<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
OSI SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF OSI SYSTEMS, INC.]
12525 Chadron Avenue
Hawthorne, California 90250
October 16, 2000
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of OSI Systems, Inc. (the "Company"), which will be held at
10:00 a.m., local time, on November 16, 2000, at the executive offices of the
Company, 12525 Chadron Avenue, Hawthorne, California 90250. All holders of the
Company's outstanding common stock as of the close of business on October 10,
2000, are entitled to vote at the Annual Meeting. Enclosed is a copy of the
Notice of Annual Meeting of Stockholders, Proxy Statement and Proxy.
We hope you will be able to attend the Annual Meeting. Whether or not you
expect to attend, it is important that you complete, sign, date and return the
Proxy in the enclosed envelope in order to make certain that your shares will be
represented at the Annual Meeting.
Sincerely,
/s/ Ajay Mehra
Ajay Mehra
Secretary
<PAGE>
[LOGO OF OSI SYSTEMS, INC.]
12525 Chadron Avenue
Hawthorne, California 90250
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 16, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of OSI Systems, Inc., a California corporation (the "Company"), will
be held at 10:00 a.m., local time, on November 16, 2000, at the executive
offices of the Company, 12525 Chadron Avenue, Hawthorne, California 90250, for
the following purposes:
1. To elect five (5) directors to hold office for a one-year term and
until their respective successors are elected and qualified.
2. To ratify an amendment to the OSI Systems, Inc. 1997 Stock Option Plan
to increase the number of shares of the Company's common stock for which
options may be granted under the plan from 850,000 shares to 1,850,000 shares.
3. To ratify the selection of Deloitte & Touche L.L.P. as the Company's
independent accountants for the fiscal year ending June 30, 2001.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 10, 2000, as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and all adjourned meetings thereof.
By Order of the Board of Directors
/s/ Ajay Mehra
Ajay Mehra
Secretary
Dated: October 16, 2000
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PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY
REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
--------------------------------------------------------------------------------
<PAGE>
OSI SYSTEMS, INC.
12525 Chadron Avenue
Hawthorne, California 90250
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of OSI Systems, Inc. (the "Company") for
use at the Annual Meeting of Stockholders (the "Annual Meeting" or the
"Meeting"), to be held at 10:00 a.m., local time, on November 16, 2000, at the
executive offices of the Company, 12525 Chadron Avenue, Hawthorne, California
90250, and at any adjournment thereof. When such proxy is properly executed and
returned, the shares it represents will be voted in accordance with any
directions noted thereon. Any stockholder giving a proxy has the power to revoke
it at any time before it is voted by written notice to the Secretary of the
Company or by issuance of a subsequent proxy. In addition, a stockholder
attending the Annual Meeting may revoke his or her proxy and vote in person if
he or she desires to do so, but attendance at the Annual Meeting will not of
itself revoke the proxy.
At the close of business on October 10, 2000, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, the Company had issued and outstanding 9,354,803 shares of common
stock, without par value ("Common Stock"). Each share of Common Stock entitles
the holder of record thereof to one vote on any matter coming before the Annual
Meeting. In voting for directors, however, if any stockholder gives notice at
the Annual Meeting prior to voting of an intention to cumulate votes, then each
stockholder has the right to cumulate votes and to give any one or more of the
nominees whose names have been placed in nomination prior to voting a number of
votes equal to the number of directors to be elected (i.e., five) multiplied by
the number of shares which the stockholder is entitled to vote. Unless the proxy
holders are otherwise instructed, stockholders, by means of the accompanying
proxy, will grant the proxy holders discretionary authority to cumulate votes.
Only stockholders of record at the close of business on October 10, 2000 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
The enclosed Proxy, when properly signed, also confers discretionary
authority with respect to amendments or variations to the matters identified in
the Notice of Annual Meeting and with respect to other matters which may be
properly brought before the Annual Meeting. At the time of printing this Proxy
Statement, management of the Company was not aware of any other matters to be
presented for action at the Annual Meeting. If, however, other matters which are
not now known to management should properly come before the Annual Meeting, the
proxies hereby solicited will be exercised on such matters in accordance with
the best judgment of the proxy holders.
Shares represented by executed and unrevoked proxies will be voted in
accordance with the instructions contained therein or in the absence of such
instructions, in accordance with the recommendations of the Board of Directors.
Neither abstentions nor broker non-votes will be counted for the purposes of
determining whether any of the proposals has been approved by the stockholders
of the Company, although they will be counted for purposes of determining the
presence of a quorum.
The election of directors requires a plurality of the votes cast by the
holders of the Company's Common Stock. A "plurality" means that the individuals
who receive the largest number of affirmative votes cast are elected as
directors up to the maximum number of directors to be chosen at the Annual
Meeting. Approval of the other proposals will require the affirmative vote of a
majority of the shares of Common Stock present and voting at the Meeting.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the cost of preparing, assembling and mailing the proxy
solicitation materials. Proxies may be solicited personally, by mail, by telex
or by telephone, by directors, officers and regular employees of the Company who
will not be additionally
<PAGE>
compensated therefor. It is anticipated that this Proxy Statement and
accompanying Proxy will be mailed on or about October 16, 2000 to all
stockholders entitled to vote at the Annual Meeting.
The matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding notice and are more fully discussed below.
ELECTION OF DIRECTORS
(Item 1 of the Proxy Card)
The Company has a Board of Directors consisting of five members. At each
annual meeting of stockholders, directors are elected for a term of one year to
succeed those directors whose terms expire on the annual meeting dates.
Management's nominees for election as directors at the Annual Meeting are
Deepak Chopra, Ajay Mehra, Steven C. Good, Meyer Luskin and Madan G. Syal. The
enclosed Proxy will be voted in favor of these individuals unless other
instructions are given. If elected, the nominees will serve as directors until
the Company's Annual Meeting of Stockholders in 2001, and until their successors
are elected and qualified. If any nominee declines to serve or becomes
unavailable for any reason, or if a vacancy occurs before the election (although
management knows of no reason to anticipate that this will occur), the proxies
may be voted for such substitute nominees as management may designate.
If a quorum is present and voting, the five nominees for directors
receiving the highest number of votes will be elected as directors. Abstentions
and shares held by brokers that are present, but not voted because the brokers
were prohibited from exercising discretionary authority, i.e., broker non-votes,
will be counted as present for purposes of determining if a quorum is present.
The following are Management's nominees for election as directors at this
meeting.
<TABLE>
<CAPTION>
Director
Name Age Position Since
---- --- -------- --------
<S> <C> <C> <C>
Deepak Chopra.............................. 49 Chairman of the Board, Chief Executive 1987
Officer and President
Ajay Mehra................................. 38 Vice President, Chief Financial Officer, 1996
Secretary and Director
Steven C. Good (1)(2)...................... 58 Director 1987
Meyer Luskin (1)(2)........................ 74 Director 1990
Madan G. Syal (1).......................... 74 Director 1987
</TABLE>
__________________
(1) Member of Audit Committee
(2) Member of Compensation Committee
Deepak Chopra is the founder of the Company and has served as President,
Chief Executive Officer and a Director since the Company's inception in May
1987. He has served as the Company's Chairman of the Board since February 1992.
Mr. Chopra also serves as the President and Chief Executive Officer of the
Company's major subsidiaries. From 1976 to 1979 and from 1980 to 1987, Mr.
Chopra held various positions with ILC Technology, Inc. ("ILC"), a publicly-held
manufacturer of lighting products, including serving as Chairman of the Board,
Chief Executive Officer, President and Chief Operating Officer of its United
Detector Technology division. In 1990, the Company acquired certain assets of
ILC's United Detector Technology division. Mr. Chopra has held various positions
with Intel Corporation, TRW Semiconductors and RCA Semiconductors. Mr. Chopra
holds a Bachelor of Science degree in Electronics and a Master of Science degree
in Semiconductor Electronics.
2
<PAGE>
Ajay Mehra joined the Company as Controller in 1989, has served as Vice
President and Chief Financial Officer since November 1992, and became Secretary
and a Director in March 1996. Mr. Mehra also serves as Vice President and Chief
Financial Officer of the Company's major subsidiaries. Prior to joining the
Company, Mr. Mehra held various financial positions with Thermador/Waste King, a
household appliance company, Presto Food Products, Inc. and United Detector
Technology. Mr. Mehra holds a Bachelor of Arts degree from the School of
Business of the University of Massachusetts, Amherst, and a Master of Business
Administration degree from Pepperdine University.
Steven C. Good has served as a Director of the Company since September
1987. He is a Senior Partner in the accounting firm of Good Swartz & Berns,
which he founded in 1974, and has been active in consulting and advisory
services for businesses in various sectors including the manufacturing, garment,
medical services and real estate development industries. Mr. Good is the founder
and has served as Chairman of California United Bancorp, and was elected in 1997
as a Director of Arden Realty Group, Inc., a publicly-held Real Estate
Investment Trust listed on the New York Stock Exchange. Since October 1997, Mr.
Good has also served as a Director of Big Dogs, Inc., a publicly held
corporation listed on Nasdaq. Mr. Good holds a Bachelor of Science degree in
Business Administration from the University of California, Los Angeles.
Meyer Luskin has served as a Director of the Company since February 1990.
Since 1961, Mr. Luskin has served as the President, Chief Executive Officer and
Chairman of the Board of Scope Industries, a publicly-held company listed on the
American Stock Exchange, which is engaged in the business of recycling and
processing food waste products into animal food. Mr. Luskin has also served as a
Director of Scope Industries since 1958 and currently serves as a Director of
Stamet, Inc., an industrial solid pump manufacturer, and Chromagen, Inc., a
biotechnology company. Mr. Luskin holds a Bachelor of Arts degree from the
University of California, Los Angeles, and a Master of Business Administration
degree from Stanford University.
Madan G. Syal has served as a Director of the Company since the Company's
inception in May 1987. From May 1987 until February 1992, he served as Secretary
of the Company. Mr. Syal is the sole proprietor of Pro Printers, a printing
service business he founded in October 1984. Prior to 1984, Mr. Syal held
various positions with Shell Oil Company, Exxon Corporation, Burmah Oil Company,
C.F. Braun and Bechtel Group, Incorporated. Mr. Syal holds a Bachelor of Science
degree from the American College in Lahore (now Pakistan) and a B.S.E. in
Electrical and Mechanical Engineering from London University.
Executive Officers
Andreas F. Kotowski has served as the President of U.S. Operations, General
Manager and a Director of the Company's subsidiary, Rapiscan Security Products
(U.S.A.), Inc. ("Rapiscan U.S.A."), since January 1993. As General Manager of
Rapiscan U.S.A., Mr. Kotowski is also responsible for the operations of Rapiscan
U.K., the subsidiary of Rapiscan U.S.A. From September 1989 to January 1993, Mr.
Kotowski was self-employed as an Engineering Consultant, providing technical and
management consulting services to businesses in the explosive detection and
medical imaging industries. In 1992, Mr. Kotowski was a director of Dextra
Medical, Inc., a company that filed for bankruptcy in July of that year. From
1979 to 1989, Mr. Kotowski held various positions with EG&G Astrophysics,
including Vice President of Engineering and Chief Engineer, in which he was
responsible for product planning, design, development and management. Prior to
1979, he worked as an Engineer at National Semiconductor Corporation and the Jet
Propulsion Laboratory. Mr. Kotowski holds a Bachelor of Science degree in
Electrical Engineering and a Bachelor of Science degree in Physics from
California State Polytechnic University, Pomona, and a Master of Science degree
in Electrical Engineering from Stanford University.
Thomas K. Hickman has served as Managing Director of Opto Sensors
(Singapore) Pte Ltd. and Opto Sensors (Malaysia) Sdn. Bhd., subsidiaries of the
Company, since July 1995, and as the Managing Director of Rapiscan Consortium
(M) Sdn. Bhd. since its formation in October 1996. From July 1993 to July 1995,
Mr. Hickman served as Vice President of Operations and Director of Operations
for Rapiscan U.S.A. and Rapiscan U.K., respectively. From November 1992 to July
1993, Mr. Hickman served as Director of Materials for UDT Sensors, Inc. ("UDT
Sensors"), a subsidiary of the Company, and, from July through November 1992,
provided service as an independent consultant to UDT Sensors. From 1985 through
1992, Mr. Hickman held various positions at Mouse Systems
3
<PAGE>
Corporation, a manufacturer of computer optical mouse systems, including that of
Director of OEM Operations, Purchasing Manager and Representative Director of a
joint venture. Prior to 1985, Mr. Hickman was the Director of Materials for
Measurex Corporation, the Representative Director for Hitachi-Singer Corp. and a
Product Line Manager for Singer Business Machines. Mr. Hickman holds a Bachelor
of Arts degree from Stetson University and a Master of Business Administration
degree from the University of San Francisco.
There are no arrangements or understandings known to the Company between
any of the directors or nominees for director of the Company and any other
person pursuant to which any such person was or is to be elected a director.
Ajay Mehra and Madan G. Syal are the first cousin and father-in-law,
respectively, of Deepak Chopra. Other than these relationships, there are no
family relationships among the directors and executive officers of the Company.
The Board of Directors unanimously recommends that you vote FOR the
election of each of Deepak Chopra, Ajay Mehra, Steven C. Good, Meyer Luskin and
Madan G. Syal as directors of the Company. Holders of proxies solicited by this
Proxy Statement will vote the proxies received by them as directed on the Proxy
or, if no direction is made, for each of the above-named nominees. The election
of directors requires a plurality of the votes cast by the holders of the
Company's Common Stock present and voting at the Meeting.
Board of Directors Meetings and Committees of the Board of Directors
There were five meetings of the Board of Directors and the Board of
Directors acted pursuant to unanimous written consent on three additional
occasions during the fiscal year ended June 30, 2000. The Board of Directors has
established an Audit Committee and a Compensation Committee. The members of each
committee are appointed by the majority vote of the Board of Directors. There is
no nominating committee.
Audit Committee
The Audit Committee makes recommendations for selection of the Company's
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and any non-audit
fees, and reviews the financial statements of the Company and the adequacy of
the Company's internal accounting controls and financial management practices.
The Audit Committee consists of Messrs. Good, Luskin and Syal. There was one
meeting of the Audit Committee during the fiscal year ended June 30, 2000.
Compensation Committee
The Compensation Committee is responsible for determining compensation for
the Company's executive officers, reviewing and approving executive compensation
policies and practices, and providing advice and input to the Board of Directors
in the administration of the Company's stock option plans. The Compensation
Committee presently consists of Messrs. Good and Luskin. There was one meeting
of the Compensation Committee during the fiscal year ended June 30, 2000. See
Report of Compensation Committee on Executive Compensation.
Director Compensation
Each non-employee Director receives a fee of $7,500 per year, $1,500 for
each Board or Committee meeting attended, and options to purchase 5,000 shares
of Common Stock at an exercise price equal to 110% of fair market value as of
the date of grant. The Directors also are reimbursed for expenses incurred in
connection with the performance of their services as Directors.
4
<PAGE>
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 2000, Steven C. Good and Meyer Luskin
served on the Compensation Committee.
The Company currently intends that any future transactions, if any, with
affiliates of the Company will be on terms at least as favorable to the Company
as those that can be obtained from nonaffiliated third parties.
Executive Compensation and Other Information
The following table sets forth the compensation for the Chief Executive
Officer and each of the four most highly compensated executive officers whose
individual remuneration exceeded $100,000 for the fiscal year ended June 30,
2000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- ----------------------------------------
Awards Payouts
--------------------------- -----------
All Other Securities
Annual Restricted Underlying
Name and Principal Compen- Stock Options/ SARS LTIP All Other Compen-
Position Year Salary ($) Bonus ($) sation ($) Awards (#) (#) Payouts ($) sation ($)
------------------------------ ---- ---------- --------- ---------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Deepak Chopra (1) 2000 536,539 22,500 -- -- 50,000 (3) -- --
Chief Executive Officer 1999 483,723 200,000 -- -- 5,200 -- --
1998 450,000 158,600 -- -- -- -- 222,750 (2)
Ajay Mehra 2000 250,251 17,500 -- -- 25,000 (3) -- --
Chief Financial Officer 1999 221,137 55,000 -- -- 12,400 -- --
1998 200,000 65,300 -- -- -- -- 178,200 (2)
Andreas F. Kotowski 2000 178,904 -- -- -- 8,500 -- --
President of U.S. Operations, 1999 159,594 30,000 -- -- 1,700 -- --
Rapiscan U.S.A. 1998 140,000 -- -- 5,000 -- --
Thomas K. Hickman 2000 185,275 -- -- -- 15,000 -- --
Managing Director, 1999 134,732 50,000 -- -- 650 -- --
OSI Malaysia and 1998 124,936 50,000 -- -- 2,500 -- --
OSI Singapore
</TABLE>
________________________
(1) The Company paid aggregate insurance premiums of approximately $38,000 for
three universal life insurance policies of Mr. Chopra in each of 2000,
1999, and 1998. Mr. Chopra or his estate is obligated to repay to the
Company all amounts paid by it on behalf of Mr. Chopra upon the death or
termination of employment of Mr. Chopra. The value of such benefit is not
susceptible to precise determination.
(2) Consists of gain on exercise of non-qualified stock options.
(3) This table does not include options granted by OSI Medical, Inc., of which
the Company is a majority stockholder. As compensation for services as a
director of that company, on February 1, 1999, OSI Medical, Inc. granted to
this person 7,500 10-year options to purchase common stock of OSI Medical,
Inc. at a price of $1.35 per share, and on January 28, 2000, granted an
additional 7,500 options at an exercise price of $1.50 per share. These
options vest in five equal installments on the first through the fifth
anniversaries of the grant date, conditioned upon continued service to the
company. In the event of termination of such service, the options expire 90
days thereafter. 1,500 options vested on February 1, 2000. There presently
exists no public market for the stock of OSI Medical, Inc.
The Company has entered into an employment agreement with Deepak Chopra,
with a term of five years commencing on April 1, 1997, pursuant to which he
serves as Chairman of the Board, Chief Executive Officer and President of the
Company. The employment agreement provides for an initial base salary of
$450,000 per year, with annual raises to be determined by the Compensation
Committee. The Compensation Committee increased Mr.
5
<PAGE>
Chopra's annual base salary to $500,000 effective April 1, 1998 and to $600,000
effective April 15, 2000. Pursuant to the employment agreement, Mr. Chopra is
also entitled to receive at least one-third of the amount of the aggregate bonus
pool established by the Company for its officers and employees. Mr. Chopra is
eligible to participate in certain incentive compensation and other employee
benefit plans established by the Company from time to time. Mr. Chopra's
employment agreement contains confidentiality provisions and provides that he
shall assign and the Company shall be entitled to any inventions or other
proprietary rights developed by him under certain circumstances during his
employment.
The Company entered into a three-year employment agreement with Ajay Mehra,
which became effective on April 1, 1997. The employment agreement provided for a
base salary of $200,000 per year, with annual raises to be determined by
management. The Compensation Committee increased Mr. Mehra's annual base salary
to $230,000 effective April 1, 1998. Pursuant to this employment agreement, Mr.
Mehra was also eligible to receive discretionary bonus payments from the bonus
pool established by the Company for its officers and employees and to
participate in incentive compensation and other employee benefit plans
established by the Company from time to time. The employment agreement
contained confidentiality provisions and provides that the employee shall assign
and the Company shall be entitled to any inventions or other proprietary rights
developed by the employee under certain circumstances during his employment. On
September 1, 2000, the Company entered into a new three-year employment
agreement with Mr. Mehra. This agreement provides for a base salary of
$260,000, and is otherwise similar to the prior agreement.
Andreas F. Kotowski is currently employed by the Company pursuant to an
employment agreement that is terminable by either party thereto at any time for
any reason. Mr. Kotowski's annual salary initially was $140,000, which was
increased to $165,000 effective April 16, 1998 and to $175,000 on September 1,
1999. Pursuant to an incentive compensation agreement entered into in December
1996, for the 1997, 1998 and 1999 fiscal years Mr. Kotowski was entitled to
receive as additional incentive compensation amounts equal to 10% of the
consolidated pre-tax earnings of Rapiscan U.S.A. and Rapiscan U.K. in excess of
certain pre-determined amounts, up to maximum compensation of $150,000 for any
fiscal year. This agreement expired at the end of fiscal year 1999.
Thomas K. Hickman is currently employed by the Company pursuant to an
employment agreement that may be terminated by either the Company or by Mr.
Hickman upon six months prior notice. Under the employment agreement, Mr.
Hickman's initial annual salary was $125,000. Effective July 1, 1998, his salary
was increased to $137,500, and effective July 1, 2000 it was increased to
$160,000. During fiscal 1999, Mr. Hickman received a bonus payment of $50,000,
which amount was his bonus for fiscal 1998. In addition to his salary, the
Company paid certain expenses related to his service in Singapore. Mr. Hickman
has been temporarily transferred from Malaysia to the U.K. as of February 1,
2000. In connection with such transfer, he was allowed a relocation allowance of
up to approximately $13,000. During his posting in the U.K., the Company is also
paying him a cost-of-living allowance of approximately $45,000 per year and
providing him with a leased automobile at a cost of approximately $9,200 per
year. Mr. Hickman's employment agreement contains confidentiality provisions and
provides that he shall assign and the Company shall be entitled to any
inventions or other proprietary rights developed by him under certain
circumstances during his employment.
As part of a cost savings program, Messrs. Chopra, Mehra and Kotowski took
a voluntary 10% pay cut for the fourth quarter of fiscal 1999. Additionally,
during fiscal 1999, Messrs. Chopra, Mehra, Kotowski and Hickman took voluntary
pay cuts for which the Company granted to them options to purchase 5,200, 2,400,
1,700 and 650 shares, respectively, of the Company's Common Stock, at an
exercise price of $7.00 per share.
Management of the Company allocates bonuses to officers and employees of
the Company under a bonus plan that has been in effect since the Company's
inception. The amount of bonus for each officer or employee is determined by
comparing the profits of the subsidiary or division in which such person
performed services against the budget profit goals for such subsidiary or
division as determined before the start of the fiscal year.
6
<PAGE>
Certain Relationships and Related Transactions
On December 23, 1997, the Board of Directors authorized the Company to loan
to Deepak Chopra and Ajay Mehra the sum of $90,000 and $70,000 respectively, at
an interest rate of six percent per annum, to be repaid within 48 months of such
date. Of these amounts, Mr. Chopra has repaid $22,500 and Mr. Mehra has repaid
$35,000.
The Company, Mr. Chopra and Mr. Mehra, each currently owns a 36.0%, 10.5%
and 4.5% interest, respectively, in ECIL-Rapiscan Security Products Limited
("ECIL Rapiscan"). The remaining 49.0% interest in ECIL Rapiscan is owned by
Electronics Corporation of India Limited ("ECIL"), an unaffiliated Indian
company. The Company sells security and inspection kits to ECIL at a price no
less favorable to the Company than the price the Company charges unaffiliated
third parties for such products. To date, the Company's portion of the earnings
of ECIL Rapiscan have been insignificant.
The Company contracts for a portion of its automobile rental and daily
messenger services from a business that is owned by Deepak Chopra and his wife.
The Company paid the business approximately $90,000 for such services during
fiscal 2000. The Company contracts for printing services from a business owned
by Madan G. Syal, a Director of the Company. The Company paid the business
approximately $46,000 for such services during fiscal 2000. The Company
contracts for professional services from a firm of which Steven C. Good, a
Director of the Company, is a part owner. The Company paid the firm
approximately $9,000 for such services during fiscal 2000.
The Company believes that each of the foregoing transactions was on terms
at least as favorable to the Company as those that could have been obtained from
nonaffiliated third parties. The Company currently intends that any future
transactions with affiliates of the Company will be on terms at least as
favorable to the Company as those that can be obtained from nonaffiliated third
parties.
Option Grants
The following table sets forth certain information concerning grants of
options to the Named Executive Officers during the year ended June 30, 2000:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
% of Total Value of Assumed
Number of Options Annual Rates of
Securities Granted to Stock Price
Underlying Employees Exercise Appreciation for
Options in Fiscal Price Expiration Option Term (1)
------------------
Name Granted(#) Year (%) ($/Share) Date 5%($) 10%($)
---- --------- ------ -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Deepak Chopra 50,000 (2) 13.7 7.70 4/23/05 106,368 235,046
Ajay Mehra 5,000 (2) 1.4 7.00 8/2/04 9,670 21,368
20,000 5.5 8.62 2/6/05 47,630 105,252
Andreas F. Kotowski 5,000 1.4 7.00 8/2/04 9,670 21,368
3,500 1.0 8.62 2/6/05 8,335 18,419
Thomas K. Hickman 5,000 1.4 7.00 8/2/04 9,670 21,368
10,000 2.7 8.62 2/6/05 23,815 52,626
</TABLE>
____________
(1) Sets forth potential option gains based on assumed annualized rates of stock
price appreciation from the exercise price at the date of grant of 5% and
7
<PAGE>
10% (compounded annually) over the full term of the grant with appreciation
determined as of the expiration date. The 5% and 10% assumed rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future Common Stock prices.
(2) This table does not include options granted by OSI Medical, Inc., of which
the Company is a majority stockholder. As compensation for services as a
director of that company, on February 1, 1999, OSI Medical, Inc. granted to
this person 7,500 10-year options to purchase common stock of OSI Medical,
Inc. at a price of $1.35 per share, and on January 28, 2000, granted an
additional 7,500 options at an exercise price of $1.50 per share. These
options vest in five equal installments on the first through the fifth
anniversaries of the grant date, conditioned upon continued service to the
company. In the event of termination of such service, the options expire 90
days thereafter. 1,500 options vested on February 1, 2000. There presently
exists no public market for the stock of OSI Medical, Inc.
All of these options vest in three annual installments, beginning on the
first anniversary of the date of grant, 25% each at the end of the first and
second years , 25% at the end of the second year, and 50% at the end of the
third year.
Option Exercises and Fiscal Year-End Values
The following table sets forth certain information regarding option
exercises by the Named Executive Officers during the fiscal year 2000 and held
by them on June 30, 2000:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Shares Underlying Unexercised the-Money Options at
Name Acquired On Value Options at Fiscal Year-End (#) Fiscal Year End ($) (1)
---- ------------------------------
Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Deepak Chopra (2) 0 -- 53,800 71,400 1,261 3,782
Ajay Mehra (2) 0 -- 35,913 45,237 3,007 9,021
Andreas F. Kotowski 0 -- 47,572 24,657 38,937 1,231
Thomas K. Hickman 5,250 31,343 24,944 18,331 135,221 472
</TABLE>
______________
(1) Amounts are shown as the positive spread between the exercise price and fair
market value (based on the fair market price at fiscal year end of $7.97 per
share).
(2) This table does not include options granted by OSI Medical, Inc., of which
the Company is a majority stockholder. As compensation for services as a
director of that company, on February 1, 1999, OSI Medical, Inc. granted to
this person 7,500 10-year options to purchase common stock of OSI Medical,
Inc. at a price of $1.35 per share, and on January 28, 2000, granted an
additional 7,500 options at an exercise price of $1.50 per share. These
options vest in five equal installments on the first through the fifth
anniversaries of the grant date, conditioned upon continued service to the
company. In the event of termination of such service, the options expire 90
days thereafter. 1,500 options vested on February 1, 2000. There presently
exists no public market for the stock of OSI Medical, Inc.
Stock Option Plans
1987 Incentive Stock Option Plan. In May 1987, the Board of Directors
adopted the Incentive Stock Option Plan (the "1987 Plan"). The 1987 Plan
provides for the grant of options to directors, officers and other key employees
of the Company to purchase up to an aggregate of 1,050,000 shares of Common
Stock. The purpose of the 1987 Plan is to provide participants with incentives
which will encourage them to acquire a proprietary interest in, and continue to
provide services to, the Company. The 1987 Plan is administered by the Board of
Directors, which has discretion to select optionees and to establish the terms
and conditions of each option, subject to the provisions of the 1987 Plan.
Pursuant to the 1987 Plan, the Company has from time to time granted its
directors, officers and employees options to purchase shares of the Company's
Common Stock at exercise prices determined by the Board of Directors. The stock
options generally expire either on the fifth or tenth anniversary of the date of
grant of the option. All stock options are nontransferable by the grantee and
may be exercised only by the optionee during his service to the Company as a
director, officer or employee. The aggregate number of options issuable under
the 1987 Plan, number of options outstanding and the exercise price thereof are
subject to adjustment in the case of certain transactions such as mergers,
recapitalizations, stock splits or stock dividends. As of June 30, 2000,
8
<PAGE>
726,735 shares had been issued upon the exercise of stock options under the 1987
Plan, stock options to purchase an aggregate of 291,451 shares were outstanding
under the 1987 Plan at exercise prices ranging from $2.00 to $11.10 per share,
and no shares remained available for grant, since the 1987 Plan expired on
December 31, 1998. As of such date, stock options to purchase 172,613 shares of
Common Stock were exercisable.
1997 Stock Option Plan. In May 1997, the Board of Directors adopted the
Company's 1997 Stock Option Plan (the "1997 Plan"). The 1997 Plan, which was
approved by the Company's stockholders in June 1997, provides for the grant of
options to directors, officers, other employees and consultants of the Company
to purchase up to an aggregate of 850,000 shares of Common Stock. Proposal # 2
described in this Proxy Statement provides for an increase of the number of
shares of Common Stock for which options may be granted to 1,850,000. No
eligible person may be granted options during any 12-month period covering more
than 425,000 shares of Common Stock. The purpose of the 1997 Plan is to provide
participants with incentives which will encourage them to acquire a proprietary
interest in, and continue to provide services to, the Company. The 1997 Plan is
administered by the Board of Directors, or a committee of the Board, which has
discretion to select optionees and to establish the terms and conditions of each
option, subject to the provisions of the 1997 Plan. Options granted under the
1997 Plan may be "incentive stock options" as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or nonqualified options.
The exercise price of incentive stock options may not be less than 100% of
the fair market value of Common Stock as of the date of grant (110% of the fair
market value if the grant is to an employee who owns more than 10% of the total
combined voting power of all classes of capital stock of the Company). The Code
currently limits to $100,000 the aggregate value of Common Stock that may be
acquired in any one year pursuant to incentive stock options under the 1997 Plan
or any other option plan adopted by the Company. Nonqualified options may be
granted under the 1997 Plan at an exercise price of not less than 85% of the
fair market value of the Common Stock on the date of grant. Nonqualified options
may be granted without regard to any restriction on the amount of Common Stock
that may be acquired pursuant to such options in any one year. Options may not
be exercised more than ten years after the date of grant (five years after the
date of grant if the grant is an incentive stock option to an employee who owns
more than 10% of the total combined voting power of all classes of capital stock
of the Company). Options granted under the 1997 Plan generally are
nontransferable, but transfers may be permitted under certain circumstances in
the discretion of the administrator. Shares subject to options that expire
unexercised under the 1997 Plan will once again become available for future
grant under the 1997 Plan. The number of options outstanding and the exercise
price thereof are subject to adjustment in the case of certain transactions such
as mergers, recapitalizations, stock splits or stock dividends. As of June 30,
2000, stock options to purchase 8,000 shares were exercised under the 1997 Plan,
stock options to purchase an aggregate of 761,311 shares were outstanding under
the 1997 Plan at exercise prices ranging from $6.56 to $13.50 per share, and
stock options to purchase 80,689 shares remained available for grant. As of such
date, stock options to purchase 272,827 shares were exercisable. The 1997 Plan
is effective for ten years, unless sooner terminated or suspended.
During fiscal 2000, the Board of Directors of the Company granted options
to purchase an aggregate of 365,750 shares of Common Stock available for
issuance under the 1997 Plan to certain officers and employees of the Company.
These options are exercisable at a price equal to the fair market value of the
Common Stock on the date of grant. The options generally will be subject to
vesting and will become exercisable in equal installments over a period of four
years from the first anniversary of the date of grant, subject to the optionee's
continuing employment with the Company.
In general, upon termination of employment of an optionee, all options
granted to such person which were not exercisable on the date of such
termination will immediately terminate, and any options that are exercisable
will terminate not more than three months (six months in the case of termination
by reason of death or disability) following termination of employment.
To the extent nonqualified options are granted under the 1987 Plan and the
1997 Plan, the Company intends to issue such options with an exercise price of
not less than the market price of the Common Stock on the date of grant.
9
<PAGE>
Employee Stock Purchase Plan
In August 1998, the Board of Directors adopted the Company's Employee Stock
Purchase Plan (the "1998 Plan"). The 1998 Plan, which was approved by the
Company's stockholders in November 1998, provides persons who have been regular
employees of the Company or its U.S. subsidiaries for at least six months, and
who meet certain other criteria, the opportunity to purchase through regular
payroll deductions up to an aggregate of 200,000 shares of Common Stock. The
1998 Plan is administered by the Board of Directors, or a committee of the
Board. The 1998 Plan qualifies as an "employee stock purchase plan" as defined
in Section 423 of the Code.
To participate in the 1998 Plan, eligible employees submit a form to the
Company's payroll office authorizing payroll deductions in an amount between 1%
and 10% of the employee's regular annual pay. At the end of each offering
period, initially set at six months duration, the aggregate amount deducted from
each participating employee's paycheck is applied to the purchase of a whole
number of shares of Common Stock, with any sums remaining being returned to the
employee. No interest accrues on payroll deductions. The purchase price of the
Common Stock is 85% of the lesser of the fair market value of the Common Stock
(as determined by the Board of Directors) on the first day or the last day of
the offering period. If the aggregate number of shares of Common Stock which
all participants elect to purchase during any offering period is greater than
the number of shares remaining available for issuance under the 1998 Plan, the
remaining shares will be allocated pro-rata among participants. Notwithstanding
any of the foregoing, no employee may purchase Common Stock under the 1998 Plan
if (i) after any such purchase, the employee would own 5% or more of the total
combined voting power or value of all classes of the Company's stock on a
consolidated basis, or (ii) the rights to purchase Common Stock under the 1998
Plan and all other qualified employee stock purchase plans of the Company or any
of its subsidiaries granted to that employee would exceed $25,000 per calendar
year.
A participant may elect to withdraw from the 1998 Plan at any time up to
the last day of an offering period by filing a form to such effect. Upon
withdrawal, the amount contributed to the employee will be refunded in cash,
without interest. Any person withdrawing may not participate again in the 1998
Plan until the end of one complete offering period. Termination of a
participant's employment for any reason shall be treated as a withdrawal.
Employee Benefit Plan, Pension Plans
In 1991, the Company established a tax-qualified employee savings and
retirement plan (the "401(k) Plan") covering all of its employees. Pursuant to
the 401(k) Plan, employees may elect to reduce their current compensation by up
to the annual limit prescribed by statute ($10,500 in calendar 1999) and
contribute the amount of such reduction to the 401(k) Plan. The 401(k) Plan
allows for matching contributions to the 401(k) Plan by the Company, such
matching and the amount of such matching to be determined at the sole discretion
of the Board of Directors. As of June 30, 2000, no matching contributions had
been made, but subsequent to that date the Company is providing discretionary
matching contributions with respect to the 401(k) Plan. The trustee under the
401(k) Plan, at the direction of each participant, invests the assets of the
401(k) Plan in numerous investment options. The 401(k) Plan is intended to
qualify under Section 401 of the Code so that contributions by employees to the
401(k) Plan, and income earned on plan contributions, are not taxable until
withdrawn, and so that the contributions by employees will be deductible by the
Company when made.
Rapiscan U.K. and Advanced Micro Electronics AS, subsidiaries of the
Company, each has a pension plan in effect for certain of their employees. As of
the date hereof, approximately 50 employees are covered by these plans.
Report of Compensation Committee on Executive Compensation
This Compensation Committee Report discusses the components of the
Company's executive officer compensation policies and programs and describes the
bases upon which compensation is determined by the Compensation Committee with
respect to the executive officers of the Company, including the Named Executive
Officers.
10
<PAGE>
The Compensation Committee reviews and approves salaries, benefits and
other compensation for executive officers and reviews bonus pool allocations for
key employees of the Company. The Compensation Committee is composed of two non-
employee directors.
Compensation Philosophy. The Compensation Committee endeavors to ensure
that the compensation programs for the executive officers of the Company and its
subsidiaries are effective in attracting and retaining key executives
responsible for the success of the Company and are administered with the long-
term interests of the Company and its stockholders in mind. The Compensation
Committee seeks to align total compensation for senior management with corporate
performance by linking directly executive compensation to individual and team
contributions, continuous improvements in corporate performance and stockholder
value .
The Compensation Committee takes into account various qualitative and
quantitative indicators of corporate and individual performance in determining
the level and composition of compensation for the executive officers. The
primary quantitative factors reviewed by the Compensation Committee include such
financial measures as net income, cash flow and earnings-per-share, and market
capitalization of the Company and may vary its quantitative measurements from
employee to employee and from year to year. The Compensation Committee also
appreciates the importance of achievements that may be difficult to quantify,
and accordingly recognizes qualitative factors, such as superior individual
performance, new responsibilities or positions within the Company, leadership
ability, overall contributions to the Company and the national and global
business and economic environment.
In order to attract and retain highly qualified executives in the areas in
which the Company does business and in recognition of the overall
competitiveness of the market for highly qualified executive talent, the
Compensation Committee also evaluates the total compensation of the executive
officers in light of information regarding the compensation practices and
corporate financial performance of other companies in its industry.
In implementing its compensation program for executive officers, the
Compensation Committee seeks to achieve a balance between compensation and the
Company's annual and long-term budgets and business objectives, encourage
executive performance in furtherance of stated Company goals, provide variable
compensation based on the performance of the Company, create a stake in the
executive officer's efforts by encouraging stock ownership in the Company, and
align executive remuneration with the interests of the Company's stockholders.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 paid for any
fiscal year to the corporation's chief executive officer and certain other of
the most highly compensated executive officers as of the end of any fiscal year.
However, the statute exempts qualifying performance-based compensation from the
deduction limit if certain requirements are met. Although, at the present time,
the Company is not paying any compensation to any of its executive officers or
any other employee that would be disallowed by Section 162(m), the Compensation
Committee currently intends to structure performance-based compensation,
including stock option grants and annual bonuses, to executive officers who may
be subject to Section 162(m) in a manner that satisfies those requirements if,
in the future, the need arises. The Board of Directors and the Compensation
Committee, however, reserve the authority to award non-deductible compensation
in other circumstances as they deem appropriate.
Compensation Program Components. The Compensation Committee regularly
reviews the Company's compensation program to ensure that pay levels and
incentive opportunities are competitive with the market and reflect the
performance of the Company. The particular elements of the compensation program
for executive officers consist of the following:
Base Salary. Base salaries for executive officers are established at levels
considered appropriate in light of the duties and scope of responsibilities of
each executive officer's position, and the experience the individual brings to
the position. Salaries are reviewed periodically and adjusted as warranted to
reflect sustained individual performance. Base salaries are kept within a
competitive range for each position, reflecting both job performance and market
forces.
11
<PAGE>
Annual Bonus. Management of the Company allocates bonuses to officers and
key employees of the Company under a bonus plan that has been in effect since
the Company's inception. The amount of bonus for each officer is determined by
comparing the profits of the subsidiary or division in which such person
performed services against the budget profit goals for such subsidiary or
division as determined before the start of the fiscal year.
Long-Term Incentive Compensation. The Company's long-term incentive program
consists of periodic grants of stock options, which are made at the discretion
of the Board of Directors with the advice and input of the Compensation
Committee. Decisions made regarding the amount of the grant and other
discretionary aspects of the grant take into consideration Company performance,
individual performance and experience, competitive forces to attract and retain
senior management, and the nature and terms of grants made in prior years.
Chief Executive Officer's Compensation. The Company has entered into an
employment agreement with Deepak Chopra, with a term of five years commencing on
April 1, 1997, pursuant to which he serves as Chairman of the Board, Chief
Executive Officer and President of the Company. The employment agreement
provides for an initial base salary of $450,000 per year, with annual raises to
be determined by the Compensation Committee. The Compensation Committee
increased Mr. Chopra's annual base salary to $500,000 effective April 1, 1998
and to $600,000 effective April 15, 2000. Pursuant to the employment agreement,
Mr. Chopra is also entitled to receive at least one-third of the amount of the
aggregate bonus pool established by the Company for its officers and employees.
Mr. Chopra is eligible to participate in certain incentive compensation and
other employee benefit plans established by the Company from time to time.
Summary. The Compensation Committee believes that the total compensation
program for executive officers of the Company is focused on increasing value for
the Company's stockholders, by attracting and retaining the best qualified
people as senior management and enhancing corporate performance. Furthermore,
the Compensation Committee believes that executive compensation levels of the
Company are competitive with the compensation programs provided by other
corporations with which the Company is competitive. The foregoing report has
been approved by all the members of the Compensation Committee.
COMPENSATION COMMITTEE
Steven C. Good
Meyer Luskin
Performance Graph
The graph below compares the Company's cumulative total stockholder return
since the Company's Common Stock became publicly traded on October 2, 1997, with
the Nasdaq Market Index and with a peer group comprised of companies with which
the Company generally competes.
The peer group is comprised of the following companies: Barringer
Technologies, Inc. (Nasdaq Symbol: BARR); PerkinElmer, Inc. (NYSE Symbol: PKI),
which was previously known as "EG&G"; and InVision Technologies, Inc. (Nasdaq
Symbol: INVN). The Company previously included Optek Technology, Inc. (Nasdaq
Symbol: OPTT) and Vivid Technologies, Inc. (Nasdaq Symbol: VVID) in its peer
group. Optek Technology, Inc. was acquired by a wholly-owned subsidiary of the
Dyson-Kissner-Moran Corporation in June 1999, and Vivid Technologies, Inc. was
acquired by PerkinElmer, Inc. in January 2000; accordingly, Optek Technology,
Inc. and Vivid Technologies, Inc. are not included in the peer group.
The graph assumes that $100.00 was invested on October 2, 1997 in the
Company's Common Stock, at the closing price of $15.13 per share (on which date
the initial public offering price was $13.50 per share), and in each of the
indexes mentioned above, and that all dividends were reinvested.
12
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG OSI SYSTEMS, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPH APPEARS HERE]
ASSUMES $100 INVESTED ON OCT. 2, 1997
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JUNE 30, 2000
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
OSI SYSTEMS, INC., NASDAQ MARKET INDEX AND PEER GROUP INDEX
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/02/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99
-------- -------- ------- ------- ------- -------- ------- -------
OSI Systems, Inc.............. 100.00 80.99 76.86 66.12 50.41 57.02 34.30 33.06
Nasdaq Market Index........... 100.00 93.70 109.81 112.65 101.53 131.98 147.45 160.45
Peer Group.................... 100.00 95.86 129.60 130.89 99.40 121.51 114.39 152.05
9/30/99 12/31/99 3/31/00 6/30/00
------- -------- ------- -------
OSI Systems, Inc.............. 24.79 36.36 97.52 52.69
Nasdaq Market Index........... 163.06 240.83 274.02 235.68
Peer Group.................... 167.09 176.63 280.16 277.31
</TABLE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the amount of shares of the Company
beneficially owned as of June 30, 2000 by each person known by the Company to
own beneficially more than 5% of the outstanding shares of the Company's
outstanding Common Stock:
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner (1) Beneficial Ownership of Percent of Class
---------------------------- Common Stock (2) of Common Stock
----------------- ---------------
<S> <C> <C>
Deepak Chopra (3)........................................................... 1,367,761 14.6%
Scope Industries (4)........................................................ 1,029,680 11.0%
Sally F. Chamberlain (5).................................................... 965,853 10.3%
Brinson Partners, Inc. (6).................................................. 877,400 9.4%
Wellington Management Company, LLP (7)...................................... 633,000 6.8%
</TABLE>
_______________
13
<PAGE>
(1) Except as noted otherwise, the address of each stockholder is c/o OSI
Systems, Inc., 12525 Chadron Avenue, Hawthorne, California 90250.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock which
are purchasable under options which are currently exercisable, or which
will become exercisable no later than 60 days after June 30, 2000, are
deemed outstanding for computing the percentage of the person holding such
options but are not deemed outstanding for computing the percentage of any
other person. Except as indicated by footnote and subject to community
property laws where applicable, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(3) Includes 254,951 shares and 254,951 shares owned by The Deepika Chopra
Trust UDT dated July 17, 1987 and The Chandini Chopra Trust UDT dated July
17, 1987, respectively. Deepak Chopra is the co-trustee of both
irrevocable trusts. Of the balance of such shares, 792,434 shares are held
jointly by Mr. Chopra and his wife, Nandini Chopra, and 11,625 shares are
held individually by Mr. Chopra. Includes 53,800 shares issuable pursuant
to options which become exercisable no later than 60 days after June 30,
2000. Mr. Chopra is the Chairman of the Board, Chief Executive Officer and
President of the Company.
(4) The address of Scope Industries, Inc. is 233 Wilshire Boulevard, Suite
310, Santa Monica, California 90401.Does not include shares beneficially
owned by Meyer Luskin. Mr. Luskin is the President, Chief Executive
Officer, Chairman of the Board and a principal stockholder of Scope
Industries.
(5) Based solely upon a review of filings made by such stockholder pursuant to
Section 16(a) of the Exchange Act. Such shares are held by Sally F.
Chamberlain as Trustee of the Edward P. Fleischer and Sally F. Fleischer
Family Trust dated June 3, 1991. The address of Mrs. Chamberlain is c/o
Hecht, Solberg, Robinson & Goldberg, LLP, 600 West Broadway, 8th Floor,
San Diego, California 92101.
(6) As reported in a Schedule 13G filed with the Securities and Exchange
Commission by Brinson Partners, Inc., whose address was reported as 209
LaSalle, Chicago, Illinois 60604.
(7) As reported in a Schedule 13G filed with the Securities and Exchange
Commission by Wellington Management Company, LLP, whose address was
reported as 75 State Street, Boston, MA 02109.
The following table sets forth the amount of shares of the Company
beneficially owned as of June 30, 2000 by each director of the Company, each
Named Executive Officer, and all directors and executive officers as a group:
<TABLE>
<CAPTION>
Name of Beneficial Owner (1) Amount and Nature of
---------------------------- Beneficial Ownership of Percent of Class
Common Stock (2) of Common Stock
----------------- ---------------
<S> <C> <C>
Deepak Chopra (3).................................................................... 1,367,761 14.6%
Ajay Mehra (4)....................................................................... 173,127 1.8%
Andreas F. Kotowski (5).............................................................. 138,611 1.5%
Thomas K. Hickman (6)................................................................ 40,181 *
Steven C. Good (7)................................................................... 11,875 *
Meyer Luskin (8)..................................................................... 68,072 *
Madan G. Syal (9).................................................................... 91,929 1.0%
All directors and executive officers as a group (7 persons) (3)(4)(5)(6)(7)(8)(9).... 1,891,556 19.8%
</TABLE>
_____________
* Less than 1.0%.
(1) Except as noted otherwise, the address of each stockholder is c/o OSI
Systems, Inc., 12525 Chadron Avenue, Hawthorne, California 90250.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock which
are purchasable under options which are currently exercisable, or which will
become exercisable no later than 60 days after June 30, 2000, are deemed
outstanding for computing the percentage of the person holding such options
but are not deemed outstanding for computing the percentage of any other
person. Except as indicated by footnote and subject to community property
laws where applicable, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(3) Includes 254,951 shares and 254,951 shares owned by The Deepika Chopra Trust
UDT dated July 17, 1987 and The Chandini Chopra Trust UDT dated July 17,
1987, respectively. Deepak Chopra is the co-trustee of both irrevocable
trusts. Of the balance of such shares, 792,434 shares are held jointly by
Mr. Chopra and his wife, Nandini Chopra, and 11,625 shares are held
individually by Mr. Chopra. Includes 53,800 shares issuable pursuant to
options which become exercisable no later than 60 days after June 30, 2000.
Mr. Chopra is the Chairman of the Board, Chief Executive Officer and
President of the Company.
14
<PAGE>
(4) Includes 37,163 shares issuable pursuant to options which become exercisable
no later than 60 days after June 30, 2000. Mr. Mehra is the Vice President,
Chief Financial Officer, Secretary and a Director of the Company.
(5) Includes 48,822 shares issuable pursuant to options which become exercisable
no later than 60 days after June 30, 2000. Mr. Kotowski is the President of
U.S. Operations of Rapiscan U.S.A.
(6) Includes 26,194 shares issuable pursuant to options which become exercisable
no later than 60 days after June 30, 2000. Mr. Hickman is the Managing
Director of OSI Singapore and OSI Malaysia.
(7) Includes 6,250 shares issuable pursuant to options which become exercisable
no later than 60 days after June 30, 2000. Does not include 25,000 shares
owned for Mr. Good's benefit by the Good Swartz & Berns Pension & Profit
Sharing Plan, of which Mr. Good is a co-trustee and in which he
participates. Mr. Good is a Director of the Company. The address of Mr. Good
is 11755 Wilshire Boulevard, 17th Floor, Los Angeles, California 90025.
(8) Includes 6,742 shares held by the Meyer and Doreen Luskin Family Trust.
Includes 17,500 shares issuable pursuant to options which become exercisable
no later than 60 days after June 30, 2000. Does not include 1,029,680 shares
beneficially owned by Scope Industries, Inc. Mr. Luskin is the President,
Chief Executive Officer, Chairman of the Board and a principal stockholder
of Scope Industries, Inc. The address of Mr. Luskin is c/o Scope Industries,
233 Wilshire Boulevard, Suite 310, Santa Monica, California 90401.
(9) Includes 85,679 shares held by Mr. Syal and his wife, Mohini Syal as
trustees for the Syal Trust. Includes 6,250 shares issuable pursuant to
options which become exercisable no later than 60 days after June 30, 2000.
Mr. Syal is a Director of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who beneficially own more than 10% of a registered
class of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission.
Such officers, directors and stockholders are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all such
reports that they file. Based solely upon the Company's review of such forms
furnished to the Company during the fiscal year ended June 30, 2000, and written
representations from certain reporting persons, the Company believes that all
filing requirements applicable to the Company's executive officers, directors
and more than 10% stockholders have been complied with, except that Mr. Good
made one late filing with respect to two transactions.
RATIFICATION OF AMENDMENT OF 1997 STOCK OPTION PLAN
(Item 2 of the Proxy Card)
The Company's 1997 Stock Option Plan (the "1997 Plan") is described above in
Stock Option Plans. The Board of Directors has voted to amend the 1997 Plan to
increase the number of shares of Common Stock for which options may be issued
under the plan from 850,000 to 1,850,000. No other change in the plan is
presently proposed. As of September 30, 2000, options to purchase 8,000 shares
were exercised under the 1997 Plan and options to purchase 811,311 shares were
outstanding under the 1997 Plan, leaving options to purchase only 30,689 shares
of Common Stock authorized for issuance under the 1997 Plan. The Board of
Directors believes that the proposed increase in the number of shares of Common
Stock available for issuance as provided in the 1997 Plan will provide the
Compensation Committee with greater flexibility in the administration of the
Incentive Plan and is appropriate in light of the growth of the Company and the
addition of new employees who will be subject to the Incentive Plan. The
increase in the number of shares for which options may be issued under the 1997
Plan would represent approximately 10.7% of the issued and outstanding shares of
Common Stock of the Company as of September 30, 2000.
The Board of Directors unanimously recommends that you vote FOR this
proposal (Proposal 2 on the Proxy) to ratify the amendment of the Company's 1997
Stock Option Plan to increase the number of shares of Common Stock for which
options may be issued under the plan from 850,000 to 1,850,000. Holders of
proxies solicited by this Proxy Statement will vote the proxies received by them
as directed on the Proxy or, if no direction is made, in favor of this proposal.
In order to be adopted, this proposal must be approved by the affirmative vote
of the holders of a majority of the shares of Common Stock present and voting at
the Meeting.
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RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(Item 3 of the Proxy Card)
The Board of Directors has selected Deloitte & Touche L.L.P. ("Deloitte &
Touche") as the Company's independent accountants for the fiscal year ending
June 30, 2000, and has further directed that management submit the selection of
independent accountants for ratification by the stockholders at the Annual
Meeting. Deloitte & Touche has no financial interest in the Company and neither
it nor any member or employee of the firm has had any connection with the
Company in the capacity of promoter, underwriter, voting trustee, director,
officer or employee. A representative of Deloitte & Touche is not expected to be
present at the Annual Meeting.
In the event the stockholders fail to ratify the selection of Deloitte &
Touche, the Audit Committee will reconsider whether or not to retain the firm.
Even if the selection is ratified, the Audit Committee and the Board of
Directors in their discretion may direct the appointment of a different
independent accounting firm at any time during the year if they determine that
such a change would be in the best interests of the Company and its
stockholders.
The Board of Directors unanimously recommends that you vote FOR this
proposal (Proposal 3 on the Proxy) to ratify the selection of the independent
accountants. Holders of proxies solicited by this Proxy Statement will vote the
proxies received by them as directed on the Proxy or, if no direction is made,
in favor of this proposal. In order to be adopted, this proposal must be
approved by the affirmative vote of the holders of a majority of the shares of
Common Stock present and voting at the Meeting.
OTHER BUSINESS
The Company does not know of any other business to be presented to the
Annual Meeting and does not intend to bring any other matters before such
meeting. If any other matters properly do come before the Annual Meeting,
however, the persons named in the accompanying Proxy are empowered, in the
absence of contrary instructions, to vote according to their best judgment.
STOCKHOLDER PROPOSALS
Any proposals of security holders which are intended to be presented at
next year's annual meeting must be received by the Company at its principal
executive offices on or before June 15, 2001, in order to be considered for
inclusion in the Company's proxy materials relating to that meeting.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission is available upon written request and without
charge to stockholders by writing to Ajay Mehra, Secretary, OSI Systems, Inc.,
12525 Chadron Avenue, Hawthorne, California 90250.
By Order of the Board of Directors
/s/ Ajay Mehra
Ajay Mehra
Secretary
Hawthorne, California
October 16, 2000
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PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED REPLY ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
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PROXY OSI SYSTEMS, INC. PROXY
12525 Chadron Avenue, Hawthorne, CA 90250
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders and the Proxy Statement and
appoints Deepak Chopra and Ajay Mehra and each of them, the Proxy of the
undersigned, with full power of substitution, to vote all shares of Common
Stock of OSI Systems, Inc. (the "Company") held of record by the undersigned as
of the close of business on October 10, 2000, either on his or her own behalf
or on behalf of any entity or entities, at the Annual Meeting of Stockholders
of the Company to be held on November 16, 2000, and at any adjournment or
postponement thereof, with the same force and effect as the undersigned might
or could do if personally present thereat. The shares represented by this Proxy
shall be voted in the manner set forth below.
1. To elect the following directors to serve until the 2001 Annual Meeting of
Stockholders or until their respective successors are elected and
qualified:
[_] FOR ALL [_] WITHHOLD AUTHORITY FOR ALL
Deepak Chopra, Ajay Mehra, Steven C. Good, Meyer Luskin, Madan G. Syal
To withhold authority to vote for any individual nominee, write the
nominee's name in the space provided below:
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2. To ratify an amendment to the OSI Systems, Inc. 1997 Stock Option Plan to
increase the number of shares of the Company's common stock for which
options may be granted under the plan from 850,000 shares to 1,850,000
shares
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the Board of Director's selection of Deloitte & Touche LLP to
serve as the Company's independent accountants for the fiscal year ending
June 30, 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
<PAGE>
This Proxy, when properly executed, will be voted in the manner directed
herein. This Proxy will be voted FOR the election of the directors listed and
FOR the other proposals if no specification is made.
Please sign exactly as your name(s) is (are) shown on the stock certificate to
which the Proxy applies. When shares are held by joint tenants, both should
sign. When signing as an attorney, executor, administrator, trustee or
guardian, please give full title, as such. If a corporation, please sign in
full corporate name by the President or other authorized officer. If a
partnership, please sign in the partnership's name by an authorized person.
Dated: _____, 2000
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Signature
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Signature if
held jointly
Please mark, sign, date
and return the proxy
card promptly using the
enclosed envelope.
