<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:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the
|X| 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
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:
1
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STERLING VISION, INC.
1500 Hempstead Turnpike
East Meadow, NY 11554
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 26, 1998
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 26th day of June, 1998, at 10:00 a.m. (local time),
for the following purposes:
(1) to elect three Class 1 Directors to the Company's Board of
Directors to hold office until the 2000 Annual Meeting of
Shareholders or until each of their respective successors shall
have been duly elected and qualified;
(2) to ratify the action taken by the Board of Directors on December
12, 1997, 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;
(3) to ratify the action taken by the Board of Directors on December
12, 1997, 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;
(4) to ratify the selection of Arthur Andersen LLP, independent public
accountants, as the auditors of the Company for the 1998 fiscal
year; and
(5) 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 24, 1998
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
By:/s/ Joseph Silver
--------------------
JOSEPH SILVER,
Secretary
April 30, 1998
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STERLING VISION, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held June 26, 1998
INTRODUCTION
This Proxy Statement is being furnished to shareholders of record of
Sterling Vision, Inc. ("Sterling" or the "Company") as of April 24, 1998, in
connection with the solicitation, by the Board of Directors of Sterling, of
proxies for the 1998 Annual Meeting of Shareholders to be held at 1500
Hempstead Turnpike, East Meadow, New York 11554 on Friday, June 26, 1998, at
10:00 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 to Shareholders of this Proxy Statement, enclosed
form of Proxy and the Company's Annual Report, is May 8, 1998.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 24,
1998 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 14,322,863 shares of Common Stock.
Each share of Common Stock is entitled to one vote on all matters presented at
the Annual Meeting. In addition, the Company, on such date, had outstanding
thirty-five (35) shares of a class of its Preferred Stock, par value $.01 per
share (the "Preferred Stock") designated as "Senior Convertible Preferred
Stock", each of which shares had no voting power.
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.
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SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of April 24,
1998, 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 Jay Fabrikant is 560 Sylvan
Avenue, Englewood Cliffs, New Jersey 07632. The address of Joel Gold is 630
Fifth Avenue, New York, New York 10111. The address of Lancer Group is 375
Park Avenue, New York, New York 10152 The address of all persons listed below,
other than Mr. Fabrikant and Mr. Gold, is 1500 Hempstead Turnpike, East
Meadow, New York 11554.
Beneficial Percent
Name Ownership of Class
---- --------- --------
Dr. Robert Cohen .......................... 968,657(1)(2) 6.8%
Dr. Alan Cohen ............................ 1,298,657(1)(2)(3) 9.1%
Dr. Edward Cohen .......................... 371,295(1) 2.6%
Stefanie Cohen Rubin ...................... 764,826 5.3%
Allyson Cohen ............................. 764,826 5.3%
Jeffrey Cohen ............................. 764,826 5.3%
Meryl Cohen a/c/f Gabrielle Cohen ......... 1,147,239 8.0%
Meryl Cohen a/c/f Jaclyn Cohen ............ 1,147,239 8.0%
Meryl Cohen ............................... 2,294,478(4) 16.0%
Joel Gold ................................. 26,500(5) *
Jerry G. Lewis ............................ 83,333(6) *
Joseph Silver ............................. 145,178(7) 1.0%
Jerry Darnell ............................. 145,178(8) 1.0%
Dr. Nicholas Shashati ..................... 6,667(9) *
Charles Raab .............................. -0- -0-
William J. Young .......................... -0- -0-
Jay Fabrikant ............................. 143,340(10) 1.0%
Lancer Group .............................. 970,877(11) 6.8%
All Directors and executive
officers as a group (11)
persons) .................................. 3,188,805(12) 22.3%
- -------------------------
* less than 1%
4
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(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 100,000 presently exercisable options granted to
each of Drs. Robert and Alan Cohen, as the designees of Meadows
Management, LLC, a limited liability company owned by Drs. Robert and
Alan Cohen. Excludes an additional 50,000 options granted to each of Drs.
Robert and Alan Cohen which are subject to certain vesting requirements.
(3) This number excludes 2,294,478 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 of Common
Stock 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. Gold's
minor children and includes warrants: (i) to purchase 10,000 shares of
Common Stock at $5.81 per share (the "A-Warrants"); and (ii) to purchase
15,000 shares of Common Stock at $9.00 per share (the "B-Warrants"),
which B-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 B-Warrants are exercisable at any time
prior to December 26, 2000. At the time the B-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. The A Warrants are exercisable at any time prior
to February 12, 2008.
(6) This number represents the right to acquire 83,333 shares of Common Stock
upon the exercise of presently exercisable, outstanding options.
(7) This number represents the right to acquire 145,178 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(8) This number represents the right to acquire 145,178 shares of Common
Stock upon the exercise of presently exercisable, outstanding options.
(9) This number represents the right to acquire 6,667 shares of Common Stock
upon the exercise of presently exercisable, outstanding options.
(10) This number includes: (i) the right to acquire 10,000 shares of Common
Stock upon the exercise of presently exercisable, outstanding options;
and (ii) options to purchase an additional 133,340 shares of Common
Stock, subject to the approval of the grant thereof at the Annual
Meeting.
(11) This number includes and/or represents: (i) 550,172 shares of Common
Stock owned by Lancer Partners, L.P., together with warrants to purchase
an additional 68,200 shares of Common Stock; (ii) 320,705 shares of
Common Stock owned by Lancer Offshore, Inc., together with warrants to
purchase an additional 15,600 shares of Common Stock; (iii) the right of
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Lancer Voyager Fund to acquire 6,500 shares of Common Stock upon the
exercise of warrants; and (iv) the right of Michael Lauer to acquire
9,700 shares of Common Stock upon the exercise of Warrants. Excludes the
right to acquire up to an additional 50,000 shares of Common Stock upon
the exercise of additional warrants issuable(on a pro- rata basis) to
each of the above entities and individual upon the exercise of the above
described warrants within a specified period of time.
(12) This number includes: (1) the right to acquire 615,356 shares of Common
Stock upon the exercise of presently exercisable, outstanding options and
warrants; and (ii) the right to acquire an additional 333,341 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 948,697 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.
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors consists of six 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
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until their respective successors are duly elected and qualified or until an
earlier resignation, removal from office, retirement or death. Mr. Jerry
Lewis, Mr. Jay Fabrikant and Dr. Edward Cohen presently serve as Class 1
Directors and are scheduled to hold office until the Annual Meeting. Drs.
Robert and Alan Cohen and Mr. Joel Gold presently serve as Class 2 Directors
and are scheduled to hold office until the 1999 Annual Meeting of
Shareholders.
Item 1. ELECTION OF DIRECTORS (PROPOSAL 1)
The Board of Directors has nominated Mr. Jerry Lewis, Mr. Jay Fabrikant
and Dr. Edward Cohen to serve as Class 1 Directors until the 2000 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
- ------------------------------
Jerry Lewis (Current Director standing for election at the Annual Meeting)
Jay Fabrikant (Current Director standing for election at the Annual Meeting)
Dr. Edward Cohen (Current Director standing for election at the Annual
Meeting)
Class 2 - Term Expires in 1999
- ------------------------------
Dr. Robert Cohen (Current Director)
Dr. Alan Cohen (Current Director)
Mr. Joel Gold (Current Director)
Shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the following three nominees: Mr.
Jerry Lewis, Mr. Jay Fabrikant and Dr. Edward Cohen. 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.
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:
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<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Robert Cohen, O.D. 54 Chairman of the Board of Directors
Alan Cohen, O.D. 47 Vice-Chairman of the Board of Directors
Jerry Lewis 52 President, Chief Executive Officer, Chief Operating Officer and
Director
William J. Young 48 Executive Vice President-Finance, Chief Financial Officer and
Treasurer
Joseph Silver 52 Executive Vice President, Secretary and General Counsel
Jerry R. Darnell 47 Executive Vice President-Franchising
Edward Cohen, O.D. 59 Director
Joel L. Gold 56 Director
Jay Fabrikant 41 Director
Nicholas Shashati 38 President-VisionCare of California
Charles Raab 50 Chief Financial Officer - Insight Laser Centers, Inc.
</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
the Company's executive offices in East Meadow, New York. Dr. Robert Cohen and
his brothers, Drs. Edward Cohen and Alan Cohen, together with certain members
of their immediate families (collectively, the "Cohen Family"), are the
principal shareholders of Sterling. In addition, Dr. Robert Cohen, together
with his brother, Dr. Alan Cohen, are the sole members of Meadows Management,
LLC ("Meadows") which, in 1997, rendered 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 offices in the Company's executive offices
in East Meadow, New York. Dr. Cohen and his brothers, Drs. Edward Cohen and
Alan Cohen, together with certain members of their immediate families, also
are the sole 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, f/k/a Rapid Cast ("Rapid Cast"), which offers for sale
equipment and supplies to produce ophthalmic lenses. Additionally, he,
together with Jay Fabrikant, are directors of National Health Plan Plus, Inc.,
a multi-state health, life, disability and managed care company, as well as a
director of Daleen Technology, a computer software company. Dr. Cohen is also
an officer and a director of several management and real estate companies and
numerous 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 of Sterling. His
principal office is located at the Company's executive offices in East Meadow,
New York. Dr. Alan Cohen and his brothers, Drs. Edward Cohen and Robert
Cohen, together with certain members of their immediate families, are the
principal shareholders of Sterling. In addition, Dr. Alan Cohen, together with
his brother, Dr. Robert Cohen, are the sole members of Meadows which, in 1997,
provided consulting services to the Company. From 1974 to the present, Dr.
Alan Cohen has been engaged in the retail and wholesale optical business. For
more than 10 years, 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 Rapid Cast. He is also an officer and director of several
management and real estate companies and numerous other businesses.
Jerry G. Lewis was appointed President and Chief Operating Officer of
Sterling in May 1997, and Chief Executive Officer in January 1998. From 1990
through 1997, Mr. Lewis served as Managing Director of SpecSavers Optical
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Superstores, a retail optical group doing business in the United Kingdom and
Ireland. Mr. Lewis is a qualified optician, and previously held senior
management positions with Bausch & Lomb, Inc. and American Optical, Inc., both
in the United States. During his twenty years with both companies, he worked
in most international markets and was responsible for individual country
operations for both sales and manufacturing. Mr. Lewis has belonged to several
professional organizations in Europe and has been a speaker at International
Optical Symposia. He also directed the Annual European Research Symposium on
Contact Lenses, for Bausch & Lomb, in 1984 and 1985.
William J. Young joined the Company in March 1998 as its Executive Vice
President-Finance, Chief Financial Officer and Treasurer. From December 1987
through March 1998, Mr. Young served in various capacities with Sbarro, Inc.,
an 800 store restaurant chain, first, as its Director of Internal Audit,
thereafter, as its Controller, and, finally, as its Director of Corporate
Finance. Mr. Young has been a Certified Public Accountant for more than ten
years.
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
provided legal services to other persons or entities, including persons and
entities which are affiliates of the Company, although such legal services
(except with respect to two wholly-owned subsidiaries of the Company and
except for legal services rendered for no consideration) 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 Store 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, 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 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, served as Chairman of its trade show 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.
Dr. Edward Cohen has served as 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 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. Dr. Cohen is also an officer
and a director of several management and real estate companies and numerous
other businesses.
9
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Joel L. Gold has served as a Director of Sterling since December 1995.
He is currently a Senior Managing Director of Interbank Capital Group, LLC, an
investment banking firm located in New York City. From April, 1996 to
September, 1997, Mr. Gold was an Executive Vice President of LT Lawrence &
Co., and from March, 1995 to April, 1996, a Managing Director of Fechtor,
Detwiler & Co., Inc. ("Fechtor"), a representative of the underwriters for the
Company's initial public offering. 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 Concord Camera Corp., a manufacturer and
distributor of cameras ("Concord"); Life Medical Sciences, a biotechnological
company ("Life"); BCAM Corporation, a provider of ergonometric services
("BCAM"); and PMCC Financial Corp., a specialty, consumer finance company. He
currently serves on the Compensation Committee of each of Concord, Life and
BCAM.
Jay Fabrikant has been actively engaged in the health care field for
over 15 years. Mr. Fabrikant, since 1983, has been the President of Medical
Development Systems, Inc., a health care consulting firm. Mr. Fabrikant has
been the Chairman and Chief Executive Officer of Total Health Systems, a
NASDAQ (NMS) traded firm, Chairman and Chief Executive Officer of Advanced
Healthcare Systems, Inc., a New Jersey State Certified Managed Care
Organization, President of The New York Health Plan, Inc., and the founder and
initial Chairman and Chief Executive Officer of National Health Plan Plus,
Inc., a multi-state health, life, disability, and managed care company. Mr.
Fabrikant has also been on several governmental panels for health care
regulation.
Dr. Nicholas Shashati has been the Director of Professional Services of
the Company since July, 1992 and, since March 1, 1998, President of VisionCare
of California ("VCC"). Dr. Shashati earned a Doctor of Optometry degree from
Pacific University of California in 1984, and received a Bachelor of Science
degree from Pacific University and a Bachelor of Science degree in Biology
from San Diego State University. Dr. Shashati is licensed as an optometrist
in the States of New York, California, Arizona and Oregon. He is Chairperson
for the Quality Assurance Committee of the Company, as well as a Practice
Management Consultant.
Charles Raab has been employed by Insight Laser Centers, Inc.
("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 Chief Financial Officer 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.
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.
10
<PAGE>
OPERATION OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1997, the Board of Directors
of the Company held three meetings in person, held an additional three
meetings telephonically, and acted by written consent six times. 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 Jerry Lewis, 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, 1997, and acted once
by unanimous written consent.
The Audit Committee, whose members are Joel Gold, Jay Fabrikant and
Jerry Lewis, 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 once during the year
ended December 31, 1997.
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 three times during the year ended December 31, 1997, and
acted twice by unanimous written consent.
The Independent Committee, whose members are Joel Gold, Jerry Lewis and
Jay Fabrikant, is generally authorized to review any transaction (or 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 three times during the year
ended December 31, 1997, and acted once by unanimous written consent.
11
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The Right of First Refusal Committee, whose members are Joel Gold, Jay
Fabrikant and Jerry Lewis, 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, 1997.
DIRECTOR COMPENSATION
Directors who are not employees or officers of the Company or associated
with the Company 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.
On December 12, 1997, 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 composite closing
price, as quoted on the NASDAQ Stock Market (the "Closing Price") of said
Common Stock on the date of grant (December 12, 1997). 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. See
"Item 2. RATIFICATION OF THE GRANT OF OPTIONS TO DRS. ROBERT, ALAN AND EDWARD
COHEN (PROPOSAL NO. 2)".
On December 12, 1997, 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 previously providing and 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
Closing Price of the Company's Common Stock on the date of grant (December 12,
1997); and (ii) vest two-thirds immediately and one-third on November 19,
1998. See "Item 3. RATIFICATION OF THE GRANT OF OPTIONS TO MR. JAY FABRIKANT
(PROPOSAL NO. 3)".
On February 12, 1998, the Board of Directors, with Messrs. Joel Gold and
Jay Fabrikant abstaining, authorized the grant, to each such individuals, of
options, each having a term of ten years, to purchase 10,000 shares of the
Company's Common Stock at an exercise price equal to the Closing Price of said
Common Stock on the date of grant (February 12, 1998).
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.
12
<PAGE>
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
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, 1997, all Section 16(a)
filing requirements applicable to its executive officers, Directors and
greater than ten percent beneficial owners were complied with, except for Drs.
Robert and Alan Cohen, who were late in filing each of their respective Form
4, and Mr. Jerry Lewis and Mr. William Young, who were late in filing each of
their respective Form 3.
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<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, 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
Compensation
Fiscal Annual Compensation Securities All Other
Name and Principal Position Year Salary Bonus Underlying Stock Options Compensation
- --------------------------- ---- ------ ----- ------------------------ ------------
<S> <C> <C> <C> <C> <C>
Jerry Lewis 1997 $156,801 -- 250,000 $34,345 (2)
President, Chief 1996 -- -- -- --
Operating Officer,
Director (1)
Robert Greenberg 1997 $210,000 $ 40,000 193,569 $23,086 (4)
President, Chief 1996 $256,010 -- 193,569 $30,154 (4)
Executive Officer and
Director (3))
Jerry Darnell 1997 $159,600 $ 71,553(5) 193,569 $14,786 (6)
Executive Vice 1996 $229,467 $ 30,000(5) 193,569 $14,786 (6)
President -
Franchising
Joseph Silver 1997 $100,800 $21,600 193,569 $161,844 (7)(8)
Executive Vice 1996 $126,010 -- 193,569 $159,244 (7)(8)
President, Secretary
and General Counsel
Sebastian Giordano
Executive Vice
President - Finance, 1997 $128,100 $ 32,130 96,782 $10,200 (10)
Chief Financial 1996 $156,268 -- 96,782 $10,200 (10)
Officer and Treasurer (9)
Kevin Cambra
Executive Vice 1997 $99,750 $35,104 (12) 96,782 $ 9,398 (13)
President-Company 1996 $96,651 $36,000 (12) 96,782 $10,898 (13)
Store Operations (11)
</TABLE>
- ---------
(1) Jerry Lewis was appointed to the position of President and Chief
Operating Officer as of May 1, 1997; and was appointed to the positions
of Chief Executive Officer and Director in January, 1998.
(2) Represents legal fees advanced by the Company in connection with Mr.
Lewis' emigration to the United States, relocation expenses pertaining
thereto, life and disability insurance premiums paid by the Company, car
allowance payments made to and/or on behalf of Mr. Lewis, and
reimbursement of medical insurance deductions.
(3) Mr. Greenberg resigned from his position as President of the Company in
May, 1997, and from his positions as Director and Chief Executive Officer
of the Company in December, 1997.
(4) Represents car allowance payments made to Mr. Greenberg, life insurance
and disability insurance premiums paid by the Company and reimbursement
of medical insurance deductions.
(5) Includes commissions paid to Mr. Darnell of $31,653 and $30,000 in 1997
and 1996, 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 $132,600 and $130,000 in legal fees paid by Sterling Vision of
California, Inc. ("SVCI") in 1997 and 1996, 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) Mr. Giordano resigned from his positions as Executive Vice
President-Finance, Chief Financial Officer and Treasurer in February,
1998.
(10) Represents car allowance payments made to Mr. Giordano, life insurance
and disability premiums paid by the Company and reimbursement of medical
insurance deductions.
(11) Mr. Cambra resigned from his position as Executive Vice President-Company
Store Operations
14
<PAGE>
in February, 1998.
(12) Represents commissions paid to Mr. Cambra based upon Company store
performance.
(13) Represents car allowance payments made to Mr. Cambra, life insurance and
disability premiums paid by the Company and reimbursement of medical
insurance deductions.
15
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 1997, an aggregate of 250,000
options were granted by the Company's Compensation Committee to Jerry Lewis,
the Company's President, Chief Executive Officer and Chief Operating Officer,
which options: (i) have a term of ten years; (ii) provide for an exercise
price equal to the Closing Price of the Company's Common Stock on the date of
grant (May 1, 1997); and (iii) vest one-third immediately, one-third on May 1,
2000 and one-third subject to the Company achieving certain performance
standards, which standards have not yet been agreed to between the members of
the Compensation Committee and Mr. Lewis. Other than as described above, no
other 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>
Jerry Lewis - - 83,333/250,000 -0-
Joseph Silver - - 145,178/193,569 -0-
Jerry Darnell - - 145,178/193,569 -0-
Sebastian Giordano - - 72,587/96,782 -0-
Kevin Cambra - - 72,587/96,782 -0-
</TABLE>
- ---------
* Based on the Nasdaq Stock Market composite closing price for the last
business day of the fiscal year ($5.31). All of the stock options granted
to the Named Executive Officers have exercise prices as follows: Mr.
Lewis - $8.00; and Messrs. Silver, Giordano, Cambra and Darnell - $6.00.
16
<PAGE>
Stock Price Performance Graph
The following graph shows the annual cumulative total shareholder return
for the fiscal year ended December 31, 1997 based on: (i) an assumed
investment of $100; and (ii) no reinvestment of dividends. 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 Cole National Corp.,
National Vision Associates, Ltd., New West Eyeworks, Inc., Sight Resources
Corp., and Laser Vision Centers, Inc.
COMPARISON OF TWO YEARS CUMULATIVE TOTAL RETURN
Among Sterling Vision, Inc., S&P 500, and the Company selected Peer Group
[GRAPH]
<TABLE>
<CAPTION>
12/20/95 12/31/96 3/32/97 6/30/97 9/30/97 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Sterling Vision, Inc. 100 110 111.67 84.14 101.67 75.83
Peer Group 100 102.4 111.47 145.2 151.21 118.27
S&P Index 100 122.25 124.95 146.08 156.33 160.15
</TABLE>
17
<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, the executive who was
responsible for Company store operations until his resignation in February,
1998, and Jerry Darnell, the executive officer who is responsible for
franchising, respectively, the Compensation Committee believes that it was
(and 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 was entitled to a bonus based upon
monthly store performance targets which were 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 might 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 Jerry Lewis, is $8.00, for
Messrs. Silver, Darnell, Giordano and Cambra, is $6.00, and for Nicholas
Shashati, is $7.50. 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
18
<PAGE>
to the creation of long-term value for shareholders, the Compensation
Committee provides that these stock options generally vest over a three to
five-year period.
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 1997
During the fiscal year ended December 31, 1997, each of the Company's
executive officers, other than Charles Raab and Nicholas Shashati, 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) Mr. Lewis, which became effective on May 1, 1997; and (ii) William
Young, which became effective in March, 1998, were entered into in November,
1995, effective January 1, 1996. The base salary to which each executive
officer was entitled for 1997 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, 1997, Mr. Cambra
received a bonus of $35,104 based upon the Company-stores' 1997 financial
performance; and Mr. Darnell received $31,653 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. During the fiscal year
ended December 31, 1997, no Named Executive Officer of the Company, other than
Mr. Lewis, was awarded stock options.
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 1997
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, 1997, Mr. Greenberg was paid an annual base salary of
approximately $210,000, exclusive of certain performance bonuses.
19
<PAGE>
The Committee believes that Mr. Greenberg's 1997 salary was reasonable
in light of Mr. Greenberg's leadership. The Committee believed that Mr.
Greenberg's 1997 compensation level reflected the Committee's confidence in
Mr. Greenberg and the Company's desire to retain Mr. Greenberg's talents, as
the President, until May, 1997, 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, 1998 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 until December 26, 2000. In March, 1996, Fechtor
transferred 15,000 of such warrants to Mr. Gold.
EMPLOYMENT CONTRACTS
Sterling previously entered into employment agreements with Robert B.
Greenberg, Jerry Darnell, Joseph Silver, Sebastian Giordano and Kevin Cambra,
each of which was extended for the 1997 calendar year (but not renewed for the
1998 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.
In addition: (i) in May, 1997, the Company and Mr. Lewis agreed upon the
basic terms of his employment as the President and Chief Operating Officer of
the Company, which agreement is in the process of being memorialized into a
written agreement; and (ii) in March, 1998, the Company and Mr. William J.
Young entered into a written employment agreement pursuant to which he became
employed by the Company as its Chief Financial Officer.
The following summary of certain provisions of these 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 (other than with respect to Messrs. Lewis and Young) were filed as
Exhibits to the Company's Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on December 8, 1995.
Under their respective Employment Agreements, as orally extended for the
1997 fiscal year, Messrs. Greenberg, Darnell, Silver and Giordano received an
20
<PAGE>
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
received an annual base salary of $99,750. 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 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 could 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 was 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 were reduced if
another employee of the Company was entitled to a commission with respect to
the same transaction.
Pursuant to Mr. Silver's Employment Agreement, he was additionally
entitled to a monthly legal fee payable by SVCI 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 had a term coexistent therewith (the "Legal Fee
Retainer Agreement"). Pursuant to the Legal Fee Retainer Agreement, as orally
renewed for the 1997 calendar year, BOS and SVCI paid 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 was 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 with the foregoing individuals, as orally
renewed, could be terminated by the Company for cause and permanent disability
(as such terms were defined in the respective Employment Agreements) and
automatically terminated upon the death of the executive. If the Company
terminated the employment of an executive for cause, or if an executive died,
the Company was required to pay such executive his compensation accrued
through the date of termination. In the case of termination because of
permanent disability, an executive was 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, each such Employment Agreement
entitled the executive to receive a monthly car allowance and premiums for
disability and life insurance.
In addition, under the terms of each such Employment Agreement, each
executive was 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 was terminated: (i) for cause by the
21
<PAGE>
Company; or (ii) by voluntary termination, by the executive, in violation of
his Employment Agreement.
On May, 1997, the Compensation Committee and Mr. Jerry Lewis, the
Company's President and Chief Operating Officer as of May 1, 1997, and its
Chief Executive Officer as of January 4, 1998, agreed upon the terms of his
employment by the Company (which agreement is in the process of being
memorialized into a written agreement), as follows: (i) a term of three (3)
years; (ii) an annual base salary of $250,000; (iii) life and disability
insurance comparable to those maintained for the individuals identified above;
(iv) a monthly car allowance; (v) reimbursement of Mr. Lewis' relocation
expenses to the United States and his legal fees in connection therewith; (vi)
reimbursement of Mr. Lewis' medical insurance deductions; (vii) options to
purchase up to 250,000 shares of the Company's Common Stock at an exercise
price equal to the Closing Price of such Common Stock on the commencement of
his employment ($8.00); and (viii) severance pay equal to six months' salary.
In March, 1998, the Company and William J. Young entered into a written
employment agreement pursuant to which Mr. Young was appointed to the position
of Chief Financial Officer, effective March 30, 1998. Such agreement provides
for: (i) a term of two (2) years; (ii) an annual base salary of $125,000;
(iii) an annual minimum bonus of $12,500; (iv) options to purchase up to
30,000 shares of the Company's Common Stock (one-half of which will vest as of
each of April 1, 1999 and 2000) at an exercise price equal to the Closing
Price of the Company's Common Stock on March 30, 1998; and (v) a monthly car
allowance.
Item 2. RATIFICATION OF THE GRANT OF OPTIONS TO DRS. ROBERT, ALAN AND
EDWARD COHEN (PROPOSAL NO. 2)
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 the date for repayment of the balance of said loan to May 1, 1997,
which balance was paid on such date. 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), which grant was subsequently approved by the Company's shareholders.
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.
22
<PAGE>
Notwithstanding the shareholders' approval (at the 1997 Annual Meeting)
of such grant of options, each of Drs. Robert, Alan and Edward Cohen
subsequently relinquished their respective rights to said options as a result
of the negative impact that the issuance of said options would have on the
Company's financial statements for the year ended December 31, 1996.
Thereafter, in December, 1997, the Independent Committee recommended to
the Board of Directors that said options again be granted to each of said
individuals, which recommendation was approved by the Board of Directors on
December 12, 1997, subject to each of said options having an exercise price
equal to the Closing Price of the Company's Common Stock on such date, as well
as the approval of the grant thereof, by the Company's shareholders (other
than Drs. Robert, Alan and Edward Cohen) at the Annual Meeting, which options,
if so approved by the shareholders, will be issued under the Company's 1995
Stock Incentive Plan.
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 3. RATIFICATION OF THE GRANT OF OPTIONS TO MR. JAY FABRIKANT
(PROPOSAL NO. 3)
On December 12, 1997, 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 (December 12, 1997); and (iii) vest two-thirds immediately and,
provided he then continues to provide such services to the Company, one-third
on November 19, 1998.
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.
Item 4. RATIFICATION OF APPOINTMENT OF AUDITORS (PROPOSAL NO. 4)
23
<PAGE>
On or about April 15, 1998, the members of the Registrant's Executive and
Audit Committees considered the reappointment of Deloitte & Touche LLP
("Deloitte"), the Company's principal accountants which audited its financial
statement for the fiscal years ended December 31, 1995 through December 31,
1997, and determined it was in the best interest of the Company to select
another firm of independent public accountants, as the auditors of the Company
for the 1998 fiscal year. In response to such determination, certain of the
Company's management team commenced their selection process by interviewing a
number of other firms of certified public accountants.
On April 24, 1998, the Audit Committee recommended to the Board that it
select Arthur Andersen ("Andersen") as such aditors, which recommendation was so
accepted by the Board. Also, on April 24, 1998, Deloitte notified the Company,
in writing, of its decision to resign as the Company's auditors, effective
immediately.
As a result of the foregoing, the Board of Directors has appointed the
firm of Arthur Andersen LLP ("Andersen"), independent public accountants, as
the auditors of the Company (and its subsidiaries) for the 1998 fiscal year,
subject to the ratification of such appointment by the Company's shareholders
at the Annual Meeting.
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, and
continuing through December 31, 1997. 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, however, continued and will continue to provide certain tax
and advisory services to the Company.
In connection with the audit of the three fiscal years ended December
31, 1995, 1996 and 1997, 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 three fiscal years ended
December 31, 1995, 1996 and 1997, there were no disagreements with Deloitte on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements, if not
resolved to the satisfaction of Deloitte, would have caused it to make
reference to the subject matter of the disagreement as part of its Reports.
However, Deloitte has indicated to the Company that, if its appointment
continued for the 1998 fiscal year, it might be in disagreement with the
Company's intended treatment, for financial reporting purposes, of the
Company's Senior Convertible Preferred Stock issued as of February 17, 1998.
If the foregoing appointment of Andersen is not ratified by the
shareholders, the Board of Directors will appoint another firm of independent
public 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.
A representative of Andersen 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 Andersen, as the Company's independent
public accountants, will require the affirmative vote of the holders of a
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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 ARTHUR ANDERSEN LLP.
CERTAIN TRANSACTIONS AND OTHER MATTERS
Fast Cast
Certain members of the families of Drs. Robert and Alan Cohen
collectively own an approximately 10% interest in Fast Cast, of which Dr.
Robert Cohen 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.").
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 April 1, 1997,
CFO had 70 franchised stores and 20 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, 1997, 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, 1997, approximately 28 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 one or more of the
Company's retail optical stores, thereby competing directly with such 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.
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 on-half (8 1/2) month consulting agreement
with Meadows Management, LLC, a limited liability company owned by Drs. Robert
and Alan Cohen ("MML"). Said agreement provided for compensation computed at
the rate of three hundred thousand ($300,000) dollars per annum, and for the
granting, to each of Drs. Robert and Alan Cohen, as the designees of MML, of
options, each having a term of five years, to each purchase 150,000 shares of
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the Company's Common Stock at an exercise price equal to the Closing Price of
the Company's Common Stock as of the date of such approval ($8.9375). The
granting of said options was approved by the Company's shareholders at the
1997 Annual Meeting, were issued under the Company's 1995 Stock Incentive Plan
and will vest as follows: one-half (50%) immediately (April 9, 1997); and an
additional one-sixth (16.67%) on each of April 9, 1998, 1999 and 2000.
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
was opened; or (ii) the date that the Drs. Robert, Alan and Edward Cohen and
certain members of each of their respective, immediate families (collectively,
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 photorefractive kerectectomy (a procedure performed with an
excimer laser to correct certain degrees of myopia; hereinafter "PRK")
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
Company appointed the Right of First Refusal Committee. During the fiscal year
ended December 31, 1997, 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, 1997, CFO has purchased
ophthalmic lenses from the Company's ophthalmic laboratory located in Roslyn,
New York. In addition, during the fiscal year ended December 31, 1997, CFO
purchased products fabricated from the Company's poster reproduction system.
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 initially
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. In
February, 1998, the Company and such entity voluntarily agreed to reduce such
space by approximately 2,500 square feet and, in connection therewith, agreed
on a pro-rata reduction of such occupancy costs. The balance of the space not
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utilized by the Company is subleased to CFO, Fast Cast and an unrelated third
party. 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, 1997, Mr. Greenberg owed approximately $111,000 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 rate thereon
to six (6%) percent per annum.
Effective January 1, 1998, the Company and Mr. Greenberg severed their
relationship and entered into an agreement pursuant to which: (i) Mr.
Greenberg received severance pay of $17,500 per month for the months of
January through March, 1998, on the condition that he continued to provide
certain real estate consulting services to the Company during said period; and
(ii) Mr. Greenberg will receive severance pay, at the rate of $17,500, for the
months of April through June, 1998, reduced by all compensation earned by Mr.
Greenberg, during such period, in excess of $10,000.
Matter Relating to Joel Gold
In connection with the Company's issuance and private placement, in
February, 1997, of its Convertible Debentures, Due August 25, 1998, the
Company paid to L. T. Lawrence & Co., Inc. a fee of $480,000. Joel Gold, a
Director of the Company, was a Managing Director of L. T. Lawrence & Co., Inc.
at such time.
Franchise Interest by Certain Members of Management and their Families
Joseph Silver, together with his wife, are the shareholders of RJL
Optical, Inc. ("RJL"), the franchisee of the Sterling Optical Center located
in Great Neck, New York. In November, 1995, RJL entered into a management
agreement whereby the Company operates such store on behalf of RJL in exchange
for the payment to it 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.
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 at a rental less than the amount of
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rent payable by the Company under the equipment leases pursuant to which the
Company financed the cost of such systems, which lesser amount was agreed to
by the Company due to the age and condition of the systems delivered to
Dura-Lab.
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.
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, 1997 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 contact. 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 Common Stock
held of record by such persons, and the Company will reimburse them for the
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
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vote in person, is urged to fill in, date and sign the enclosed Proxy and
return it promptly in the enclosed return and envelope.
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 Prosy 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 December 31, 1998.
By Order of the Board of Directors
By: \s\Joseph Silver
--------------------------
JOSEPH SILVER,
Secretary
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF STERLING VISION, INC.
ANNUAL MEETING OF SHAREHOLDERS: FRIDAY, JUNE 26, 1998
The undersigned shareholder of Sterling Vision, Inc., a New York
corporation (the "Company"), hereby appoints Dr. Robert Cohen, Mr. William
Young 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 10:00 a.m.
(local time), on Friday, June 26, 1998, 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 and "FOR" Proposal No. 4. 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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Please mark |X| |X|
your votes as
indicated in
this example
The Board of Directors recommends a vote "FOR" Items 1 through 4
Item 1 - ELECTION OF CLASS 1 DIRECTORS:
FOR WITHHELD
NOMINEES:
Jerry Lewis |_| |_|
Jay Fabrikant |_| |_|
Edward Cohen |_| |_|
WITHHELD FOR: (Write that nominee's name in the
space provided below):
- ----------------------------------------------
FOR AGAINST ABSTAIN
ITEM 2-APPROVAL OF THE GRANT OF |_| |_| |_|
66,667 STOCK OPTIONS TO
EACH OF DRS. ROBERT, ALAN
AND EDWARD COHEN
ITEM 3-APPROVAL OF THE GRANT OF |_| |_| |_|
200,000 STOCK OPTIONS TO
JAY FABRIKANT
ITEM 4-RATIFICATION OF APPOINTMENT |_| |_| |_|
OF ARTHUR ANDERSEN LLP
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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