<PAGE>
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:
<TABLE>
<S> <C>
|X| Preliminary Proxy Statement |_| Confidential, For Use of the
|_| Definitive Proxy Statement Commission Only (as permitted by
|_| Definitive Additional Materials Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
STERLING VISION, INC.
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how its was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
STERLING VISION, INC.
1500 Hempstead Turnpike
East Meadow, NY 11554
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 20, 1997
The Annual Meeting of Shareholders of Sterling Vision, Inc. ("Sterling"
or the "Company") will be held at 1500 Hempstead Turnpike, East Meadow, New
York 11554, on Friday, the 20th day of June, 1997, at 9:00 a.m. (local time),
for the following purposes:
(1) to elect three Class 2 Directors to the Company's Board of
Directors to hold office until the 1999 Annual Meeting of
Shareholders or until each of their respective successors
shall have been duly elected and qualified;
(2) to consider and act upon a proposal to approve Amendment No. 2
to the Company's 1995 Stock Incentive Plan (the "Plan") to
increase the number of shares reserved for issuance
thereunder;
(3) to consider and act upon a proposal to approve Amendment No. 3
to the Plan to delete the provision restricting any member of
the Cohen family from receiving options thereunder, as well as
to require the approval of the Independent Committee of any
grant of options thereunder to any member of the Cohen family;
(4) to ratify the action taken by the Board of Directors on
November 19, 1996, in granting to each of Drs. Robert, Alan
and Edward Cohen options to purchase 66,667 shares of the
Company's Common Stock, par value $.01 per share (the "Common
Stock"), as additional consideration for each of said person's
making a loan to the Company, in the amount of $666,666.67;
(5) to ratify the action taken by the Board of Directors on
November 19, 1996, in granting to Jay Fabrikant, a Director of
the Company, options to purchase 200,000 shares of the
Company's Common Stock in consideration of his assisting the
Company in the development and expansion of its third party,
managed care programs;
(6) to ratify the action taken by the Board of Directors on April
8, 1997 in granting to Meadows Management, LLC ("Meadows"), a
limited liability company owned by Drs. Robert Cohen and Alan
Cohen, options to purchase 300,000 shares of the Company's
Common Stock, as additional consideration for Meadows
providing consulting services to the Company;
(7) to ratify the selection of Deloitte & Touche LLP, independent
public accountants, as the auditors of the Company for the
1997 fiscal year; and
(8) to transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 25,
1997 as the record date for the determination of the shareholders of the Company
entitled to notice of, and to vote at, the Annual Meeting of Shareholders. Each
share of the Company's Common Stock is entitled to one vote on all matters
presented at the Annual Meeting.
ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO
ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND
RETURN PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
JOSEPH SILVER,
Secretary
May , 1997
<PAGE>
STERLING VISION, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held June 20, 1997
INTRODUCTION
This Proxy Statement is being furnished to shareholders of record of
Sterling Vision, Inc. ("Sterling" or the "Company") as of April 25, 1997, in
connection with the solicitation, by the Board of Directors of Sterling, of
proxies for the 1997 Annual Meeting of Shareholders to be held at 1500 Hempstead
Turnpike, East Meadow, New York 11554 on Friday, June 20, 1997 at 9:00 a.m.
(local time), or at any and all adjournments thereof (the "Annual Meeting" or
"Meeting"), for the purposes stated in the Notice of Annual Meeting of
Shareholders to which this Proxy Statement is annexed. The approximate date of
mailing of this Proxy Statement, enclosed form of Proxy and the Company's Annual
Report to Shareholders is May 1, 1997.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 25,
1997 as the record date for the determination of shareholders entitled to notice
of the Annual Meeting, and only holders of record of the Common Stock, par value
$.01 per share (the "Common Stock"), of the Company on that date will be
entitled to notice of, and to vote at, the Annual Meeting. As of the record
date, the Company had outstanding 12,693,282 shares of Common Stock. Each share
of Common Stock is entitled to one vote on all matters presented at the Annual
Meeting.
The presence, in person or by proxy, of the holders of a majority of
the shares of Common Stock issued and outstanding and entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted to determine whether a quorum
is present. A plurality of the votes cast at the Meeting is required for the
election of Directors. For all matters to be considered at the Annual Meeting,
generally a vote of a majority of the votes cast on the matter will be required
for approval. Broker non-votes and abstentions will not be counted for purposes
of determining the number of votes cast. The Directors and officers as a group
have indicated their intention to vote "FOR" the election to the Board of
Directors of the individuals named as nominees herein, and "FOR" each of the
other items to be considered at the Annual Meeting.
If the enclosed Proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the pleasure of the
shareholder signing it, either by delivering written notice of revocation to the
Secretary of the Company, or by voting the shares covered thereby in person or
by another proxy dated subsequent to the date thereof.
Shares represented by duly executed proxies in the accompanying form
will be voted in accordance with the instructions indicated on such proxies, and
if no such instructions are indicated thereon, will be voted in favor of the
nominees named below for election as Directors and for the other proposals
referred to below. In their discretion, the Proxies are authorized to consider
and vote upon such matters incident to the conduct of the Annual Meeting and
upon such other business matters or proposals as may properly come before the
Meeting that the Board of Directors of the Company did not know, within a
reasonable time prior to this solicitation, would be presented at the Meeting.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of April 25,
1997, regarding the beneficial ownership of the Company's Common Stock by: (i)
each shareholder known by the Company to be the beneficial owner of more than
five percent of the outstanding shares of the Company's Common Stock; (ii) each
Director of the Company; (iii) each Named Executive Officer (as hereinafter
defined) of the Company; and (iv) all Directors and executive officers of the
Company as a group. Unless otherwise indicated, the Company believes that the
beneficial owners of the Common Stock listed below, based on information
provided by such owners, have sole investment and voting power with respect to
such shares. The address of Dr. L'Esperance, Jr. is 1 East 71st Street, New
York, New York 10021. The address of Jay Fabrikant is 560 Sylvan Avenue,
Englewood Cliffs, New Jersey 07632. The address of Joel Gold is 3 New York
Plaza, New York, New York 10004. The address of all persons listed below other
than Dr. L'Esperance, Jr., Mr. Fabrikant and Mr. Gold is 1500 Hempstead
Turnpike, East Meadow, New York 11554.
<TABLE>
<CAPTION>
Beneficial
Name Ownership Percent of Class
---- ---------- ----------------
<S> <C> <C>
Dr. Robert Cohen..................................... 1,018,657(1)(2) 8.0%
Dr. Alan Cohen....................................... 1,348,657(1)(2)(3) 10.6%
Dr. Edward Cohen..................................... 371,295(1) 2.9%
Stefanie Cohen Rubin................................. 766,076 6.0%
Allyson Cohen........................................ 766,076 6.0%
Jeffrey Cohen........................................ 766,076 6.0%
Meryl Cohen a/c/f Gabrielle Cohen.................... 1,149,114 9.1%
Meryl Cohen a/c/f Jaclyn Cohen....................... 1,149,114 9.1%
Meryl Cohen.......................................... 2,298,228(4) 18.1%
Joel Gold............................................ 16,500(5) *
Robert Greenberg..................................... 97,085(6) *
Joseph Silver........................................ 96,785(7) *
Jerry Darnell........................................ 96,785(8) *
Sebastian Giordano.................................. 48,391(9) *
Kevin Cambra......................................... 48,391(10) *
Dr. Francis L'Esperance, Jr.......................... 122,000(11) 1.0%
Al Akbar............................................. 8,333(12) *
Jay Fabrikant........................................ 200,000(13) 1.6%
Lancer Group......................................... 943,746(14) 7.4%
All Directors and executive
officers as a group (13
persons).............................................. 3,473,878(15) 25.0%
- -------------------------
* less than 1%
- 2 -
<PAGE>
(1) This number includes options to purchase 66,667 shares of Common Stock,
subject to the approval of the grant thereof at the Annual Meeting.
(2) This number includes fifty (50%) percent of the options granted to
Meadows Management, LLC, a limited liability company owned by Drs.
Robert and Alan Cohen, to purchase an aggregate of 300,000 shares of
Common Stock subject to the approval of the grant thereof at the Annual
Meeting.
(3) This number excludes 2,298,228 shares of Common Stock beneficially
owned by Meryl Cohen, the wife of Dr. Alan Cohen, as custodian for
their children, Gabrielle and Jaclyn Cohen, of which shares Dr. Cohen
disclaims beneficial ownership.
(4) Meryl Cohen is deemed to be the beneficial owner of the shares held by
her as custodian for her children, Gabrielle and Jaclyn Cohen.
(5) This number represents 1,500 shares of Common Stock owned by Mr. Gol
d's minor children and includes warrants to purchase 15,000 shares of
Common Stock at $9.00 per share. Such warrants were part of 220,000
warrants granted to the underwriters of the Company in connection with
the Company's initial public offering (consummated in December, 1995)
and were transferred to Mr. Gold on March 27, 1996. Such warrants are
exercisable at any time prior to December 26, 2000. At the time the
warrants were transferred to Mr. Gold, Mr. Gold was a Managing Director
of Fechtor, Detwiler & Co., Inc., which acted as an underwriter in
connection with the Company's initial public offering.
(6) This number represents 300 shares of Common Stock owned by Mr.
Greenberg's minor children and the right to acquire 96,785 shares of
Common Stock upon the exercise of presently exercisable, outstanding
options.
(7) This number represents the right to acquire 96,785 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(8) This number represents the right to acquire 96,785 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(9) This number represents the right to acquire 48,391 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(10) This number represents the right to acquire 48,391 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(11) This number includes the right to acquire 110,000 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(12) This number represents the right to acquire 8,333 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(13) This number represents options to purchase 200,000 shares of Common
Stock, subject to the approval of the grant thereof at the Annual
Meeting.
- 3 -
<PAGE>
(14) This number includes and/or represents: (i) 390,500 shares of Common
Stock owned by Lancer Partners, L.P.; (ii) 299,400 shares of Common
Stock owned by Lancer Offshore, Inc.; (iii) the right of Lancer
Partners, Inc. to acquire 104,923 shares of Common Stock upon
conversion of the Company's Convertible Debentures, due August 25,
1998 (the "Debentures"), assuming a conversion price of $6.50 per
share of Common Stock, and warrants to acquire an additional 68,200
shares of Common Stock; (iv) the right of Lancer Offshore, Inc.
to acquire 14,000 shares of Common Stock upon conversion of the
Debentures, assuming the above conversion price, and warrants to
acquire an additional 9,100 shares of Common Stock; (v) the right of
Lancer Voyager Fund to acquire 10,000 shares of Common Stock upon
conversion of the Debentures, assuming the above conversion price, and
warrants to purchase an additional 6,500 shares of Common Stock; (vi)
the right of Lancer Polaris to acquire 10,000 shares of Common Stock
upon conversion of the Debentures, assuming the above conversion
price, and warrants to purchase an additional 6,500 shares; and (vii)
the right of Michael Lauer to acquire 14,923 shares of Common Stock
upon conversion of the Debentures, assuming the above conversion
price, and warrants to purchase an additional 9,700 shares of Common
Stock. Excludes the right to acquire up to an additional 50,000
shares of Common Stock upon exercise of additional warrants
issuable(on a pro-rata basis) to each of the above entities and
individual upon exercise of the above described warrants within a
specified period of time.
(15) This number includes the right to acquire 520,470 shares of
Common Stock upon the exercise of presently exercisable, outstanding
options and warrants, and includes the right to acquire an additional
701,000 shares of Common Stock, within sixty (60) days of the date
hereof, upon the exercise of options, the grants of which are subject
to approval at the Annual Meeting. In accordance with Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, as amended, the
1,221,470 shares of Common Stock for which the Company's Directors and
executive officers, as a group, hold currently exercisable options or
warrants, (including those options which require shareholder
approval), have been added to the total number of issued and
outstanding shares of Common Stock solely for the purpose of
calculating the percentage of such total number of issued and
outstanding shares of Common Stock beneficially owned by such
Directors and executive officers as a group.
- 4 -
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors consists of seven Directors. The Directors of
the Company are divided into two classes, designated as Class 1 and Class 2,
respectively. Directors of each class will be elected at the Annual Meeting of
the Shareholders of the Company held in the year in which the term of such class
expires and will serve thereafter for two years. All Directors serve until their
respective successors are duly elected and qualified or until an earlier
resignation, removal from office, retirement or death. Mr. Joel Gold and Drs.
Robert and Alan Cohen presently serve as Class 2 Directors and are scheduled to
hold office until the Annual Meeting. Mr. Robert Greenberg, Mr. Jay Fabrikant
(who was appointed as a Director in April, 1996), and Drs. Edward Cohen and
Francis L'Esperance, Jr. presently serve as Class 1 Directors and are scheduled
to hold office until the 1998 Annual Meeting of Shareholders.
Item 1. ELECTION OF DIRECTORS (PROPOSAL 1)
The Board of Directors has nominated Mr. Joel Gold and Drs. Robert and
Alan Cohen to serve as Class 2 Directors until the 1999 Annual Meeting of
Shareholders or until their respective successors are duly elected and
qualified.
The following table lists the current Class 1 and Class 2 Directors of
the Company:
Class 1 - Term Expires in 1998
- ------------------------------
Robert Greenberg (Current Director)
Jay Fabrikant (Current Director)
Dr. Edward Cohen (Current Director)
Dr. Francis L'Esperance, Jr. (Current Director)
Class 2 - Term expires in 1997
- ------------------------------
Dr. Robert Cohen (Current Director standing for election at the Annual Meeting)
Dr. Alan Cohen (Current Director standing for election at the Annual Meeting)
Mr. Joel Gold (Current Director standing for election at the Annual Meeting)
Shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the following three nominees: Dr. Robert
Cohen, Dr. Alan Cohen and Mr. Joel Gold. Each nominee for director has consented
to serve on the Board of Directors and will be elected by a plurality of the
votes cast at the Annual Meeting. If any (or all) such persons should be
unavailable or unable to serve, the persons named in the enclosed Proxy will
vote the shares covered thereby for such substitute nominee (or nominees) as the
Board of Directors may select; however, at the present time, the Board of
Directors knows of no reason why any nominee might be unable to serve.
Shareholders may withhold authority to vote for any nominee by entering the name
of such nominee in the space provided for such purpose on the enclosed Proxy
Card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE NOMINEES NAMED HEREIN.
- 5 -
<PAGE>
Set forth below is certain information with respect to each of the
nominees for the office of Director, each Director and each other executive
officer or key employee of the Company.
Directors, Executive Officers and Key Employees
The executive officers, Directors and key employees of Sterling are as
follows:
</TABLE>
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Robert Cohen, O.D. 53 Chairman of the Board of Directors
Alan Cohen, O.D. 46 Vice-Chairman of the Board of Directors
Robert B. Greenberg 52 President, Chief Executive Officer, Director
Sebastian Giordano 39 Executive Vice President-Finance, Chief Financial Officer and
Treasurer
Joseph Silver 51 Executive Vice President, Secretary and General Counsel
Jerry R. Darnell 46 Executive Vice President-Franchising
Kevin Cambra 33 Executive Vice President - Company Store Operations
Edward Cohen, O.D. 57 Director
Joel L. Gold 55 Director
Francis A. L'Esperance,
Jr., M.D. 64 Director and Chairman of the Board - Insight Laser
Centers, Inc.
Martin J. Shoman, O.D. 57 President - VisionCare of California
Jay Fabrikant 40 Director
Charles Raab 48 Chief Financial Officer - Insight Laser Centers, Inc.
Ali Akbar 44 Vice President-Managed Care
</TABLE>
Dr. Robert Cohen has served as Chairman of the Board of Directors of
Sterling since its inception. He also served as Chief Executive Officer of
Sterling from inception until October, 1995. His principal office is located at
1500 Hempstead Turnpike, East Meadow, New York. Dr. Robert Cohen and his
brothers, Drs. Edward Cohen and Alan Cohen, together with certain members of
their respective, immediate families, are the principal shareholders of
Sterling. In addition, Dr. Cohen, together with his brother, Dr. Alan Cohen, are
the owners of Meadows Management, LLC ("MML")which renders consulting services
to the Company. From 1968 to the present, Dr. Robert Cohen has been engaged in
the retail and wholesale optical business. For more than 10 years, Dr. Cohen has
also served as President and a director of Cohen Fashion Optical, Inc. ("CFO"),
which currently maintains its principal office in East Meadow, New York. Dr.
Cohen and his brothers, Drs. Edward Cohen and Alan Cohen, together with certain
members of their respective, immediate families, also are the shareholders of
CFO. CFO engages in the operation and franchising of retail optical stores
similar to those operated and franchised by the Company. Dr. Cohen is a director
of and, together with Dr. Alan Cohen and certain members of their respective,
immediate families, is a shareholder of Fast Cast Corporation ("Fast Cast"),
which offers for sale equipment and supplies to produce ophthalmic lenses. Dr.
Cohen is also an officer and a director of several management and real estate
companies and other businesses.
Dr. Alan Cohen has served as a Director of Sterling since its
inception. He also served as Chief Operating Officer of Sterling from 1992 until
October, 1995 when he became Vice-Chairman of the Board of Directors. In
addition, Dr. Cohen, together with his brother, Dr. Robert Cohen, are the owners
of MML, which renders consulting services to the Company. His principal office
is located at 1500 Hempstead Turnpike, East Meadow, New York. Dr. Alan Cohen and
his brothers, Drs. Edward Cohen and Robert Cohen, together with certain members
of their respective, immediate families, are the principal shareholders of
Sterling. From 1974 to the present, Dr. Alan Cohen has been engaged in the
retail and wholesale optical business. For more than 10 years,
- 6 -
<PAGE>
Dr. Cohen has also been a director, principal shareholder and officer of CFO.
Dr. Cohen is a director of and, together with Dr. Robert Cohen and certain
members of their respective, immediate families, is a shareholder of Fast Cast.
He is also a shareholder, director and officer of Lensco, which acts as a
consultant to Neolens. Dr. Cohen is also an officer and a director of several
management and real estate companies and other businesses.
Robert B. Greenberg has served as a Director of Sterling since July,
1992, became President in August, 1994, and became Chief Executive Officer in
October, 1995. From 1984 through 1994, Mr. Greenberg served as President of
Natural Cosmetic Licensing, Inc. and its predecessor companies, which was, until
September, 1994, the owner and licensor of "i natural" skin care and cosmetic
products. From September 1994 through October 1995, Mr. Greenberg served as a
director of I Natural, Inc., the general partner of I Natural Cosmetics, L.P.,
the current owner and licensor of the name and the products offered under the
name "i natural cosmetics". Mr. Greenberg is a member of the Board of Directors
of Benihana, Inc., a company operating company-owned and franchised
Japanese-style restaurants, which position he has held since 1983. In addition,
since 1983, Mr. Greenberg has been a member of the International Council of
Shopping Centers and the International Franchise Association. In addition, from
time to time, Mr. Greenberg renders real estate and financial consulting
advisory services to various companies, including CFO.
Sebastian Giordano has served as Chief Financial Officer, Executive
Vice President-Finance and Treasurer of Sterling since July, 1992. From March
1990 to July 15, 1992, Mr. Giordano was Vice President and Treasurer of Sterling
Optical Corp., f/k/a IPCO Corporation ("IPCO"), substantially all of the assets
of which the Company purchased in July, 1992. Mr. Giordano was Vice President
and Treasurer of IPCO at the time it filed for protection under Chapter 11 of
the United States Bankruptcy Code. In June, 1992, he was appointed Responsible
Officer by the Bankruptcy Court overseeing the liquidation of IPCO, to be the
person in charge of the liquidation of the remaining assets of IPCO. Mr.
Giordano resigned from that position on or about July 26, 1992. Mr. Giordano and
his wife are the shareholders of Dani-Marc Optical, Inc., the former franchisee
of the Sterling Optical Center located in Nanuet, New York.
Joseph Silver has served as Executive Vice President and Secretary of,
and General Counsel to, the Company since March, 1992. From May 1985 to December
1991, Mr. Silver served as General Counsel to The Trump Organization, located in
New York, New York. Mr. Silver is a member of the New York State Bar, and
received a Juris Doctorate degree from Brooklyn Law School in 1969. In addition
to the services which Mr. Silver provides to the Company, he also provides legal
services to other persons or entities, including persons and entities which are
affiliates of the Company, although such legal services (except for legal
services rendered: (i) for no consideration; and (ii) to Sterling's
subsidiaries) ceased upon consummation of the Company's initial public offering.
Mr. Silver, together with his wife, are the principal stockholders of RJL
Optical, Inc., the franchisee of the Sterling Optical Center located in Great
Neck, New York, which is presently being managed by the Company.
Jerry Darnell has served as Sterling's Executive Vice
President-Franchising since July, 1992. From February 1990 through December
1991, Mr. Darnell served as Director of Franchise Development for Physicians
Weight Loss Centers, Inc., located in Akron, Ohio. From July 1989 to February
1990,
- 7 -
<PAGE>
he was Senior Vice President of Formu-3 International, Inc., a company operating
company-owned and franchised weight loss centers, located in Canton, Ohio. From
August 1988 to July 1989, Mr. Darnell was Vice President of Franchise
Development of Medicine Shoppe International, Inc., a company engaged in the
business of franchising retail pharmaceutical stores, located in St. Louis,
Missouri, having first been associated with that company, as a consultant, in
November 1987. Mr. Darnell is a member of the International Franchise
Association, has served as Chairman of its exhibit committee and has served as a
franchise consultant to many franchise organizations where he has been a seminar
leader. He has also been a keynote speaker for national sales and business
organizations.
Kevin Cambra has been employed by Sterling in various capacities since
October, 1993. He has been responsible for Company-store operations, first as
Director of Store Operations, and most recently as Executive Vice President
Company Store Operations. From 1987 to 1993, Mr. Cambra was employed by Site For
Sore Eyes Opticians, Inc. ("SFSE") in various capacities, including Vice
President of Company Store Operations, a position to which he was appointed in
1990. SFSE filed for bankruptcy protection under Chapter 11 of the United States
Bankruptcy Code in the Bankruptcy Court for the Northern District of California
in May, 1992 and was merged with and into Sterling Vision of California, Inc.
("SVC"), a wholly-owned subsidiary of the Company, in October, 1993 (the "SFSE
Merger"). Mr. Cambra was an officer of SFSE at the time it filed its petition in
bankruptcy and prior to the SFSE Merger.
Dr. Edward Cohen has been a Director of Sterling since July, 1992. He
also served as Vice President of Sterling from July, 1992 until October, 1995.
Dr. Edward Cohen and his brothers, Drs. Robert Cohen and Alan Cohen, together
with certain members of their respective, immediate families, are principal
shareholders of Sterling. For more than 16 years, Dr. Edward Cohen has also been
a director, shareholder and officer of CFO. In addition, Dr. Cohen is also an
officer and a director of several management and real estate companies and
numerous other businesses.
Joel L. Gold has served as a Director of Sterling since December, 1995.
He has been a Managing Director of LT Lawrence & Co., Inc. since April 1996. He
was a Managing Director of Fechtor, Detwiler & Co., Inc., one of the
underwriters for the Company's initial public offering, from April, 1995 until
April 1996. Mr. Gold was a Managing Director of Furman Selz Incorporated from
January, 1992 until March, 1995. From April, 1990 until January, 1992, Mr. Gold
was a Managing Director of Bear Stearns and Co., Inc. ("Bear Stearns"). For
approximately 20 years before he became affiliated with Bear Stearns, he held
various positions with Drexel Burnham Lambert, Inc. He is currently a director
of Action Industries, Inc., a marketer of houseware products ("Action"); Concord
Camera Corp., a manufacturer and distributor of cameras ("Concord"); Life
Medical Sciences, a biotechnological company; BCAM Corporation, a provider of
ergonometric services ("BCAM"); and William Greenberg, Jr. Desserts and Cafes,
Inc., a specialty bakery. He currently serves on the Compensation Committee of
each of Action, Concord, Life and BCAM.
Dr. Francis A. L'Esperance, Jr. has served as a Director of Sterling
since December, 1995 and has served as Chairman of the Board of Insight Laser
Centers, Inc., a wholly-owned subsidiary of Sterling ("Insight"), since March,
1996. Dr. L'Esperance has been a Professor of Clinical Ophthalmology at the
Columbia University College of Physicians and Surgeons and an Attending
Ophthalmologist at the Edward S. Harkness Eye Institute and the Manhattan Eye,
- 8 -
<PAGE>
Ear and Throat Hospital since 1985. Throughout his career, Dr. L'Esperance has
written eight textbooks and 104 articles and multiple chapters particularly on
the subject of ophthalmic laser applications. He has been researching ophthalmic
lasers since 1963 and has performed various ophthalmic procedures using various
types of lasers since 1968. He co-founded Taunton Technologies, Inc. (which
later merged with VISX, Incorporated). Taunton Technologies, Inc. was the first
excimer laser company to receive an FDA Investigative Device Exemption (1968) to
evaluate excimer laser refractive surgery and which later gained FDA approval
for the removal of corneal scars and the performance of photorefractive
keratectomy ("PRK") surgery. He was awarded the William B. Mark Award for
Research Excellence by the American Society for Laser Medicine and Surgery in
1986 and the Arthur L. Schawlow Award by the Laser Institute of America in 1988.
In addition, Dr. L'Esperance has been an Overseers Member at Dartmouth Medical
School and C. Everett Koop Institute in Hanover, New Hampshire.
Dr. Martin Shoman has served as President and Chief Operating Officer
of VisionCare of California ("VCC"), a wholly-owned subsidiary of the Company,
since June, 1994. From April, 1994 until June, 1994, he was Vice President of
VCC. From May, 1993 through June, 1994, he was President of M.J. Shoman &
Associates, an eyecare consultant business that offered services to the Company
and other retail optical stores. From January, 1977 until May, 1993 he was
President and Chief Executive Officer of a subsidiary of Pearle Vision Centers,
operating a California specialized health maintenance organization.
Jay Fabrikant has been actively engaged in the healthcare field for
over 15 years. Mr. Fabrikant currently is the President of Medical Development
Systems, Inc., a healthcare consulting firm. From 1983 to 1990, Mr. Fabrikant
served as the Chairman and Chief Executive Officer of Total Health Systems, a
regional health maintenance organization. From 1990 to 1996, Mr. Fabrikant was
the Chairman and Chief Executive Officer of Advanced Healthcare Systems Inc., a
New Jersey state certified managed care organization. From 1993 through 1996, he
was also the President of The New York Health Plan, Inc., a Medicaid managed
care provider; and, in 1996, was one of the founders of National Health Plan
Plus, Inc., a multi-state health, life, disability, and managed care company.
Mr. Fabrikant has also served on several governmental panels with respect to
healthcare regulations.
Charles Raab has been employed by Insight since February, 1996, and, in
March, 1996, was elected as its Chief Financial Officer. Prior to joining
Insight, Mr. Raab served as President of Empire Fiscal Management, Inc.,
("Empire"), since 1986. Prior to joining Empire, he held CFO positions, over a
twelve year period, with the Osteopathic Hospital and Clinic located in Queens,
New York and the New York Medical College/Flower Fifth Avenue Hospital, located
in New York City.
Ali Akbar has been Vice President-Managed Care of Sterling since March,
1996. For the 11 years prior thereto, Mr. Akbar served in various capacities at
Pearle, Inc., including Director of Managed Care. In 1980, Mr. Akbar received
his Masters Degree in Business Administration from the University of Dallas
Graduate School of Business.
All officers of the Company serve at the discretion of the Board of
Directors. Except for Drs. Robert Cohen, Alan Cohen and Edward Cohen being
brothers, there are no family relationships between any director, executive
officer or person nominated or chosen to become a director or officer and any
other such persons.
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<PAGE>
Agreement for Underwriters to Designate One Director
In connection with the Company's initial public offering, and pursuant
to the underwriting agreement between the Company and Fechtor, Detwiler & Co.,
Inc. ("Fechtor") and Burnham Securities Inc. (collectively, the "Underwriters"),
the Underwriters may designate one representative to serve on the Board of
Directors of Sterling until December 26, 1997. The Underwriters have designated
Joel L. Gold, who was a Managing Director of Fechtor at the time of his
designation, to be a Director of Sterling.
OPERATION OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1996, the Board of Directors
of the Company held one meeting in person, held an additional four meetings
telephonically, and acted by written consent one time. Each Director attended at
least 75% of the meetings held by the Board of Directors during the period in
which such Director served, including the meetings held by the Committees on
which such Director served.
Committees of the Board
The standing committees of the Board of Directors include the Executive
Committee, the Audit Committee, the Compensation Committee, the Independent
Committee and the Right of First Refusal Committee.
The Executive Committee, whose members are Drs. Robert and Alan Cohen
and Robert Greenberg, is generally authorized to exercise the powers of the
Board of Directors in connection with the management of the Company; provided,
however, that the Executive Committee does not have the authority to submit to
shareholders any action that needs shareholder approval under law, fill
vacancies in the Board of Directors or in any Committee, fix the compensation of
Directors for serving on the Board of Directors or on any Committee, amend or
repeal the By-Laws of the Company or adopt new by-laws of the Company, or, as
may be further limited by applicable law, the Company's Certificate of
Incorporation or By-Laws. The Executive Committee was established in December,
1995, met nine times during the year ended December 31, 1996, and acted once by
unanimous written consent.
The Audit Committee, whose members are Joel Gold, Jay Fabrikant and
Robert Greenberg, recommends the selection of the Company's independent
auditors, receives reports from such independent auditors on any material
recommendations made to management, and reviews, with the auditors, any material
questions or problems with respect to the accounting records, procedures or
operations of the Company which have not been resolved to their satisfaction
after having been brought to the attention of management. The Audit Committee
was established in December, 1995 and met two times during the year ended
December 31, 1996.
The Compensation Committee, whose members are Drs. Robert and Alan
Cohen and Joel Gold, administers the Company's 1995 Stock Incentive Plan and
recommends to the Board of Directors the salaries and bonuses of the executive
officers of the Company. The Compensation Committee was established in December,
1995, met one time during the year ended December 31, 1996, and acted twice by
unanimous written consent.
The Independent Committee, whose members are Joel Gold, Robert
Greenberg and Jay Fabrikant, is generally authorized to review any transaction
(or
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<PAGE>
series of transactions) involving more than $10,000 in any single instance, or
more than $50,000 in the aggregate (other than compensation matters which are
determined by the Compensation Committee) between the Company and: (i) any of
its Directors, officers, principal shareholders, and/or each of their respective
affiliates; or (ii) any employee of, or consultant to, the Company who also
renders services to CFO, a retail optical company owned by certain principal
shareholders of the Company, whether or not for compensation. The Independent
Committee was established in December, 1995, met two times during the year ended
December 31, 1996, and acted once by unanimous written consent.
The Right of First Refusal Committee, whose members are Joel Gold, Jay
Fabrikant and Robert Greenberg, is generally authorized to consider any rights
of first refusal granted to the Company by CFO pursuant to a referral agreement
between the Company and CFO (the "Referral Agreement") whereby CFO agreed, under
certain conditions, to grant the Company a right of first refusal prior to its
acquisition of any new leaseholds or retail optical stores located outside of
CFO's existing areas of operations, as well as prior to its acquisition of any
retail optical store chain (four or more stores). See "Certain Transactions and
Other Matters." The Right of First Refusal Committee did not meet during the
year ended December 31, 1996.
DIRECTOR COMPENSATION
Directors who are not employees or officers of the Company or
associated with the Company will receive $500 for each Board and Committee
meeting attended in person and $250 for each Board and Committee meeting
attended telephonically. Further, all Directors are reimbursed for certain
expenses in connection with their attendance at Board and Committee meetings.
In December, 1995, the Company granted to Dr. L'Esperance, Jr. options
to purchase an aggregate of 10,000 shares of Common Stock, at an exercise price
equal to $7.50 per share, in consideration of his agreement to serve as a
Director. In addition, in March, 1996, the Company and Dr. L'Esperance, Jr.
entered into a consulting agreement whereby Dr. L'Esperance, Jr. served as
Chairman of the Board of Directors of Insight in consideration of the payment to
him of the sum of $75,000 for the first year of service, which amount was paid
to him in three equal installments. In addition, the agreement granted to Dr.
L'Esperance, Jr. options to purchase an aggregate of 300,000 shares of Common
Stock, of which the options to purchase 100,000 shares of Common Stock are
immediately exercisable; and the right to exercise the remaining options would
have vested ratably on each of March 29, 1997, 1998, 1999 and 2000,
respectively. The exercise price for such options is $6.00 per share. The
agreement also afforded both the Company and Dr. L'Esperance, Jr. the right to
terminate the same, at any time, by written notice; and, on March 19, 1997, the
Company notified Dr. L'Esperance, Jr. of its election to so terminate the
agreement, effective as of the expiration of the first anniversary thereof.
Accordingly, the balance (200,000) of the options granted to Dr. L'Esperance
will not vest.
On May 22, 1996, the Board of Directors (with Mr. Joel Gold abstaining)
authorized the Company to enter into a consulting agreement with L.T. Lawrence &
Co., Inc. ("LTL"), a company which employs Joel Gold, a Director of the Company,
as a Managing Director, in exchange for the Company's issuance to LTL of options
to purchase 100,000 shares of the Company's Common Stock at an exercise price of
$7.50 per share. As of the date hereof, the Company and LTL
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<PAGE>
have not entered into said agreement and, accordingly, said options have not yet
been granted.
On November 19, 1996, the Board of Directors (with Mr. Jay Fabrikant
abstaining) authorized the granting of 200,000 options to Jay Fabrikant, a
Director of the Company, in exchange for his agreeing to provide assistance to
the Company in the development and expansion of its third party, managed care
programs. The grant of such options is subject to the approval of the Company's
shareholders at the Annual Meeting; and, if approved, would: (i) provide for an
exercise price per share equal to the composite closing price, as quoted on the
NASDAQ Stock Market (the "Closing Price") of the Company's Common Stock as of
the date of grant (November 19, 1996); and (ii) vest one-third immediately and
one-third each twelve month period thereof. See "Item 5. RATIFICATION OF THE
GRANT OF OPTIONS TO MR. JAY FABRIKANT (PROPOSAL NO. 5)".
On November 19, 1996, the Independent Committee recommended, and the
Board of Directors (with Drs. Robert, Alan and Edward Cohen abstaining)
authorized, the grant, to each of Drs. Robert, Alan and Edward Cohen, of
options, each having a term of five years, to purchase 66,667 shares of the
Company's Common Stock at an exercise price equal to the Closing Price of said
Common Stock as of the date of grant (November 19, 1996). See "Item 4.
RATIFICATION OF THE GRANT OF OPTIONS TO DRS. ROBERT, ALAN AND EDWARD COHEN
(PROPOSAL NO. 4)". The grant of such options is subject to the approval of
the Company's shareholders at the Annual Meeting and will be issued under the
Company's 1995 Stock Incentive Plan, provided the shareholders of the Company
approve of Amendment No. 3 thereto. See "Item 3. APPROVAL OF AMENDMENT NO. 3
TO THE 1995 STOCK INCENTIVE PLAN (PROPOSAL NO. 3)".
On April 9, 1997, the Independent Committee recommended, and the Board
of Directors (with Drs. Robert and Alan Cohen abstaining) approved, of the
Company entering into an eight and one-half (8 1/2) month consulting agreement
with MML. Said agreement provides for compensation computed at the rate of Three
Hundred Thousand ($300,000) Dollars per annum, and for the granting, to MML, of
options, having a term of ten years, to purchase 300,000 shares of the Company's
Common Stock at an exercise price per share equal to the Closing Price of the
Company's Common Stock as of the date of such approval (April 9, 1997), fifty
(50%) percent of which options may be transferred by MML to each of Drs. Robert
and Alan Cohen; provided, however that: (i) the granting of said options is
subject to the approval of the Company's shareholders at the Annual Meeting; and
(ii) if so approved, the options will be issued under the Company's 1995 Stock
Incentive Plan, provided the shareholders of the Company approve of Amendment
No. 3 thereto. See "Item 3. APPROVAL OF AMENDMENT NO. 3 TO THE 1995 STOCK
INCENTIVE PLAN (PROPOSAL NO. 3)" and "Item 6. RATIFICATION OF THE GRANT OF
OPTIONS TO MEADOWS MANAGEMENT, LLC (PROPOSAL NO. 6)".
Other than with respect to reimbursement of expenses, Directors who are
employees or officers of the Company will not receive additional compensation
for service as a Director.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
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
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<PAGE>
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Executive officers, Directors
and greater than ten percent shareholders are required by, SEC regulation, to
furnish the Company with copies of all Section 16(a) forms they may file.
Based solely on a review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that, during the year ended December 31, 1996, all Section 16(a) filing
requirements applicable to its executive officers, Directors and greater than
ten percent beneficial owners were complied with.
- 13 -
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth the compensation of
Robert Greenberg, the Chief Executive Officer and President of the Company,
since October, 1995 Robert Cohen, the Chief Executive Officer prior to October,
1995, and the other four most highly compensated executive officers of the
Company (the "Named Executive Officers") for the Company's last two (2)
completed fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
Fiscal -------------------------- Securities All Other
Name and Principal Position Year Salary Bonus Underlying Stock Options Compensation
- --------------------------- ------ -------- --------- ------------------------ -------------
<S> <C> <C> <C> <C>
Robert Cohen 1996 -- -- 66,667(2) --
Chairman of the Board 1995 -- -- -- --
of Directors and Chief
Executive Officer (1)
Robert Greenberg 1996 $256,010 -- 193,569 $30,154(4)
President, Chief 1995 $199,992 $50,000 193,569 $58,348(4)
Executive Officer and
Director (3)
Jerry Darnell 1996 $229,467 $ 30,000(5) 193,569 $14,786(6)
Executive Vice 1995 $190,000 $101,765(5) 193,569 $18,727(6)
President -
Franchising
Joseph Silver 1996 $126,010 -- 193,569 $159,244(7)(8)
Executive Vice 1995 $120,000 $50,000 193,569 $106,648(7)(8)
President, Secretary
and General Counsel
Sebastian Giordano
Executive Vice
President-Finance, 1996 $156,268 -- 96,782 $10,200(9)
Chief Financial 1995 $152,600 -- 96,782 $10,822(9)
Officer and Treasurer
Kevin Cambra
Executive Vice 1996 $96,651 $36,000 96,782 $10,898(10)
President-Company 1995 $95,004 $25,721 96,782 $11,489(10)
Store Operations
</TABLE>
<TABLE>
<S> <C>
(1) Dr. Robert Cohen resigned from his position as Chief Executive Officer of the Company
in October, 1995.
(2) The grant of such options is subject to the approval of the Company's shareholders at the
Annual Meeting.
(3) Mr. Greenberg became Chief Executive Officer of the Company in October, 1995.
(4) Represents car allowance payments made to Mr. Greenberg, life insurance and disability
insurance premiums paid by the Company, reimbursement of medical insurance deductions and
forgiveness of interest on a loan by the Company to Mr. Greenberg. See "Certain
Transactions - Matters Relating to Robert B. Greenberg."
(5) Represents commissions paid to Mr. Darnell and includes $4,000 and $21,000 paid to Mr.
Darnell by SVC, a wholly-owned subsidiary of the Company, in 1996 and 1995, respectively.
(6) Represents car allowance payments made to Mr. Darnell, life insurance
and disability insurance premiums paid by the Company and reimbursement
of medical insurance deductions.
(7) Includes $130,000 and $80,000 in legal fees paid by SVC in 1996 and 1995, respectively.
(8) Includes car allowance payments made to and/or on behalf of Mr. Silver, life insurance and
disability premiums paid by the Company and reimbursement of medical insurance deductions.
(9) Represents car allowance payments made to Mr. Giordano, life insurance and disability
premiums paid by the Company and reimbursement of medical insurance deductions.
(10) Represents car allowance payments made to Mr. Cambra, life insurance and disability
premiums paid by the Company and reimbursement of medical insurance deductions.
</TABLE>
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 1996, no options were granted
by the Company's Compensation Committee to any of the Company's Named Executive
Officers.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Shares Underlying Unexercised the-Money Options at FY-
Acquired Options at FY-End (#) End ($)*
on Exercise Value
Name (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert Greenberg - - 96,785/193,569 $217,766/$435,530
Joseph Silver - - 96,785/193,569 $217,766/$435,530
Jerry Darnell - - 96,785/193,569 $217,766/$435,530
Sebastian - - 48,391/96,782 $108,880/$217,760
Giordano
Kevin Cambra - - 48,391/96,782 $108,880/$217,760
</TABLE>
---------------
* Based on the Nasdaq Stock Market composite closing price for the last
business day of the fiscal year ($8.25). All of the stock options
granted to the Named Executive Officers have exercise prices of $6.00
per share.
- 15 -
<PAGE>
Stock Price Performance Graph
The following graph shows the annual cumulative total shareholder
return for the fiscal year ended December 31, 1996 based on an assumed
investment of $100. The Company's Common Stock began trading on the Nasdaq Stock
Market on December 20, 1995 at a price of $7.50 per share. The graph compares
the Company's performance with that of the S&P 500 Index and a peer group
consisting of [ ], [ ], [ ], [ ] and [ ].
- 16 -
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company has
furnished the following report on executive compensation:
Philosophy
The compensation philosophy of the Company is to develop and implement
policies that will encourage and reward outstanding performance, seek to
increase the profitability of the Company, and maximize the Company's return on
equity so as to increase shareholder value. Maintaining competitive compensation
levels in order to attract and retain executives who bring valuable experience
and skills to the Company is also an important consideration. The Company's
executive compensation programs are designed to attract and retain talented
individuals and motivate them to achieve the Company's business objectives and
performance targets, including increasing long-term stockholder value.
The Compensation Committee of the Board of Directors is composed of the
following three Directors: Dr. Robert Cohen, Dr. Alan Cohen and Mr. Joel Gold.
Working with the Company, the Compensation Committee develops and implements
compensation plans for the Company's executive officers.
Compensation Structure
The Compensation Committee believes that it is in the best interests of
the Company and its shareholders that its executive officers be compensated in a
manner that provides such officers with a strong incentive to advance both the
short-term and long-term interests of the Company.
The annual cash compensation of most of the executive officers,
including the Chief Executive Officer, consists primarily of annual salary. The
Compensation Committee also has discretion to award bonuses to each of the
executive officers. With respect to Kevin Cambra and Jerry Darnell, the
executive officers who are responsible for Company-store operations and
franchising, respectively, the Compensation Committee believes that it is
important to compensate such individuals with a measure that is directly related
to the performance of such individuals' areas of responsibility. Accordingly,
Mr. Darnell, in addition to his annual base salary, is entitled to a commission
for each new franchise agreement entered into by the Company and for each
franchise transferred by an existing franchisee to another franchisee, both of
which may be reduced if another employee of the Company is entitled to a
commission with respect to the same transaction. In addition, Mr. Cambra is
entitled to a bonus based upon monthly store performance targets which are set
by the Company. Such targets are not disclosed herein because the Board of
Directors has determined that it is confidential business information, the
disclosure of which would have an adverse effect on the Company.
Non-cash compensation of executive officers consists of options granted
under the Company's 1995 Stock Incentive Plan. The stock options produce value
for executives only if the Company's stock price increases over the option
exercise price which, for all options granted to the Named Executive Officers
during the fiscal year ended December 31, 1995, is $6.00. Although there are no
particular targets with respect to the number of options granted to an executive
officer, in general, the higher the level of an executive's responsibility, the
larger this stock-based component of such person's compensation will be. In
order to assure the retention of high-level executives and to tie compensation
of those executives to the creation of
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<PAGE>
long-term value for shareholders, the Compensation Committee provides that
these stock options generally vest over a five-year period. See "Description
of the 1995 Stock Incentive Plan and Amendments Nos. 2 and 3".
The compensation of each executive officer is based on an annual review
of such officer's performance by the Chief Executive Officer and his
recommendations to the Compensation Committee. In establishing and administering
the variable elements in the compensation of the Company's executive officers,
the Compensation Committee tries to recognize individual contributions, as well
as overall business results. Compensation levels are also determined based upon
the executive's responsibilities, the efficiency and effectiveness with which he
marshals resources and oversees the matters under his supervision, and the
degree to which he has contributed to the accomplishments of major tasks that
advance the Company's goals.
Executive Officer Compensation for 1996
During the fiscal year ended December 31, 1996, each of the Company's
executive officers, other than Charles Raab, was employed pursuant to an
employment agreement, the purpose of which was to retain the services of such
officer and to protect the Company with the establishment of non-compete
obligations for former executives. All such employment agreements (other than
the employment agreement between the Company and: (i) Dr. Shoman, which became
effective on May 12, 1994, and which provides for annual base compensation of
$75,000; and (ii) Ali Akbar, which became effective in March, 1996, and which
provides for annual base compensation of $100,000, together with reimbursement
of all expenses relating to his commutation to, and living in, the New York
area) were entered into in November, 1995, effective January 1, 1996. The base
salary to which each executive officer was entitled for 1996 was based upon the
Company's goal of attracting and retaining qualified executives and a comparison
of executive base salaries paid to executives of other companies in the retail
optical and related industries. During the fiscal year ended December 31, 1996,
Mr. Cambra received a bonus of $36,000 based upon the Company-stores' 1996
financial performance; and Mr. Darnell received $30,000 in commissions for the
same year.
Stock options are awarded to the executives by the Compensation
Committee. In determining the size of option awards for a particular executive
officer, the Compensation Committee considers the amount of stock options
awarded to other executive officers in a like position, in addition to the other
compensation considerations discussed above.
Although the Compensation Committee believes that the compensation paid
to its executive officers is comparable to compensation paid by similar
companies, it has not made any independent investigation.
The Compensation Committee feels that actions taken regarding executive
compensation are appropriate in view of each individual's, as well as the
Company's, overall performance.
Chief Executive Officer Compensation for 1996
Mr. Greenberg was employed under an employment agreement which became
effective on January 1, 1996, and had a one year term that was renewable, at the
option of the Company, for successive one year terms not to exceed, in the
aggregate, four such additional, successive one year periods. For the year ended
December 31, 1996, Mr. Greenberg was paid an annual base salary of approximately
$256,000.
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<PAGE>
The Committee believes that Mr. Greenberg's 1996 salary was reasonable
in light of Mr. Greenberg's leadership. The Committee believes that Mr.
Greenberg's 1996 compensation level reflected the Committee's confidence in
Mr. Greenberg and the Company's desire to retain Mr. Greenberg's talents, as
the President and Chief Executive Officer of the Company.
In January, 1997, the Compensation Committee and Mr. Greenberg orally
agreed to renew, for an additional one year period, his employment agreement
with the Company, as amended by certain modifications thereto, which
modifications were orally agreed to between the Company and Mr. Greenberg.
See "EMPLOYMENT CONTRACTS".
Dated: April 1, 1997 Respectfully submitted:
THE COMPENSATION COMMITTEE
By: Robert Cohen
Alan Cohen
Joel Gold
Compensation Committee Interlocks and Insider Participation
Dr. Robert Cohen, Dr. Alan Cohen and Mr. Joel Gold served on the
Compensation Committee since it was formed in December, 1995. Mr. Gold was a
Managing Director of Fechtor, which acted as one of the Underwriters in
connection with the Company's initial public offering which was consummated in
December, 1995. In addition, in connection with the Company's initial public
offering, the Company granted to the Underwriters warrants to purchase 220,000
shares of Common Stock at an exercise price of $9.00 per share, which warrants
are exercisable at any time from and after December 25, 1996 until December 26,
2000. In March, 1996, Fechtor transferred 15,000 of such warrants to Mr. Gold.
EMPLOYMENT CONTRACTS
In addition to its employment agreements with Dr. Shoman and Mr. Akbar
as described above, Sterling has entered into employment agreements with Robert
B. Greenberg, Jerry Darnell, Joseph Silver, Sebastian Giordano and Kevin Cambra
(collectively, the "Employment Agreements"), each of which was extended for the
1997 calendar year based upon certain modifications (as discussed below) orally
agreed to between the Compensation Committee and each such employee, which
modifications were deemed necessary by the Compensation Committee as a result of
the Company's poor financial performance during the fiscal year ended December
31, 1996.
The following summary of certain provisions of the Employment
Agreements does not purport to be complete and is subject to, and is qualified
in its entirety by, reference to each actual Employment Agreement, copies of
which were filed as Exhibits to the Company's Registration Statement on Form S-1
filed with the SEC on December 8, 1995.
Under their respective Employment Agreements, as orally extended for
the 1997 fiscal year, Messrs. Greenberg, Darnell, Silver and Giordano will
receive an annual base salary of $210,000, $159,600, 100,800 and $128,100,
respectively, each of which base salary reflects a 20% reduction in the annual
base salary being paid to each such individual as of December 31, 1996; and Mr.
Cambra will receive an annual base salary of $94,500. In addition, due to the
Company's poor financial performance for the 1996 fiscal year, each such
individual and the Compensation Committee orally agreed to the following,
additional modifications to his existing Employment Agreement: (i) the
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<PAGE>
elimination of the automatic, five (5%) percent increase in such base salary
which would have otherwise become effective on July 1, 1997; and (ii) except as
to Mr. Cambra (whose base salary was not reduced), a quarterly bonus based upon
the Company's ability to meet certain, agreed upon, targeted financial
performance standards, which bonuses may not, in any quarterly period, exceed
such 20% reduction in base salary plus an additional amount equal to ten (10%)
percent of the annual base salary that would have otherwise been payable to each
such individual, absent such 20% reduction thereof.
Pursuant to Mr. Darnell's Employment Agreement, as orally renewed for
the 1997 calendar year, he is additionally entitled to a commission, not to
exceed $2,000, for each franchise agreement transferred by an existing
franchisee to another franchisee and for each new franchise agreement entered
into by the Company as a result of his efforts, both of which will be reduced if
another employee of the Company is entitled to a commission with respect to the
same transaction.
Pursuant to Mr. Silver's Employment Agreement, he is additionally
entitled to a monthly legal fee payable by SVC and Sterling Vision BOS, Inc.
("BOS"), two wholly-owned subsidiaries of the Company, pursuant to a separate
legal fee retainer agreement that was executed simultaneously with his
Employment Agreement and has a term coexistent therewith (the "Legal Fee
Retainer Agreement"). Pursuant to the Legal Fee Retainer Agreement, as orally
renewed for the 1997 calendar year, commencing January 1, 1997, BOS and SVC will
annually pay to Mr. Silver, in the aggregate, legal fees of $109,200 (which
reflects a 20% reduction in the legal fees being paid to him, by such entities,
as of December 31, 1996). The other terms of such Legal Fee Retainer Agreement
are substantially similar to his Employment Agreement, including those
pertaining to the elimination of the automatic 5% increase in legal fees and the
bonus structure discussed above.
Pursuant to Mr. Cambra's Employment Agreement, as orally renewed for
the 1997 calendar year, he is additionally entitled to a bonus based upon
monthly Company store performance, which bonus structure was revised, in lieu of
a 20% reduction in his base salary.
Each Employment Agreement, as orally renewed, may be terminated by the
Company for cause and permanent disability (as such terms are defined in the
respective Employment Agreements) and will automatically terminate upon the
death of the executive. If the Company terminates the employment of an executive
for cause, or if an executive dies, the Company will be required to pay such
executive his compensation accrued through the date of termination. In the case
of termination because of permanent disability, an executive will be entitled to
receive his salary for the three-month period following the commencement of such
disability, reduced by all benefits then available to him under any disability
insurance policy provided to him by the Company.
In addition, under the terms of each Employment Agreement, each
executive is prohibited from competing with the Company during the period of his
employment with the Company and for a period of six months thereafter in the
event such Employment Agreement is terminated: (i) for cause by the Company; or
(ii) by voluntary termination, by the executive, in violation of his Employment
Agreement.
Item 2. APPROVAL OF AMENDMENT NO. 2 TO THE 1995 STOCK INCENTIVE PLAN
(PROPOSAL 2).
On April 15, 1997, the Compensation Committee recommended,
and the Board of Directors approved, Amendment No. 2 to the Company's 1995 Stock
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<PAGE>
Incentive Plan (the "1995 Stock Incentive Plan") to increase the number of
shares of Common Stock authorized for issuance thereunder from 2,000,000 shares
to 3,500,000 shares ("Amendment No. 2").
The Board of Directors believes that it is in the best
interests of the Company and its shareholders to approve Amendment No. 2, which
will allow the Company to continue to grant options under the 1995 Stock
Incentive Plan in order to help the Company secure and retain the services of
key employees and consultants.
Item 3. APPROVAL OF AMENDMENT NO. 3 TO THE 1995 STOCK INCENTIVE PLAN
(PROPOSAL 3).
On April 15, 1997, the Independent Committee recommended, and
the Board of Directors (with Drs. Robert, Alan and Edward Cohen abstaining)
approved Amendment No. 3 to the 1995 Stock Incentive Plan which: (i) eliminates
the restriction (currently contained therein) on granting options under the 1995
Stock Incentive Plan to members of the Cohen family; and (ii) grants to the
Company's Independent Committee the exclusive power to so grant options
thereunder to any member of the Cohen family.
The Board of Directors believes that it is in the best interests of the
Company and its shareholders to afford to the Independent Committee the ability
and power to grant options under the 1995 Stock Incentive Plan to members of the
Cohen family.
Description Of the 1995 Stock Incentive Plan and Amendments Nos. 2 and 3
The Company adopted the 1995 Stock Incentive Plan in order to motivate
qualified employees and certain consultants of Sterling and its affiliates, as
well as to assist Sterling and its affiliates in attracting employees and to
align the interests of such persons with those of the shareholders of Sterling.
As of April 1, 1997, 35 individuals and/or entities held options under the 1995
Stock Incentive Plan. In addition to the following, the following occurred with
respect to the 1995 Stock Incentive Plan:
1. In March, 1997, the Company terminated its agreement with Dr.
Francis L'Esperance, Jr., a Director of the Company and Chairman of the Board
of Directors of the Company's subsidiary, Insight. As a result thereof,
200,000 of the 300,000 options granted to Dr. L'Esperance, Jr. will not vest;
2. On May 22, 1996, the Board of Directors authorized the Company to
enter into a consulting agreement with LTL, a company which employs Joel Gold, a
Director of the Company, as a Managing Director, in exchange for the Company's
issuance, to LTL, of options to purchase 100,000 shares of the Company's Common
Stock at an exercise price of $7.50 per share. As of the date hereof, the
Company and LTL have not entered into said agreement and, accordingly, said
options have not yet been granted;
3. On April 10, 1996, the Company entered into an Option and Consulting
Agreement with each of Shamrock Partners, Ltd. and Coburn and Meredith, Inc.
pursuant to which each of said entities was retained by the Company, for a
period of two (2) years, to render consulting services to the Company in respect
of its financial, corporate finance, public and private security markets,
investment banking and public relations matters. Pursuant to said agreements,
each of said entities were granted 37,500 options to purchase the Company's
Common Stock at a price of $6.00 per share, each of which options has a term of
five years. In addition, each agreement reflects
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the authority granted to the Company's Executive Committee (by its Compensation
Committee) to grant to each such entity up to an additional 112,500 options on
the same terms and conditions as described above;
4. For information regarding options granted to each of Drs. Robert
Cohen, Alan Cohen and Edward Cohen, Directors of the Company, see "Item 4.
APPROVAL OF THE GRANT OF OPTIONS TO EACH OF DRS. ROBERT COHEN, ALAN COHEN AND
EDWARD COHEN (PROPOSAL NO. 4)";
5. For information regarding options granted to Jay Fabrikant, a
Director of the Company, see "Item 5. APPROVAL OF THE GRANT OF OPTIONS TO JAY
FABRIKANT (PROPOSAL NO. 5)"; and
6. For information regarding options granted to MML, a limited
liability company owned by Drs. Robert and Alan Cohen, see "Item 6. APPROVAL
OF THE GRANT OF OPTIONS TO MEADOWS MANAGEMENT, LLC (PROPOSAL NO. 6)".
A full copy of each of the proposed Amendments is attached as Exhibit A
and B, respectively, to this Proxy Statement. The major features of the 1995
Stock Incentive Plan are summarized below. The description provided below is
qualified in its entirety by reference to the actual 1995 Stock Incentive Plan,
a copy of which was filed as an Exhibit to the Company's Registration Statement
on Form S-1 filed with the SEC on December 20, 1995, as well as to Amendment No.
1 thereto, a copy of which was filed as an Exhibit to the Company's Proxy
Statement, dated May 1, 1996.
The 1995 Stock Incentive Plan provides for the grant of "incentive
stock options" ("Incentive Stock Options") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified
stock options ("Nonqualified Options") to officers and key employees of, and
consultants to, Sterling and its affiliates. The 1995 Stock Incentive Plan is
administered by the Compensation Committee.
The 1995 Stock Incentive Plan currently authorizes the issuance of
options to purchase a maximum of 2,000,000 shares of Common Stock. The 1995
Stock Incentive Plan contains customary provisions with respect to adjustments
for stock splits and similar transactions. If any stock option granted under the
1995 Stock Incentive Plan terminates, expires unexercised, or is cancelled, the
shares of Common Stock that would otherwise have been issuable pursuant thereto
will be available for issuance pursuant to the grant of new stock options.
All officers, key employees, consultants and independent contractors of
Sterling and its affiliates are eligible to participate in the 1995 Stock
Incentive Plan other than Drs. Robert Cohen, Alan Cohen and Edward Cohen,
together with certain members of their respective, immediate families
(collectively, the "Cohen Family"), who are currently ineligible to receive
options thereunder. (See "Item 3. APPROVAL OF AMENDMENT NO. 3 TO THE 1995 STOCK
INCENTIVE PLAN (PROPOSAL 3)"). The Compensation Committee has exclusive
discretion (except as may be designated or permitted in the 1995 Stock Incentive
Plan or by the By-Laws of the Company, and except as to options which may be
granted to the members of the Cohen Family, subject to the shareholders'
approval of Amendment No. 3 to the 1995 Stock Incentive Plan) to select to whom
stock options will be granted and to determine the type, size, terms and
conditions under which each stock option may be exercisable, and the expiration
date of each option. The Compensation Committee also has exclusive discretion to
make all other determinations which its members deem necessary or desirable in
the interpretation and administration of the 1995 Stock Incentive Plan.
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Stock options granted under the 1995 Stock Incentive Plan generally
expire not later than ten years after the date on which they are granted. The
exercise price may not be less than the par value of the underlying Common
Stock, except that, in the case of an Incentive Stock Option, the exercise price
may be not less than 100% of the fair market value of the Common Stock on the
date any such stock option is granted (110% in the case of any optionee who, at
the time of grant, owns, directly or by attribution, more than 10% of the
combined voting power of all classes of capital stock of the Company [a "ten
percent owner optionee"]). In addition, the term of an Incentive Stock Option
for a ten percent owner optionee cannot exceed five years from the date of
grant. The aggregate fair market value (determined at the time the option is
granted) of the Common Stock granted as Incentive Stock Options to an optionee
that may become exercisable for the first time during any calendar year cannot
exceed $100,000 (or such other limit as may be imposed by the Code). Payment of
the full amount of the exercise price must be made at the time of exercise
either in cash, by tendering to the Company shares of Common Stock previously
acquired by the optionee having a fair market value equal to the exercise price,
by a combination thereof, or, in certain instances, by a loan from the Company
to the optionee.
The 1995 Stock Incentive Plan provides that the Compensation Committee,
in its sole discretion, may provide, by the express terms of any stock option
agreement, that such option cannot be exercised after the merger or
consolidation of the Company with or into another corporation, the acquisition
by another corporation or person of all or substantially all of the Company's
assets or 80% or more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company; and the Compensation Committee may
also provide, either by the terms of any such option or by resolution adopted
prior to the occurrence of such merger, consolidation, acquisition, liquidation
or dissolution, that, for some period of time prior to any such event, such
option shall be exercisable as to all shares covered thereby.
The Board of Directors or the Compensation Committee may amend the 1995
Stock Incentive Plan at any time and from time to time, but any such amendment
is subject to shareholder approval where the absence of such shareholder
approval would adversely affect the compliance of the 1995 Stock Incentive Plan
with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, or other applicable laws or regulations. Accordingly, no action of the
Board or the Compensation Committee may, without shareholder approval, increase
the maximum number of shares which may be issued upon exercise of an option,
modify the eligibility requirements of the 1995 Stock Incentive Plan, reduce the
minimum option exercise price requirements, or extend the limits imposed on the
period during which options may be granted or issued.
Amendment No. 2 would increase the total number of shares which may be
subject to options granted under the 1995 Stock Incentive Plan by 1.5 million
shares, from 2,000,000 to 3,500,000. Amendment No. 3 would eliminate the current
restriction on the granting of options, under the 1995 Stock Incentive Plan, to
members of the Cohen Family, as well as grant to the members of the Company's
Independent Committee the exclusive power to grant options thereunder to any
such Cohen Family member.
Federal Income Tax Consequences
A. Incentive Stock Options. The following general rules are
applicable, under existing law, to holders of Incentive Stock Options and to
the Company for Federal income tax purposes:
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1. Generally, no taxable income results to the optionee
upon the grant of an Incentive Stock Option or upon the issuance of
shares to him, her or it upon exercise of an Incentive Stock Option;
2. No tax deduction is allowed to the Company upon either the
grant or exercise of an Incentive Stock Option under the 1995 Stock
Incentive Plan;
3. If shares acquired upon the exercise of an Incentive Stock
Option are not disposed of prior to the later of: (i) two years
following the date the Incentive Stock Option was granted; or (ii) one
year following the date the shares are transferred to the optionee
pursuant to the exercise of such Incentive Stock Option, the difference
between the amount realized on any subsequent disposition of the shares
and the exercise price will generally be treated as long-term capital
gain or loss to the optionee;
4. If shares acquired upon the exercise of an Incentive Stock
Option are disposed of before the expiration of one or both of the
requisite holding periods (a "disqualifying disposition"), then, in
most cases, the lesser of: (i) any excess of the fair market value of
the shares at the time of exercise of the Incentive Stock Option over
the exercise price; or (ii) the actual gain on disposition, will be
treated as compensation to the optionee and will be taxed as ordinary
income in the year of such disposition;
5. Any excess of the amount realized by the optionee as the
result of a disqualifying disposition over the sum of: (i) the exercise
price; and (ii) the amount of ordinary income recognized under the
above rules, will be treated as either a long-term or short-term
capital gain, depending upon the time elapsed between receipt and
disposition of the shares disposed of;
6. In any year that an optionee recognizes compensation income
on a disqualifying disposition of shares acquired by exercising an
Incentive Stock Option, the Company will generally be entitled to a
corresponding deduction for income tax purposes; and
7. The bargain element at the time of exercise of an Incentive
Stock Option (i.e., the amount by which the fair market value of the
Common Stock acquired upon exercise of the Incentive Stock Option
exceeds the exercise price) may be taxable to the optionee under the
"alternative minimum tax" provisions of the Code.
B. Nonqualified Options. The following general rules are applicable,
under existing law, to holders of Nonqualified Options and to the Company for
Federal income tax purposes:
1. The optionee will not realize any taxable income upon the
grant of a Nonqualified Option, and the Company is not allowed a
business expense deduction by reason of any such grant;
2. The optionee will recognize ordinary compensation income at
the time of the exercise of a Nonqualified Option in an amount equal to
the excess, if any, of the fair market value of the shares on the date
of exercise over the exercise price. Gain or loss upon a subsequent
disposition of the shares underlying a Nonqualified Option will be
either long-term or short-term capital gain or loss, depending on the
time elapsed between receipt and disposition of such shares disposed
of; and
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3. In general, the Company will be entitled to a tax
deduction upon the exercise of a Nonqualified Option.
Options Outstanding Under the 1995 Stock Incentive Plan
As of April 1, 1997, Nonqualified Options to acquire 1,199,527 shares
of Common Stock were granted under the 1995 Stock Incentive Plan (excluding the
701,000 options granted to certain Directors of the Company (401,000) and to MML
(300,000), as described above, which are subject to shareholder approval). As of
April 1, 1997, the Company had not granted any Incentive Stock Options.
As of April 1, 1997, Sterling had granted stock options to certain key
employees of, and consultants to, the Company. Each of Messrs. Greenberg, Silver
and Darnell have been granted options to purchase 193,569 shares of Common
Stock, Messrs. Giordano and Cambra have been granted options to purchase 96,782
shares of Common Stock, and two consultants to the Company have been granted
options to purchase 38,714 and 38,709 shares of Common Stock, respectively. Such
consultants are employees of CFO who provide real estate and construction
supervisory consulting services to the Company from time to time.
All of the above described options are exercisable at a price of $6.00
per share. One-half of the options granted to Messrs. Greenberg, Silver,
Giordano, Cambra and Darnell vested on November 15, 1995, with one-quarter of
the remainder vesting on each November 15th thereafter until November 15, 1999.
Thereafter, options will become exercisable on their vesting date. The vesting
of all such options, as well as any other options granted to employees of the
Company, is subject and contingent upon such officers and employees being in the
Company's employ, or, in the case of the two consultants referred to above,
remaining as a consultant to the Company, as of the applicable vesting date;
provided, however, that if the employment of any such key employee is terminated
without cause, such employee will be entitled to receive a pro rata portion of
the options to become vested on the immediately succeeding vesting date based
upon the number of full quarterly periods that such key employee had been in the
employ of the Company since the last vesting date. Notwithstanding the
foregoing, all stock options granted under the 1995 Stock Incentive Plan
immediately vest in the event the employee becomes permanently disabled or dies
while still in the employ of the Company. Moreover, each of Messrs. Greenberg,
Silver, Darnell, Giordano and Cambra is subject to certain restrictions in
connection with selling the shares underlying such stock options while he is in
the employ of the Company. No such employee may sell any underlying shares prior
to May 15, 1997; each such employee may not sell more than 30% of his total
underlying shares prior to November 15, 1998; and each such employee may not
sell more than 60% of his total underlying shares prior to May 15, 2000;
provided, however, that each such employee may earlier sell a pro rata portion
of the total number of shares underlying his respective options in an amount
equal to the percentage that the total number of shares previously sold by any
members of the Cohen Family bears to the total number of shares owned by such
members of the Cohen Family as of the consummation of the Company's initial
public offering.
In addition, during the fiscal year ended December 31, 1996, the
Company granted: (i) an aggregate of 15,833 Nonqualified Options to three of the
Company's employees, all of which provide for an exercise price equal to the
Closing Price of the Company's Common Stock on the date of grant; (ii) an
additional 37,500 Nonqualified Options to each of Shamrock Partners, Ltd., and
Coburn and Meredith, Inc., consultants to the Company, all of which provide for
an exercise price equal to the Closing Price on the date of grant; and (iii) an
additional 100,000 Nonqualified Options to Thomas DePetrillo, a
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consultant to the Company, all of which provide for an exercise price equal to
the Closing Price on the date of grant.
The number of shares which may be subject to options to be granted
under the 1995 Stock Incentive Plan in the future is entirely within the
discretion of the Compensation Committee and is, therefore, not determinable at
this time.
The Closing Price of the Company's Common Stock on April 1, 1997, as
reported on the Nasdaq Stock Exchange, was $8.00 per share.
Vote Required for Approval of Amendment No. 2 to the 1995 Stock Incentive Plan
Approval by the holders of a majority of the votes cast at the Annual
Meeting by the holders of shares of Common Stock entitled to vote thereon is
necessary for shareholder approval of Amendment No. 2 to the 1995 Stock
Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
AMENDMENT NO. 2 TO THE 1995 STOCK INCENTIVE PLAN.
Vote Required for Approval of Amendment No. 3 to the 1995 Stock Incentive Plan
Approval by the holders of a majority of the votes cast at the Annual
Meeting by the holders of shares of Common Stock (other than such shares of
Common Stock held by any member of the Cohen Family) entitled to vote thereon is
necessary for shareholder approval of Amendment No. 3 to the 1995 Stock
Incentive Plan.
THE BOARD OF DIRECTORS (WITH DRS. ROBERT, ALAN AND EDWARD COHEN
ABSTAINING) RECOMMENDS A VOTE "FOR" THE APPROVAL OF AMENDMENT NO. 3 TO THE
1995 STOCK INCENTIVE PLAN.
Item 4. RATIFICATION OF THE GRANT OF OPTIONS TO DRS. ROBERT, ALAN AND
EDWARD COHEN (PROPOSAL NO. 4)
On November 29, 1996, the Company borrowed from each of Drs.
Robert, Alan and Edward Cohen, on an unsecured basis and for a term of 90 days,
the sum of $666,666.67, in exchange for the Company's payment to them of a loan
origination fee, in the aggregate amount of $20,000, and interest on said loan,
computed at a rate equal to 1% above the prime rate of interest in effect, from
time to time, during the term thereof; and on February 27, 1997: (i) the Company
repaid to each such individual fifty (50%) percent of the amount then due
thereunder; and (ii) each of such individuals orally agreed to extend repayment
of the balance of said loan to May 1, 1997. The acceptance of said loan was
recommended by the Independent Committee and authorized by the Board of
Directors (with Drs. Robert, Alan and Edward Cohen abstaining) on November 19,
1996 and, in connection therewith, the members thereof (other than Drs. Robert,
Alan and Edward Cohen), based upon a recommendation made to them by the
Independent Committee, authorized the grant, to each of Drs. Robert, Alan and
Edward Cohen, of options, each having a term of five years, to purchase 66,667
shares of the Company's Common Stock at an exercise price equal to the Closing
Price of said Common Stock on the date of such grant (November 19, 1996). The
grant of such options is subject to the approval of the Company's shareholders
(other than Drs. Robert, Alan and Edward Cohen) at the Annual Meeting and will
be issued under the 1995 Stock Incentive Plan,
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provided such shareholders approve of Amendment No. 3 thereto. See "Item 3.
APPROVAL OF AMENDMENT NO. 3 TO THE 1995 STOCK INCENTIVE PLAN (PROPOSAL 3)".
As of the date of the Board of Directors' authorization to
accept said loan, the members thereof were of the opinion that the Company could
not secure such financing from any alternative sources. Accordingly, the
Independent Committee was of the opinion that the granting of said options,
subject to shareholder approval, was reasonable, in light of the circumstances
under which the loan was to be made (ie., on an unsecured basis), as well as the
Company's perceived inability to obtain alternative sources for such financing.
Vote Required for Ratification of the Grant of Options to Drs. Robert, Alan
and Edward Cohen.
Approval by the holders of a majority of the votes cast at the Annual
Meeting by the holders of shares of Common Stock (other than shares held by any
of Drs. Robert, Alan and Edward Cohen) entitled to vote thereon, is necessary
for shareholder approval of the grant of the aforesaid options to each of Drs.
Robert, Alan and Edward Cohen.
THE BOARD OF DIRECTORS (WITH DRS. ROBERT, ALAN AND EDWARD COHEN
ABSTAINING) RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE GRANTING OF SAID
OPTIONS TO EACH OF DRS. ROBERT, ALAN AND EDWARD COHEN.
Item 5. RATIFICATION OF THE GRANT OF OPTIONS TO MR. JAY FABRIKANT
(PROPOSAL NO. 5)
On November 19, 1996, the Board of Directors (with Mr.
Fabrikant abstaining) authorized the granting of 200,000 stock options to Mr.
Jay Fabrikant, a Director of the Company, in exchange for his agreeing to
provide assistance to the Company in the development and expansion of its third
party, managed care programs. The grant of such options is subject to the
approval of the Company's shareholders at the Annual Meeting and, if approved,
would: (i) be issued under the 1995 Stock Incentive Plan; (ii) provide for an
exercise price equal to the Closing Price of the Company's Common Stock as of
the date of grant (November 19, 1996); and (iii) vest one-third immediately and,
provided he then continues to provide such services to the Company, one-third
each twelve month period thereafter.
The Board of Directors believes that it is in the best
interests of the Company and its shareholders to obtain such assistance from Mr.
Fabrikant and, accordingly, to grant to Mr. Fabrikant such options.
Vote Required for Ratification of the Grant of Options to Mr. Fabrikant.
Approval by the holders of a majority of the votes cast at the Annual
Meeting by the holders of shares of Common Stock (other than shares held by
Mr. Fabrikant) entitled to vote thereon is necessary for the ratification of
the Board of Directors grant of the aforesaid options to Mr. Fabrikant
THE BOARD OF DIRECTORS (WITH MR. FABRIKANT ABSTAINING) RECOMMENDS A
VOTE "FOR" THE RATIFICATION OF THE GRANTING OF SAID OPTIONS TO MR. FABRIKANT.
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Item 6. RATIFICATION OF THE GRANT OF OPTIONS TO MEADOWS MANAGEMENT,
LLC (PROPOSAL NO. 6)
On April 9, 1997, the Independent Committee recommended to the
Board, and the Board (with Drs. Robert and Alan Cohen abstaining) authorized the
Company to enter into an eight and one-half (8 1/2) month consulting agreement
with MML, a limited liability company owned by Drs. Robert and Alan Cohen. Said
agreement, which commenced as of April 14, 1997, provides for annual
compensation at the rate of Three Hundred Thousand ($300,000) Dollars.
In connection with the foregoing, and as requested by Drs.
Robert and Alan Cohen, the Independent Committee recommended to the Board, and
the Board (with Drs. Robert and Alan Cohen abstaining) authorized the granting,
to MML, subject to shareholder approval at the Annual Meeting, of options to
purchase 300,000 shares of the Company's Common Stock which options, if so
approved, will have a term of ten years and an exercise price equal to the
Closing Price of the Company's Common Stock on the date of grant (April 9,
1997). In addition: (i) fifty (50%) percent of such options, if so approved,
will be transferrable by MML to each of Drs. Robert and Alan Cohen; and (ii)
such options will be issued under the 1995 Stock Incentive Plan, provided such
shareholders approve of Amendment No. 3 thereto. See "Item 3. APPROVAL OF
AMENDMENT NO. 3 TO THE 1995 STOCK INCENTIVE PLAN (PROPOSAL 3)".
The Board of Directors believes that the monetary compensation
payable to MML, as described above, is extremely reasonable in light of the
services to be provided to the Company by Drs. Robert and Alan Cohen, as the
sole owners of MML. Accordingly, the Board also believes that the granting of
said options to MML, when coupled with the monetary consideration to be paid to
it pursuant to said agreement, is more than reasonable and, as a result,
recommends approval of the grant thereof.
Vote Required for Ratification of the Grant of Options to MML.
Approval by the holders of a majority of the votes cast at the Annual
Meeting by the holders of shares of the Company's Common Stock (other than
shares held by Drs. Robert and Alan Cohen) entitled to vote thereon is necessary
for shareholder ratification of the grant of the aforesaid options to MML.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
GRANT OF SAID OPTIONS TO MML.
Item 7. RATIFICATION OF APPOINTMENT OF AUDITORS (PROPOSAL NO. 7)
The Board of Directors has appointed the firm of Deloitte &
Touche LLP ("Deloitte"), independent public accountants, as the auditors of the
Company for the 1997 fiscal year, subject to the ratification of such
appointment by the shareholders at the Annual Meeting. Deloitte has audited the
Company's financial statements for the fiscal years ended December 31, 1995 and
1996.
Prior to the appointment of Deloitte, Janover Rubinroit, LLC
("Janover Rubinroit") was the principal accountant for the Company that audited
the Company's financial statements. In connection with the Company's initial
public offering, the Company and its Underwriters agreed that it would be in the
best interests of the Company to retain a "big six" accounting firm as the
Company's principal accountants, effective for the audit of the Company's
financial statements for the fiscal year ended December 31, 1995.
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Accordingly, the Audit Committee, on February 23, 1996, determined to engage
Deloitte; and on March 4, 1996, Janover Rubinroit's appointment as principal
accountant was terminated by the Company and Deloitte was engaged as the
Company's principal accountants. Janover Rubinroit will continue to provide
certain tax and advisory services to the Company.
In connection with the audits of the two fiscal years ended
December 31, 1995 and 1996, the Deloitte reports contained no adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. During the two fiscal years ended December
31, 1995 and 1996, there were no disagreements with Deloitte on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope of procedure, which disagreements, if not resolved to the satisfaction of
Deloitte, would have caused it to make reference to the subject matter of the
disagreements in connection with its reports.
If the foregoing appointment of Deloitte is not ratified by
the shareholders, the Board of Directors will appoint other independent
accountants whose appointment, for any period subsequent to the Annual Meeting,
will be subject to the approval of the Company's shareholders at that Meeting.
Pursuant to an agreement, dated December 26, 1995, the Company agreed with the
Underwriters that the audit of the Company's financial statements for the year
ended December 31, 1995 and each year thereafter through December 31, 1997 would
be conducted by a "big six" accounting firm, Grant Thornton, LLC or another
nationally recognized accounting firm reasonably satisfactory to the
Underwriters. Accordingly, any independent accountants that may be appointed by
the Board of Directors during such period, will be appointed subject to such
agreement.
A representative of Deloitte is expected to be present at the
Annual Meeting and will have an opportunity to make a statement, should he or
she so desire, and to respond to appropriate questions.
Vote Required for Ratification of Appointment of Auditors
Ratification of the selection of Deloitte, as independent public
accountants, will require the affirmative vote of holders of a majority of the
votes cast at the Annual Meeting by the holders of shares of Common Stock
entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP.
CERTAIN TRANSACTIONS AND OTHER MATTERS
Fast Cast
Certain members of the Cohen Family collectively own an approximately
% interest in Fast Cast, of which Dr. Robert Cohen and Jeffrey Rubin, the
husband of Stefanie Cohen Rubin, each serves as a director. Fast Cast sells
equipment to produce ophthalmic lenses, which lenses are made from a patented
liquid monomer which must also be purchased through Fast Cast. Until February 1,
1997, the Company operated a laboratory at which ophthalmic lenses were
manufactured, on Fast Cast equipment, using such patented monomer (see
"Transactions with Dura-Lab, Inc."). As of April 1, 1997, Fast Cast had supplied
approximately $ of molds and products to the Company's
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Roslyn ophthalmic laboratory and certain of its retail optical stores; and the
Company had purchased, or committed to purchase, approximately $ of Fast
Cast equipment through third party finance companies. In addition, as of April
1, 1997, Fast Cast supplied approximately $ of equipment and
approximately $ of molds and products to the Company's franchisees. The
Company believes that these transactions were as favorable to the Company as
could have been obtained from an unrelated party. Further, Fast Cast has
installed equipment in Company-owned stores. Franchisees may, but are not
required to, purchase the lens production system from Fast Cast.
Cohen Fashion Optical
Drs. Robert, Alan and Edward Cohen are officers and directors of CFO
and Real Optical Purchasing Corp. ("REAL"). CFO, which has been in existence
since 1978, owns a chain of company-operated and franchised retail optical
stores doing business under the name "Cohen's Fashion Optical." As of December
31, 1996, CFO had 65 franchised stores and 28 company-owned stores (including
one store operated by an affiliate of CFO); and REAL, which has been in
existence since 1984, had five company-owned stores. In addition, CFO also
licenses to retail optical stores the right to operate under the name "Cohen's
Kids Optical" or "Ultimate Spectacle." As of December 31, 1996, there were 3
Ultimate Spectacle stores located in the State of New York. CFO stores are
similar to the Company's retail optical stores. CFO has been offering franchises
since 1979 and currently has retail optical stores in the states of Connecticut,
Florida, New Hampshire, Massachusetts, New Jersey, New York and Pennsylvania. In
the future, Cohen's Fashion Optical, Cohen's Kids Optical or Ultimate Spectacle
stores may be located in additional states. As of December 31, 1996,
approximately CFO stores were located in the same shopping center or mall as, or
in close proximity to, the Company's retail optical stores. It is possible that
one or more additional Cohen's Fashion Optical stores, Cohen's Kids Optical
stores or Ultimate Spectacle stores may, in the future, be located near the
Company's retail optical stores, thereby competing directly with any of the
Company's stores. In addition, the Company's stores and certain of CFO's stores
jointly participate, as providers, under certain third party benefit plans
obtained by either Sterling or CFO, which arrangement is anticipated to continue
in the future.
Agreements and Transactions Between the Company and the Cohen Family
In December, 1995, the Company entered into an agreement with CFO for
nominal monetary consideration, providing, among other things, that until the
earlier of: (i) three years from the date that the first Insight Laser Center is
opened; or (ii) the date that the Cohen Family shall cease to beneficially own,
directly or indirectly, an aggregate of 50% or more of the issued and
outstanding shares of Common Stock of either the Company or CFO, CFO will use
reasonable efforts to refer, and to cause its franchisees to refer, all of their
respective customers who are interested in the PRK procedure exclusively to the
Company's Insight Laser Centers, and will not develop any managed eyecare
centers offering PRK.
In addition, such agreement provides that until the earlier of: (i)
three years from December 26, 1995; or (ii) the date that the Cohen Family shall
cease to beneficially own, directly or indirectly, an aggregate of 50% or more
of the issued and outstanding shares of Common Stock of either the Company or
CFO, CFO will grant to the Company a right of first refusal prior to its
acquisition of any new leaseholds or retail optical stores located outside of
CFO's existing areas of operations, as well as prior to its acquisition of any
retail optical store chain (four or more stores), wherever located; provided,
however, that such agreement will not apply to CFO's unaffiliated franchisees or
licensees. In connection with this agreement, the
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<PAGE>
Company appointed the Right of First Refusal Committee. During the fiscal
year ended December 31, 1996, CFO, to the best of the Company's knowledge, did
not acquire any stores which were subject to the Company's right of first
refusal. See "Committees of the Board."
In September, 1995, CFO assigned its rights to one excimer laser to the
Company for nominal consideration, although Sterling reimbursed CFO for all
lease payments previously made by CFO with respect to such excimer laser.
During the fiscal year ended December 31, 1996, CFO has purchased
ophthalmic lenses from the Company's ophthalmic laboratory located in Roslyn,
New York, in the approximate amount of $ . In addition, during the fiscal
year ended December 31, 1996, CFO and Fast Cast purchased products fabricated
from the Company's poster reproduction system in the approximate amounts of
$ and $ , respectively. The Company believes that the terms of these
transactions were as favorable to the Company as could have been obtained from
an unrelated party.
An entity owned by Drs. Robert, Alan and Edward Cohen is the lessee of
an office building located in East Meadow, New York. In April, 1996, the Company
relocated all of its corporate offices to this building and subleased
approximately 22,000 square feet (approximately 60% of the building), on a "net
lease" basis, for a term of ten years at an aggregate base rental (in addition
to a pro rata share of the building's real estate taxes and costs of operations)
of $221,796 for the first three years, which amount increases gradually over the
remainder of the term of the sublease. The balance of the space not utilized by
the Company is subleased to CFO and Fast Cast. The Company believes that the
Company's rent with respect to such space is equal to the fair market rental
value of such space. Such transaction was approved by the Independent Committee
on February 23, 1996.
Matter Relating to Robert B. Greenberg
During 1994, Sterling loaned to Mr. Robert B. Greenberg, a Director and
the President and Chief Executive Officer of Sterling, an aggregate of $190,000
at a fluctuating rate of interest equal to the prime rate in effect from time to
time. The loan was made in connection with Mr. Greenberg's relocation to New
York, when he became President of Sterling. As of December 31, 1996, Mr.
Greenberg owed approximately $122,500, plus accrued but unpaid interest of
approximately $7,068, on such loans. As part of his 1996 compensation package,
the Compensation Committee, in March, 1997: (i) agreed to forgive all interest
payable on such loans through December 31, 1996; (ii) agreed to extend the
period for the repayment of the principal of said loans over a term of sixty
months, commencing February 1, 1997; and (iii) in connection with the foregoing,
agreed to reduce the interest thereon to six (6%) percent per annum.
Franchise Interest by Certain Members of Management and their Families
Sebastian Giordano, together with his wife, are the shareholders of
Dani-Marc Optical, Inc. ("Dani-Marc"), a former franchisee of the Company.
Sterling financed $253,802 (which includes $11,340 of six months of accrued
interest) at an interest rate of 12% per annum, of the purchase price of the
franchised store in question, the assets of which were purchased by Dani-Marc in
August, 1994. Mr. Giordano, together with his wife, and the Company mutually
agreed that, on or before June 5, 1996, Dani-Marc would sell its franchise due
to Mr. Giordano's prior failure to obtain advance consent from the Company with
respect to a transfer of a portion of the equity interests in the franchise as
required by the Franchise Agreement. On December 23, 1996,
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<PAGE>
the Company and Dani-Marc entered into various agreements pursuant to which the
franchise and sublease for Dani-Marc's store were terminated and Dani-Marc
conveyed to the Company all of the assets (other than inventory) located
therein, which assets were immediately thereafter sold to another entity which,
simultaneously therewith, entered into a franchise agreement for said store.
Joseph Silver, together with his wife, are the shareholders of RJL
Optical, Inc. ("RJL"), a franchisee of the Company. In November, 1995, RJL
entered into a management agreement whereby the Company operates such store on
behalf of RJL in exchange for the payment of a fee, equal to 5% of the gross
revenues of the store, subject to such store generating sufficient cash flow
proceeds to pay such amount. In addition, RJL has agreed to sell the assets of,
and the franchise for, its Sterling Optical Center at a certain established,
minimum purchase price.
Jeffrey Rubin, the husband of Stefanie Cohen Rubin, a member of the
Cohen Family, was, until September 30, 1996, a franchisee of the Company. The
Company financed 100% of the purchase price and franchise fee for this store, on
a non-recourse basis, at 12% interest per annum and, until September 30, 1996,
operated the store, on his behalf, in exchange for the payment of a fee, equal
to 5% of the gross revenues of the store, subject to such store generating
sufficient cash flow proceeds to pay such amount. On September 30, 1996, Mr.
Rubin sold the assets of his Sterling Optical Center to another franchisee of
the Company which, simultaneously therewith, entered into a franchise agreement
therefor.
American Calling Systems, Inc.
Drs. Robert Cohen and Alan Cohen and certain of their respective
children own approximately 80% of American Calling Systems, Inc. ("ACS"), a
sales agent for long distance telephone services. During the fiscal year ended
December 31, 1996, ACS received approximately $11,000 in commission payments as
a result of payments made by the Company for long distance telephone time.
Although the Company derives financial benefit from ACS, it has not determined
whether similar or additional benefits would be available from other long
distance telephone service providers.
Transactions with Dura-Lab, Inc.
In February, 1997, the Company, in connection with the closing of its
Roslyn, New York laboratory facility, delivered and orally agreed to sublease to
Dura-Lab, Inc. ("Dura-Lab"), a company owned, in part, by Jeffrey Cohen, a
principal shareholder of the Company and the son of Dr. Robert Cohen, four of
its Fast Cast lens manufacturing systems. The rent payable under each such
sublease has yet to be agreed upon between the Company and Dura-Lab, although it
is anticipated that, due to the age and condition of the systems delivered to
Dura-Lab, such rent will be less than the amount of rent payable by the Company
under the equipment leases pursuant to which the Company financed the cost of
such systems.
In addition to the foregoing, in March, 1997, the Company commenced
purchasing a portion of its ophthalmic lenses from Dura-Lab at prices which the
Company believes to be not more than those charged by other distributors of
similar type lenses.
Credit Agreement, Stock Pledge and Personal Guarantees
In connection with the Company's initial public offering, the Company
and Chase Manhattan Bank (f/k/a Chemical Bank) executed amendments to the
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<PAGE>
Revolving Credit and Term Loan Agreement, dated as of April, 1994, as amended,
between the Company and Chase Manhattan Bank to, among other things, eliminate
the personal guarantees of, and release the pledges of shares of Common Stock
held by, Drs. Robert Cohen, Alan Cohen and Edward Cohen and Mr. Neal Polan, the
former President of Sterling, with respect to a portion of the indebtedness
payable by the Company to Chase Manhattan Bank, in the original principal amount
of $2,500,000.
Tax Indemnities
In connection with the Company's initial public offering, the Company
agreed to indemnify the shareholders of the Company immediately prior to the
Company's initial public offering for any tax liability arising from a
determination, after consummation of the initial public offering, that the
Company's reported income was understated for any period prior to the
consummation of the initial public offering; provided that such indemnity is
limited to an adjustment equal to the amount by which the Company's deferred tax
liability is reduced as a result of such determination. Additionally, if and to
the extent any shareholder who was a shareholder immediately prior to the
Company's initial public offering receives a tax refund as a result of a
determination, after consummation of the initial public offering, that the
Company's reported income was overstated for any period prior to the
consummation of the initial public offering, such shareholder will be required
to pay such amount to the Company.
GENERAL
Other Matters
The Board of Directors does not know of any matters that are to be
presented at the Annual Meeting other than those stated in the Notice of Annual
Meeting and referred to in this Proxy Statement. If any other matters should
properly come before the Annual Meeting, it is intended that the proxies in the
accompanying form will be voted as the persons named therein may determine, in
their discretion.
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 is being mailed to shareholders together with this Proxy
Statement.
Solicitation of Proxies
The cost of solicitation of proxies in the accompanying form will be
borne by the Company, including expenses in connection with preparing and
mailing this Proxy Statement. In addition to solicitation of proxies by mail,
Directors, officers and employees of the Company (who will receive no additional
compensation therefor) may solicit the return of proxies by telephone, telegram
or personal interview. Arrangements have also been made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
Each holder of the Company's Common Stock who does not expect to be
present at the Annual Meeting or who plans to attend but who does not wish to
vote in person is urged to fill in, date and sign the enclosed Proxy and return
it promptly in the enclosed return envelope.
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<PAGE>
Shareholder Proposals
If any shareholder of the Company intends to present a proposal for
consideration at the next Annual Meeting of Shareholders and desires to have
such proposal included in the Proxy Statement and form of Proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's principal executive offices, 1500 Hempstead Turnpike,
East Meadow, New York 11554, Attention: Joseph Silver, not later than May 30,
1997.
By Order of the Board of Directors
JOSEPH SILVER,
Secretary
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<PAGE>
Exhibit A
SECOND AMENDMENT TO
STERLING VISION, INC.'S
1995 STOCK INCENTIVE PLAN
WHEREAS, Sterling Vision, Inc. (the "Company") has adopted its
1995 Stock Incentive Plan (as previously amended, the "1995 Plan");
and
WHEREAS, pursuant to Section 7.2 of the 1995 Plan, the Company's Board
of Directors or Compensation Committee may amend the 1995 Plan, provided, among
other things, that such amendment shall be effective only upon approval by the
shareholders of the Company where the failure to obtain such approval would
increase the limit imposed in Section 2.1 (other than as adjusted due to stock
splits and similar transactions) on the maximum number of shares of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), which may
be issued upon exercise of an option; and
WHEREAS, there are currently reserved for issuance under the 1995 Plan
2,000,000 shares of Common Stock; and
WHEREAS, the Company's Board of Directors deems it in the best
interests of the Company to increase the total number of shares of Common Stock
reserved for issuance under the 1995 Plan.
NOW, THEREFORE, by Resolution of the Company's Board of Directors, the
1995 Plan is hereby amended, subject to approval by the Company's shareholders
at the 1997 Annual Meeting by eliminating, in its entirety, the second sentence
of Section 2.1 thereof and substituting, in lieu thereof, the following:
"The maximum aggregate number of such shares
which may be issued under the Plan shall
be 3,500,000 shares."
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<PAGE>
Exhibit B
THIRD AMENDMENT TO
STERLING VISION, INC.'s
1995 STOCK INCENTIVE PLAN
WHEREAS, Sterling Vision, Inc. (the "Company") has adopted its
1995 Stock Incentive Plan (as previously amended, the "1995 Plan");
and
WHEREAS, pursuant to Section 7.2 of the 1995 Plan, the Company's Board
of Directors or Compensation Committee may amend the 1995 Plan, provided, among
other things, that such amendment shall be effective only upon approval by the
shareholders of the Company where the failure to obtain such approval would
modify the eligibility requirements of Section 3.1 thereof; and
WHEREAS, Section 3.1 of the 1995 Plan prohibits the granting of any
options thereunder to any member of the Cohen family; and
WHEREAS, Section 3.1 of the 1995 Plan grants to the Compensation
Committee the exclusive power to grant options under the 1995 Plan; and
WHEREAS, the Company's Board of Directors (with Drs. Robert, Alan and
Edward Cohen abstaining) deems it in the best interests of the Company to
authorize the granting of options under the 1995 Plan to members of the Cohen
family, provided any such grant is approved by the members of the Company's
Independent Committee.
NOW, THEREFORE, by Resolution of the Company's Board of Directors (with
Drs. Robert, Alan and Edward Cohen abstaining), Section 3.1 of the 1995 Plan is
hereby amended, subject to approval by the Company's shareholders (other than
the members of the Cohen family) at the 1997 Annual Meeting, by deleting
therefrom, in its entirety, Section 3.1 and by substituting, in lieu thereof,
the following:
"Section 3.1 - Participation
Consistent with the purposes of the Plan, the Compensation Committee,
except as otherwise set forth below, in this Section, with respect to Options to
be granted to any member of the Cohen family, shall have exclusive power (except
as may be delegated or permitted herein or by the By-Laws of the Company) to
select the key employees and, with respect to Non-Statutory Stock Options, other
key individuals performing services to the Company, including consultants or
independent contractors and others who perform services to the Company, its
Subsidiaries and/or its affiliates, who may participate in the Plan and be
granted Options under the Plan. Eligible individuals may be selected
individually or by groups or categories, as determined by the Compensation
Committee, in its discretion.
Notwithstanding the provisions set forth above in this Section, the
Independent Committee shall have the exclusive power to select any member of the
Cohen family who may participate in the Plan and be granted Options under the
Plan."
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<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF STERLING VISION, INC.
ANNUAL MEETING OF SHAREHOLDERS: FRIDAY, JUNE 20, 1997
The undersigned shareholder of Sterling Vision, Inc., a New York
corporation (the "Company"), hereby appoints Robert Greenberg, Sebastian
Giordano and Joseph Silver, or any of them, voting singly in the absence of the
others, as his/her/its attorney(s) and proxy(ies), with full power of
substitution and revocation, to vote, as designated on the reverse side, all of
the shares of Common Stock of Sterling Vision, Inc. that the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at 1500 Hempstead Turnpike, East Meadow, New York 11554 at 9:00 a.m. (local
time), on Friday, June 20, 1997, or any adjournment or adjournments thereof, in
accordance with the instructions on the reverse side hereof.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is
made, this Proxy will be voted "FOR" each of the nominees listed in
Proposal No. 1, "FOR" Proposal No. 2, "FOR" Proposal No. 3, "FOR"
Proposal No. 4, "FOR" Proposal No. 5, "FOR" Proposal No. 6, and "FOR"
Proposal No. 7. The proxies are authorized to vote as they may
determine, in their discretion, upon such other business as may
properly come before the Meeting.
- ----------------------------------------------------------------------
FOLD AND DETACH HERE
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<PAGE>
Please mark /X/
your votes as
indicated in
this example
The Board of Directors recommends a vote FOR Items 1 through 7
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
Item 1 - ELECTION OF CLASS 2 DIRECTORS FOR WITHHELD ITEM 2-APPROVAL OF AMENDMENT NO.2
FOR ALL TO THE COMPANY'S 1995
STOCK INCENTIVE PLAN
NOMINEES: |_| |_| ITEM 3-APPROVAL OF AMENDMENT NO. 3 |_| |_| |_|
Robert Cohen TO THE COMPANY'S 1995
Alan Cohen STOCK INCENTIVE PLAN
Joel Gold
WITHELD FOR: (Write that nominee's name in the ITEM 4-APPROVAL OF THE GRANT OF |_| |_| |_|
space provided below). 66,667 STOCK OPTIONS TO
EACH OF DRS. ROBERT, ALAN
AND EDWARD COHEN
ITEM 5-APPROVAL OF THE GRANT OF |_| |_| |_|
200,000 STOCK OPTIONS TO
JAY FABRIKANT
ITEM 6-APPROVAL OF THE GRANT OF |_| |_| |_|
300,000 STOCK OPTIONS TO
MEADOWS MANAGEMENT, LLC
ITEM 7-RATIFICATION OF APPOINTMENT |_| |_| |_|
OF DELOITTE & TOUCHE, LLP
</TABLE>
The proxies are authorized to vote as they may determine, in their discretion,
upon such other business as may properly come before the meeting.
Signature:
---------------------------------------
Signature:
---------------------------------------
Date:
--------------------------------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by an
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
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