<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how 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> 2
HEARx LTD.
1250 NORTHPOINT PARKWAY
WEST PALM BEACH, FLORIDA 33407
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of HEARx
Ltd., a Delaware corporation ("Company"), will be held at The Princeton Club of
New York, 15 West 43rd Street, New York, New York 10036-7497, on May 18, 1998,
at 10:00 A. M. Eastern Time, to consider and act upon:
1. The election of five directors of the Company, each to hold office
until the next Annual Meeting of Stockholders and thereafter until his
successor is duly elected and qualified, or as otherwise provided by
the Bylaws or statute;
2. The ratification of the selection of BDO Seidman LLP as the Company's
independent certified public accountants for its fiscal year ending
December 25, 1998; and
3. The transaction of such other business as may properly come before the
meeting.
The close of business on March 31, 1998 has been fixed as the record date for
the determination of stockholders who are entitled to notice of, and to vote at,
the meeting. The voting rights of the stockholders are described in the Proxy
Statement.
By order of the Board of Directors,
Tommy E. Kee
Vice President,
Secretary and Treasurer
April 6, 1998
PLEASE SPECIFY YOUR CHOICES, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING SO
THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING.
<PAGE> 3
HEARx LTD.
1250 Northpoint Parkway
West Palm Beach, Florida 33407
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
To be held on May 18, 1998
This Proxy Statement, with the accompanying proxy card, is being mailed
or given to stockholders commencing on or about April 6, 1998, in connection
with the solicitation of proxies by the Board of Directors of HEARx Ltd.
("Company") to be used at the Annual Meeting of Stockholders of the Company to
be held at The Princeton Club of New York, 15 West 43rd Street, New York, New
York 10036-7497, on Monday, May 18, 1998, at 10:00 A.M. Eastern Time and at any
adjournment or adjournments thereof.
PROXY PROCEDURE
If the enclosed proxy card is properly executed and returned prior to
the meeting, the shares represented thereby will be voted in accordance with the
stockholder's directions or, if no directions are indicated, the shares will be
voted in accordance with the recommendations of the Board of Directors as
specified in this Proxy Statement. The Board of Directors does not know of any
other business to be brought before the meeting, but it is intended that, as to
any such other business, a vote may be cast pursuant to the proxy in accordance
with the judgment of the person or persons acting thereunder. Any stockholder
executing a proxy may revoke that proxy at any time prior to the voting thereof
either by delivering written notice to the Secretary of the Company or by voting
in person at the meeting.
PROXY SOLICITATION
All costs of the solicitation of proxies will be borne by the Company.
In addition to the solicitation of proxies by the use of the mails, the Company
may utilize the services of some of the officers and regular employees of the
Company (who will receive no compensation therefor in addition to their regular
salaries) to solicit proxies personally and by telephone. The Company will
request banks, brokers, custodians, nominees and fiduciaries to forward copies
of the proxy solicitation materials to beneficial owners and to request
authority for the execution of proxies. The Company will reimburse such persons
or entities for their expenses in so doing.
<PAGE> 4
VOTING AT MEETING
Holders of record of shares of Common Stock, par value $.10 per share
("Common Stock"), as of the close of business on March 31, 1998, are entitled to
notice of, and to vote at, the meeting. As of that date, there were outstanding
100,794,250 shares of Common Stock. Each holder of Common Stock is entitled to
one vote for each share held. The holders of a majority of the shares of Common
Stock issued and outstanding as of the close of business on March 31, 1998, will
constitute a quorum at the meeting. Those five director nominees receiving the
greatest number of votes will be elected as directors. The affirmative vote of
the holders of a majority of the shares of Common Stock represented in person or
by proxy at the meeting is required to approve each matter presented to the
meeting other than the election of directors.
Under the Delaware General Corporation Law, any stockholder who
abstains from voting on any particular matter described herein will be counted
for purposes of determining a quorum. Shares of Common Stock represented by
proxies that are marked "withhold authority" with respect to the election of one
or more nominees for director and abstentions with respect to the other
proposals have the same effect as if the shares represented thereby were voted
against such nominee or nominees and against such other matters, respectively.
Broker non-votes will be treated as not represented at the meeting as to any
matter for which a non-vote is indicated on the broker's proxy.
The Company's principal executive offices are located at 1250
Northpoint Parkway, West Palm Beach, Florida 33407.
<PAGE> 5
ELECTION OF DIRECTORS
PROPOSAL NO. 1
Five directors of the Company are to be elected at the meeting, each to
hold office until the next Annual Meeting of Stockholders and until his
successor is elected and qualified, or as otherwise provided by the Company's
Bylaws or by statute.
The Board of Directors has nominated the five persons hereinafter named
for election as directors, all of whom are presently serving as such. Mr.
Gitterman was appointed to the Board by the Board of Directors in November 1997
to fill the vacancy created by the death of Fred N. Gerard. All other members of
the Board have been previously elected as directors by the Company's
stockholders. It is intended that the shares represented by the enclosed proxy
will be voted for the election of these five nominees (unless such authority is
withheld by a stockholder). In the event that any of the nominees should become
unable or unwilling to serve as a director (which is not anticipated), it is
intended that the proxy will be voted for the election of such person or
persons, if any, as shall be designated by the Board of Directors.
The nominees for election as directors are:
<TABLE>
<CAPTION>
Director Position with
Names and Ages Since the Company
-------------- ----- -----------
<S> <C> <C>
Paul A. Brown, M.D. 1986 Chairman of the Board and
(60) Chief Executive Officer
Stephen J. Hansbrough 1997 President, Chief Operating
(51) Officer and Director
Thomas W. Archibald 1993 Director
(60)
David J. McLachlan 1986 Director
(59)
Joseph L. Gitterman III 1997 Director
(61)
</TABLE>
Paul A. Brown, M.D., holds an A.B. from Harvard College and an M.D.
from Tufts University School of Medicine. From 1970 to 1984, Dr. Brown was
Chairman of the Board of MetPath Inc., a New Jersey-based corporation offering a
full range of clinical laboratory services to physicians and hospitals, which he
founded in 1967 while a resident in pathology at Columbia Presbyterian Medical
Center in New York City. MetPath developed into the largest clinical lab in the
world with over 3,000 employees
3
<PAGE> 6
and was listed on the American Stock Exchange prior to being sold to Corning in
1982 for $140 million. Dr. Brown is the past Chairman of the Board of Overseers
of Tufts University School of Medicine as well as an emeritus member of the
Board of Trustees of Tufts University, a member of the Visiting Committee of the
Boston University School of Medicine and a part-time lecturer in pathology at
Columbia University of Physicians and Surgeons. Dr. Brown has also served as a
member of the Board of Directors of UroCor, Inc. since 1988.
Stephen J. Hansbrough, President, Chief Operating Officer and Director
joined the Company in December 1993. Mr. Hansbrough has an extensive background
in the retail arena. He served as Chairman and Chief Executive Officer of Dart
Drug Stores until 1988. Subsequently and prior to joining the Company, he was an
independent consultant specializing in turn-around and start-up operations
primarily in the retail field.
Thomas W. Archibald attended the London School of Economics and
received a B.A. degree in economics from Denison University and a Juris Doctor
degree from the Ohio State University Law School. He retired from The Bank of
New York in 1995 where he served as Executive Vice President of the Personal
Trust Sector. He had held that position at Irving Trust Company when it merged
with The Bank of New York in 1988. Mr. Archibald is a past Director of Group
Health Incorporated, the only not-for-profit health insurance carrier chartered
to operate throughout New York State.
David J. McLachlan holds an A.B. Degree in engineering from Harvard
College and an M.B.A. Degree from Harvard Graduate School of Business
Administration. He has been the Executive Vice President of Genzyme Company
since December 1989. Prior to that he was the Vice President, Treasurer and
Chief Financial Officer of Adams-Russell Co., Inc., an owner and operator of
cable television systems and Adams-Russell Electronics, Inc., a defense
electronics manufacturer.
Joseph L. Gitterman III attended the University of Virginia and
Columbia University. He is the manager of EIP Group LLC, an investing, trading
and consulting firm which he founded in 1994. Until 1994, he was the Senior
Managing Director of LaBranche & CO. He was a member of the New York Stock
Exchange for over thirty years and was appointed a Governor in 1986. At the New
York Stock Exchange, he was on over fourteen committees, serving as chairman of
some of them. He is a director of Classic Turf Co., Intrepid International, Mill
Bridge Inc. and Custom Data Services. He is also a trustee of the Margaret
Bartlett Foundation, the Steep Rock Association and the Westminster School
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL THE ABOVE-NAMED NOMINEES AS DIRECTORS OF THE COMPANY.
4
<PAGE> 7
DIRECTORS' COMPENSATION, MEETING ATTENDANCE AND COMMITTEES
The Board of Directors received no cash compensation during the fiscal
year ended December 26, 1997 and will not receive any such compensation during
the current fiscal year. The Company does reimburse out-of-pocket expenses for
attendance at meetings. Messrs. Archibald and McLachlan each received on May 22,
1997 an option to acquire 15,000 shares of Common Stock at a price of $1.875 per
share (the then fair market value of such shares), pursuant to the Company's
stockholder approved Non-Qualified Stock Option Plan for Non-Employee Directors.
These options are exercisable for a period of ten years and vested immediately.
Under the Plan, each non-employee director elected at the 1998 Annual Meeting
will be entitled to receive options for 15,000 shares of Common Stock,
exercisable at the then fair market value.
There were five meetings of the Board of Directors during the fiscal
year ended December 26, 1997. Each of the incumbent directors attended all of
the meetings of the Board of Directors and all the meetings of the committee on
which they serve, held while they were on the Board and such committee, in the
year ended December 26, 1997.
The standing committee of the Board of Directors is the Audit
Committee. The Board has not appointed a nominating committee or a compensation
committee.
Messrs. Archibald, McLachlan and Gitterman are members of the Audit
Committee. The functions of the Audit Committee are to review the adequacy of
systems and procedures for preparing the financial statements of the Company as
well as the suitability of internal financial controls, and to review and
approve the scope and performance of the independent auditors' work. The Audit
Committee met once during the fiscal year ended December 26, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own beneficially more
than ten percent of any class of equity security of the Company to file with the
Securities and Exchange Commission initial reports of such ownership and reports
of changes in such ownership. Officers, directors and such beneficial owners are
required by Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, during the fiscal year ended December 26,
1997, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than ten-percent beneficial owners were complied
with except as follows: for Paul A. Brown, one transaction was reported late for
the 1997 fiscal year; for Stephen J. Hansbrough, one transaction was reported
late for the 1996 fiscal year, and one transaction was reported late for the
1995 fiscal year; and for James W. Peklenk, one
5
<PAGE> 8
transaction was reported late for the 1997 fiscal year, and one transaction was
reported late for the 1996 fiscal year.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
for services rendered in all capacities to the Company and its subsidiaries
during the 1997, 1996 and 1995 fiscal years, of those persons who were at fiscal
year-end 1997 (i) the Chief Executive Officer and (ii) the other executive
officers whose salary and bonus exceeded $100,000 (these three persons are
hereafter referred to as the "Named Executive Officers"):
<TABLE>
<CAPTION>
=============================================================================================================
SUMMARY COMPENSATION TABLE
=============================================================================================================
Annual Compensation
------------------- All Other
Name and Year Salary Bonus Options Compensation
Principal Position ($) ($) (#)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul A. Brown, M.D.(1) 1997 $200,000 $70,000 -0- -0-
Chairman and Chief 1996 100,000 -0- -0- -0-
Executive Officer 1995 -0- -0- -0- -0-
Stephen J. Hansbrough 1997 $175,000 $50,000 -0- -0-
President and Chief 1996 151,462 18,510 175,000 -0-
Operating Officer 1995 124,000 62,000 1,100,000 N/A
James W. Peklenk 1997 $100,000 $20,000 25,000 -0-
Vice President - Finance 1996 83,846 20,000 125,000 -0-
Chief Financial Officer 1995 N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Dr. Brown began receiving an annual salary of $200,000 on July 1, 1996.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the grants
of options to the Named Executive Officers to purchase Common Stock during the
fiscal year ended December 26, 1997:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF TOTAL ANNUAL RATES OF STOCK
OPTIONS OPTIONS GRANTED PRICE APPRECIATION
GRANTED EMPLOYEES IN EXERCISE EXPIRATION FOR OPTION TERM
NAME (#) FISCAL YEAR PRICE DATE 5% $10%
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Brown, M.D. -0- N/A --- --- --- ---
Stephen J. Hansbrough -0- N/A --- --- --- ---
James W. Peklenk 25,000 3% $1.875 5/22/07 $49,219 $51,563
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
OPTION EXERCISES AND AGGREGATED FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to stock option
exercises, unexpired options to purchase shares of the Company's Common Stock
and the value of such unexercised options granted in fiscal years prior to 1997
and held by the Named Executive Officers as of the end of fiscal 1997:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Shares Number of Value of Unexercised
Acquired on Value Unexercised Options at In-the-Money Options at
Exercise Realized Fiscal Year-End Fiscal Year-End
(#) ($) (#) ($)
- ---------------------------------------------------------------------------------------------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul A. Brown, M.D. -0- $-0- 100,000/-0- $-0-/$-0-
Stephen J. Hansbrough 50,000 $68,125 1,011,250/856,250 $655,281/$272,141
James W. Peklenk -0- $-0- 56,250/143,750 $-0-/$-0-
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
REPORT OF THE BOARD OF DIRECTORS ON COMPENSATION
The Company's executive compensation program is administered by the
Board of Directors. In addition to base salary, compensation for the Company's
executive officers may include annual performance bonuses, stock options
pursuant to the Company's stock option plan and otherwise and stock grants
pursuant to the Company's stock bonus plan. It is the intention of the Board of
Directors to use salary and bonuses as compensation for current and past
performance, while using stock options and restricted stock grants to provide
incentives for superior long-term performance.
To establish compensation for the Company's executive officers, the
Board of Directors uses subjective performance evaluations, compensation
statistics of other similar sized health care organizations and, with respect to
executive officers other than Dr. Brown, the salary and bonus recommendations of
Dr. Brown. In consideration of the Company's financial position, in 1993 Dr.
Brown determined to waive payment of any cash compensation to him until the
Company could achieve two successive quarters of profitability. In 1996, in
light of the improved financial position of the Company as a result of the
successful completion of the combined $30 million private placement of the
Company's securities and the fourteen additional contracts that were signed with
health care providers during that year, the Board of Directors determined to
reinstate Dr. Brown's cash compensation at an annual rate of $200,000. During
1997, Dr. Brown also received an annual bonus of $70,000 for his successful
completion of an additional $10 million private placement of the Company's
securities and the signing of additional contracts with health care providers.
BOARD OF DIRECTORS
Paul A. Brown, M.D. - Chairman
Stephen J. Hansbrough
Thomas W. Archibald
David J. McLachlan
Joseph L. Gitterman III
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Brown is the Chairman of the Board of Directors and the Company's
Chief Executive Officer. Mr. Hansbrough is the President and Chief Operating
Officer of the Company. The other members of the Board of Directors are not
employees or former employees of the Company.
COMMON STOCK PERFORMANCE
As part of the executive compensation information presented in this
Proxy Statement, the Securities and Exchange Commission requires a five-year
comparison of stock performance for the Company with stock performance of other
companies. The
8
<PAGE> 11
closing price of the Common Stock at December 26, 1997 was $1.5625 per share.
The Common Stock has been traded on the American Stock Exchange since March 15,
1996. Prior thereto, the Common stock was traded on the over-the-counter market
with prices being reported by the National Association of Securities Dealers,
Inc., OTC Bulletin Board Service. The Company has selected each of the AMEX
Market Value Index and the Hambrecht & Quist Healthcare (excluding
biotechnology) Index. The graph below reflects all comparison indexes and
depicts a comparison of five-year cumulative total returns for each of the
Company, the AMEX Market Value Index and the Hambrecht and Quist Healthcare
Index, excluding biotechnology.
COMPARISON OF FIVE YEARS CUMULATIVE TOTAL RETURN*
AMONG HEARx LTD., THE AMEX MARKET VALUE INDEX AND THE
HAMBRECHT AND QUIST HEALTHCARE INDEX, EXCLUDING
BIOTECHNOLOGY
[CHART]
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------------------
12/92 12/93 12/94 12/95 12/96 12/97
<S> <C> <C> <C> <C> <C> <C> <C>
HEARX LTD. EAR 100.00 71.43 78.57 146.43 321.43 178.57
AMEX MARKET VALUE IXAX 100.00 119.52 108.63 137.32 146.10 177.20
H & Q HLTHCARE-EXCL BIOTECH IHH- 100.00 71.62 76.10 126.71 140.67 167.64
</TABLE>
* $100 INVESTED ON 12/31/92 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF ALL DIVIDENDS.
FISCAL YEARS ENDING DECEMBER 31
9
<PAGE> 12
RELATED PARTY TRANSACTIONS
Pursuant to a series of agreements, the first of which was executed in
October, 1991, between the Company and Minnesota Mining and Manufacturing
Company ("3M"), 3M acquired from the Company or obtained options to acquire from
the Company a total of seven series of Senior Preferred Stock, par value $1.00
per share, at varying purchase prices. The Company also entered into a number of
different arrangements with 3M pursuant to which the Company became an
authorized distributor of hearing aids manufactured by 3M. This arrangement
terminated as a result of the divestiture by 3M of its hearing aid operation.
The terms of each series of Senior Preferred Stock subscribed for by or
subject to options granted to 3M provided that upon the listing of the Common
Stock on the American Stock Exchange, the outstanding Senior Preferred Stock and
the options to acquire shares of Senior Preferred Stock would be automatically
converted into shares of Common Stock and the right to acquire shares of Common
Stock, respectively. Accordingly, on March 15, 1996, when the Common Stock was
listed on the American Stock Exchange, 3M's holdings of Senior Preferred Stock
were automatically converted into 8,882,400 shares of Common Stock. As of the
end of fiscal year 1997, 3M had exercised options to acquire 11,000 additional
shares of Common Stock of a total of 1,100,000 shares subject to options held by
3M. Since the end of fiscal year 1997, 3M has exercised the remaining options it
held.
10
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 27, 1998, the names of
all persons known by the Company to be the beneficial owners of more than five
percent of the Common Stock. On February 27, 1998, there were 100,787,425 shares
of Common Stock issued and outstanding.
<TABLE>
<CAPTION>
Amount and Nature
Title Name and Address of of Beneficial Percent of
Class Beneficial Owner Ownership Class
----- ---------------- --------- -----
<S> <C> <C> <C>
Common Stock Paul A. Brown, M.D. 11,544,178 (1) 11.4%
1250 Northpoint Parkway
West Palm Beach, FL 33407
Common Stock Minnesota Mining and 8,969,931 8.9%
Manufacturing Company
3M Center
St. Paul, MN 55144
</TABLE>
- ---------------------
(1) Includes 100,000 shares of Common Stock subject to non-qualified
options, all of which are currently exercisable.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 27, 1998, the number of
shares of Common Stock owned beneficially by each director, each Named Executive
Officer and by all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership (1) Class
- ---- ------------------------ -----
<S> <C> <C>
Paul A. Brown, M.D. 11,544,178 (2) 11.4%
Stephen J. Hansbrough 1,161,613 (3) 1.1%
James W. Peklenk 66,450 (4) *
David J. McLachlan 400,459 (5) *
Thomas W. Archibald 261,700 (6) *
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C> <C>
Joseph L. Gitterman III 1,307,918 (7) 1.3%
All directors and 14,742,318 (8) 14.4%
executive officers
as a group (6 persons)
</TABLE>
* Less than 1%
- ---------------------
(1) The named individuals have both sole investment power and sole voting
power with respect to all securities listed as beneficially owned by
them.
(2) Includes 100,000 shares of Common Stock subject to non-qualified
options, all of which are currently exercisable.
(3) Includes 1,036,250 employee stock options, which are currently
exercisable (or exercisable within 60 days).
(4) Includes 66,250 employee stock options, which are currently exercisable
(or exercisable within 60 days).
(5) Includes (i) 120,000 shares of Common Stock issuable upon the exercise
of non-qualified options, all of which are currently exercisable, and
(ii) 30,000 shares of Common Stock issuable upon the exercise of Common
Stock purchase warrants acquired as part of a 1989 private placement.
(6) Includes 75,000 shares of Common Stock issuable upon the exercise of
non-qualified options, all of which are currently exercisable.
(7) Includes 127,500 shares of Common Stock issuable upon the exercise of
warrants acquired as part of the 1993 private placement.
(8) Includes 1,555,000 shares of Common Stock issuable upon the exercise of
options and warrants, which are currently exercisable (or exercisable
within 60 days).
12
<PAGE> 15
RATIFICATION OF SELECTION OF AUDITORS
PROPOSAL NO. 2
The Board of Directors has selected the accounting firm of BDO Seidman
LLP as the Company's independent certified public accountants for its fiscal
year ending December 25, 1998. BDO Seidman LLP has served as the Company's
independent certified public accountants since the 1993 fiscal year. Stockholder
ratification of the selection is not required under the laws of the State of
Delaware, but the Board has nevertheless decided to ascertain the views of
stockholders in this regard. If the selection of such firm is not ratified at
the meeting, the Board will consider the selection of other auditors.
One or more representatives of BDO Seidman LLP are expected to be
present at the meeting and will have the opportunity to make a statement if they
desire to do so. In addition, they will be available to respond to appropriate
questions from stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF BDO SEIDMAN LLP AS THE COMPANY'S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR ITS FISCAL YEAR ENDED DECEMBER 25, 1998.
OTHER MATTERS
As of the date hereof, the Board of Directors knows of no other
matters, which are likely to be presented for consideration at the meeting.
However, in the event any other matters properly come before the meeting, it is
the intention of the persons named in the enclosed proxy to vote said proxy in
accordance with their best judgment.
STOCKHOLDER PROPOSALS
All proposals of stockholders of the Company intended to be presented
at the 1999 Annual Meeting of Stockholders must be received by the Company no
later than December 7, 1998, in order to be included in the Company's Proxy
Statement and form of proxy relating to that meeting.
By Order of the Board of Directors,
Tommy E. Kee
Vice President,
Secretary and Treasurer
April 6, 1998
<PAGE> 16
--------------
--------------
<TABLE>
<S> <C> <C> <C>
1. The election of the following nominees FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
as directors of the Company. listed below for all nominees listed below
</TABLE>
Nominees: Paul A. Brown, M.D., Stephen J. Hansbrough, Thomas W. Archibald, David
J. McLachlan and Joseph L. Gitterman III.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions
---------------------------------------------------------------------
2. With respect to the ratification of the selection of the auditors referred
to in the Proxy Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. The transaction of such other business as may properly come before the
meeting and any and all adjournments thereof.
Change of Address and [ ]
or Comments Mark Here
(Please sign exactly as your name(s) appear(s)
hereon. Joint holders must each sign. Persons
signing as executors, administrators, trustee,
guardians, etc. will please so indicate when
signing.)
Dated: ,1998
------------------------------------
----------------------------------------------
Signature(s) of Stockholder(s)
----------------------------------------------
Signature(s) of Stockholder(s)
VOTES MUST BE INDICATED [X]
(X) IN BLACK OR BLUE INK.
PLEASE DATE, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED REPLY ENVELOPE.
HEARx LTD.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD ON MAY 18, 1998
The undersigned stockholder(s) of HEARx Ltd. ("Company") hereby appoint(s)
Paul A. Brown, M.D., Stephen J. Hansbrough and Tommy E. Kee, and each of them,
proxies with full power to vote all shares which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company to be held at The Princeton Club of New York, 15 West 43rd Street,
New York, New York 10036-7497 on Monday, May 18, 1998, at 10:00 A.M., Eastern
Time, and at any and all adjournments thereof, on the following matters.
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE
STOCKHOLDER'S DIRECTIONS HEREIN, BUT WHERE NO DIRECTIONS ARE INDICATED, SAID
SHARES WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED ON THE
REVERSE SIDE, FOR THE RATIFICATION OF THE SELECTION OF THE AUDITORS, AND IN THE
DISCRETION OF THE PROXIES, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING, ALL IN ACCORDANCE WITH THE COMPANY'S PROXY STATEMENT, RECEIPT OF WHICH
IS HEREBY ACKNOWLEDGED.
HEARx LTD.
P.O. BOX 11319
NEW YORK, N.Y. 10203-0319
(Continued and to be SIGNED on the reverse side)
