<PAGE>
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 240.14a-11(c) or 240.14a-12
CompuMed, 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 Rule 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 it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
COMPUMED, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of CompuMed, Inc., a Delaware corporation (the "Company"), will be
held at 1230 Rosecrans Avenue, Manhattan Beach, California, on Friday, May 1,
1998, at 10:00 a.m., Pacific Standard Time, for the following purposes:
1. To elect five directors to serve for the following year and until
successors have been elected and qualified.
2. To act upon a proposal to approve an amendment to the 1992 Stock Option
Plan increasing the number of shares subject to the Plan from 880,000 to
1,200,000.
3. To act upon the ratification of the appointment of Ernst & Young LLP as
the Company's independent auditors for the 1998 fiscal year.
4. To act upon such other matters as may properly come before the Meeting
or any adjournments thereof.
Only stockholders of record at the close of business on March 26, 1998 shall
be entitled to notice of and to vote at the Meeting or any adjournments
thereof. All stockholders are cordially invited to attend the Meeting in
person.
By order of the Board of Directors
Phuong Dang
Secretary
April 1, 1998
Manhattan Beach, California
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR SHARES OF
COMMON STOCK OR PREFERRED STOCK, AS THE CASE MAY BE, TO BE VOTED, YOU ARE
REQUESTED TO SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT
PURPOSE.
1
<PAGE>
COMPUMED, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 1, 1998
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors and management of CompuMed, Inc., a Delaware corporation
(the "Company"), of proxies for use at the 1998 Annual Meeting of
Stockholders of the Company (the "Meeting") to be held at the Company's
executive offices at 1230 Rosecrans Avenue, Manhattan Beach, California, on
Friday, May 1, 1998, at 10:00 a.m., Pacific Standard Time, and at any and all
adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders ("Notice of Meeting").
This Proxy Statement, Notice of Meeting and accompanying Proxy are first
being mailed to stockholders on April 1, 1998.
VOTING SECURITIES AND VOTE REQUIRED
Only stockholders of record at the close of business on March 26, 1998 are
entitled to notice of and to vote the shares of common stock, $.01 par value
("Common Stock"), Class A $3.50 Cumulative Convertible Preferred Stock, $.10
par value ("Class A Preferred Stock") and Class B $3.50 Convertible Preferred
Stock, $.10 par value ("Class B Preferred Stock" and collectively with the
Common Stock and the Class A Preferred Stock the "Voting Stock"), of the
Company held by them on such date at the Meeting or any and all adjournments
thereof. As of March 23, 1998, 10,531,836 shares of Common Stock, 8,400
shares of Class A Preferred Stock and 400 shares of Class B Preferred Stock
were outstanding. There was no other class of voting securities outstanding
at that date.
The presence, in person or by proxy, of the holders of majority of the
outstanding shares of Voting Stock is necessary to constitute a quorum at the
Meeting. Assuming that a quorum is present, the affirmative vote of the
holders of a majority of the shares of Voting Stock voting at the Meeting
will be required to approve Proposal No. 2, regarding amending the 1992 Stock
Option Plan, and Proposal No. 3, regarding ratification of the appointment of
auditors. A plurality of votes cast will be required for the election of
directors.
Each share of Voting Stock held by a stockholder entitles such stockholder to
one vote on each matter that is voted upon at the Meeting or any adjournments
thereof.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect except that votes withheld will be counted toward
determining the presence of a quorum for the transaction of business.
2
<PAGE>
Abstentions and broker "non-votes" will be counted toward determining the
presence of a quorum for the transaction of business. Abstentions may be
specified on all proposals except the election of directors. With respect to
proposals other than the election of directors, abstentions will have the
effect of a negative vote. A broker "non-vote" will have no effect on the
outcome of any of the proposals.
If the accompanying Proxy is properly signed and returned to the Company and
not revoked, it will be voted in accordance with the instructions contained
therein. Unless contrary instructions are given, the persons designated as
proxy holders in the accompanying Proxy will vote "FOR" the Board of
Directors' slate of nominees, "FOR" amending the 1992 Stock Option Plan to
increase the number of shares subject to the Plan from 880,000 to 1,200,000,
and "FOR" ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the 1998 fiscal year, and as recommended
by the Board of Directors with regard to any other matters or if no such
recommendation is given, in their own discretion. Each such proxy granted by
a stockholder may be revoked by such stockholder at any time before it is
exercised by filing with the Secretary of the Company a revoking instrument
in the form of a duly executed Proxy bearing a later date. The powers of the
Proxy holders will be suspended if the person executing the Proxy attends the
Meeting in person and so requests. Attendance at the Meeting will not, in
itself, constitute revocation of the Proxy.
The cost of soliciting these Proxies, consisting of the printing, handling,
and mailing of the Proxy and related material, and the actual expense
incurred by brokerage houses, custodians, nominees and fiduciaries in
forwarding proxy material to the beneficial owners of stock, will be paid by
the Company.
In order to assure that there is a quorum, it may be necessary for certain
officers, directors, regular employees and other representatives of the
Company to solicit Proxies by telephone or telegraph or in person. These
persons will receive no extra compensation for their services.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting five (5) directors will be elected to serve until the next
Meeting and until their successors are elected and qualified. The Board of
Directors will vote all Proxies received by them in the accompanying form for
the nominees listed below. The current size of the Board of Directors of the
Company is six (6). All of the nominees are presently serving as directors.
Rod Raynovich will cease his directorship upon the election of directors at
the meeting. Robert Goldberg is the nominee for Chairman of the Board. The
size of the Board of Directors is being reduced from six (6) to five (5)
members as of the Meeting. In the event any nominee is unable to or declines
to serve at the time of the Meeting, the proxies will be voted for an
alternative nominee who shall be designated by the present Board of Directors
to fill the vacancy. As of the date of this Proxy Statement, the Board of
Directors is not aware of any nominee who is unable or will decline to serve
as a director.
THE FOLLOWING ARE THE NOMINEES FOR ELECTION AS DIRECTORS:
<TABLE>
<CAPTION>
Name Position with Company Year Became Director Age
- ---- --------------------- -------------------- ---
<S> <C> <C> <C>
Robert Goldberg Chairman of the Board 1994 64
Herbert S. Lightstone Director 1997 64
John Minnick Director 1985 49
John Romm, M.D. Director 1997 67
Robert Stuckelman Director 1973 66
</TABLE>
The terms of the Board of Directors will expire at the next annual meeting
of stockholders. The Company's officers are elected by the Board of
Directors and hold office at the will of the Board.
3
<PAGE>
BACKGROUND EXPERIENCE OF DIRECTORS AND OFFICERS
MR. GOLDBERG is a senior partner in the firm of Francis, Goldberg & Powers, a
certified Public Accounting Firm, and has been associated with such firm
since January 1995. Prior thereto, he was a senior partner in the Los
Angeles office of Bernstein, Fox, Goldberg & Licker Certified Public
Accountants. He is certified in both California and New York and has been a
member of the New York State Bar. Mr. Goldberg attended Lehigh University,
Brooklyn Law School and New York University School of Law and has lectured
for the Practicing Law Institute and The American College of Life
Underwriters. He is a member of the Estate Planning Council, Professional
Planners Forum and various accounting societies.
MR. LINESCH joined the Company in June 1996 as Vice President and Chief
Financial Officer and became President in August 1997. From 1991 until 1996,
he served as Chief Financial Officer of Universal Self Care, Inc.
("Universal"), a durable medical equipment supplier publicly traded on the
NASDAQ Small Cap market, and is currently a director of that company. Prior
to Universal, from 1987 to 1991, he served as the Chief Financial Officer of
Science Dynamics Corp., specializing in sales, service and development of
medical billing software. He was a practicing CPA with Price Waterhouse in
California from 1981 to 1984. Mr. Linesch received his BS degree in Finance
from California State University, Northridge, and his MBA degree from the
University of Southern California.
MR. LIGHTSTONE is Vice President, Corporate Development, with ICN
Pharmaceuticals. (NYSE:ICN) where he is also responsible for ICN's global
public and investor relations activities. He rejoined ICN in 1994 and also
served with ICN from 1968 until 1981. Prior to ICN, Mr. Lightstone served as
a Director, and subsequently as Chairman & CEO of Immunetech Pharmaceuticals
from 1983 through 1986. In 1981 and 1982 he served as President of Revlon
Ophthalmic International. He has been a consultant to numerous emerging
companies.
MR. MINNICK is President of Minnick Capital Management, an investment
management firm that he founded in 1972. Mr. Minnick is a member of the
Kansas and Federal Bar and has had a long-standing relationship with the
Company in his capacity as investment counsel for a large number of investors
in franchise programs that the Company originated. He has served as a
director on other corporate and non-profit boards and is a member of the
Association for Investment Management and Research (AIMR). Mr. Minnick is a
graduate of Washburn University (BA) and the Washburn University School of
Law (JD).
MR. RAYNOVICH is currently a principal of Raygent Associates. He was
President and Chief Executive Officer of the Company from October 1994 until
August 1997. Mr. Raynovich has 25 years of experience in the medical
diagnostics and biotechnology industry. Mr. Raynovich served as President of
Raygent Associates, a healthcare consulting firm providing investment banking
and business development services from April 1993 to October 1994. Prior to
becoming president of Raygent Associates, he was President and CEO of Leeco
Diagnostics, Inc. (which merged into Endogen, Inc.) from August 1990 to April
1993. Mr. Raynovich was Vice President of Business Development of Cambridge
Bioscience Corp. He has also held management positions with Abbott
Laboratories and Johnson & Johnson. Mr. Raynovich received his M.B.A. from
Rutgers University and his B.S. from Penn State University.
DR. ROMM has practiced internal medicine and gastroenterology in private
practice since 1962. He earned his MD at Wayne State College of Medicine and
also holds a BS in biology. He is an associate professor of medicine at the
University of California, Los Angeles and is an attending physician at
Cedars-Sinai Medical Center.
MR. STUCKELMAN founded the Company in 1973 and served as its President to
1982. From 1982 through 1989, Mr. Stuckelman was a business consultant for
small and medium size companies. In 1989, he rejoined the Company as
President and Chief Executive Officer in which capacities he served until
October 1994. Mr. Stuckelman has been a director of the Company since its
incorporation. Since 1994,
4
<PAGE>
he has been President of Technical Management Consultants, which provides
business consulting services to many companies. He is also on the Board of
Directors of Medical Resources Management, Inc., a public company that rents
laser surgery equipment to doctors and hospitals. He holds an MSEE from the
University of Southern California and a BEE from Cornell University.
There is no family relationship among the directors or executive
officers of the Company.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended September 30, 1997. No director attended fewer than
75% of the aggregate of all meetings of the Board of Directors.
The Audit Committee is primarily responsible for approving the services
performed by the Company's independent auditors and reviewing reports of the
Company's internal and external auditors regarding the Company's accounting
practices and systems of internal accounting controls. This Committee
currently consists of Mr. Stuckelman and Mr. Goldberg. The Audit Committee
met two times during the fiscal year ended September 30, 1997.
The Compensation Committee reviews and approves the Company's compensation
policy and has assumed responsibility for administration of the Company's
1992 Stock Option Plan. This Committee currently consists of Mr. Minnick and
Dr. Romm. The Compensation Committee met two times during the fiscal year
ending September 30, 1997.
The Executive Committee is comprised of Mr. Goldberg, Mr. Minnick, Mr.
Lightstone and Mr. Linesch. The Executive Committee meets monthly.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of its
Common Stock, to file reports of ownership and changes of ownership with the
Securities and Exchange Commission ("SEC") and each exchange
[or market quotation system] on which the Company's securities are
registered. Officers, directors and greater than ten-percent stockholders
are required by SEC regulation to furnish the Company with copies of all
ownership forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations that no Form 5 was required, the Company believes
that, during the year ended September 30, 1997, its officers, directors, and
greater than ten-percent beneficial owners complied with all applicable
filing requirements.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation for the fiscal year
ended September 30, 1997 for the Company's chief executive officer and all
executive officers whose compensation exceeded $100,000 for such fiscal year.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name and Principal Position Fiscal Year Annual Salary Compensation Long-Term
Bonus Compensation
Stock Options
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James Linesch 1997 $98,077 $5,000 25,000
President and CEO 1996 $32,308* 0 63,750
1995 0 0 0
Rod Raynovich 1997 $111,660** 0 25,000
Former President 1996 $90,000
1995 $140,000*** $25,000 158,150
- ------------------------------------------------------------------------------------------------
</TABLE>
* Reflects actual salary from June 1996 to fiscal year end 1996
** Reflects actual salary from October 1996 to August 1997
*** Reflects actual salary from October 1994 to fiscal year end 1995.
EMPLOYMENT AGREEMENTS
Mr. Raynovich had an employment agreement with the Company through May 31,
1998 and left the Company in August 1997. Pursuant to the terms of the
Agreement, dated June 1, 1996, he received an annual salary of $120,000
(subject to annual increases based on the Consumer Price Index) and was also
entitled to receive periodic discretionary bonuses with an annual cumulative
amount not to exceed $40,000. In connection with his relocation, the Company
agreed to loan him up to $42,000, the liability of which will be forgiven
over approximately two years. The Company and Mr. Raynovich are currently in
negotiations in connection with the termination of the employment agreement.
EMPLOYEE STOCK OPTION PLANS
The Company established its 1992 Stock Option Plan (the "1992 Plan") to
enable the Company to recruit and retain selected officers and other
employees by providing equity participation in the Company to such
individuals. Under the 1992 Plan, regular salaried employees, including
directors who are full time employees, may be granted options exercisable at
not less than 100% of the fair market value of the Common Stock on the date
of grant. The exercise price of any option granted to an optionee who owns
stock possessing more than 10% of the voting power of all classes of stock of
the Company must be 110% of the fair market value of the Common Stock on the
date of grant and the duration of the options granted may not exceed five
years. Prior to the existence of any public market for the Company's shares,
the fair market value had been determined from time to time by the Board of
Directors. Options generally become exercisable at a rate of 33% of the
shares subject to an option one year after its grant. The remaining shares
generally become exercisable over an additional 24 months. The duration of
options may not exceed ten years. Options under the Plan are nonassignable,
except in the case of death and may be exercised only while the optionee is
employed by the Company, or in certain cases, within a specified period after
termination of employment (within three months) or death (within twelve
months).
6
<PAGE>
The purchase price and number of shares of Common Stock that may be purchased
upon exercise of options are subject to adjustment in certain cases,
including stock splits, recapitalizations and reorganizations.
Under The 1992 Plan, the Company may grant qualified or non-qualified options
for the purchase of up to 880,000 shares of Common Stock. At the year ended
September 30, 1997, there were 594,975 shares reserved for exercise of
options granted, of which 431,937 were exercisable subject to vesting, and
285,025 were available for grant under such Plan. Officers and members of the
Board of Directors hold an aggregate of 346,057 options under The Plan,
subject to vesting, having exercise prices ranging from $1.00 to $1.25.
Both the amount of options granted and to whom they are granted are
determined by the Board of Directors with the recommendation of the
Compensation Committee, at their discretion. There are no specific criteria,
performance formulas or measures applicable to the determination of the
amount of options to be granted and to whom such options are to be granted.
For a fuller description of the 1992 Plan, see ITEM 2, below.
The Company's 1982 Stock Option Plan (the "1982 Plan") terminated on January
29, 1992. The terms and conditions of such Plan were in all material
respects identical with the 1992 Plan. As of December 31, 1997, 9,805
options remain outstanding under the 1982 Plan expiring in 2001 at an
exercise price of $1.00, and no further options may be granted under such
Plan.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Number of Securities
(shares of Common Stock) % of Total Options Exercise
Underlying Options Granted to Employees Price Expiration
Name Granted (1) in Fiscal Year ($/share) Date
- ---- ------------------------ -------------------- --------- ----------
<S> <C> <C> <C> <C>
J. Linesch 25,000 11% $.75 2006
R. Raynovich 25,000 11% $.75 2006
</TABLE>
- -------------------
(1) Options vested over a three-year period.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information regarding the exercise of
stock options during the fiscal year ended September 30, 1997 and the fiscal
year-end value of unexercised options for the Company's named executive
officers.
<TABLE>
<CAPTION>
Number of Securities
(shares of Common Stock) Value of Unexercised
Shares Underlying Unexercised In-the-money Options at
Acquired Value Options at Fiscal Year End Fiscal Year End (1)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- -------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
J. Linesch -- -- 21,250 / 67,500 $19,975 / $75,950
R. Raynovich -- -- 158,150 / 25,000 $188,199 / $36,000
</TABLE>
(1) Based upon the closing market price of the Company's Common Stock as
reported on the Nasdaq Small Cap market on September 30, 1997 minus
the respective option exercise prices.
NON PLAN STOCK OPTIONS
Between February 1992 and March 1997, a total of 944,918 stock options were
granted to directors, officers and consultants outside either the 1982 or the
1992 Plan. The exercise prices of these non-plan stock options were between
$1.00 and $4.00 per share which were equal to the fair market value of the
Common Stock on the respective dates of grant, and they expire between 1996
and 2001. As of December 31, 1997, 166,037 of these non-qualified stock
options were exercised and 778,881 were still outstanding.
SAVINGS AND RETIREMENT PLANS
In July 1987 the Company instituted a Savings and Retirement Plan (the "S&R
Plan"). Under the S&R Plan, every full-time salaried employee who is 18
years of age or older may contribute up to 15% of his or her annual salary to
the S&R Plan. The Company will make a matching contribution of $.25 for
every $1.00 of the employee's contribution for an employee contribution of up
to but not exceeding 6 percent of the employee's annual salary. Company
contributions are 100% vested after 60 months of contributions to the S&R
Plan. Benefits are payable under the S&R Plan upon termination of a
participant's employment with the Company or at retirement. The S&R Plan
meets the requirements of Section 401(k) of the Internal Revenue Code.
Internal Revenue Service regulations limit the percentage of tax-deferred
contributions that can be made by higher-compensated participants. There are
restrictions upon withdrawal of tax deferred contributions, but participants
are permitted to borrow against the value of their tax deferred accounts.
8
<PAGE>
PRINCIPAL STOCKHOLDERS
MANAGEMENT
The following table sets forth information concerning beneficial ownership of
the Company's Common Stock as of March 20, 1998 by: (a) each director of the
Company; and (b) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
----------------------------------------------
Name and Address* of Beneficial
Owner Number of Shares (1) Percent of Class
- ------------------------------- -------------------- ----------------
<S> <C> <C>
Robert Stuckelman 265,325 (2) 3%
John Minnick 267,899 (3) 3%
Rod Raynovich 191,483 (4) 2%
Robert Goldberg 177,937 (5) 2%
Herbert S. Lightstone 50,000 (6) **
John Romm, M.D. 8,333 (7) **
James Linesch 8,333 (8) **
All Officers and Directors
as a group (7 in number) 969,310 9%
------- --
------- --
</TABLE>
- -------------------
(1) Includes options exercisable within sixty days of January 28, 1998.
(2) Includes 125,810 shares subject to non-qualified and qualified stock
options.
(3) Includes 198,614 shares subject to non-qualified stock options.
(4) Includes 166,483 shares subject to non-qualified stock options.
(5) Includes 167,937 shares subject to non-qualified stock options.
(6) Includes 50,000 shares subject to non-qualified stock options.
(7) Includes 8,333 shares underlying non-qualified stock options.
(8) Includes 8,333 shares underlying non-qualified stock options.
(*) c/o CompuMed, Inc, 1230 Rosecrans Avenue, Manhattan Beach, California
90206.
(**) Less than 1%.
9
<PAGE>
PROPOSAL 2
PROPOSAL TO APPROVE AN AMENDMENT TO THE 1992 STOCK
OPTION PLAN INCREASING THE NUMBER OF SHARES
ISSUABLE UNDER THE PLAN TO 1,200,000 SHARES
In March 1992, the Board of Directors of the Company and its stockholders
approved the 1992 Stock Option Plan (the "1992 Plan") to issue 120,000
options to purchase shares of Common Stock. In March 1993, March 1994 and
March 1995 the Board of Directors of the Company and its stockholders amended
the 1992 Plan to add 120,000 options in each of the three years, and in March
of 1996 to add an additional 400,000 options. As of March 19, 1998, 431,937
shares of Common Stock were reserved for issuance upon exercise of options
previously granted under the 1992 Plan and 605,025 shares were reserved for
the grant of future options. Options for 158,798 shares were exercised
during the 1997 fiscal year.
On March 6, 1998, the Board of Directors approved an amendment to the 1992
Plan, subject to stockholder approval, to increase the number of shares
reserved for issuance by an additional 320,000 shares, thereby increasing the
number of shares of Common Stock available for future option grants to
605,025 shares. The Board adopted this amendment to ensure that the Company
will continue to be able to grant stock options to employees and officers and
directors of the Company. Management has found the 1992 Plan to be useful in
the hiring and retention of qualified officers and key personnel.
At the Meeting, the stockholders are being requested to consider and approve
the amendment to the 1992 Plan. The affirmative vote of the holders of a
majority of the shares of the Common Stock voting at the Meeting will be
required to approve the amendment.
The essential features of the 1992 Plan are outlined below:
SHARES SUBJECT TO OPTION. Up to 880,000 shares of Common Stock may be issued
under the 1992 Plan, as amended to date. If Proposal 2 is approved, then up
to 1,200,000 shares will be available for issuance under the 1992 Plan. The
number of shares available for options and subject to option, and the option
exercise price, is to be adjusted upward or downward, as the case may be, in
the event of any stock dividend, recapitalization, merger, consolidation,
split up or similar transaction affecting shares of the Company's Common
Stock. If any option granted under the 1992 Plan terminates or expires
without having been exercised in full, the shares not purchased under such
options will again be available for purposes of the 1992 Plan.
ADMINISTRATION. The 1992 Plan is administered by the Company's Compensation
Committee (the "committee") consisting of not less than two members of the
Board of Directors. The committee is presently composed of Mr. Minnick and
Dr. Romm. The Committee has sole authority to determine which eligible
employees of the Company and its subsidiaries shall receive options under the
1992 Plan, the times when they are to receive them, the number of shares to
be optioned in each case, the provisions of the option agreements and the
terms and conditions of exercise. However, options granted to any member of
the Stock Option Committee require the approval of an independent majority of
the Board of Directors.
EXERCISE PRICE. The exercise price in each incentive stock option granted
under the 1992 Plan may be not less than 100 percent of the fair market value
of the shares of the optioned stock on the date the option is granted and 110
percent of such fair market value if the optionee owns more than ten percent
of the voting rights of the Company's outstanding capital stock. The
exercise price of "non-qualified options" granted under the 1992 Plan may be
established at any price determined by the Compensation Committee. The
exercise price must be paid to the Company in cash or, in the sole discretion
of the committee, with Common Stock on the date of exercise.
ELIGIBLE EMPLOYEES. Subject to selection by the committee, any full-time or
part-time employee of, or consultant to, the Company is eligible to be
granted one or more options pursuant to the 1992 Plan. All officers,
directors, and nominees for election as directors are eligible to participate
in the 1992 Plan.
10
<PAGE>
MAXIMUM OPTION TERM. No option under the 1992 Plan may be made exercisable
after the expiration of ten years from the date it is granted.
NON-TRANSFERABILITY. No option is transferable by the optionee except by
will or the laws of descent or distribution.
EXERCISE OF OPTIONS. Options are exercisable in whole or in part at such
times after the date of grant as are set forth in an option agreement as
determined by the Committee. An option is exercisable by the optionee only
during his or her lifetime and only while he or she is an employee of the
Company, or within three months after termination of employment. In the
event of an optionee's death or disability, the option, to the extent
exercisable at the date of termination of employment and unexercised, may be
exercised by the optionee or his or her estate within one year from date of
death or disability, but in no event may the option be exercised after its
expiration.
TERMINATION OF OPTIONS. An option to the extent not validly exercised, will
terminate automatically upon the termination of employment with the Company,
except by death or disability. All options which are exercisable on the date
of such termination of employment may be exercised during a three-month
period beginning on the date of termination.
RESTRICTIONS ON OPTIONS. Each option granted under the 1992 Plan will be for
a term, and exercisable only in accordance with, option agreements approved
by the Committee. The term of stock options granted under the 1992 Plan is
limited to a period of ten years from the date of grant. Although the
committee reserves the right to establish other terms and conditions as to
any option granted under the 1992 Plan, it is currently anticipated that the
Committee will continue to follow this policy as to options granted under the
1992 Plan. The exercisability of an option under the 1992 Plan may be
determined upon an individual basis by the Compensation Committee at the time
of grant.
The 1992 Plan contains provisions which authorize the Compensation Committee,
in the event of a sale or merger of all or substantially all of the Company's
assets, or a merger or consolidation in which the Company is not the
surviving corporation, to take certain action in its discretion. In the
event of such a transaction the Committee may accelerate the exercisability
of any option to permit its exercise in full during such period as the
Committee may prescribe following the public announcement of a sale of
assets, merger or consolidation. The Committee may also require an optionee
in the event of such a transaction to surrender his option in return for a
substitute option issued by a surviving corporation which is determined by
the Committee to have a value substantially equal to the value of the
surrendered option.
Under the terms of the 1992 Plan, the aggregate fair market value (determined
at the time an option is granted, which will normally be equal to the option
exercise price per share) of Common Stock exercisable under an incentive
stock option for the first time in any calendar year may not exceed $100,000.
The 1992 Plan provides that shares of Common Stock acquired upon exercise of
options will be paid for in cash or, in the sole discretion of the committee,
through the delivery of shares of Common Stock with a market value equal to
the option exercise price. The ability to pay the exercise price in shares
of Common Stock would, if permitted by the committee, enable an optionee to
engage in a series of successive stock for stock exercises of an option
(sometimes referred to as "pyramiding") and thereby fully exercise an option
with little or no cash investment by the optionee.
AMENDMENT. The Board of Directors may amend the 1992 Plan without the
approval of stockholders, except that stockholder approval will be required
for any amendment which would (i) increase the total number of shares
obtainable under the 1992 Plan, or (ii) reduce the exercise price of
incentive stock options below 100 percent of the fair market value of the
stock on the day the option is granted, or (iii) change the class of persons
eligible to participate in the 1992 Plan, or (iv) extend the period during
which options may be granted or exercised. Adjustments in the total number
of shares optionable under the 1992 Plan and
11
<PAGE>
adjustments of the exercise price may be made, however, without stockholder
approval pursuant to the adjustment provisions mentioned under the subcaption
"Shares Subject to Option" above.
DURATION. No option may be granted under the 1992 Plan after March 22, 2002
but options granted on or before that date will remain valid in accordance
with respective terms.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENT TO THE 1992 STOCK OPTION PLAN.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company has appointed Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending September 30, 1998. Ernst & Young LLP
has served as the Company's independent auditors since 1981.
Services provided to the Company and its subsidiaries by Ernst & Young LLP
with respect to Fiscal 1997 included the examination of the Company's
consolidated financial statements, limited reviews of quarterly reports,
services related to filings with the Securities and Exchange Commission and
consultations on various tax and information services matters.
Representatives of Ernst & Young LLP will be present at the Meeting to
respond to appropriate questions and to make such statements as they may
desire.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE 1998 FISCAL YEAR.
ANNUAL REPORT
All stockholders of record as of March 26, 1998 have or are currently being
sent a copy of the Company's Annual Report for the fiscal year ended
September 30, 1997 (the "Annual Report") which contains audited financial
statements of the Company. The Annual Report is deemed to be part of the
material for the solicitation of proxies.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL HOLDER OF ITS
COMMON STOCK ON MARCH 26, 1998 WHO DID NOT RECEIVE A COPY OF THE COMPANY'S
ANNUAL REPORT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED SEPTEMBER
30, 1997 AS FILED WITH THE SEC. ANY SUCH REQUEST SHOULD BE MADE IN WRITING
TO THE SECRETARY, COMPUMED, INC., 1230 ROSECRANS AVENUE, MANHATTAN BEACH,
CALIFORNIA 90266.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no business that
will be presented for consideration at the Meeting other than that which has
been referred to above. As to other business, if any, that may come before
the Meeting, it is intended that proxies in the enclosed form will be voted
in respect thereof in accordance with the judgment of the person or persons
voting the proxies.
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<PAGE>
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Stockholder proposals must be received by the Secretary of the Company, for
inclusion in the Company's proxy materials relating to the 1999 Annual
Meeting of Stockholders, by December 1, 1998.
By order of the Board of Directors
Phuong Dang
Secretary
April 1, 1998
STOCKHOLDERS ARE ASKED TO SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN
THE ENVELOPE PROVIDED AS SOON AS POSSIBLE. YOUR PROMPT RESPONSE WILL BE
GREATLY APPRECIATED.
13
<PAGE>
COMPUMED, INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 1, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of COMPUMED, INC., a Delaware corporation (the
"Company"), acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement, dated April 1, 1998, and hereby constitutes and appoints
JAMES LINESCH or PHUONG DANG, or either of them acting singly in the absence of
the other, with the power of substitution in either of them, the proxies of the
undersigned to vote all shares of Voting Stock of the Company which the
undersigned would be entitled to vote at the Annual Meeting of Stockholders, and
at any adjournment or adjournments thereof, hereby revoking any proxy or proxies
heretofore given and ratifying and confirming all that said proxies may do or
cause to be done by virtue thereof with respect to the following matters:
<TABLE>
<S> <C> <C>
1. The election of five directors nominated by the Board of Directors:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(EXCEPT AS INDICATED) to vote for all nominees listed
below
</TABLE>
Robert Goldberg, Herbert S. Lightstone, John Minnick,
John Romm, M.D. and Robert Stuckelman
(INSTRUCTION: To withhold authority to vote for any individual nominee or
nominees write such nominee's or nominees'
name in the space provided below)
________________________________________
<TABLE>
<S> <C> <C>
2. The amendment to the 1992 Stock Option Plan increasing the number of shares
subject to the Plan to 1,200,000:
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C>
3. The ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the 1998 fiscal year.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C>
4. Other matters as may properly come before the meeting or any adjournment of
adjournments thereof.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
This Proxy, when properly executed, will be voted as directed. If no
direction is indicated, the Proxy will be voted FOR each of the above proposals.
Dated: _____________________, 1998
____________________________(L.S.)
____________________________(L.S.)
Please sign your name exactly as
it appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title as it appears
hereon. When signing as joint
tenants, all parties in the joint
tenancy must sign. When a proxy is
given by a corporation, it should
be signed by an authorized officer
and the corporate seal affixed. No
postage is required if returned in
the enclosed envelope and mailed
in the United States.
PLEASE SIGN, DATE AND MAIL THIS
PROXY IMMEDIATELY IN THE ENCLOSED
ENVELOPE.
