LASER PHOTONICS INC, DEF 14A, 1999-05-18

LASER PHOTONICS INC
DEF 14A, 1999-05-18
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES

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<PAGE>

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Amendment No. ____
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 ss.240.14a-11(c) or ss.240.14a-12

LASER PHOTONICS, INC.
---------------------
(Name of Registrant as Specified In Its Charter)

CHAIM MARKHEIM, CHIEF FINANCIAL OFFICER
---------------------------------------
(Name of Person(s) Filing Proxy Statement)

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:
_______________________________________________________________________

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>

LASER PHOTONICS, INC.
A DELAWARE CORPORATION

EXECUTIVE OFFICES
2431 IMPALA DRIVE
CARLSBAD, CALIFORNIA 92008
(760) 602-3300

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON June 22, 1999
------------------------

TO THE STOCKHOLDERS OF LASER PHOTONICS, INC.:

The Annual Meeting of Stockholders (the "Meeting") of Laser Photonics,
Inc., a Delaware corporation (the "Company"), will be held at the Olympic Resort
Hotel & Spa, 6111 El Camino Real, Carlsbad, California 92009, on June 22, 1999,
at 10:00 a.m., local time, to consider and vote on the following proposals:

PURPOSE OF MEETING

(1) To elect to the Board of Directors seven (7) directors, to serve
until the next Annual Meeting of Stockholders of the Company or until their
successors are elected and qualify, subject to their prior death, resignation or
removal.

(2) To adopt and approve a Restated Certificate of Incorporation and
revised Bylaws of the Company which generally have the effect of: (a) adopting
certain measures (the "Measures") affecting stockholders' rights and adopting
certain "anti-takeover" provisions in connection with changes of control of the
Company, including: (i) the division of the Board of Directors into three (3)
classes to be elected for separate terms of office, and (ii) supermajority
requirements of 66 2/3% of the voting power of all issued and outstanding shares
of voting stock with respect to the amendment, change or repeal of certain
provisions of the proposed Restated Certificate of Incorporation and Bylaws, (b)
permitting extensive indemnification of officers and directors, and (c)
authorizing a class of up to 2,000,000 shares of Preferred Stock of the Company.

(3) To consider and vote upon an amendment to the Company's Certificate
of Incorporation to increase the authorized number of shares of Common Stock to
25,000,000 shares.

(4) To adopt the Company's 1999 Stock Option Plan (the "1999 Stock
Option Plan") and to reserve up to 500,000 shares of the Company's Common Stock
for issuance under the 1999 Stock Option Plan.

(5) To approve the form of indemnification agreements between the
Company and the members of the Company's Board of Directors.

(6) To ratify the appointment of Hein + Associates LLP, as independent
public accountants for the Company for the year ending December 31, 1999.

(7) To transact such other business as may properly come before the
Meeting and any adjournments thereof.

<PAGE>

ONLY STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON MAY 26, 1999
(THE "RECORD DATE") ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING.

PLEASE FILL IN, SIGN, DATE, AND RETURN THE ENCLOSED PROXY TO AMERICAN
STOCK TRANSFER & TRUST CO., 40 WALL STREET, 46TH FLOOR, NEW YORK, NEW YORK
10005, ATTN: PROXY SERVICES, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. A
RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.

By Order of the Board of Directors

LASER PHOTONICS, INC.

By: /s/ Chaim Markheim
----------------------------------
Chaim Markheim
Chief Financial Officer
Carlsbad, California
DATED: May 12, 1999

<PAGE>

LASER PHOTONICS, INC.
A DELAWARE CORPORATION

EXECUTIVE OFFICES
2431 IMPALA DRIVE
CARLSBAD, CALIFORNIA 92008
(760) 602-3300
-----------------------

PROXY STATEMENT
-------------------------

This proxy statement is furnished to the stockholders of Laser Photonics,
Inc., a Delaware corporation (the "Company"), in connection with the Annual
Meeting of Stockholders (the "Meeting") to be held at the Olympic Resort Hotel &
Spa, 6111 El Camino Real, Carlsbad, California 92009, on June 22, 1999 at 10:00
a.m., local time.

The Meeting will be held to consider and vote on the following proposals:

PURPOSE OF MEETING

(3) To consider and vote upon an amendment to the Company's Certificate
of Incorporation to increase the authorized number of shares of Common Stock to
25,000,000 shares.

(4) To adopt the Company's 1999 Stock Option Plan (the "1999 Stock
Option Plan") and to reserve up to 500,000 shares of the Company's Common Stock
for issuance under the 1999 Stock Option Plan.

(5) To approve the form of indemnification agreements between the
Company and the members of the Company's Board of Directors.

(6) To ratify the appointment of Hein + Associates LLP, as independent
public accountants for the Company for the year ending December 31, 1999.

(7) To transact such other business as may properly come before the
Meeting and any adjournments thereof.

The list of all stockholders of record on May 26, 1999, will be available
at the Meeting and at the offices of the Company at 2431 Impala Drive, Carlsbad,
California 92008, (760) 602-3300 for the ten (10) days preceding the Meeting.

<PAGE>

Requests should be addressed to the Company, to the attention of Laser
Photonics, Inc., Chaim Markheim, Chief Financial Officer, 2431 Impala Drive,
Carlsbad, California 92008, (760) 602-3300.

INCORPORATION BY REFERENCE

Laser Photonics, Inc., a Delaware corporation (the "Company") is currently
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and, in accordance therewith, files reports, proxy
and Proxy Statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and Proxy Statements and
other information may be inspected and copied at the public reference facilities
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington D.C. 20549; at its New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048; and at its Chicago Regional Office, 500
West Madison Street, Suite 1400, Chicago Illinois 60661-2511, and copies of such
materials can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington D.C. 20549 at prescribed rates. In addition,
such materials may be accessed electronically at the Commission's site on the
World Wide Web, located at http:/www.sec.gov. The Company intends to furnish its
stockholders with annual reports containing audited financial statements and
such other periodic reports as the Company may determine to be appropriate or as
may be required by law.

Portions of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, are incorporated by reference in this Proxy Statement.

As part of this Proxy Statement, the Company also incorporates by
reference a copy of the following documents filed herewith as exhibits to this
Proxy Statement:

1. Appendix A - Restated Certificate of Incorporation
2. Appendix B - Bylaws
3. Appendix C - 1999 Stock Option Plan
4. Appendix D - Indemnification Agreement

Upon written request, the Company will provide, without charge: (i) a copy
of the exhibits to this Proxy Statement, and (ii) a copy of its Annual Report on
Form 10-K, for the year ended December 31, 1998, to any stockholder of record or
any stockholder who owned Common Stock listed in the name of a bank or broker,
as nominee, at the close of business on May 26, 1999.

Requests should be addressed to the Company, to the attention of Laser
Photonics, Inc., Chaim Markheim, Chief Financial Officer, 2431 Impala Drive,
Carlsbad, California 92008, (760) 602-3300.

<PAGE>

INFORMATION CONCERNING SOLICITATION AND VOTING

The following information is provided to stockholders to explain the use
of this Proxy Statement for this Meeting:

RECORD DATE

Only stockholders of record at the close of business on May 26, 1999 are
entitled to vote at the Meeting. The Company's Common Stock is its only class of
voting securities. As of April 30, 1999, the Company had issued and outstanding
9,933,127 shares of Common Stock of record.

REVOCABILITY OF PROXIES

A PROXY FOR USE AT THE MEETING IS ENCLOSED. ANY STOCKHOLDER WHO EXECUTES
AND DELIVERS A PROXY HAS THE RIGHT TO REVOKE IT AT ANY TIME BEFORE ITS EXERCISE
BY FILING WITH THE SECRETARY OF THE COMPANY AN INSTRUMENT REVOKING IT OR A DULY
EXECUTED PROXY BEARING A LATER DATE. IN ADDITION, A STOCKHOLDER MAY REVOKE A
PROXY PREVIOUSLY EXECUTED BY HIM BY ATTENDING THE MEETING AND ELECTING TO VOTE
IN PERSON.

VOTING AND SOLICITATION

Proxies are being solicited by the Board of Directors of the Company. The
cost of this solicitation will be borne by the Company. Solicitation will be
primarily by mail, but may also be made by telephone, fax transmission or
personal contact by certain officers and directors of the Company, who will not
receive any compensation therefor. Shares of Common Stock represented by
properly executed proxies will, unless such proxies have been previously
revoked, be voted in accordance with the instructions indicated thereon. IN THE
ABSENCE OF SPECIFIC INSTRUCTIONS TO THE CONTRARY, PROPERLY EXECUTED PROXIES WILL
BE VOTED FOR EACH OF THE PROPOSALS DESCRIBED ABOVE. No business other than that
set forth in the accompanying Notice of Annual Meeting of Stockholders is
expected to come before the Meeting. Should any other matter requiring a vote of
stockholders properly arise, the persons named in the enclosed form of proxy
will vote such proxy in accordance with the recommendation of the Board of
Directors.

Each share of Common Stock is entitled to one vote for each share held as
of record, and there are no preemptive rights. The Company's current Certificate
of Incorporation (the "Certificate of Incorporation") and Bylaws do not provide
for cumulative voting for the election of directors or any other purpose.

QUORUM; ABSTENTIONS; BROKER NON-VOTES

Shares representing 50% of the voting power of the 9,911,347 shares of
Common Stock outstanding on the Record Date, which have voting rights, must be
represented at the Meeting to constitute a quorum for conducting business. In
the absence of a quorum, the stockholders present in person or by proxy, by
majority vote and without further notice, may adjourn the meeting from time to
time until a quorum is attained. At any reconvened meeting following such
adjournment at which a quorum shall be present, any business may be transacted
which might have been transacted at the Meeting as originally notified.

The required quorum for the transaction of business at the Meeting is a
majority of the votes eligible to be cast by holders of shares of Common Stock
issued and outstanding on the Record Date. Shares that are voted "FOR" or
"AGAINST" a matter are treated as being present at the Meeting for purposes of
establishing a quorum and are also treated as shares entitled to vote at the
Meeting (the "Votes Cast") with respect to such matter.

The Company will count abstentions for purposes of determining both: (i)
the presence or absence of a quorum for the transaction of business, and (ii)
the total number of Votes Cast with respect to a proposal (other than the
election of directors). Accordingly, abstentions will have the same effect as a
vote against the proposal.

<PAGE>

Further, the Company intends to count broker non-votes for the purpose of
determining the presence or absence of a quorum for the transaction of business,
although broker non-votes will not be counted for purposes of determining the
number of Votes Cast with respect to the particular proposal on which the broker
has expressly not voted. Thus, a broker non-vote will not affect the outcome of
the voting on a proposal.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's next Annual Meeting of Stockholders for
the fiscal year ending December 31, 1999 must be received by the Company no
later than September 30, 1999, in order to be considered for inclusion in the
proxy statement and form of proxy relating to that meeting.

DIRECTORS AND EXECUTIVE OFFICERS

The directors of the Company currently have terms which will end at the
next annual meeting of the stockholders of the Company or until their successors
are elected and qualify, subject to their prior death, resignation or removal.
Officers serve at the discretion of the Board of Directors. There are no family
relationships among any of the Company's directors and executive officers.

The following sets forth certain biographical information concerning the
persons who have been nominated by the Board of Directors to be directors of the
Company in connection with Proposal 1 of this Proxy Statement and the current
executive officers of the Company:

NAME POSITION AGE
-------------------------------------------------------------------
Warwick Alex Charlton Non-Executive Chairman of the
Board of Directors 39

Raymond A. Hartman Director, President and Chief 51
Executive Officer

Chaim Markheim Director, Chief Operating Officer 53
and Chief Financial Officer

John J. McAtee, Jr. Director 61

Alan R. Novak Director 64

Harry Mittelman, M.D. Director 58

Steven Girgenti Director 52

WARWICK ALEX CHARLTON was appointed to the Board of Directors and
became the Non-Executive Chairman of the Board of Directors on March 8, 1999.
Mr. Charlton is a Vice President of Computer Science Corporation ("CSC") and is
also the Vice President and North American Practice Leader of CSC Healthcare,
Inc., where Mr. Charlton is responsible for business development and operating
performance. In his capacity at CSC, Mr. Charlton provides consulting services
to various businesses, including the Company, regarding the introduction of
medical technology for commercialization. CSC provides such services to the
Company in connection with a consulting agreement dated October 29, 1998. Mr.
Charlton has 19 years of business experience, consisting of ten years of line
management experience and nine years in the consulting profession (previously
with Booz Allen & Hamilton and the Wilkerson Group). Mr. Charlton received an
honors degree in Marketing from the University of Newcastle and an MBA from
Cranfield Institute of Technology.

<PAGE>

RAYMOND A. HARTMAN was appointed to the Board of Directors in October,
1997, and also serves as the President and Chief Executive Officer of Laser
Photonics and Acculase. Mr. Hartman is responsible for the engineering and
development of the excimer laser, handpieces and fiberoptics for TMR. Prior
employment includes: Founder and President of Electrode Technology, Inc., Union
City, California; Vice President of Manufacturing and Research and Development,
Applied Medical Technology, Palo Alto, California. Mr. Hartman was an Assistant
Professor at the Ohio State University in Columbus Ohio, Business Law and
Marketing (Graduate School of Business); Business Policy (Graduate School of
Business) and Seapower and Maritime Affairs (ROTC). Mr. Hartman was a Lieutenant
in the United States Navy. He received his MBA from the Ohio State University,
and a BS with Honors in Chemistry at Montana State University.

CHAIM MARKHEIM was appointed to the Board of Directors of the Company
in May, 1995. He also serves as the Company's Chief Operating Officer and Chief
Financial Officer. Mr. Markheim was a director and the Chief Operating Officer
of Helionetics from May, 1992 until January, 1998. Helionetics filed a petition
for bankruptcy reorganization under Chapter 11 of the Federal Bankruptcy Act in
1997. Mr. Markheim acted as business consultant to a diverse group of companies,
including Helionetics from 1985 to 1992. From 1980 to 1985, Mr. Markheim served
in various financial positions with Campbell Soup Company. His last position was
Controller of the Beverage Division. From 1976 to 1980, Mr. Markheim served in a
number of financial positions with Atlantic Richfield Company. Prior to 1976, he
was employed as an auditor with Coopers and Lybrand and Seidman & Seidman. Mr.
Markheim was a licensed Certified Public Accountant in the State of California.
Mr. Markheim holds a Bachelor of Science Degree in Accounting from California
State University, at Northridge.

JOHN J. McATEE, JR. has been a member of the Board of Directors of the
Company since March 4, 1998. From March 4, 1998 until March 8, 1999, Mr. McAtee
served as the Non-Executive Chairman of the Board of Directors. From 1990 to
1996, Mr. McAtee was Vice Chairman of Smith Barney, Inc. (now Salomon Smith
Barney), one of the world's largest banking and brokerage firms. Before that, he
was a partner in the New York law firm of Davis Polk & Wardwell for more than
twenty years. Mr. McAtee is a graduate of Princeton University and Yale Law
School. Mr. McAtee is also a director of U.S. Industries, Inc., a diversified
industrial management corporation, and Whitehall Corporation, which provides
products and services to the commercial and military markets.

ALAN R. NOVAK was appointed to the Board of Directors of the Company in
October, 1997. Mr. Novak is Chairman of Infra Group, L.L.C., an international
project finance and development company. He is also Chairman of Lano
International, Inc., a real estate development company, and a director of
Strategic Partners (Holdings) Limited, an international airport and seaport
development company. Mr. Novak is a graduate of Yale University, Yale Law
School, and Oxford University as a Marshall scholar. Mr. Novak practiced law at
Cravath, Swaine & Moore and Swidler & Berlin, Chartered. His public service
includes three years as an officer in the United States Marine Corp., a U.S.
Supreme Court clerkship with Justice Potter Stewart, Senior Counsel, Senator E.
M. Kennedy, Senior Executive Assistant to Undersecretary of State, Eugene
Rostow, and Executive Director, President Johnson's Telecommunications Task
Force. Mr. Novak was appointed by President Carter and served for five years as
Federal Fine Arts Commissioner.

HARRY MITTELMAN, M.D. was appointed to the Board of Directors on April
20, 1999, and is a graduate of the University of Kansas, School of Medicine in
1967. Dr. Mittelman practices medicine as a Comestic and Plastic Surgeon and
Otolaryngologist. Dr. Mittelman was a Foundation Board Member of the American
Academy of Facial Plastic and Reconstruction Surgery, 1997-1998 and was the
Chairman of the Laser Surgery and Safety Committee; American Academy of Cosmetic
Surgery, 1991-1993. As well as being in private practice, Dr. Mittleman is an
Associate Clinical Professor of Medicine at Stanford University Hospital and
Medical Center.

STEVEN GIRGENTI was appointed to the Board of Directors on April 20,
1999, and has served as Chairman of the Board and Chief Executive Officer of
Healthwork Corporation, a public company ("Healthworld") since August 1997. Mr.
Girgenti co-founded Girgenti, Hughes, Butler & McDowell, Inc. a wholly-owned
subsidiary of Healthworld, in April 1986 and has served as its President and
Chief Executive Officer since then. Beginning in 1969, Mr. Girgenti worked in
the pharmaceutical industry for advertising companies specializing in medical
communications, including William Douglas McAdams. Prior to that, Mr. Girgenti
held a variety of positions with pharmaceutical companies, including Director of
Marketing Research and Product Manager for DuPont Pharmaceuticals and Manager of
Commercial Development for Bristol-Myers Squibb Company.

<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning compensation
of certain of the Company's executive officers, including the Company's Chief
Executive Officer and all executive officers (the "Named Executives") whose
total annual salary and bonus exceeded $100,000, for the years ended December
31, 1998, 1997 and 1996:

- ----------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------

Restricted Securities
Name and Other annual Stock Underlying LTIP All other
Principal Compensation Awards (s) Options/SARs Payouts Compensation
Position Year Salary Bonus ($) ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Steven A. Qualls 1997 $75,000 0 0 0 0 0 0
(CEO)(1) 1996 $75,000 0 0 $15,000 $60,000 0 0

Raymond A. 1998 $125,008 0 0 0 0 0 0
Hartman (CEO)(2) 1997 $125,000(3) 0 0 0 0 0 270

Chaim Markheim 1998 $125,008 0 0 0 0 0 0

</TABLE>

- ------------------------

(1) Mr. Qualls served as the Company's Chief Executive Officer until October,
1997.

(2) Mr. Hartman became the Company's Chief Executive Officer in October, 1997.

(3) Includes paid and accrued salary for each such fiscal year.

<PAGE>

OPTION/SAR GRANTS TABLE

The following table sets forth certain information concerning grants of
stock options to certain of the Company's executive officers, including the
Named Executives for the year ended December 31, 1998:

<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rate of
Stock Price Appreciation
Individuals Grants For Option Term (1)
- ----------------------------------------------------------------------------------------------------------

(a) (b) (c) (d) (e) (f) (g)
Number of % of
Securities Total
Underlying Options/
Options/ SARs Exercise
SARs Granted to Or Base
Granted Employees Price Expiration
Name (#) In Fiscal Year ($/Share) (1) Date (1) 5% ($) 10%($)
- ----------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Chaim Markheim 250,000 64% 2.875 4/10/03 107,794 276,838
- ----------------------------------------------------------------------------------------------------------

</TABLE>

1. This chart assumes a market price of $2.72 for the Common Stock,
the average of the bid and asked prices for the Company's Common Stock in the
Over-The-Counter Market as of December 31, 1998, as the assumed market price for
the Common Stock with respect to determining the "potential realizable value" of
the shares of Common Stock underlying the options described in the chart, as
reduced by any lesser exercise price for such options. Further, the chart
assumes the annual compounding of such assumed market price over the relevant
periods, without giving effect to commissions or other costs or expenses
relating to potential sales of such securities. The Company's Common Stock has a
very limited trading history. These values are not intended to forecast the
possible future appreciation, if any, price or value of the Common Stock.

OPTION EXERCISES IN 1998

No Named Executive exercised any stock option in 1998.

1995 NON QUALIFIED OPTION PLAN

On January 2, 1996, the Company adopted the Company's 1995 Non
Qualified Option Plan for key employees, officers, directors and consultants,
and reserved up to 500,000 options to be granted thereunder. The option exercise
price is not less than 100% of market value on the date granted, 40% of granted
options vest immediately, and may be exercised immediately; 30% vest and may be
exercised beginning one year after grant; and the remaining 30% vest and may be
exercised beginning two (2) years from grant.

No options may be exercised more than ten (10) years after grant,
options are not transferable (other than at death), and in the event of complete
termination "for cause" (other than death or disability) or "voluntary"
termination, all "unvested" options automatically terminate.

<PAGE>

On January 2, 1996, the Company granted a total of 335,000 options at
an exercise price of $1.50 per share to certain directors, employees and
consultants.

LIMITATION ON DIRECTORS' LIABILITIES; INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Certificate of Incorporation and Bylaws designate the
relative duties and responsibilities of the Company's officers, establish
procedures for actions by directors and stockholders and other items. The
Company's Certificate of Incorporation and Bylaws also contain extensive
indemnification provisions which will permit the Company to indemnify its
officers and directors to the maximum extent provided by Delaware law. Pursuant
to the Company's Certificate of Incorporation and under Delaware law, directors
of the Company are not liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty, except for liability in connection with a
breach of duty of loyalty, for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, for dividend
payments or stock repurchases illegal under Delaware law or any transaction in
which a director has derived an improper personal benefit.

TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS

The Company has no compensatory plans or arrangements which relate to
the resignation, retirement or any other termination of an executive officer or
key employee with the Company or a change in control of the Company or a change
in such executive officer's or key employee's responsibilities following a
change in control.

COMPENSATION AND AUDIT COMMITTEES; COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION

The Board has a Compensation Committee comprised of John J. McAtee, Jr.
and Alan R. Novak, and an Audit Committee comprised of Chaim Markheim, John J.
McAtee, Jr. and Alan R. Novak. Messrs. McAtee and Novak may be deemed to be
outside/non-employee directors. The Board has no standing committee on
nominations or any other committees performing equivalent functions.

The Compensation Committee reviews and approves the annual salary and
bonus for each executive officer (consistent with the terms of any applicable
employment agreement), reviews, approves and recommends terms and conditions for
all employee benefit plans (and changes thereto) and administers the Company's
stock option plans and such other employee benefit plans as may be adopted by
the Company from time to time.

The Audit Committee reports to the Board regarding the appointment of
the independent public accountants of the Company, the scope and fees of the
prospective annual audit and the results thereof, compliance with the Company's
accounting and financial policies and management's procedures and policies
relative to the adequacy of the Company's system of internal accounting
controls.

COMPENSATION OF DIRECTORS

Outside/non-employee members of the Board of Directors receive options
to purchase up to 20,000 shares of Common Stock as compensation, on an annual
basis, at an exercise price equal to the market price of the Common Stock on the
last trading day of the preceding year. The options vest at the rate of 5,000
options per quarter during which such person has served as a member of the Board
of Directors. The Company granted to John J. McAtee and Alan R. Novak options to
purchase up to 20,000 shares of Common Stock at an exercise price of $2.875 per
share for services rendered during 1998; all such options are vested. The
Company granted to Messrs. McAtee and Novak an additional 20,000 options to
purchase a like number of shares of Common Stock at an exercise price of $2.8125
per share for service to be rendered during 1999. Of these options, 5,000 are
vested as of the date of this Proxy Statement. Upon Mr. Charlton joining the
Company's Board of Directors on March 8, 1999, he was granted options to
purchase 20,000 shares of Common Stock at an exercise price of $2.8125 per share
for services to be rendered during 1999. Of these options, 5,000 are vested as
of the date of this Proxy Statement. Upon joining the Board of Directors on
April 20, 1999, each of Harry Mittelman and Steven Girgenti was granted options
to purchase 15,000 shares of Common Stock at an exercise price of $4.75 per
share for services to be rendered during 1999. These options are not vested as
of the date of this Proxy Statement.

<PAGE>

The Company does not compensate directors for services rendered as
directors. The Company has obtained directors' and officers' liability insurance
with a $2,500,000 limit of liability and $2,500,000 excess coverage. The policy
period expires on February 24, 2000. The Company intends to renew such policy or
obtain comparable coverage after the expiration of such policy. However, there
can be no assurances to this effect.

COMMON STOCK PERFORMANCE GRAPH

The Company's Common Stock is listed for trading in the
Over-the-Counter Market under the symbol "LSPT." The Company's Common Stock,
subsequent to the confirmation of the Company's Third Amended Plan of
Reorganization (the "Bankruptcy Reorganization") on May 22, 1995, following the
filing of a Petition for Reorganization under Chapter 11 of the Federal
Bankruptcy Act on May 13, 1994 (the "Bankruptcy Proceeding"), has been quoted on
the Electronic Bulletin Board since approximately January 22, 1996 under the
stock symbol "LSPT." The first available pricing date for the Common Stock in
the Over-the-Counter Market, following the Bankruptcy Reorganization, was
February 21, 1996. The Company's "old" Common Stock, prior to the confirmation
of the Bankruptcy Reorganization, was also quoted on the Electronic Bulletin
Board in 1993, and during the period from May 13, 1994 to May 22, 1995, during
the pendency of the related Bankruptcy Proceeding, in the "pink sheets" under
the stock symbol "LAPHQ."

The following stock performance graph illustrates the yearly percentage
change in the cumulative total stockholder return on the Company's Common Stock,
compared with the cumulative total return on: (i) the NASDAQ (U.S. Companies)
Stock Index (the "NASDAQ U.S. Index") and (ii) an index (the "Peer Group
Index"), based on a peer group (the "Peer Group") of eight (8) companies
selected by the Company, whose primary business includes the sale and
manufacture of electromedical surgical laser devices, during the period from
February 21, 1996 through December 31, 1998:

[STOCK PERFORMANCE GRAPH TO BE INCLUDED
IN PRINTED GRAPHIC OF DEFINITIVE PROXY
STATEMENT - EDGAR REPRESENTATION OF
DATA POINTS ARE SET FORTH BELOW IN DATA CHART]

The stock performance graph set forth above was based on the following data:

=========================================================================

COMPANY/INDEX/MARKET 2/21/96 12/31/96 12/31/97 12/31/98
-------------------------------------------------------------------------

LASER PHOTONICS, INC. $100.00 $25.00 $98.61 $58.33
-------------------------------------------------------------------------

PEER GROUP $100.00 $47.75 $26.47 $23.20
-------------------------------------------------------------------------

NASDAQ U.S. INDEX $100.00 $115.81 $141.66 $199.79
=========================================================================

The entities included in the Peer Group are: Autonomous Technologies,
Inc., Cardiogenesis Corporation, Eclipse Surgical Technologies, Inc.,
Lasersight, Inc., PLC Systems, Inc., Spectranetics Corp., Summit Technology,
Inc. and Trimedyne, Inc.

In all cases, the cumulative total return assumes, as contemplated by
Commission rules, the investment of $100 at February 21, 1996 in the Common
Stock and the traded securities of the entities which comprise the NASDAQ U.S.
Index and the Peer Group Index, and that any cash dividends on the common stock
of each entity included in the data presented above were reinvested in that
security. The Company has paid no dividends on its Common Stock.

All data contained in the stock performance graph and data chart set
forth above are derived from sources believed to be reliable, but, because of
the possibility of human and mechanical error and other factors, are provided
from such sources with no express or implied warranties of any kind, and without
any representations, warranties or guarantees as to either the accuracy or
timeliness of such data.

Historical stock price performance should not be relied upon as
indicative of future stock price performance.

<PAGE>

Notwithstanding any reference in prior or future filings of the Company
with the Commission which purport to incorporate this Proxy Statement by
reference into another filing, such incorporation does not include any material
included herein under the caption "Common Stock Performance Graph."

COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and beneficial holders of more than 10% of the Company's
Common Stock to file with the Commission initial reports of ownership and
reports of changes in ownership and reports of changes in ownership of such
equity securities of the Company. Based solely upon a review of such forms, or
on written representations from certain reporting persons that no other reports
were required for such persons, the Company believes that all reports required
pursuant to Section 16(a) with respect to its executive officers, directors and
10% beneficial stockholders for the ended December 31, 1998 were timely filed.

To the Company's knowledge, all other filing requirements of executive
officers and directors were timely complied with during the year ended December
31, 1998.

<PAGE>

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The following table reflects, as of April 21, 1999, the beneficial
Common Stock ownership of: (a) each director of the Company, (b) each Named
Executive (See "Compensation of Executive Officer and Directors"), (c) each
person known by the Company to be a beneficial holder of five percent (5%) or
more of its Common Stock, and (d) all executive officers and directors of the
Company as a group:

NAME AND ADDRESS
OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT #
- ------------------- ---------------- -----------------

<S> <C> <C>
Chaim Markheim(1) 320,250 3.13

Raymond A. Hartman(2) 340,250 3.32

Steven A. Qualls(3) 64,666 *

Alan R. Novak(4) 125,000 1.25

John J. McAtee, Jr.(5) 209,000 2.09

Calvin Hori and Hori
Capital Management, Inc.(6) 933,100 9.41

Platinum Partners, LP(6) 759,000 7.66

Warwick Alex Charlton (7) 155,000 1.54

Steven Girgenti (8) 50,000 *

Harry Mittelman (9) 256,000 2.53

Pennsylvania Merchant Group Ltd(10) 869,840 8.35

Richard Hansen (10) 869,840 8.35

Joseph E. Gallo, Trustee(11) 950,500 9.69

All directors and
Officers as a group
(8 persons)(12) 1,520,766 13.47

- -----------------------
</TABLE>
(FOOTNOTES CONTINUE ON THE FOLLOWING PAGE)

<PAGE>

(FOOTNOTES FROM THE PRIOR PAGE)

# Pursuant to the rules of the Commission, shares of Common Stock which
an individual or group has a right to acquire within 60 days pursuant to the
exercise of options or warrants are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table.

* Less than 1%.

1. Includes options to purchase up to 320,250 shares of Common Stock.
Mr. Markheim's address is 2431 Impala Drive, Carlsbad, California 92008.

2. Includes options to purchase up to 330,250 shares of Common Stock
registered in his name and options to purchase up to 10,000 shares of Common
Stock registered in the name of his wife, Sandra Hartman. Mr. Hartman's address
is 2431 Impala Drive, Carlsbad, California 92008.

3. Includes 4,666 shares of Common Stock and options to purchase up to
60,000 shares of Common Stock. Mr. Qualls' address is 12351 Research Parkway,
Orlando, Florida 32826.

4. Includes 28,601 shares of Common Stock, which are being registered
on Form S-1 and options to purchase up to 96,399 shares of Common Stock. Does
include options to purchase up to 25,000 shares of Common Stock, which are
vested, and does not include 15,000 options, which may vest periodically during
the course of the year. Mr. Novak's address is 3050 K Street, NW, Suite 105,
Washington, D.C. 20007.

5. Includes 99,000 shares of Common Stock, including 84,000 of which
are being registered on Form S-1 and options to purchase up to 110,000 shares of
Common Stock. Does include options to purchase up to 25,000 shares of Common
Stock, which are vested, and does not include 15,000 options, which may vest
periodically during the course of the year. Mr. McAtee's address is Two
Greenwich Plaza, Greenwich, Connecticut 06830.

6. The listed persons, Calvin Hori ("Hori"), Hori Capital Management,
Inc. ("Hori Capital") and Platinum Partners, LP ("Platinum") have jointly filed
an Amendment No. 1 to Schedule 13D (the "Schedule 13D"), dated December 1, 1997,
with respect to 933,100 shares of Common Stock. The Schedule 13D provides, in
pertinent part, that: (a) Hori, Hori Capital and Platinum may be deemed to be
the beneficial owners of 759,000 of these shares, and (b) Hori and Hori Capital
may be deemed to be the beneficial owners of an additional 174,100 of these
shares. The address for each of the listed persons is One Washington Mall,
Boston, Massachusetts 02108.

7. Includes options to purchase 155,000 shares of Common Stock. Does
not include options to purchase up to 15,000 shares of Common Stock, which may
vest subject to certain schedules periodically during the course of the year.
Mr. Charlton's address is 304 Old Colony Road, Hartsdale, New York 10530.

8. Includes options to purchase 50,000 shares of Common Stock. Does not
include options to purchase up to 15,000 shares of Common Stock, which may
vest subject to certain schedules periodically during the course of the year.
Mr. Girgenti's address is Healthwork Corporation, 100 Avenue of the Americas,
8th Floor, New York, NY 10013.

9. Includes 86,100 shares, warrants to purchase 33,000 shares and
options to purchase 50,000 shares of Common Stock. Dr. Mittelman owns, as
Trustee of four family trusts, $140,000 principal amount of convertible
promissory notes, convertible into 70,000 shares of Common Stock, and warrants
to purchase up to 35,000 shares of Common Stock, of which warrants 50% are
currently vested. Only the vested warrants are included here. Does not include
options to purchase up to 15,000 shares of Common Stock, which may vest subject
to certain schedules periodically during the course of the year. Dr. Mittelman's
address is 2200 Sand Hill Road, Suite 110, Menlo Park, CA 94025. See "Certain
Relationships and Related Transactions - Convertible Debt and Conversion of
Convertible Debt."

10. Includes 369,840 shares of Common Stock and 500,000 Warrants to
purchase shares of Common Stock. This figure also includes 50,000 shares of
Common Stock owned by Penelope Hansen, wife of Richard Hansen in her own name.
The address of Pennsylvania Merchant Group Ltd. ("PMG") and Mr. Hansen is Four
Falls Corp Center, West Conshohocken, PA 19428.

11. Includes 888,000 shares of Common Stock and 62,500 Warrants to
purchase shares of Common Stock. Mr.Gallo is the Trustee of four (4) trusts
which own these securities. All of the shares of Common Stock and the shares
underlying the Warrants are being registered on Form S-1. In addition, three of
these trusts are entitled to receive additional shares which will be issued
subsequent to the date of this Proxy Statement in exchange for accrued but
unpaid interest on loans made to the Company. As of the date of this Proxy
Statement the exact amount of additional shares to be issued is unknown but the
Company estimates that the number will not exceed 25,000 shares. Mr. Gallo's
address is 600 Yosemite Blvd., Modesto, CA 95354.

12. Includes 165,267 shares of Common Stock and options, notes and
warrants to purchase up to 1,380,499 shares of Common Stock. Does not include
options to purchase up to 92,500 shares of Common Stock, which may vest subject
to certain schedules during the course of the year.

<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONVERTIBLE DEBT AND CONVERSION OF CONVERTIBLE DEBT

In 1995, the Company sold an aggregate of $500,000 in six-month
convertible secured notes in a private transaction, pursuant to an exemption
from registration under Regulation S promulgated under the Securities Act. The
Company also issued to such persons warrants to purchase up to 500,000 shares of
Common Stock which expired in 1995 due to the Company's meeting of certain
filing requirements. The noteholders were also granted a transferable one-year
option to purchase 134,000 additional shares at $2.25 per share, and 134,000
shares at $3.00 per share, which were exercised in 1996, and 107,000 shares at
$3.75 per share, which expired without exercise. In January and April 1996, the
notes were converted into an aggregate of 538,583 shares of Common Stock at a
conversion price of $0.96 per share. In April 1996, an additional 30,000 shares
were issued pursuant to Regulation S as payment of past due rent valued at
$60,000.

During July and August, 1998, Acculase issued $1,000,000 of 10%
Convertible Promissory Notes (the "Convertible Notes"). The Convertible Notes
were guaranteed by the Company. Interest was payable annually and could be paid
in cash or in the Company's Common Stock at the Company's option. The entire
amount of principal was automatically converted into 500,000 shares of the
Company's Common Stock, at a conversion price of $2.00 per share, on December
31, 1998. Additional shares will be issued subsequently in exchange for accrued
but unpaid interest. As of the date of this Proxy Statement the exact amount of
additional shares to be issued is unknown but the Company estimates that the
number will not exceed 25,000 shares. The shares issued in conversion of the
Convertible Notes are being registered on Form S-1. At December 31, 1998, the
amount of accrued and unpaid interest on the Convertible Notes was $42,009.

As of March 31, 1999, PMG arranged for the Company to issue to various
investors $2,380,000 of units of its securities (the "Units"), each Unit
consisting of: (i) $10,000 principal amount of 7% Series A Convertible
Subordinated Notes (the "Subordinated Notes"); and (ii) common stock purchase
warrants to purchase up to 2,500 shares of Common Stock (the "Unit Warrants").
The entire principal is due and payable in one payment on the earlier of: (i)
December 15, 1999; or (ii) the date that is three business days after the
Company consummates its next equity financing (the "Subsequent Financing") in
which the Company receives net proceeds of at least $2,380,000 (the "Due Date").
Interest accruing on the Subordinated Notes through June 15, 1999 is payable on
June 15, 1999. Interest accrued as of the earlier of the Due Date or December
15, 1999, is payable on the earlier of the Due Date or December 15, 1999.
Payment of principal and interest on the Subordinated Notes is subordinate and
junior in right of payment to the prior payment in full of all senior debt of
the Company. The Subordinated Note holders may convert the Subordinated Notes
and accrued and unpaid interest thereon, if any, into shares of Common Stock at
any time prior to maturity or receipt of prepayment into shares of Common Stock
at a conversion price of $2.00 per share. The Subordinated Notes provide that
the conversion price is to be adjusted in the event that the Company issues
shares of Common Stock for consideration of less than $2.00 per share. In such
event, the per share conversion price will be adjusted to the issue price of
such additionally issued shares of Common Stock.

The Unit Warrants are exercisable into an initial 1,250 shares of
Common Stock at any time after purchase until March 31, 2004. The balance of the
Unit Warrants are exercisable into an additional 1,250 shares of Common Stock
(the "Contingent Shares") if the Unit holder has voluntarily converted at least
a portion of the principal amount of the Subordinated Note that make up a
portion of the Unit into shares of Common Stock. The amount of Contingent Shares
that may be acquired by a Unit Warrant holder will be proportionate to the ratio
of the amount of principal of the Subordinated Notes which are converted into
shares of Common Stock over the original principal amount of the Subordinated
Notes. The exercise price of the Unit Warrants will be the lower of (i) $2.00
per share of Common Stock; and (ii) the price per share of Common Stock in the
Subsequent Financing. The Unit Warrants provide that they may be adjusted in the
event that the Company issues shares of Common Stock for consideration of less
than $2.00 per share. In such event, the per share exercise price of the Unit
Warrants will be adjusted to the issue price of such additionally issued shares
of Common Stock. As of the date of this Proxy Statement, no adjustments have
been made. All of the shares of Common Stock underlying the Subordinated Notes
and the Unit Warrants are being registered on Form S-1.

<PAGE>

CERTAIN ISSUANCES TO FORMER AFFILIATES

In February, 1996, the Company issued 25,000 shares of Common Stock to
Susan E. Barnes, the wife of Bernard B. Katz, a former director and Chairman of
the Board of the Company, in consideration for her personal guaranty of $81,000
in lease obligations associated with the Company's Andover, Massachusetts
facility. In February, 1996, the Company agreed to issue to Ms. Barnes 50,000
shares of Common Stock at a value of $1.00 per share for services she arranged
to provide in connection with raising $1.5 million to finance the Company's
emergence from the Bankruptcy Proceeding.

In October, 1996, the Company issued an additional 100,000 shares of
Common Stock to Ms. Barnes in connection with a second guaranty of the Andover
lease and lease extension, after the lease went into default and the landlord
was threatening immediate eviction. This second personal guaranty was secured by
a pledge of 391,360 shares of her personally owned Helionetics common stock. The
Andover lease was subsequently terminated. The Andover lease was the only lease
of the Company guaranteed by stockholders of the Company. All guarantees of Ms.
Barnes have been terminated.

ISSUANCE OF SHARES, OPTIONS AND WARRANTS

On January 2, 1996, the Company adopted the Company's 1995
Non-Qualified Option Plan for key employees, officers, directors and
consultants, and reserved up to 500,000 shares of Common Stock for which options
could be granted thereunder. On January 2, 1996, the Company granted a total of
335,000 options at an exercise price of $1.50 per share to certain directors,
employees and consultants.

During 1996, the Company issued 151,000 shares of Common Stock and
options to purchase up to 62,500 shares of Common Stock in exempt transactions
to key employees and consultants for services rendered and as compensation at an
exercise price of $2.50 per share. Included were issuances to certain current
and former officers and directors for services rendered, as follows: (i) Steven
A. Qualls (10,000 shares), (ii) Chaim Markheim (5,000 shares) and (iii) Maxwell
Malone (5,000 shares).

During 1997, the Company issued a total of 105,000 shares of Common
Stock to Don Davis, Esq. as a consultant in connection with legal services
rendered to the Company. The services included, but were not limited to, general
representation of the Company and securities disclosure work in relation to the
Company's continuing obligation to provide reports pursuant to the Exchange Act.
In addition, the Company issued to Raymond A. Hartman options to acquire 250,000
shares of Common Stock at an exercise price of $0.50 per share and having a
five-year term, contingent upon certain performance contingencies. On April 5,
1999, the Company's Board of Directors deemed all such contingencies fulfilled
and the options vested.

On July 1, 1997, the Company granted a total of 108,500 options at an
exercise price of $1.00 per share to certain employees and consultants. On
October 31, 1997, the Company issued options to purchase up to 20,000 shares of
Common Stock at an exercise price of $1.00 per share to a former director of the
Company. In October, 1997, in satisfaction of all compensation owed by the
Company to K.B. Equities, Inc., an affiliate of Mr. Katz and Ms. Barnes, for
consulting services rendered to the Company in 1997, the Board of Directors
granted options to acquire 100,000 shares of Common Stock to K.B. Equities at an
exercise price of $0.75 per share, and with a term of seven years. Mr. Katz
resigned from the Board of Directors of the Company on October 9, 1997.

In August, 1997, the Company issued options to purchase up to 211,899
shares of Common Stock to the following persons, who are currently officers and
directors of the Company, at an exercise price of $1.25 per share with a term of
five (5) years: (i) Chaim Markheim (20,250 options), (ii) Raymond A. Hartman
(20,250 options), (iii) Alan R. Novak (71,399 options), and (iv) John J. McAtee,
Jr. (100,000 options).

<PAGE>

In April, 1998, the Company issued options to Chaim Markheim to
purchase up to 250,000 shares of Common Stock at an exercise price of $2.875 per
share with a five (5) year term.

In April, 1998, the Company issued options to purchase up to 100,000
shares of Common Stock, at the exercise price of $2.875 per share, with a
five-year term, and 20,000 shares of Common Stock to certain consultants for
services rendered. The 20,000 shares were issued for services rendered at a
price of $1.00 per share.

Upon Warwick Alex Charlton's joining the Company's Board of Directors
on March 8, 1999, he was granted options to purchase 20,000 shares of Common
Stock at an exercise price of $2.8125 per share for services to be rendered
during 1999. In addition, Mr. Charlton was granted options, all of which are
vested, to acquire up to 150,000 shares of Common Stock at $3.00 per share. Of
these options 5,000 are vested as of the date of this Proxy Statement. Upon
appointment of Steven Girgenti and Harry Mittelman to the Board of Directors on
April 20, 1999, they were each granted options to purchase 15,000 shares of
Common Stock at an exercise price of $2.8125 per share for services to be
rendered during 1999. None of these options are vested as of the date of this
Proxy Statement. In addition, Mr. Girgenti and Dr. Mittelman were each granted
options, all of which are vested, to acquire up to 50,000 shares of Common
Stock at $4.75 per share.

In 1999, in respect of the period August, 1998, through February, 1999,
the Company granted to its current legal counsel, Matthias & Berg LLP ("M& B"),
options to acquire an aggregate of 17,864 shares of the Company's Common Stock
at exercise prices of between $1.50 and $2.56 per share. The options are
exercisable for a period of 120 months from the date of grant. These options
were issued as a part of a fee agreement between the Company and M&B, whereby
M&B received options having an exercise price equal to 20% of its monthly fees
in the form of common stock of the Company valued at the closing bid price on
the last day of each month. M&B agreed to forego collection of such fees, and
use the uncollected fees to exercise the options by cancellation of the
outstanding fees.

On April 5, 1999, the Company issued to a non-executive employee
options to purchase 50,000 shares of the Company's Common Stock at an exercise
price of $3.1875. Such options vest, pursuant to a schedule, over a period of
five years.

CERTAIN ISSUANCES OF SECURITIES

In September and October, 1997, the Company privately sold a total of
679,500 restricted shares of Common Stock in a private placement at a price of
$1.25 per share. The price of the Common Stock on the date of this transaction
was $2.50 per share. These funds were used in part to pay outstanding accounts
payable and delinquent Federal and State taxes outstanding. The Company sold an
additional 28,601 shares at a price of $1.25 per share in the third quarter of
1997. The price of the Common Stock on the date of this transaction was $2.56
per share.

In September, 1997, PMG purchased from Helionetics, with the approval
of the Federal Bankruptcy Court in the pending Helionetics Chapter 11 Bankruptcy
proceeding, all debt owed by Acculase to Helionetics. In October, 1997, the
Company purchased the debt owing by Acculase, in the amount of $2,159,708 from
PMG in consideration of 800,000 shares of Common Stock.

<PAGE>

In November, 1997, the Company issued 1,500,000 shares of Common Stock
and 750,000 warrants (the "Warrants"), with an exercise price of $4.00 per share
and a term of five (5) years, in a private placement, resulting in gross
proceeds of $6,000,000 to the Company. The price of the Common Stock on November
30, 1997, was $5.06 per share. The Company also issued 150,000 Warrants and paid
a commission of $480,000 to PMG as a placement agent fee. The Warrants have an
exercise price of $4.00 per share. The Warrants provide that they may be
adjusted in the event that the Company issues shares of Common Stock for
consideration of less than $4.00 per share. In such event, the per share
exercise price will be adjusted to the issue price of such additionally issued
shares of Common Stock. In December, 1998, the Company issued shares of its
Common Stock at $1.50 per share. The effect of such issuance was to reduce the
exercise price of the 750,000 Warrants and the 150,000 Warrants issued to PMG to
$1.50 per share. The Shares underlying these Warrants are being registered on
Form S-1.

The Company has agreed to issue to PMG an additional 75,000 warrants
(the "Contingent Warrants") at a purchase price of $0.001 per share at such time
as any of the other 750,000 Warrants have been exercised. The Contingent
Warrants will be exercisable for a period of five years following the date of
issue at an exercise price equal to the average closing bid price for the Common
Stock for the ten trading days preceding the date of issue. The Warrants may be
redeemed by the Company, upon 30 days' notice, at a redemption price of $0.10
per share if the closing bid price of the Common Stock exceeds $8.00 per share
for a period of thirty consecutive trading days.

On December 15, 1997, the Company issued Warrants to PMG to purchase up
to 300,000 shares of Common Stock at an exercise price of $2.00 per share, which
expire on December 15, 2002. The Warrants were issued to PMG as compensation for
past and future investment banking and advisory services. The 300,000 shares
underlying the Warrants are being registered on Form S-1.

In July, 1998, the Company granted warrants to acquire 300,000 shares
of Common Stock to PMG and an employee of PMG at an exercise price of $2.00 per
share in consideration for the guarantee, by PMG, of a lease of office space in
Carlsbad, California by the Company and the raising of a bridge loan of
$1,000,000. Such Warrants are exercisable at anytime until July 15, 2003. The
shares underlying these Warrants are being registered on Form S-1.

On December 31, 1998, the Company sold to Mr. & Mrs. Richard A. Hansen
an aggregate of 100,000 shares of the Company's restricted Common Stock at $1.50
per share. The price of the Common Stock at December 30, 1998, was $2.50 per
share. Mr. Hansen is the President of PMG, the Company's investment banker.
These Shares are being registered on Form S-1.

The Company believes that all such transactions with affiliates of the
Company have been entered into on terms no less favorable to the Company than
could have been obtained from independent third parties. The Company intends
that any transactions and loans with officers, directors and five percent (5%)
or greater stockholders, following the date of this Proxy Statement, will be
on terms no less favorable to the Company than could be obtained from
independent third parties and will be approved by a majority of the
independent, disinterested directors of the Company.

<PAGE>

OTHER TRANSACTIONS.

On October 29, 1998, the Company and CSC through CSC Healthcare-Life
Sciences Practice Group entered into the CSC Agreement, whereby CSC is to
develop a commercial strategy, define required execution resources and obtain
required resources for the commercial exploitation of the Company's excimer
laser technology. CSC provides consulting services to various businesses,
including the Company, regarding the introduction of medical technology for
commercialization. CSC has been compensated for its consulting services through
the payment of approximately $231,100 in fees and expenses. In addition to the
fees that have been paid in 1998, the Company is to pay to CSC an additional
$157,600 as contingent compensation at such time as the Company raises no less
then $6,000,000 in equity. Warwick Alex Charlton, Vice President of CSC, is also
the Non-Executive Chairman of the Board of the Company.

<PAGE>

MATTERS FOR CONSIDERATION BY STOCKHOLDERS

PROPOSAL 1. ELECTION OF DIRECTORS.

Seven (7) directors will be elected at the Annual Meeting, each to hold
office until the next Annual Meeting of the Stockholders of the Company or until
their successors are elected and qualify, subject to their prior death,
resignation or removal. Officers serve at the discretion of the Board of
Directors. There are no family relationships among any of the Company's
directors and executive officers. In the absence of instructions to the
contrary, shares of Common Stock represented by properly executed proxies will
be voted for the seven (7) nominees listed hereinbelow, all of whom are
recommended by management of the Company and who have consented to be named and
to serve if elected.

In the event that any management nominee is unable or declines to serve
as a director at the time of the Meeting, the proxies will be voted for any
nominee who is designated by the present Board of Directors to fill the vacancy.
It is not expected that any nominee will be unable or will decline to serve as a
director.

The Board of Directors met or adopted actions by unanimous written
consent approximately six (6) times during the year ended December 31, 1998. All
directors who were members of the Board at the time action and who are standing
for reelection attended 100% of the meetings of the Board. The Board did not
have any standing committee on nominations, compensation or audit, or other
Board committees performing equivalent functions during the year ended December
31, 1998.

The Board knows of no reason why any of the nominees will be
unavailable or decline to serve as a director. The information presented below
is as of April 20, 1999 and is based in part on information furnished by the
nominees and, in part, from the records of the Company.

The affirmative vote of a plurality of the combined Votes Cast at the
Meeting is required to elect the directors nominated below.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF THE
NOMINEES LISTED BELOW.

NOMINEES FOR ELECTION AS DIRECTOR
---------------------------------

The following persons have been recommended by management of the
Company and have consented to be named and to serve as members of the Company's
Board of Directors if elected. Alex Charlton is the Non-Executive Chairman of
the Board of Directors. Biographies of such persons may be reviewed in the
section of this Proxy Statement entitled "Directors and Executive Officers."

NAME DIRECTOR SINCE:
---- ---------------

Raymond A. Hartman October, 1997
Chaim Markheim May, 1995
John J. McAtee, Jr. March, 1998
Alan R. Novak October, 1997
Alex Charlton March, 1999
Harry Mittelman, M.D. April 20, 1999
Steven Girgenti April 20, 1999

<PAGE>

PROPOSAL 2. PROPOSED RESTATED CERTIFICATE OF INCORPORATION AND REVISED BYLAWS

GENERAL

The Board of Directors has approved the proposal to adopt a Restated
Certificate of Incorporation and revised Bylaws, subject to stockholder
approval. If approved, the Restated Certificate of Incorporation will become the
governing instrument of the Company and will differ in several respects from the
current Certificate of Incorporation. Some of the changes will be procedural in
nature but others will result in materials changes in stockholders' rights and
corporate procedures from those currently provided. A copy of the form of the
Restated Certificate of Incorporation and revised Bylaws are attached hereto as
Exhibits "A" and "B," respectively. Stockholders should carefully review such
Restated Certificate of Incorporation and revised Bylaws to determine the nature
and desirability of the proposed changes.

The following discussion generally summarizes certain of the changes
and is qualified in its entirety by reference to the Restated Certificate of
Incorporation and the revised Bylaws.

The proposed Restated Certificate of Incorporation and revised Bylaws
of the Company will generally have the effect of: (a) adopting certain measures
the "Measures") affecting stockholders' rights and adopting certain
"anti-takeover" provisions in connection with changes of control of the Company,
including: (i) the division of the Board of Directors into three (3) classes to
be elected for separate terms of office, and (ii) supermajority requirements of
66 2/3% of the voting power of all issued and outstanding shares of voting stock
with respect to the amendment, change or repeal of certain provisions of the
proposed Restated Certificate of Incorporation and revised Bylaws, (b)
permitting extensive indemnification of officers and directors, and (c)
authorizing a class of up to 2,000,000 shares of Preferred Stock of the Company.

CERTAIN ANTI-TAKEOVER PROCEDURAL REQUIREMENTS

The Restated Certificate of Incorporation adopts certain measures (the
"Measures") which are intended to protect the Company's stockholders by
rendering it more difficult for a person or persons to obtain control of the
Company without cooperation of the Company's management. These Measures include
the potential implementation of certain supermajority requirements for the
amendment of the Company's Restated Certificate of Incorporation and Bylaws.
Such Measures are often referred to as "anti-takeover" provisions. The Company's
current Certificate of Incorporation and revised Bylaws do not include such
anti-takeover provisions.

The inclusion of such "anti-takeover" provisions in the Restated
Certificate of Incorporation may delay, deter or prevent a takeover of the
Company which the stockholders may consider to be in their best interests,
thereby possibly depriving holders of the Company's securities of certain
opportunities to sell or otherwise dispose of their securities at above-market
prices, or limit the ability of stockholders to remove incumbent directors as
readily as the stockholders may consider to be in their best interests.

The Measures are not being proposed in response to any present attempt,
known by the Board of Directors of the Company to acquire control of the
Company, to obtain representation on the Company's Board of Directors or to take
significant corporate action. Rather, management believes that the Measures are
prudent and in the best interests of the Company and its stockholders and should
be adopted for their protection. The Board of Directors further believes that
the present is an appropriate time to adopt the proposed Measures, since they
would lessen the likelihood that the Company would be required to incur
significant expense and might be subject to substantial disruption in connection
with such an attempt.

The Board of Directors does not have any current plans to seek
stockholder approval of any amendments to, or make changes in, the Company's
charter documents that may be deemed to have "anti-takeover" implications,
except as described in this Proxy Statement or as set forth in the Restated
Certificate of Incorporation and revised Bylaws. The Board of Directors may
consider other "anti-takeover" measures in the future, including measures which
do not require stockholder approval. Severance agreements, pension agreements,
restricted stock awards, acceleration of outstanding options and plans and
agreements of a similar nature which become applicable in the event of "change
in control" have become increasingly common in recent years for executives of
major public companies.

<PAGE>

TRANSACTIONS WITH INTERESTED STOCKHOLDERS. Delaware law contains a
statutory provision which is intended to curb abusive takeovers of Delaware
corporations. Section 203 of the Delaware General Corporation Law addresses the
problem by preventing certain business combinations of the corporation with
interested stockholders within three years after such stockholders become
interested. Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations with
a person or an affiliate, or associate of such person, who is an "interested
stockholder" for a period of three (3) years from the date that such person
became an interested stockholder unless: (i) the transaction resulting in a
person becoming an interested stockholder, or the business combination, is
approved by the Board of Directors of the corporation before the person becomes
an interested stockholder; (ii) the interested stockholder acquired 85% or more
of the outstanding voting stock of the corporation in the same transaction that
makes such person an interested stockholder (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) on or after the date the
person becomes an interested stockholder, the business combination is approved
by the corporation's board of directors and by the holders of at least 66-2/3%
of the corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
"interested stockholder" is defined as any person who is: (i) the owner of
fifteen percent (15%) or more of the outstanding voting stock of the corporation
or (ii) an affiliate or associate of the corporation and who was the owner of
fifteen percent (15%) or more of the outstanding voting stock of the corporation
at any time within the three (3) year period immediately prior to the date on
which it is sought to be determined whether such person is an interested
stockholder.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage, provided that such bylaw or
certificate of incorporation amendment shall not become effective until twelve
(12) months after the date it is adopted. The Company has not adopted such an
amendment to the Certificate of Incorporation or to the proposed Restated
Certificate of Incorporation. It is not anticipated that the Board of Directors
of the Company will seek stockholder approval to "opt out" of the operation of
this provision.

Because the provision may have a deterrent effect on the ability or
desire of third persons to acquire a substantial block of Common Stock and to
attempt to gain control of the Company, directors of the Company could be deemed
to have a personal interest in including the "interested stockholder" provisions
in the Restated Certificate of Incorporation.

SUPERMAJORITY REQUIRED FOR AMENDMENT

Under Delaware law, unless the certificate of incorporation otherwise
provides, amendments to the certificate of incorporation generally require the
approval of the holders of a majority of the outstanding stock entitled to vote
thereon, and if the amendment would increase or decrease the number of
authorized shares of any class or series or the par value of such shares or
would adversely affect the rights, powers or preferences of such class or
series, a majority of the outstanding stock of such class or series also would
have to approve the amendment. The proposed Restated Certificate of
Incorporation does not provide otherwise. However, the proposed Restated
Certificate of Incorporation imposes certain supermajority requirements on the
vote of stockholders to amend the proposed Restated Certificate of
Incorporation, unless such amendments are also adopted by the Board of
Directors.

Under Delaware law, directors may amend the bylaws of a corporation
only if such right is expressly conferred upon the directors in its certificate
of incorporation. The proposed Restated Certificate of Incorporation permits the
Board of Directors to adopt, alter or amend the proposed Bylaws of the Company.
However, the proposed Restated Certificate of Incorporation imposes certain
supermajority requirements on the vote of stockholders to amend the proposed
Bylaws of the Company, unless such amendments are also adopted by the Board of
Directors. The Company's current Certificate of Incorporation provides the Board
of Directors with the authority to adopt, alter or amend the Bylaws.

The Restated Certificate of Incorporation permits the Board of
Directors to adopt, amend or repeal any or all of the Company's bylaws without
stockholder action and provide that such bylaws may also be adopted, amended or
repealed by its stockholders, but only if approved by holders of 66 2/3% or more
of the voting power of all outstanding shares of voting stock, including in any
instance in which the alteration is proposed by an Interested Stockholder or by
affiliates or associate of any Interested Stockholder, the affirmative vote of
the holders of at least a majority of voting power of all outstanding shares of
voting stock held by persons other than the Interested Stockholder who proposed
such action. However, the only stockholder vote required if the modification is
approved by a majority of the continuing directors is the affirmative vote of
the majority of the voting power of all outstanding shares of voting stock.

<PAGE>

In order to insure that the substantive provisions set forth in the
Restated Certificate of Incorporation are not circumvented by the amendment of
such Restated Certificate of Incorporation pursuant to a vote of a majority of
the voting power of the Company's outstanding shares, the Restated Certificate
of Incorporation also provides that any amendment, change or repeal of the
provisions contained in the Restated Certificate of Incorporation with respect
to: (i) the Company's capitalization, (ii) amendment of the Bylaws, (iii)
determination by the Board of the number of directors, (iv) filling Board
vacancies, (v) the requirement that stockholder action be taken at an annual or
special meeting, (vi) requirements with respect to appraisal rights for
stockholders, (vii) the amendment of the provision imposing such supermajority
requirement for amendment of the Restated Certificate of Incorporation, or
(viii) classification of the Board of Directors, shall require the affirmative
vote of the holders of at least 66 2/3% of the voting power of all outstanding
shares of voting stock, including, in any instance where the repeal or amendment
is proposed by an Interested Stockholder (as such term is defined in Section 203
of the Delaware General Corporation Law) or its affiliate or associate, the
affirmative vote of a majority of the voting power of all outstanding shares of
voting stock held by persons other than such Interested Stockholder or its
affiliates or associates. However, only the affirmative vote of the majority of
the voting power of all outstanding shares of voting stock is required if the
amendment of any of the foregoing provisions is approved by a majority of the
Continuing Directors (as such term is defined in the Restated Certificate of
Incorporation). The Company's current Certificate of Incorporation does not
currently include such provisions.

CLASSIFIED BOARD. The proposed Restated Certificate of Incorporation
provides that at the first annual meeting of the Company's stockholders after
the authorized number of directors is eight (8) or more, the Board of Directors
shall be divided into three classes, Class I, Class II and Class III. The
current Certificate of Incorporation does not include provision for a classified
Board of Directors. The current Bylaws provide that the authorized number of
directors shall not exceed nine (9) members. There are currently seven (7)
members of the Board of Directors. The proposed Bylaws provide that the maximum
authorized number of directors shall not exceed nine (9) members. In the event
of the approval of the proposed Restated Certificate of Incorporation in
connection with this resolution, the provision for the classified Board of
Directors will take effect at the first annual meeting of the Company's
stockholders following the filing of the Restated Certificate of Incorporation
with the State of Delaware. Upon the effectiveness of the classified Board of
Directors, the initial Class I directors will serve for a term of one year, the
Class II directors for a term of two years, and the Class III directors for a
term of three years. Thereafter, all directors shall serve for three year terms.
The effect of these provisions is that not more than one-third of the Company's
directors will be elected at any single annual meeting. As a result, a person
seeking control of the Company might not necessarily be able to acquire a
controlling block of stock and effect an entire change in management at a single
annual meeting.

SPECIAL MEETINGS OF STOCKHOLDERS. The proposed Bylaws provide that a
special meeting of stockholders may be called by the Chairman of the Board of
Directors, the President, a majority of the Board of Directors or 65% of the
stockholders of record of all shares entitled vote. The current Bylaws of the
Company provide that a special meeting of stockholders may be called by the
Board of Directors or the President of the Company.

CORPORATE ACTION WITHOUT A STOCKHOLDER MEETING. Delaware law permits
corporate action without a meeting of stockholders upon the written consent of
the holders of that number of shares necessary to authorize the proposed
corporate action being taken, unless the certificate of incorporation expressly
provides otherwise.

The proposed Restated Certificate of Incorporation provides that any
action required or permitted to be taken by the stockholders of the Company must
be effected at a duly called annual meeting or at a special meeting of
stockholders of the Company. The Company's current Certificate of Incorporation
and Bylaws permit corporate action without a meeting of stockholders upon the
written consent of the holders of that number of shares necessary to authorize
the proposed action being taken.

LIMITATION OF LIABILITY OF DIRECTORS; INDEMNIFICATION OF DIRECTORS AND OFFICERS

<PAGE>

As discussed below, the Proposed Restated Certificate of Incorporation
of the Company will contain a provision limiting director liability under
certain circumstances and the revised Bylaws of the Company will contain
provisions relating to indemnification of directors and officers. The inclusion
of these provisions could operate to the potential disadvantage of the
stockholders of the Company. For example, their inclusion may have the effect of
reducing the likelihood of the Company's recovering monetary damages from
directors as a result of derivative litigation against directors for breach of
their duty of care, even though such an action, if successful, might otherwise
have benefited the Company and its stockholders. In addition, if the limitation
on liability provision is part of the Certificate of Incorporation of the
Company, the stockholders of the Company will forego potential causes of action
for breach of duty of care involving grossly negligent business decisions,
including those relating to attempts to change control of the Company.

LIMITATION OF LIABILITY OF DIRECTORS. Delaware law permits a Delaware
corporation to include in its certificate of incorporation a provision which
eliminates or limits the personal liability of a director to the corporation or
its stockholders for monetary damages for breach of fiduciary duties as a
director. However, no such provision may eliminate or limit the liability of a
director: (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) for
declaration of unlawful dividends or illegal redemptions or stock repurchases;
or (iv) for any transaction from which the director derived an improper personal
benefit. Under Delaware corporate law, a corporation may provide in its charter
that directors shall not be liable to the corporation or its stockholders for
monetary damages for breach of their fiduciary duty. Each of the Certificate of
Incorporation and proposed Restated Certificate of Incorporation contain
provisions limiting a director's liability for monetary damages to the fullest
extent permitted by Delaware law.

INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each of the Certificate of
Incorporation and proposed Restated Certificate of Incorporation provide that
the Company shall indemnify its directors and officers to the fullest extent
permitted under Delaware law. See "Proposal 5 - Approval of Form of
Indemnification Agreement - Indemnification of Directors and Officers Under
Delaware Law."

The Company has obtained directors' and officers' liability insurance
with a $2,500,000 limit of liability and excess coverage of $2,500,000. Further,
the Company may enter into agreement of indemnification with its directors to
provide for indemnification to the fullest extent permitted, as currently
provided under Delaware law. This policy period expires on February 24, 2002.
The Company has also presented to the stockholders a proposal to adopt a form of
Indemnification Agreement between the Company and the members of its Board of
Directors. See "Proposal 5 - Approval of Form of Indemnification Agreement."

The members of the Board of Directors of the Company have a personal
interest in seeing that the limitation on liability and indemnification
provisions are included as a part of the proposed Restated Certificate of
Incorporation and revised Bylaws.

AUTHORIZED CAPITAL

The Company's current Certificate of Incorporation authorizes the
issuance of up to 10,000,000 shares of Common Stock, par value $0.01 per share.
As of February 4, 1998, the Company's stockholders adopted an amendment to the
Company's Certificate of Incorporation to increase the authorized number of
shares of Common Stock to 15,000,000 shares, and which is anticipated to be
filed with the State of Delaware prior to the date of the Meeting. The proposed
Restated Certificate of Incorporation, subject to Proposal 3 of this Proxy
Statement, will provide for the authorization of the issuance of up to
25,000,000 shares of Common Stock, and will further provide for the
authorization of the issuance of up to 2,000,000 shares of preferred stock, par
value $0.01 per share. The current Certificate of Incorporation does not include
a provision for the authorization of a class of preferred stock.

The proposed Restated Certificate of Incorporation authorizes a class
of preferred stock commonly known as "blank check" preferred stock. The
preferred stock may be issued from time to time in one or more series, and the
Board of Directors, without further approval of its stockholders, is authorized
to fix the relative rights, preferences, privileges and restrictions applicable
to each series of preferred stock. Such shares of preferred stock, if and when
issued, may have rights, powers and preferences superior to those of the
Company's Common Stock. While there are no current plans, commitments or
understandings, written or oral, to issue any preferred stock, in the event of
any issuances, the holders of Common Stock will not have any preemptive or
similar rights to acquire any preferred stock.

VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS

<PAGE>

Under the Company's Certificate of Incorporation and Delaware law, the
proposed Restated Certificate of Incorporation and revised Bylaws must be
approved by the affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL

PROPOSAL 3. INCREASE OF AUTHORIZED SHARES OF COMMON STOCK

GENERAL

The Company's current Certificate of Incorporation authorizes the
issuance of up to 10,000,000 shares of Common Stock, par value $0.01 per share.
As of February 4, 1998, the Company's stockholders adopted an amendment to the
Company's Certificate of Incorporation to increase the authorized number of
shares of Common Stock to 15,000,000 shares, and which is anticipated to be
filed with the State of Delaware prior to the date of the Meeting. Proposal 2 of
this Proxy Statements relates to a proposed Restated Certificate of
Incorporation which, among matters, provides for the authorization of up to
25,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock. This
Proposal 3 seeks the approval of the Company's stockholders to increase the
authorized number of shares of Common Stock to 25,000,000 shares, par value
$0.01 per share.

As of March 15, 1999, the Company had issued and outstanding 9,911,347
shares. The Board of Directors has approved an increase in the authorized number
of shares of Common Stock to 25,000,000 shares in order to facilitate the
Company's ability to raise capital, to facilitate acquisitions and mergers and
to attract qualified employees by offering stock options as incentive
compensation for such persons, by authorizing the issuance of additional
securities of the Company for purposes of effectuating such transactions. See
"Proposal 4 - Approval of the Company's 1999 Stock Option Plan."

In the event that the Company's stockholders approve this Proposal 3 of
this Proxy Statement, which includes a proposal to increase the authorized
number of shares of Common Stock to 25,000,000 shares, and further approves
Proposal 2 of this Proxy Statement with respect to the proposed Restated
Certificate of Incorporation, the Board of Directors will increase the number of
authorized shares of Common Stock set forth in the proposed Restated Certificate
of Incorporation from 15,000,000 shares to 25,000,000 shares.

VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS

Under the Company's Certificate of Incorporation and Delaware law, this
Proposal 3 to increase the authorized number of shares of Common Stock in the
Company's Certificate of Incorporation must be approved by the affirmative vote
of the holders of a majority of the issued and outstanding shares of the
Company's Common Stock.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL

PROPOSAL 4. APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN

GENERAL

The 1999 Stock Option Plan (the "1999 Stock Option Plan") was adopted
by the Board of Directors on April 12, 1999. The Company has reserved for
issuance thereunder an aggregate of 500,000 shares of Common Stock. The 1999
Stock Option Plan provides for the grant to employees of the Company of
incentive stock options within the meaning of Section 422 of the Code, and for
the grant to employees and consultants of nonstatutory stock options.

The success of the Company depends upon its ability to attract and
retain highly qualified and competent employees. The 1999 Stock Option Plan
enhances that ability and provides additional incentive to such personnel to
advance the interests of the Company and its stockholders. Management of the
Company believes that the reservation of 500,000 shares of Common Stock for
issuance under the 1999 Stock Option Plan, would provide an adequate reserve of
shares for issuance under the 1999 Stock Option Plan in order to enable the
Company to compete with other companies to attract and retain valuable
employees.

<PAGE>

A description of the 1999 Stock Option Plan is set forth below. The
description is intended to be a summary of the material provisions of the 1999
Stock Option Plan and does not purport to be complete. The following discussion
summarizes certain aspects of the 1999 Stock Option Plan, but is qualified in
its entirety by reference to the 1999 Stock Option Plan which is attached hereto
as "Exhibit C."

1999 STOCK OPTION PLAN

The general purposes of the 1999 Stock Option Plan are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to employees and consultants of the Company and
to promote the success of the Company's business. It is intended that these
purposes will be effected through the granting of stock options, which may be
either "incentive stock options" as defined in Section 422 of the Code, or
nonstatutory stock options.

The 1999 Stock Option Plan provides that options may be granted to the
employees (including officers and directors who are employees) and consultants
of the Company, or of any parent or subsidiary of the Company. Incentive stock
options may be granted only to employees. An employee or consultant who has been
granted an option may, if otherwise eligible, be granted additional options.

As of April 12, 1999, the Company's Board of Directors approved the
Company's 1999 Stock Option Plan, subject to the ratification of the Company's
stockholders.

The Company has reserved for issuance up to 500,000 shares of Common
Stock under the 1999 Stock Option Plan. No options have been granted under the
1999 Stock Option Plan as of the date of this Proxy Statement.

ADMINISTRATION OF AND ELIGIBILITY UNDER 1999 STOCK OPTION PLAN. The
1999 Stock Option Plan, as adopted, provides for the issuance of options to
purchase shares of Common Stock to officers, directors, employees, independent
contractors and consultants of the Company and its subsidiaries as an incentive
to remain in the employ of or to provide services to the Company and its
subsidiaries. The 1999 Stock Option Plan authorizes the issuance of incentive
stock options ("ISOs"), non-qualified stock options ("NSOs") and stock
appreciation rights ("SARs") to be granted by a committee (the "Committee") to
be established by the Board of Directors to administer the 1999 Stock Option
Plan, which will consist of at least two outside directors of the Company.

Subject to the terms and conditions of the 1999 Stock Option Plan, the
Committee will have the sole authority to determine: (a) the persons
("optionees") to whom options to purchase shares of Common Stock and SARs will
be granted, (b) the number of options and SARs to be granted to each such
optionee, (c) the price to be paid for each share of Common Stock upon the
exercise of each option, (d) the period within which each option and SAR will be
exercised and any extensions thereof, and (e) the terms and conditions of each
such stock option agreement and SAR agreement which may be entered into between
the Company and any such optionee.

All officers, directors and employees of the Company and its
subsidiaries and certain consultants and other persons providing significant
services to the Company and its subsidiaries will be eligible to receive grants
of options and SARs under the 1999 Stock Option Plan. However, only employees of
the Company and its subsidiaries are eligible to be granted ISOs.

STOCK OPTION AGREEMENTS. All options granted under the 1999 Stock
Option Plan will be evidenced by an option agreement or SAR agreement between
the Company and the optionee receiving such option or SAR. Provisions of such
agreements entered into under the 1999 Stock Option Plan need not be identical
and may include any term or condition which is not inconsistent with the 1999
Stock Option Plan and which the Committee deems appropriate for inclusion.

INCENTIVE STOCK OPTIONS. Except for ISOs granted to stockholders
possessing more than ten percent (10%) of the total combined voting power of all
classes of the securities of the Company or its subsidiaries to whom such
ownership is attributed on the date of grant ("Ten Percent Stockholders"), the
exercise price of each ISO must be at least 100% of the fair market value of the
Company's Common Stock as determined on the date of grant. ISOs granted to Ten
Percent Stockholders must be at an exercise price of not less than 110% of such
fair market value.

<PAGE>

Each ISO must be exercised, if at all, within ten (10) years from the
date of grant, but, within five (5) years of the date of grant in the case of
ISO's granted to Ten Percent Stockholders.

An optionee of an ISO may not exercise an ISO granted under the 1999
Stock Option Plan so long as such person holds a previously granted and
unexercised ISO.

The aggregate fair market value (determined as of time of the grant of
the ISO) of the Common Stock with respect to which the ISOs are exercisable for
the first time by the optionee during any calendar year shall not exceed
$100,000.

NON-QUALIFIED STOCK OPTIONS. The exercise price of each NSO will be
determined by the Committee on the date of grant. The Company hereby undertakes
not to grant any non-qualified stock options under the 1999 Stock Option Plan at
an exercise price less than 85% of the fair market value of the Common Stock on
the date of grant of any non-qualified stock option under the 1999 Stock Option
Plan.

The exercise period for each NSO will be determined by the Committee at
the time such option is granted, but in no event will such exercise period
exceed ten (10) years from the date of grant.

STOCK APPRECIATION RIGHTS. Each SAR granted under the 1999 Stock Option
Plan will entitle the holder thereof, upon the exercise of the SAR, to receive
from the Company, in exchange therefor, an amount equal in value to the excess
of the fair market value of the Common Stock on the date of exercise of one
share of Common Stock over its fair market value on the date of exercise of one
share of Common Stock over its fair market value on the date of grant (or in the
case of an SAR granted in connection with an option, the excess of the fair
market of one share of Common Stock at the time of exercise over the option
exercise price per share under the option to which the SAR relates), multiplied
by the number of shares of Common Stock covered by the SAR or the option, or
portion thereof, that is surrendered.

SARs will be exercisable only at the time or times established by the
Committee. If an SAR is granted in connection with an option, the SAR will be
exercisable only to the extent and on the same conditions that the related
option could be exercised. The Committee may withdraw any SAR granted under the
1999 Stock Option Plan at any time and may impose any conditions upon the
exercise of an SAR or adopt rules and regulations from time to time affecting
the rights of holders of SARs.

LIMIT TO OPTIONS GRANTED UNDER THE 1999 STOCK OPTION PLAN. Under
Section 162(m) of the Code, which was enacted in 1993, the deductibility for
federal income tax purposes of compensation paid to the Company's Chief
Executive Officer and the four other most highly compensated executive officers
who receive salary and bonus in excess of $100,000 in a particular year is
limited to $1,000,000 per year per individual. For purposes of this legislation,
compensation expense attributable to stock options and SARs would be subject to
this limitation unless, among other things, the option plan under which the
options and SARs is granted includes a limit on the number of shares with
respect to which awards may be made to any one employee in a fiscal year. Such a
potential compensation expense deduction could arise, for example, upon the
exercise by one of these executive of a nonstatutory option, i.e., an option
that is not an incentive stock option qualifying for favorable tax treatment, or
upon a disqualifying disposition of stock received upon exercise of an incentive
stock option.

In order to exclude compensation resulting from options granted under
the Company's 1999 Stock Option Plan from the $1,000,000 limit on deductibility,
the Board of Directors has approved a provision in the 1999 Stock Option Plan
which will place a 35,000 share limit on the number of options that may be
granted under the 1999 Stock Option Plan to an employee in any fiscal year. This
limit is subject to appropriate adjustment in the case of stock splits, reverse
stock splits and the like. The purpose of this provision, which is intended to
comply with Section 162(m) of the Code and the regulations thereunder, is to
preserve the Company's ability to deduct in full any compensation expense
related to stock options.

TERMINATION OF OPTION AND TRANSFERABILITY. In general, any unexpired
options and SARs granted under the 1999 Stock Option Plan will terminate: (a) in
the event of death or disability, pursuant to the terms of the option agreement
or SAR agreement, but not less than six (6) months or more than twelve (12)
months after the applicable date of such event, (b) in the event of retirement,
pursuant to the terms of the option agreement or SAR agreement, but no less that
thirty (30) days or more than three (3) months after such retirement date, or
(c) in the event of termination of such person other than for death, disability
or retirement, until thirty (30) days after the date of such termination.
However, the Committee may in its sole discretion accelerate the exercisability
of any or all options or SARs upon termination of employment or cessation of
services.

<PAGE>

The options and SARs granted under the 1999 Stock Option Plan generally
will be non-transferable, except by will or the laws of descent and
distribution.

ADJUSTMENTS RESULTING FROM CHANGES IN CAPITALIZATION. The number of
shares of Common Stock reserved under the 1999 Stock Option Plan and the number
and price of shares of Common Stock covered by each outstanding option or SAR
under the 1999 Stock Option Plan will be proportionately adjusted by the
Committee for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from any stock dividends, split-ups,
consolidations, recapitalizations, reorganizations or like event.

AMENDMENT OR DISCONTINUANCE OF STOCK OPTION PLAN. The Board of
Directors has the right to amend, suspend or terminate the 1999 Stock Option
Plan at any time. Unless sooner terminated by the Board of Directors, the 1999
Stock Option Plan will terminate on April 11, 2009, the tenth (10th) anniversary
date of the effectiveness of the 1999 Stock Option Plan.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

Options granted under the 1999 Stock Option Plan may be either
"incentive stock options," as defined in Section 422 of the Code, or
nonstatutory options.

An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of:
(i) the fair market value of the shares at the date of the option exercise, or
(ii) the sale price of the shares. A different rule for measuring ordinary
income upon such a premature disposition may apply if the optionee is also an
officer, director or Ten Percent Stockholder of the Company. Generally, the
Company will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized as long-term or short-term capital gain or loss,
depending on the holding period.

All other options that do not qualify as incentive options are referred
to as nonstatutory options. An optionee will not recognize any taxable income at
the time he or she is granted a non-statutory option. However, upon its
exercise, the optionee will recognize taxable income generally measured as the
excess of the then fair market value of the shares purchased over the purchase
price. Any taxable income recognized in connection with an option exercise by an
option who is also an employee of the Company will be subject to tax withholding
by the Company. Upon the resale of such shares by the optionee, any difference
between the sale price and the optionee's purchase price, to the extent not
recognized as taxable income as described above, will be treated as long-term
capital gain or loss, depending on the holding period.

Generally, the Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a nonstatutory option.

The foregoing is only a summary of the effect of federal income
taxation upon the optionee and the Company with respect to the grant and
exercise of options under the 1999 Stock Option Plan, does not purport to be
complete, and does not discuss the tax consequences of the optionee's death or
the income tax laws of any municipality, state or foreign country in which an
optionee may reside.

VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS

Approval of the 1999 Stock Option Plan requires the affirmative vote of
a majority of the combined Votes Cast.

<PAGE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL

PROPOSAL 5. APPROVAL OF FORM OF INDEMNIFICATION AGREEMENT

GENERAL

The stockholders are being asked at the Meeting to approve proposed
agreements (the "Indemnification Agreements") to be entered into between the
Company and its directors and officers, in substantially the form attached
hereto as "Exhibit D."

The Board of Directors believes that the Indemnification Agreements are
a response to: (i) the increasing hazard and related expense of unfounded
litigation directed against directors and executive officers; (ii) the general
unavailability of directors' and officers' liability insurance or significant
limitations in amounts and breadth of coverage; (iii) dramatic increases in
premiums for such coverage; and (iv) the potential inability of the Company to
continue to attract and retain qualified directors and executive officers in
light of these circumstances.

The Company has obtained directors' and officers' liability insurance
with a $2,500,000 limit of liability and a $2,500,000 excess coverage. The
policy period expires on February 24, 2000. The Company intends to renew such
policy or obtain comparable coverage after the expiration of such policy.
However, there can be no assurances to this effect.

The Board of Directors believes that the Indemnification Agreements
will serve the best interests of the Company and its stockholders by
strengthening the Company's ability to attract and retain the services of
knowledgeable and experienced persons as directors and officers who, through
their efforts and expertise, can make a significant contribution to the success
of the Company. The Indemnification Agreements are intended to complement the
indemnity and protection available under Delaware law, the Company's Certificate
of Incorporation and Bylaws and any policies of insurance which may hereafter be
maintained by the Company and to provide for indemnification of certain of its
agents to the fullest extend permitted by applicable law.

The following discussion summarizes certain aspects of the
Indemnification Agreement, but is qualified in its entirety by reference to the
form of Indemnification Agreement which is attached as "Exhibit D" hereto.

INDEMNIFICATION OF DIRECTORS AND OFFICERS UNDER DELAWARE LAW

In general, Delaware law empowers a corporation to indemnify any person
who was or is a party or who is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except in the case of an action by or in the
right of the corporation, by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or other enterprise. Depending on the character of the
proceeding, a corporation may indemnify against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding if the person
indemnified acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceedings, had no reasonable cause to believe his or
her conduct was unlawful.

A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or other
enterprise, against expenses, including amounts paid in settlement and
attorney's fees actually and reasonably incurred by him or her in connection
with the defense or settlement of the action or suit if he or she acted in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation. Indemnification may not be
made for any claim, issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of all appeals therefrom,
to be liable to the corporation or for amounts paid in settlement to the
corporation unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.

<PAGE>

To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, or in defense of any claim, issue
or matter therein, he or she must be indemnified by the corporation against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the defense. Any indemnification under this section, unless
ordered by a court or advanced pursuant to this section, must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made: (a) by the stockholders; (b) by
the board of directors by majority vote of a quorum consisting of directors who
were not parties to the action, suit or proceeding; (c) if a majority vote of a
quorum consisting of directors who were not parties to the action, suit or
proceeding so orders, by independent legal counsel in a written opinion; or (d)
if a quorum consisting of directors who were not parties to the action, suit or
proceeding cannot be obtained, by independent legal counsel in a written
opinion.

The certificate of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the corporation. The provisions of this section do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.

The indemnification and advancement of expenses authorized in or
ordered by a court: (a) does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
certificate of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his or her
official capacity or an action in another capacity while holding his or her
office, except that indemnification, unless ordered by a court pursuant to this
section or for the advancement of any director or officer if a final
adjudication establishes that his or her acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action; and (b) continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.

Delaware law provides that a director shall not be held personally
liable for monetary damages for breach of fiduciary duty as a director, provided
(as specified in the Delaware law) that such limitation of liability shall not
act to limit liability for the following conduct: (a) breaches of the director's
duty of loyalty to the corporation or its stockholders; (b) acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law; (c) the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or (d) any transaction from which the director derived an improper
personal benefit.

INDEMNIFICATION AGREEMENTS

The Indemnification Agreements provide the Indemnitee with the maximum
indemnification allowed under applicable law. Since the Delaware statutes are
non-exclusive, it is possible that certain claims beyond the scope of the
statute may be indemnifiable. The Indemnification Agreements provide a scheme of
indemnification which may be broader than that specifically provided by Delaware
law. It has not yet been determined, however, to what extent the indemnification
expressly permitted by Delaware law may be expanded, and therefore the scope of
indemnification provided by the Indemnification Agreements may be subject to
future judicial interpretation.

The Indemnification Agreements provide that the Company shall indemnify
an Indemnitee who is or was a party or becomes a party or is threatened to be
made a party to any threatened, pending or completed action or proceeding
whether civil, criminal, administrative or investigative by reason of the fact
that the Indemnitee is or was a director, officer, key employee or agent of the
Company or any subsidiary of the Company. The Company shall advance all
expenses, judgments, fines, penalties and amounts paid in settlement (including
taxes imposed on Indemnitee on account of receipt of such payouts) incurred by

<PAGE>

the Indemnitee in connection with the investigation, defense, settlement or
appeal of any civil or criminal action or proceeding as described above. The
Indemnitee shall repay such amounts advanced only if it shall be ultimately
determined that he or she is not entitled to be indemnified by the Company. The
advances paid to the Indemnitee by the Company shall be delivered within 20 days
following a written request by the Indemnitee. Any award of indemnification to
an Indemnitee, if not covered by insurance, would come directly from the assets
of the Company, thereby affecting a stockholder's investment.

The Indemnification Agreements set forth a number of procedural and
substantive matters which are not addressed or are addressed in less detail in
Delaware law, including the following:

First, in the event an action is instituted by the Indemnitee under the
Indemnification Agreements to enforce or interpret any of the terms therein,
Indemnitee shall be entitled to be paid all costs and expenses, including
reasonable attorneys' fees, incurred by the Indemnitee with respect to such
action, unless as a part or such action, a court of competent jurisdiction
determines that each of the material assertions made by the Indemnitee were not
made in good faith or were frivolous. In the event of an action instituted by or
in the name of the Company under the Indemnification Agreements or to enforce or
interpret any of the terms therein, the Indemnitee shall be entitled to be paid
all costs and expenses, including reasonable attorneys' fees, incurred by the
Indemnitee in the defense of such action, unless as a part of such action the
court determines that each of the Indemnitee's material defenses to such action
were made in bad faith or were frivolous. Delaware law does not set forth any
procedure for contesting a corporation's determination of a party's right to
indemnification.

Second, the Indemnification Agreements explicitly provide for partial
indemnification of costs and expenses in the event that an Indemnitee is not
entitled to full indemnification under the terms of the Indemnification
Agreement. Delaware law does not specifically address this issue. Delaware law
does, however, provide that to the extent that an Indemnitee has been successful
on the merits, he or she shall be entitled to such indemnification.

Third, in the event the Company shall be obligated to pay the expenses
of any proceeding against the Indemnitee, the Company shall be entitled to
assume the defense of such proceeding, with counsel approved by the indemnified
party, which approval shall not be unreasonably withheld, upon the delivery to
the Indemnitee of written notice of its election to do so. The Company shall
have the right to conduct such defense as it sees fit in its sole discretion,
including the right to settle any claim against Indemnitee without the consent
of the Indemnitee.

Fourth, indemnification provided by the Indemnification Agreements is
not exclusive of any rights to which the Indemnitee may be entitled under the
Company's Certificate or Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested directors, Delaware law, or
otherwise. The indemnification provided under the Indemnification Agreements
continues for any action taken or not taken while serving in an indemnified
capacity even though the Indemnitee may have ceased to serve in such capacity at
the time of the action, suit or other covered proceeding.

Finally, the Indemnification Agreements provide for certain exceptions
to indemnification which include the following: (a) indemnification for
liabilities where the law prohibits indemnification; (b) indemnification or
advancement of expenses with respect to proceedings or claims initiated or
brought voluntarily by an Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under the Indemnification Agreements or any statute or law or
otherwise as required under Delaware law; and (c) indemnification for expenses
in the payment of profits arising from the purchase and sale by the Indemnitee
of securities in violation of Section 16(b) of the Exchange Act or any similar
or successor statute.

The proposed Indemnification Agreements, together with the limitations
on the directors' liability provided by the Company's Certificate of
Incorporation and the Company's Bylaws, reduce significantly the number of
instances in which directors might be held liable to the Company for monetary
damages for breach of their fiduciary duties. Therefore, it should be noted that
the current directors of the Company have a direct personal interest in the
approval of the Indemnification Agreements.

At present, there is no pending litigation or proceeding involving an
Indemnitee where indemnification would be required or permitted under the
Indemnification Agreements.

<PAGE>

INDEMNIFICATION OF LIABILITIES UNDER THE SECURITIES ACT OF 1933

The Commission has expressed its opinion that indemnification of
directors, officers and controlling persons of the Company against liabilities
arising under the Securities Act of 1933, as amended (the "1933 Act"), is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by an Indemnitee of the Company in the successful defense of any such act or
proceeding) is asserted by such Indemnitee in connection with securities which
have been registered by the Company, the Company will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the 1933 Act and will be governed by
the final adjudication of such issue.

Delaware law generally provides that no contract or transaction between
a corporation and one or more of its directors or officers shall be void or
voidable solely for this reason, or solely because the director or officer is
present or participates in the meeting of the board or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (a) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
board of directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum, (b) the material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders, or (c) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified, by the board, a committee thereof, or the stockholders.

Since the Company intends to enter into these Indemnification
Agreements with each of its directors, the Indemnification Agreements must
either be fair to the Company or be approved by the requisite vote of
stockholders. Although the Company believes that the form of Indemnification
Agreement is fair to the Company, and that stockholder approval may not
therefore be required to validate the Indemnification Agreements, the Company
believes that it is appropriate to submit the Indemnification Agreements to the
stockholders for their consideration. If the Indemnification Agreements are not
approved by the stockholders, the invalidity of such agreements could hereafter
be asserted by the stockholders. In such an instance, the person asserting the
validity of the Indemnification Agreements will bear the burden of proving that
they were fair to the Company at the time they were authorized.

VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS

Approval of the Indemnification Agreements will require the affirmative
vote of a majority of the votes present or represented and entitled to vote on
this subject matter at the meeting and held by disinterested stockholders. Since
each director is an interested party with respect to this matter, shares owned
directly or indirectly by any director may not be voted on this proposal
although they will be counted for purposes of determining whether a quorum is
present. An abstention is not an affirmative vote and, therefor, will have the
same effect as a vote against the proposal. A broker non-vote will not be
treated as entitled to vote on this subject matter at the meeting. See
"Information Concerning Solicitation and Voting - Quorum; Abstentions; Broker
Non-Votes."

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL

PROPOSAL 6. RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT.

The Board of Directors of the Company has appointed the firm of Hein +
Associates LLP as independent certified public accountants for the Company for
the year ending December 31, 1999, subject to stockholder approval. The Company
has been advised by Hein + Associates LLP that neither that firm nor any of its
partners has any material relationship with the Company or any affiliate of the
Company.

A representative of Hein + Associates LLP is expected to be present at
the Meeting to make a statement, if he or she desires to do so, and to be
available to respond to appropriate questions at the Meeting. In the event that
the stockholders disapprove the appointment of Hein + Associates LLP as
independent public accountants for the Company, the Board of Directors will
review its selection.

<PAGE>

VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS

Approval of the appointment of Hein + Associates LLP as independent
certified public accountants for the Company for the year ending December 31,
1999 requires the affirmative vote of a majority of the combined Votes Cast.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF HEIN + ASSOCIATES LLP AS THE COMPANY'S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1999.

<PAGE>

OTHER MATTERS

The Company knows of no other matters to be submitted at the Meeting.
If any other matters properly come before the Meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.

By Order of the Board of Directors of

LASER PHOTONICS, INC.

By: /s/ Chaim Markheim
-----------------------------------
Chaim Markheim
Chief Financial Officer

Carlsbad, California
May 12, 1999

<PAGE>

P R O X Y
- - - - -

LASER PHOTONICS, INC.

THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS

FOR AN ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 1999

The undersigned stockholder appoints Chaim Markheim and Raymond A,
Hartman, or either of them, as proxy with full power of substitution, to vote
the shares of voting securities of Laser Photonics, Inc. (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the Olympic Resort Hotel & Spa, 6111 El Camino Real, Carlsbad,
California 92009, on June 22, 1999, at 10:00 a.m., local time, and at any
adjournments thereof, upon matters properly coming before the meeting, as set
forth in the Notice of Annual Meeting and Proxy Statement, both of which have
been received by the undersigned. Without otherwise limiting the general
authorization given hereby, such proxy is instructed to vote as follows:

THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE PROPOSALS INDICATED ON THIS CARD AND
AS SUCH PROXIES DEEM ADVISABLE WITH DISCRETIONARY AUTHORITY ON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENT OR ADJOURNMENTS THEREOF.

(1) [ ] FOR ALL NOMINEES LISTED HEREIN (EXCEPT AS MARKED UP TO THE
CONTRARY BELOW).

[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW.

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME LISTED BELOW)

Chaim Markheim Raymond A. Hartman Steven Girgenti Harry Mittelman

Alan R. Novak John J. McAtee, Jr. Alex Charlton

(2) To approve a Restated Certificate of Incorporation and revised Bylaws
of the Company.