, or personally appearing at the Annual Meeting and casting a contrary vote. However, no such revocation will be effective unless and until such notice of revocation has been received by the Company at or prior to the Annual Meeting. 9 PROPOSALS OF SHAREHOLDERS A proper proposal submitted by a shareholder in accordance with applicable rules and regulations for presentation at the Company's Annual Meeting of Shareholders for fiscal 1999 and received at the Company's executive offices no later than June 30, 1998, will be included in the Company's Proxy Statement and form of proxy relating to such Annual Meeting. OTHER MATTERS The Board of Directors is not aware of any matter to be presented for action at the meeting other than the matters set forth herein. Should any other matter requiring a vote of shareholders arise, the proxies in the enclosed form confer upon the person or persons entitled to vote the shares represented by such proxies the discretionary authority to vote the same in accordance with their best judgment in the interest of the Company. METHOD OF COUNTING VOTES Unless a contrary choice is indicated, all duly executed proxies will be voted in accordance with the instructions set forth on the proxy card. A broker non-vote occurs when a broker holding shares registered in street name is permitted to vote, in the broker's discretion, on routine matters without receiving instructions from the client, but is not permitted to vote without instructions on non-routine matters, and the broker returns a proxy card with no vote (the "non-vote") on the non-routine matter. Under the rules and regulation of the primary trading markets applicable to most brokers, both the election of directors or the ratification of the appointment of accountants are routine matters on which a broker has the discretion to vote if instructions are not received from the client in a timely manner. Under New York law, broker non-votes will have no impact on the election of directors or the ratification or the appointment of the Company's independent auditors. Abstentions will be counted as present for purposes of determining a quorum but will not be counted for or against the election of directors or the ratification of independent auditors. As to Item 1, the Proxy confers authority to vote for all of the five persons listed as candidates for a position on the Board of Directors even though the block in Item 1 is not marked unless the names of one or more candidates are lined out. The Proxy will be voted "For" Items 2 and 3 unless "Against" or "Abstain" is indicated. If any other business is presented at the meeting, the Proxy shall be voted in accordance with the recommendations of Management. AVAILABILITY OF ANNUAL REPORT ON FORM 10-KSB The Company has filed with the Securities Exchange Commission its Annual Report on Form 10-KSB. A copy of the Form 10-KSB for fiscal 1997 has been sent to all shareholders with this proxy statement. The Annual Report is not a part of the proxy soliciting material. BY ORDER OF THE BOARD OF DIRECTORS /s/Edmund Jaskiewicz Edmund Jaskiewicz Secretary to the Board of Directors September 5, 1997 10 PROXY FISCAL 1997 ANNUAL MEETING OF SHAREHOLDERS AMERICAN BIO MEDICA CORPORATION THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION The undersigned Shareholder of American Bio Medica Corporation, having received the Notice dated September 5, 1997, of the Fiscal 1998 Annual Meeting of Shareholders, hereby nominates, constitutes, appoints and authorizes Stan Cikpowski and Edmund Jaskiewicz, and each of them with full power to act alone, as proxies with full power of substitution, for me and in my name, place and stead, to vote all the Common Shares of said corporation standing in my name on its books on August 29, 1997, at the Fiscal 1998 Annual Meeting of Shareholders to be held at 10:00 a.m. on Tuesday, September 23, 1997 at Albany Marriott Hotel, 189 Wolf Road, Albany, New York 12205 or at any adjournments thereof, with all the power the undersigned would possess if personally present, as follows: 1. The election of the five (5) directors listed in the Proxy Statement dated September 5, 1997, accompanying the Notice of said meeting for terms of one year each and until their successors are elected and qualify. CUMULATIVE VOTING IS NOT PERMITTED. IF YOU WISH YOUR VOTES TO BE CAST FOR ALL OF THE FIVE (5) PERSONS LISTED BELOW, PLACE AN "X" IN THIS BOX |_|. IF YOU DO NOT WISH TO VOTE FOR ALL OF THE CANDIDATES, LINE OUT THE NAMES OF PERSONS FOR WHOM YOU DO NOT CHOOSE TO VOTE: DIRECTORS: Stan Cipkowski Edmund Jaskiewicz Jay Bendis John F. Murray Jasper R. Clay, Jr. 2. Approval of the appointment of Richard A. Eisner & Company, LLP as independent auditors for Fiscal year 1998. FOR |_| AGAINST |_| ABSTAIN |_| 3. Adoption of the Fiscal 1998 Nonstatutory Option Plan. FOR |_| AGAINST |_| ABSTAIN |_| 4. Upon such other business as may be brought before the meeting or any adjournments thereof. The Board of Directors at present knows of no other business to be presented. THIS PROXY CONFERS AUTHORITY TO VOTE FOR ALL OF THE FIVE PERSONS LISTED EVEN THOUGH THE BLOCK IN ITEM 1 IS NOT MARKED UNLESS THE NAMES OF ONE OR MORE CANDIDATES ARE LINED OUT. THIS PROXY WILL BE VOTED "FOR" ITEMS 2 AND 3 ABOVE UNLESS "AGAINST" OR "ABSTAIN" IS INDICATED. IF ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND THE COST OF SAME IS BORNE BY THE CORPORATION. THIS PROXY MAY BE REVOKED BY WRITING THE SECRETARY TO THE BOARD, AMERICAN BIO MEDICA CORPORATION, 102 SIMONS ROAD, ANCRAMDALE, NEW YORK 12503 OR IN PERSON AT THE FISCAL 1998 ANNUAL MEETING OF SHAREHOLDERS AT ANY TIME PRIOR TO ITS EXERCISE. Date: Name: Beneficial Shareholder (Please Print) Address: Signature(s) (All Shareholders must sign) NUMBER OF SHARES VOTING IF SHARES ARE NOT REGISTERED IN YOUR NAME, PLEASE GIVE THE NAME AND ADDRESS OF THE PERSON OR ENTITY IN WHOSE NAME THEY ARE REGISTERED. (This must be completed if applicable) Please date, fill in your complete name and address and sign above exactly as your name or names appear hereon, and return this proxy promptly in the enclosed envelope. When signing as attorney, executor, administrator, trustee or guardian, please give full title. If there is more than one fiduciary, all should sign. All joint owners must sign. EX-4 2 NONSTATUTORY OPTION PLAN Fiscal 1998 Nonstatutory Stock Option Plan Exhibit 1 AMERICAN BIO MEDICA CORPORATION NONSTATUTORY STOCK OPTION PLAN July 21, 1997 1. Purpose The purpose of this Nonstatutory Stock Option Plan (hereinafter referred to as the "Plan"), is to provide a special incentive to selected individuals who have made significant contributions to the business and success of AMERICAN BIO MEDICA CORPORATION, (hereinafter referred to as the "Company"). The Plan is designed to accomplish this purpose by offering such individuals options ("Option") to purchase the common shares of the Company ("Shares") so that they will share in the Company's success. 2. Administration The Plan shall be administered by the Board of Directors of the Company or by an option committee to be established by the board of directors of the Company. If an option committee administers the Plan, it shall consist of three or more members, at least one of whom shall be neither an officer nor an employee of the Company. (The board of directors or an option committee shall be referred to as the "Board" herein.) The Board shall have authority, consistent with the Plan, (a) to determine which individuals shall be granted Options; (b) to determine the time or times when Options shall be granted and the number of Shares to be subject to each Option; (c) to determine the exercise price of the Shares subject to each Option and the method of payment of such price; (d) to determine the time or times when each Option becomes exercisable and the duration of the exercise period, subject to the limitations contained in Paragraph 6(b); (e) to prescribe the form or forms of the instruments evidencing any Options granted under the Plan and of any other instruments required under the Plan and to change such forms from time to time; (f) to adopt, amend and rescind rules and regulations for the administration of the Plan and the Options and for its own acts and proceedings; and (g) to decide all questions and settle all controversies and disputes which may arise in connection with the Plan. All decisions, determinations and interpretations of the Board shall be binding on all parties concerned. Fiscal 1998 Nonstatutory Stock Options Plan - 1 3. Participants The Participants in the Plan shall be employees, officers, directors, consultants of the Company or any other parties who have made a significant contribution to the business and success of the Company, as may be selected from time to time by the Board in its discretion. In any grant of Options after the initial grant, Participants who were previously granted Options or sold Shares under the Plan may be included or excluded. 4. Limitations No Option shall be granted under the Plan after April 30, 2001, but Options theretofore granted may extend beyond that date. Subject to adjustment as provided in Section 8 of the Plan, the number of Shares which may be issued under the Plan shall not exceed one million (1,000,000) in the aggregate. To the extent that any Option granted under the Plan shall expire or terminate unexercised or for any reason become unexercisable as to any Shares subject thereto, such Shares shall thereafter be available for further grants under the Plan, within the limit specified above. 5. Shares to be Issued Shares to be issued under the Plan may constitute an original issue of authorized Shares or may consist of previously issued Shares acquired by the Company, as shall be determined by the Board. The Board and the proper officers of the Company shall take any appropriate action required for such issuance. The maximum number of Shares which may be issued under the Plan is one million (1,000,000) Shares. 6. Terms and Conditions of Options All Options granted under the Plan shall be subject to the following terms and conditions (except as provided in Section 7) and to such other terms and conditions as the Board shall determine to be appropriate to accomplish the purposes of the Plan: (a) Exercise price. The exercise price under each Option shall be determined by the Board and may be more, equal to or less than the then current market price of the Shares as the Board may deem to be appropriate: provided, however, that in the event an option committee shall determine to grant an option at less than 85% of the then current market price of the Shares, such Option shall not be granted by the option committee without the prior approval of the Board of Directors. (b) Period of Options. The period of an Option shall not exceed five years from the date of grant. (c) Exercise of Options. (i) Each Option shall be made exercisable at such time or times, whether or not in installments, as the Board shall prescribe at the time the Option is granted. (ii) A person electing to exercise an Option shall give written notice to the Company, as specified by the Board, of his/her election and of the number of Shares he/she has elected to purchase, such notice to be accompanied by such instruments or documents as may be required by the Board, and shall at the time of such exercise tender the purchase price of the Shares he/she has elected to purchase. (d) Payment for Issuance of Shares. Upon exercise of any Option granted hereunder, payment in full shall be made at the time of such exercise for all such Shares then being purchased. The Company shall not be obligated to issue any Shares unless and until, in the opinion of the Company's counsel, all applicable laws and regulations have been complied with, nor, in the event the Shares at the time are not listed upon any stock exchange, unless and until the Shares to be issued have been listed or authorized to be added to the list upon official notice of issuance upon such exchange, nor unless or until all other legal matters in connection with the issuance and delivery of Shares have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the Participant such investment representation or such agreement, if any, as counsel for the Company may consider necessary in order to comply with the Securities Act of 1933 as then in effect, and may require that the Participant agree that any sale of the Shares will be made only in such manner Fiscal 1998 Nonstatutory Stock Options Plan - 2 as is permitted by the Board and that a Participant will notify the Company when he/she intends to make any disposition of the Shares whether by sale, gift or otherwise. The Participant shall take any action reasonably requested by the Company in such connection. A Participant shall have the rights of a stockholder only as to Shares actually acquired by him/her under the Plan. (e) Transferability of Options. No Option may be transferred by the Participant otherwise than by will or by the laws of descent and distribution, and during the Participant's lifetime the Option may be exercised only by the Participant. (f) Termination of Employment. If the Participant is an employee and his/her employment terminates for any reason other than his/her death, the Participant may, unless discharged for cause, thereafter exercise his/her Option as provided below, but only to the extent the Participant was entitled to exercise the Option on the date when his/her employment terminated. If such termination of employment is voluntary on the part of the Participant, he/she may exercise his/her Option only within ten days after the date of termination of employment (unless a longer period not in excess of three months is allowed by the Board). If such termination of employment is involuntary on the part of the Participant, he/she may exercise his/her Option only within three months after the date of termination of employment. In no event, however, may such Participant exercise his/her Option at a time when the Option would not be exercisable had the Participant remained an employee or when the termination was for cause. For purposes of this subsection (f), a Participant's employment shall not be considered terminated in the case of sick leave or other bona fide leave of absence approved by the Company or a subsidiary, or in the case of a transfer to the employment of a subsidiary or to the employment of the Company. Anything herein to the contrary notwithstanding, an Option may be exercised only to the extent exercisable on the date of termination of employment by death or otherwise. (g) Retirement or Resignation. If prior to the expiration date of a Participant's Option an Optionee shall retire or resign with the Company's consent such Option may be exercised in the same manner as if the Optionee had continued in the Company's employ; provided, however, the Board may terminate, at any time prior to exercise, all unexercised Options if it shall determine that the retired or resigning Participant Optionee has engaged in any activity detrimental to the Company's interest. (h) Death. If a Participant dies at a time when he/she is entitled to exercise an Option, then at any time or times within one (1) year after his/her death (or such further period as the Board may allow) such Option may be exercised, as to all or any of the Shares which the Participant was entitled to purchase immediately prior to his/her death, by his/her executor or administrator or the person or persons to whom the Option is transferred by will or the applicable laws of descent and distribution, and except as so exercised such Option shall expire at the end of such period. In no event, however, may an Option be exercised after the expiration of the Option period. 7. Replacement Options The Company may grant Options under the Plan on terms differing from those provided for in Section 6 where such Options are granted in substitution for Options held by employees of other corporations who concurrently become employees of the Company or a subsidiary as the result of a merger, consolidation or other reorganization of the employing corporation with the Company or subsidiary, or the acquisition by the Company or a subsidiary of the business, property or stock of the employing corporation. The Board may direct that the substitute Options be granted on such terms and conditions as the Board considers appropriate in the circumstances. Fiscal 1998 Nonstatutory Stock Options Plan - 3 8. Changes in Stock In the event of a stock dividend, stock split or recapitalization or merger in which the Company is the surviving corporation, or other similar capital change, the number and kind of Shares or securities of the Company to be subject to the Plan and to Options then outstanding or to be granted thereunder, the maximum number of Shares or securities which may be issued or sold under the Plan, the exercise price and other relevant provisions shall be appropriately adjusted by the Board, the determination of which shall be binding on all persons. 9. Employment Rights The adoption of the Plan or the granting of an Option does not confer upon any individual any right to employment or continued employment with the Company or a subsidiary, as the case may be, nor does it interfere in any way with the right of the Company or a subsidiary to terminate the employment of any of its employees at any time. 10. Amendment The Board may at any time discontinue granting Options under the Plan. The Board of the Company may at any time or times amend the Plan or amend any outstanding Option or Options for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law provided, however, that, except to the extent required or permitted under Section 8, no such amendment shall void or diminish Options previously granted without the consent of the Participant, nor shall any amendment increase or accelerate the conditions and actions required for the exercise of an Option unless the Participant shall have been discharged from the Company's employment for cause. Adopted by the Board of Directors on June 21, 1997 Fiscal 1998 Nonstatutory Stock Options Plan - 4 -----END PRIVACY-ENHANCED MESSAGE-----