<PAGE> 1
SCHEDULE 14A
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
VASOMEDICAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/x / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j) (2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)3.
/ / 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:
- --------------------------------------------------------------------------------
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
VASOMEDICAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 5, 1995
----------------
TO THE STOCKHOLDERS OF
VASOMEDICAL, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Vasomedical, Inc. will be held at the Griffis Faculty Club, New York
Hospital-Cornell Medical Center, 521 East 68th Street, New York, New York
10021 on Tuesday, December 5, 1995 at 10:00 a.m., or at any adjournment
thereof, for the following purposes:
1. To elect four directors.
2. To ratify the appointment by the Board of Directors of Grant
Thornton LLP as the Company's independent certified public
accountants for fiscal 1996.
3. To consider and act upon such other business as may properly come
before this meeting or any adjournment thereof.
The above matters are set forth in the Proxy Statement attached to
this Notice to which your attention is directed.
Only stockholders of record on the books of the Company at the close
of business on October 20, 1995 will be entitled to vote at the Annual Meeting
of Stockholders or at any adjournment thereof. You are requested to sign, date
and return the enclosed Proxy at your earliest convenience in order that your
shares may be voted for you as specified.
By Order of the Board of Directors,
JOSEPH A. GIACALONE
Secretary
Dated: Hauppauge, New York
October 26, 1995
<PAGE> 3
VASOMEDICAL, INC.
150 MOTOR PARKWAY
HAUPPAUGE, NEW YORK 11788
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, DECEMBER 5, 1995
---------------
The Annual Meeting of Stockholders of Vasomedical, Inc. (the
"Company") will be held on Tuesday, December 5, 1995 at the Griffis Faculty
Club, New York Hospital-Cornell Medical Center, 521 East 68th Street, New York,
New York 10021 at 10:00 a.m. for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders. THE ENCLOSED PROXY IS SOLICITED BY
AND ON BEHALF OF THE BOARD OF DIRECTORS OF VASOMEDICAL, INC. FOR USE AT THE
ANNUAL MEETING OF STOCKHOLDERS. The approximate date on which this proxy
statement and the enclosed proxy are being first mailed to stockholders is
October 26, 1995.
If a proxy in the accompanying form is duly executed and returned, the
shares represented by such proxy will be voted as specified. Any person
executing the proxy may revoke it prior to its exercise either by letter
directed to the Company or in person at the Annual Meeting.
VOTING RIGHTS
Only stockholders of record on October 20, 1995 (the "Record Date")
will be entitled to vote at the Annual Meeting or any adjournment thereof. The
Company has outstanding at the Record Date one class of voting capital stock,
namely 38,948,528 shares of Common Stock, $.001 par value. Each share of
Common Stock issued and outstanding on the Record Date is entitled to one vote
at the Annual Meeting of Stockholders. The affirmative vote of a majority of
the votes cast at the Annual Meeting is required for approval of each matter to
be submitted to a vote of the shareholders. For purposes of determining
whether proposals have received a majority vote, abstentions will not be
included in the vote totals and, in instances where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not returned
a proxy (so called "broker non-votes"), those votes will not be included in the
vote totals. Therefore, abstentions and broker non-votes will have no effect
on the vote, but will be counted in the determination of a quorum.
<PAGE> 4
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of
Directors consisting of not less than three nor more than nine directors which
number may be increased in accordance with the Company's By-Laws by the Board
of Directors. The Board of Directors may be divided into three classes, as
nearly equal in number as possible, whose terms of office expire in successive
years. On September 7, 1995, the Board of Directors unanimously voted to
increase the maximum number of directors to eleven. The Company's Board of
Directors for fiscal 1995 consisted of nine directors as set forth below. Dr.
Francesco Bolgiani has been nominated by the Board of Directors for election by
stockholders at this meeting.
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
(TO SERVE UNTIL THE (TO SERVE UNTIL THE (TO SERVE UNTIL THE
ANNUAL MEETING OF ANNUAL MEETING OF ANNUAL MEETING OF
STOCKHOLDERS IN 1996) STOCKHOLDERS IN 1997) STOCKHOLDERS IN 1995)
- ---------------------- ---------------------- ----------------------
<S> <C> <C>
Anthony Viscusi (1) Abraham E. Cohen (5) Dr. Alexander G. Bearn (3) (4)
E. Donald Shapiro (1) (2) (3) Dr. John C.K. Hui (4) Dr. David S. Blumenthal (4)
Dr. Zhen-sheng Zheng(4) Eugene H. Glicksman (1) Dr. Kenneth W. Rind (2)
Dr. Francesco Bolgiani (nominee)
</TABLE>
- ---------------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Medical Advisory Committee
(5) Ex-officio member of all committees
The three current directors in Class III and Dr. Bolgiani are to be
elected to hold office until the 1998 Annual Meeting of Stockholders or until
their successors are chosen and qualified. Shares represented by executed
proxies in the form enclosed will be voted, unless otherwise indicated, for the
election as directors of the nominees named in Class III (each of whom is now a
director) unless any such nominee shall be unavailable, in which event such
shares will be voted for a substitute nominee designated by the Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees will be unavailable or, if elected, will decline to serve.
The Board of Directors held six meetings during the Company's fiscal
year ended May 31, 1995. Each director attended or participated in at least
75% of such meetings of the Board of Directors. For the fiscal year ended May
31, 1995, there was one meeting of the Audit Committee and one meeting of the
Compensation Committee. The Company's Audit Committee is involved in
discussions with the Company's independent public accountants with respect to
the year-end audited financial statements and the Compensation Committee
recommends executive compensation and the granting of stock options to key
employees. See "Compensation Committee Report on Executive Compensation." The
Executive and Medical Advisory Committees were established in fiscal 1995. The
Executive Committee was established to advise the Board of Directors and make
recommendations on matters relating to the business and operations of the
Company. The Medical Advisory Committee acts in an oversight capacity with
respect to medical issues and the Company's ongoing clinical programs.
-2-
<PAGE> 5
PRINCIPAL OCCUPATIONS OF DIRECTORS
The following is a brief account of the business experience for the
past five years of the Company's directors:
Dr. Alexander G. Bearn (72 years of age) has been a director of the
Company since November 14, 1994. Dr. Bearn is a physician, scientist and author
who has had distinguished careers in academe and industry. Since 1966, Dr.
Bearn has been an adjunct professor at Rockefeller University. He has been
Chairman of the Department of Medicine of Cornell University Medical College
and Senior Vice President of Medical and Scientific Affairs at Merck
International. He serves on many boards, including the Board of Trustees of
Rockefeller University and of the Howard Hughes Medical Institute. Dr. Bearn
also serves on the board of Biogen, Inc., a public company.
Dr. David S. Blumenthal (45) has been a director of the Company since
June 30, 1994. Dr. Blumenthal has been a practicing cardiologist in the State
of New York since 1981 and is affiliated with New York Hospital-Cornell Medical
Center.
Dr. Francesco Bolgiani, a director nominee of the Company, has been
with the Banca del Gottardo of Switzerland, which is majority owned by Sumitomo
Bank, since 1968. He became President in 1980 and Second Deputy Chairman of
the Board of Directors in 1994. Prior to joining Banca del Gottardo, he held
various positions with the World Investment Fund, a real estate investment
fund.
Abraham E. Cohen (59) has been Chairman of the Board since June 30,
1994 and a director of the Company since June 4, 1993, and is presently an
independent consultant. He retired in 1992 as Senior Vice President of Merck &
Co., Inc., a position held by him since 1985. From 1979 to 1989, Mr. Cohen was
also President of Merck Sharp & Dohme International, a division of Merck & Co.,
Inc. Mr. Cohen is a director of the following public companies: Agouron
Pharmaceuticals, Inc., Akzo Nobel Nv., Immunomedics, Inc., Teva Pharmaceutical
Industries, Ltd., Neurobiological Technologies, Inc. and MacroChem Corporation.
Eugene H. Glicksman (55), has been Executive Vice President of the
Company since July 1, 1994. Mr. Glicksman was President of the Company from
February 2, 1994 to June 30, 1994 and Executive Vice President and Secretary
from March 1992 to February 2, 1994. Mr. Glicksman has been a director of the
Company since its inception in July 1987. From January 1982 to November 1990,
he was employed as an independent agent and general agent engaged in the sale
of life insurance products through several life insurance companies.
Dr. John C.K. Hui (49) has been a director and Senior Vice President
of the Company since February 2, 1995. Dr. Hui has been an Assistant
Professor in the Department of Surgery in the State University of Stony Brook,
New York since 1978. He has also been a scientist in the medical department of
Brookhaven National Laboratories. Dr. Hui was president of and a principal
stockholder in Vasogenics, Inc. at the time of its acquisition by the Company
in January 1995.
Dr. Kenneth W. Rind (60) has been a director of the Company since
February 2, 1995. Dr. Rind has been Chairman of Oxford Venture Corporation, an
independent venture capital company since 1981. Previously, Dr. Rind was a
principal at Xerox Development Corporation for five years where he was
responsible for acquisitions and venture capital investments. From 1970 to
1976, he was Vice President-Corporate Finance at Oppenheimer & Co., Inc. He is
also a director of Medical Sterilization, Inc., Alpha Technologies, Inc. and
several private companies.
-3-
<PAGE> 6
E. Donald Shapiro (63) has been a director of the Company since June
4, 1993. Mr. Shapiro has been the Joseph Solomon Distinguished Professor of Law
since 1983 and is a former Dean of The New York Law School, as well as a
Supernumerary Fellow of St. Cross College at Oxford University, England. He
has authored numerous books and articles in the field of medicine and law and
is a recipient of honors and awards both in the United States and overseas.
Mr. Shapiro is a director of the following public companies: Loral Corporation,
Bank Leumi Trust Co., Premier Laser Systems, Inc., Interferon Sciences, Inc.,
Eyecare Products PLC, Kranzco Realty Trust and MacroChem Corporation.
Anthony Viscusi (63), has been President, Chief Executive Officer and
director of the Company since his employment on June 30, 1994. Mr. Viscusi was
Senior Vice President, Worldwide Marketing for the AgVet division of Merck &
Co., Inc. from 1987 to 1993. In 1961, Mr. Viscusi joined the international
human health division of Merck, in which he spent most of his career in various
general management positions, after having taught at Columbia, Wesleyan and
Princeton universities. Mr. Viscusi is a director of The Mallinckrodt Group,
Inc.
Dr. Zhen-sheng Zheng (65) has been a director of the Company since
February 2, 1995 . Since 1986, Dr. Zheng has been Director of the
Cardiovascular Research Institute at Sun Yat-sen University of Medical
Sciences in Guangzhou, China. Dr. Zheng has been associated with Sun Yat-sen
University since 1972 in various capacities and is also presently Chairman of
the National Laboratory for Assisted Circulation Research in China. Dr. Zheng
was a principal stockholder of Vasogenics, Inc. prior to its acquisition by the
Company in January 1995.
SECURITY OWNERSHIP
The following table sets forth as of September 30, 1995 certain
information with regard to ownership of the Company's Common Stock by (i) each
beneficial owner of 5% or more of the Company's Common Stock and Preferred
Stock, to the knowledge of the Company based upon filings with the Securities
and Exchange Commission; (ii) each current director and executive officer named
in the "Summary Compensation Table"; and (iii) all executive officers and
directors of the Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1)(2)
- ------------------------ -------------------------
<S> <C>
Dr. Alexander G. Bearn (9)(12) 100,000 shs. *
1230 York Avenue
New York, New York 10021
Dr. David S. Blumenthal (9)(11) 100,000 shs. *
407 East 70th Street
New York, New York 10021
Abraham E. Cohen (4)(5)(8) 625,000 shs. (1.6%)
100 United Nations Plaza
New York, New York 10017
Joseph A. Giacalone (6)(7) 170,000 shs. *
150 Motor Parkway
Hauppauge, New York 11788
</TABLE>
-4-
<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1)(2)
- ------------------------ -------------------------
<S> <C>
Eugene H. Glicksman (3) 1,837,888 shs. (4.7%)
150 Motor Parkway
Hauppauge, New York 11788
Dr. John C. K. Hui 960,000 shs. (2.5%)
150 Motor Parkway
Hauppauge, New York 11788
Anthony E. Peacock 27,000 shs. *
150 Motor Parkway
Hauppauge, New York 11788
Dr. Kenneth W. Rind (10) 50,000 shs. *
315 Post Road West
Westport, Connecticut 06880
E. Donald Shapiro (4)(5)(8) 635,000 shs. (1.6%)
57 Worth Street
New York, New York 10013
Anthony Viscusi (13) 375,000 shs.
150 Motor Parkway
Hauppauge, New York 11788
Dr. Zhen-sheng Zheng 100,000 shs. *
74 Zhangshan Road II
Guangzhou, 510089
P.R. China
Sun Yat-sen University of 1,935,000 shs. (5.0%)
Medical Sciences
74 Zhangshan Road II
Guangzhou, 510089
P.R. China
Directors and executive officers
as a group (11 persons) 4,979,888 shs. (12.3%)
</TABLE>
- ----------
* Less than 1% of the Company's Common Stock
(1) No officer or director owns more than one percent of the issued and
outstanding Common Stock of the Company unless otherwise indicated.
Ownership represents sole voting and investment power.
(2) Includes Common Stock issuable under stock options and warrants.
(3) Mr. Glicksman may be deemed a "parent" and "promoter" of the Company as
those terms are defined in the Rules and Regulations under the Securities
Act of 1933.
-5-
<PAGE> 8
(4) Includes warrants to purchase 150,000 shares of Common Stock at $1.50 per
share expiring in September 1997.
(5) Includes warrants to purchase 200,000 shares of Common Stock at $1.03 per
share expiring in November 1998.
(6) Includes warrants to purchase 50,000 shares of Common Stock at $.41 per
share expiring in February 2000.
(7) Includes warrants and stock options to purchase 120,000 shares of Common
Stock at $ .91 per share expiring in November 1998.
(8) Includes warrants to purchase 150,000 shares of Common Stock at $.45 per
share expiring in June 1999.
(9) Includes warrants to purchase 50,000 shares of Common Stock at $1.50 per
share expiring in March 1998.
(10) Includes warrants to purchase 50,000 shares of Common Stock at $.40 per
share expiring in February 2000.
(11) Includes warrants to purchase 50,000 shares of Common Stock at $.45 per
share expiring in June 1999.
(12) Includes warrants to purchase 50,000 shares of Common Stock at $.28 per
share expiring in November 1999.
(13) Includes warrants to purchase 250,000 shares of Common Stock at $.45 per
share expiring in June 2000.
MANAGEMENT
The following sets forth information concerning each executive officer
of the Company. The officers of the Company serve at the pleasure of the Board
of Directors or until their successors are chosen and qualify.
<TABLE>
<CAPTION>
POSITION HELD
NAME AGE WITH THE COMPANY
- ---- --- ----------------
<S> <C> <C>
Anthony Viscusi 63 President and Chief Executive Officer
Eugene H. Glicksman 55 Executive Vice President
Dr. John C. K. Hui 49 Senior Vice President, Research and Development and Manufacturing
Anthony E. Peacock 54 Vice President, Marketing and
Clinical Affairs
Joseph A. Giacalone 32 Secretary and Treasurer
</TABLE>
- ---------
Anthony E. Peacock has been Vice President, Marketing and Clinical
Affairs of the Company since his employment on January 23, 1995. From January
1994 to January 1995, Mr. Peacock was Vice President, Marketing of Dendrite
International. For more than five years prior thereto, Mr. Peacock was
Executive Director of Marketing for Cardiovascular Products with Merck & Co.,
Inc. where he played a key role in the formulation and worldwide implementation
of strategies for enalapril, Merck's $2.2 billion cardiovascular product.
Joseph A. Giacalone, a certified public accountant, has been Secretary
and Treasurer of the Company since February 2, 1994 and has been employed by
the Company since February 1993. From 1983 to 1993, Mr. Giacalone was employed
by the international accounting firm of Grant Thornton LLP, having been a
manager with the firm since 1990.
-6-
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
with respect to the Chief Executive Officer and each of the other executive
officers of the Company who earned more than $100,000 for services rendered for
the fiscal years ended May 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------------------- ------------------------------------
Number Long-
of Term All
Other Restricted Shares Incentive Other
Name and Fiscal Annual Stock Underlying Plan Compen-
Principal Position Year Salary(1) Bonus(2) Compensation(3) Awards (4) Options Payout sation
- ------------------ ---- --------- -------- --------------- ---------- --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony Viscusi 1995 $137,500 - - - - - -
President & CEO 1994 - - - - - - -
1993 - - - - - - -
Eugene H. Glicksman 1995 $133,333 - - $169,812 - - -
Executive VP 1994 $174,594 - - $169,812 - - -
1993 $185,000 $89,750 $83,578 $169,812 - - -
Steven A. Cantor 1995 $72,920(5) - - - - - -
Former Chairman & 1994 $166,261 - - $169,812 - - -
CEO and former 1993 $185,000 $67,500 $53,325 $169,813 - - -
President and Treasurer
Dr. Yair Devash 1995 - - - - - - -
Former Chairman of 1994 $171,155(6) - - - - - -
the Board and CEO 1993 $200,000(6) $222,813 - - - - -
</TABLE>
- --------------------------
(1) Effective May 1, 1994, Messrs. Cantor and Glicksman voluntarily agreed to
annual salary modifications reducing their annual salaries to $75,000 and
$125,000, respectively. The reductions were for an indefinite time period, at
their discretion, subject to review based upon future operations.
(2) Includes cash bonuses paid by Viromedics, Inc. ("VMI"), a 61% owned
subsidiary, in 1993 to Messrs. Cantor and Glicksman of $12,000 and $15,000,
respectively; value of 800,000 shares, 880,000 shares and 1,265,000 shares of
VMI common stock issued in 1993 to Messrs. Devash, Cantor and Glicksman,
respectively, for services rendered to VMI on behalf of the Company; value of
457,031 shares of the Company's common stock ownership in Vaso Interim each to
Messrs. Cantor and Glicksman in 1993 in consideration for services rendered to
Vaso Interim on behalf of the Company; and value of 250,000 shares of common
stock issued to Mr. Devash in 1993 in consideration for services rendered to
the Company. See "Item Thirteen - Certain Relationships and Related
Transactions".
(3) Represents forgiveness of loans to Messrs. Cantor and Glicksman in 1993;
The above compensation does not include the use of an automobile and other
personal benefits, the total value of which do not exceed as to any named
executive officer the lessor of $50,000 or 10% of such person's cash
compensation.
(4) Represents value of common stock issued in 1993 to each of Messrs. Cantor
and Glicksman under a stock bonus arrangement providing for vesting of 950,000
shares to each of them over five years. See "Item Thirteen - Certain
Relationships and Related Transactions".
(5) Mr. Cantor resigned as Chairman/CEO on June 30, 1994. Salary includes
$35,000 from the September 1, 1995 settlement of Mr. Cantor's employment
agreement, at which time Mr. Cantor resigned as an officer and director of the
Company.
(6) Represents payments under employment agreement with the Company's
subsidiary, Devaron, Inc. Mr. Devash was Chairman of the Board of the Company
until February 2, 1994, at which time he resigned as Chairman, CEO and
director.
-7-
<PAGE> 10
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with its former
President and the current Executive Vice President for a term ending December
31, 1997. Pursuant to such agreements, as amended, they were to receive
compensation consisting of an annual salary of $125,000 and $175,000,
respectively. The employment agreements included cumulative cost of living
adjustments, non-competition provisions during the term of the agreements and
make provisions for life insurance and for the continuation of certain benefits
following death or disability.
The Company also maintains additional employment agreements with other
officers. These agreements expire at various dates through November 1996.
Employment agreements with certain of the Company's officers also provide that
in the event there is a change in the control of the Company, as defined
therein, or in any person directly or indirectly controlling the Company, as
also defined therein, the employee has the option, exercisable within six
months of becoming aware of such event, to terminate his employment agreement.
Upon such termination, he has the right to receive as a lump sum payment
certain compensation remaining to be paid for the balance of the term of the
agreement.
In May 1994, certain officers voluntarily agreed to salary
modifications reducing their annual salaries. The reductions are for an
indefinite time period, at their discretion, subject to review based upon
future operations.
In July 1994, the Company entered into a one-year employment agreement
with its newly appointed President and Chief Executive Officer for annual
compensation of $150,000 and five-year warrants to purchase 1,000,000 shares of
the Company's common stock at $.45 per share (which approximated market value
at the date of grant) vesting at 25% per year beginning June 30, 1995. Such
vesting is contingent upon his continued employment with the Company. In
October 1995, the Company extended the agreement for an additional three-year
period.
In October 1994, the Company settled an employment commitment through
December 1997 with its former Chairman and President, aggregating $244,000, for
$35,000. In addition, this former officer forfeited 570,000 shares of the
Company's common stock issued as a stock bonus in December 1992 which had not
vested at the settlement date. This former officer also resigned from the
Company's Board of Directors.
In December 1994, the Company settled an employment commitment through
November 1996 with its former Vice President - Finance, aggregating $190,000,
for $75,000 which was charged to operations during fiscal 1995. This former
officer also resigned from the Company's Board of Directors.
In January 1995, the Company entered into a one-year employment
agreement with its recently appointed Vice President, Marketing for annual
compensation of $140,000 and five-year warrants to purchase 300,000 shares of
the Company's common stock at $.38 per share (which approximated market value
at the date of grant) vesting at 25% per year beginning January 1996. Such
vesting is contingent upon his continued employment with the Company. In
October 1995, the Company extended the agreement for an additional three-year
period.
-8-
<PAGE> 11
In February 1995, the Company entered into a three-year employment
agreement with its recently appointed Senior Vice President of R&D and
Manufacturing for annual compensation of $131,000 and five-year warrants to
purchase 300,000 shares of the Company's common stock at $.40 per share (which
approximated market value at the date of grant) vesting at 33% per year
beginning February 1996. Such vesting is contingent upon his continued
employment with the Company.
INCENTIVE STOCK OPTION PLAN
The Company adopted an Incentive Stock Option Plan (the "Incentive
Plan") for officers, directors and employees of the Company, for which it
reserved an aggregate of 250,000 shares of Common Stock. Options to purchase
112,500 shares of common stock were granted to each of Messrs. Cantor and
Glicksman in March 1991 at $.24 per share and exercised in September 1991. No
other options had been granted or were outstanding under the Plan when it was
terminated by the Board of Directors in November 1994.
1992 NON-QUALIFIED STOCK OPTION PLAN
The Company adopted a 1992 Non-Qualified Stock Option Plan (the "1992
Plan") for officers, directors, employees and consultants of the Company, for
which it reserved an aggregate of 1,500,000 shares of Common Stock. At
January 31, 1995, options to purchase 30,000 shares at prices ranging between
$.91 and $1.03 per share had been granted of which options to purchase 25,000
shares are outstanding under the 1992 Plan. No other options had been granted
or were outstanding under the 1992 Plan when it was terminated by the Board of
Directors in November 1994.
1995 STOCK OPTION PLAN
The Company adopted a 1995 Stock Option Plan (the "1995 Plan") for
officers and employees of the Company, for which the Company has reserved an
aggregate of 1,500,000 shares of Common Stock. At September 30, 1995, no
options to purchase have been granted or were outstanding under the 1995 Plan.
OUTSIDE DIRECTOR STOCK OPTION PLAN
The Company adopted an Outside Director Stock Option Plan (the
"Director Plan") for non-employee directors of the Company, for which the
Company has reserved an aggregate of 300,000 shares of Common Stock. At
September 30, 1995, options to purchase an aggregate of 77,418 shares of Common
Stock at $.78 per share have been granted under the Director Plan.
SHAREHOLDER RIGHTS PLAN
In March 1995, the Company's Board of Directors approved a Shareholder
Rights Plan, under which a dividend distribution of one Right for each
outstanding share of the Company's common stock is authorized. Each Right will
entitle shareholders of record on May 9, 1995 to purchase one-half share of
common stock at a 50% discount to market price if a person or group acquires
20% or more of the Company's outstanding stock. At present, the Company is not
aware of any such person or group seeking to acquire 20% or more of the
Company's outstanding common stock.
-9-
<PAGE> 12
DIRECTOR'S FEES
During the 1995 fiscal year, it was the policy of the Company to grant
fees of $1,000 per meeting to each outside director who attended a regularly
scheduled or special meeting of its Board of Directors. Messrs. Cohen and
Shapiro did not receive per-meeting fees but monthly fees, which effective July
1, 1994, increased from $1,000 to $2,500. In addition, the Company reimbursed
out-of-state directors for their cost of travel and lodging to attend
meetings.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the number of options or warrants
granted to the Company's executive officers in fiscal 1995.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------------------
Number of Shares % of Total
Underlying Options Granted
Options To Employees in Exercise Expiration
Name Granted Fiscal Year Price($/Sh) Date
- ---- -------------------- ------------------ ----------- ------------
<S> <C> <C> <C> <C>
Anthony Viscusi (1) 1,000,000 54% $.45 6/30/00
Eugene H. Glicksman - - - -
Steven A. Cantor - - - -
Yair Devash - - - -
</TABLE>
- -------
(1) Represents five-year warrants that vest equally over four years commencing
June 30,1995. Such vesting is contingent upon Mr.
Viscusi's continued employment with the Company.
CERTAIN TRANSACTIONS
In June 1993, the Company distributed 457,031 shares of its common
stock ownership in Vasomedical at an estimated fair market value as determined
by management of $.025 per share each to Steven A. Cantor and Eugene H.
Glicksman in consideration for services rendered by each of them to Vasomedical
on behalf of the Company. In September 1993, these executive officers each
voluntarily contributed to the Company their entire ownership of Vasomedical
Common Stock, representing a combined 21% of the outstanding common stock of
Vasomedical.
The Company provides its subsidiary, Viromedics, Inc. ("VMI"), with
certain general corporate services including management and other
administrative staff functions pursuant to the terms of an eighteen month
agreement dated May 1, 1992. These services include independent and in-house
accounting and legal services, insurance, rent and tax advice. As compensation
for these services, VMI agreed to pay the Company $330,000. In July 1993, VMI
issued 6,600,000 shares of its Common Stock to the Company in lieu of cash
compensation for such services rendered.
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From July 1993, VMI issued to Dr. Yair Devash, Steven A. Cantor,
Eugene H. Glicksman and Frederic D. Heller, 800,000 shares, 880,000 shares,
1,265,000 shares and 100,000 shares, respectively, of its Common Stock at an
estimated fair market value as determined by management of $.05 per share as an
incentive for their continued services to the Company for which the Company
charged approximately $152,000 to operations in fiscal 1993. In September 1993,
2,245,000 shares of such VMI Common Stock previously issued in July 1993 were
voluntarily contributed back to VMI by certain officers and retired. In
November 1993, the remaining 800,000 shares of such VMI Common Stock previously
issued in July 1993 were voluntarily contributed back to VMI by one such
officer and retired.
In July 1993, the Company issued 250,000 shares of its common stock
valued at $.73 per share to its then Chairman of the Board, Dr. Yair Devash, in
consideration for services rendered to the Company. In November 1993, these
shares were voluntarily contributed back to the Company by such officer and
retired.
In February 1994, the Company issued warrants to its then Chairman of
the Board to purchase 500,000 shares of its common stock for $.91 per share
expiring February 1999 for services rendered to the Company.
In the period June 1994 through January 1995, the Company has issued
five-year warrants to several of its existing or newly appointed directors to
purchase an aggregate of 825,000 shares of its Common Stock for prices ranging
from $.28 - $.45 per share (market value at the date of issuance) expiring in
various amounts between June 1999 and February 2000 for services rendered or to
be rendered to the Company. See Security Ownership. In October, November and
December 1994, Messrs. Cantor, Rosenberg and Heller, respectively, resigned
from the Company's Board of Directors.
In December 1994, the Company sold 500,000 shares of its Class A
Preferred Stock, aggregating $400,000 cash, to five individuals including
Messrs. Viscusi, Cohen and Shapiro. The price paid per preferred share (of $.80
per share) was at a premium to its then Common Stock equivalent price per
share. Each share of the Preferred Stock is entitled to two votes per share and
is convertible, at the holder's option, into two shares of Common Stock. The
Preferred Stock is senior to the Common Stock with respect to liquidation
rights; however, the Preferred Stock is not entitled to any dividends. On May
31, 1995, all such shares of Preferred Stock were converted into Common Stock
according to the terms of the Preferred Stock.
In January 1995, the Company acquired all of the outstanding capital
stock of Vasogenics, Inc., the sole minority shareholder of the Company's
Vasomedical, Inc. subsidiary, for 5,000,000 shares of the Company's common
stock. Subsequent to the transaction, Dr. Hui, a principal of Vasogenics, Inc.,
entered into a three-year employment agreement with the Company (See
"Employment Agreements"). Dr. Zheng, another principal of Vasogenics, Inc.,
entered into a consulting agreement with the Company for annual compensation
approximating $40,000. Messrs. Hui and Zheng have also been appointed to the
Company's Board of Directors.
Since July 1994, the Company has made payment to Kramex Corporation,
of which Mr. Abraham E. Cohen is a principal stockholder, of $5,000 monthly for
the use of Kramex's offices, warehouse and personnel in Garfield, New Jersey.
In May 1995, the monthly payments were reduced to $2,500. For the year ended
May 31, 1995, payments to Kramex aggregated $55,000.
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<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1995, the Company's Compensation Committee consisted of
Messrs. Alexander G. Bearn, E. Donald Shapiro and Abraham E. Cohen. None of
these persons were officers or employees of the Company during fiscal 1995 nor,
except as otherwise disclosed, had any relationship requiring disclosure in
this Proxy Statement.
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the caption "Compensation
Committee Report on Executive Compensation" will not be deemed to be
filed or to be proxy soliciting material or incorporated by reference
in any prior or future filings by the Company under the Securities Act
of 1933 or the Securities Exchange Act.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is generally
determined by the Compensation Committee of the Board of Directors, subject to
applicable employment agreements. Each member of the Compensation Committee is
a director who is not an employee of the Company or any of its affiliates. The
following report with respect to certain compensation paid or awarded to the
Company's executive officers during fiscal 1995 is furnished by the directors
who comprised the Compensation Committee during fiscal 1995.
GENERAL POLICIES
The Company's compensation programs are intended to enable the Company
to attract, motivate, reward and retain the management talent required to
achieve corporate objectives, and thereby increase shareholder value. It is the
Company's policy to provide incentives to its senior management to achieve both
short-term and long-term objectives and to reward exceptional performance and
contributions to the development of the Company's businesses. To attain these
objectives, the Company's executive compensation program includes a competitive
base salary, cash incentive bonuses and stock-based compensation. See
"Management-Employment Agreements".
Stock options are granted to employees, including the Company's
executive officers, by the Compensation Committee under the Company's Incentive
Stock Option Plan and 1995 Stock Option Plan. The Committee believes that
stock options provide an incentive that focuses the executive's attention on
managing the Company from the perspective of an owner with an equity stake in
the business. Options are awarded with an exercise price equal to the market
value of Common Stock on the date of grant, have a maximum term of ten years
and generally become exercisable for all of the option shares one year from the
date of grant. Among the Company's executive officers, the number of shares
subject to options granted to each individual generally depends upon the level
of that officer's responsibility. The largest grants are awarded to the most
senior officers who, in the view of the Compensation Committee, have the
greatest potential impact on the Company's profitability and growth. Previous
grants of stock options are reviewed but are not considered the most important
factor in determining the size of any executive's stock option award in a
particular year.
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<PAGE> 15
From time to time, the Compensation Committee intends to utilize the
services of independent consultants to perform analyses and to make
recommendations to the Committee relative to executive compensation matters.
No compensation consultant is paid on a retainer basis.
RELATIONSHIP OF COMPENSATION TO PERFORMANCE AND
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Compensation Committee annually establishes, subject to the
approval of the Board of Directors and any applicable employment agreements,
the salaries which will be paid to the Company's executive officers during the
coming year. In setting salaries, the Compensation Committee takes into account
several factors, including competitive compensation data, the extent to which
an individual may participate in the stock plans maintained by the Company, and
qualitative factors bearing on an individual's experience, responsibilities,
management and leadership abilities, and job performance.
For fiscal 1995, pursuant to the terms of his employment agreement
with the Company, the Company's President received a base salary and five-year
stock warrants contingent upon his continued employment with the Company. See
"Management -Employment Agreements." In light of this employment agreement,
the Compensation Committee was not required to make any decision regarding the
cash compensation of Mr. Viscusi.
The Compensation Committee
Alexander G. Bearn, Chairman
Abraham E. Cohen
E. Donald Shapiro
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities ("Reporting Persons") to file reports
of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. (the "NASDAQ"). These Reporting Persons are required by SEC
regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file
with the SEC and the NASDAQ. Based solely upon the Company's review of the
copies of the forms it has received, the Company believes that all Reporting
Persons complied on a timely basis with all filing requirements applicable to
them with respect to transactions during fiscal 1995.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of Directors recommends that the shareholders approve the
appointment of Grant Thornton LLP as the Company's independent public
accountants to examine the financial statements of the Comapnay for the fiscal
year ending May 31, 1996. Grant Thornton LLP acted as the Company's
independent public accountants for the fiscal years ended May 31, 1992 through
May 31, 1995 and has been selected by the Board of Directors to continue to act
as the Company's independent public accountants for the Company's 1996 fiscal
year.
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<PAGE> 16
A representative of Grant Thornton LLP plans to be present at the
Annual Meeting with the opportunity to make a statement, if he desires to do
so, and will be available to respond to appropriate questions.
FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended May 31, 1995 has been provided to all stockholders as of the Record
Date. Stockholders are referred to the report for financial and other
information about the Company, but such report, Management's Discussion and
Analysis of Financial Condition and Results of Operations and Financial
Statements, is not incorporated in this proxy statement and is not a part of
the proxy soliciting material.
MISCELLANEOUS INFORMATION
As of the date of this Proxy Statement, the Board of Directors does
not know of any business other than that specified above to come before the
meeting, but, if any other business does lawfully come before the meeting, it
is the intention of the persons named in the enclosed Proxy to vote in regard
thereto in accordance with their judgment.
The Company will pay the cost of soliciting proxies in the
accompanying form. In addition to solicitation by use of the mails, certain
officers and regular employees of the Company may solicit proxies by telephone,
telegraph or personal interview. The Company may also request brokerage houses
and other custodians and nominees and fiduciaries, to forward soliciting
material to the beneficial owners of stock held of record by such persons, and
may make reimbursement for payments made for their expense in forwarding
soliciting material to such beneficial owners.
Stockholder proposals with respect to the Company's next Annual
Meeting of Stockholders must be received by the Company no later than August
26, 1996 to be considered for inclusion in the Company's next Proxy Statement.
By Order of the Board of Directors,
JOSEPH A. GIACALONE
Secretary
Dated: Hauppauge, New York
October 26, 1995
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<PAGE> 17
VASOMEDICAL,
INC.
The undersigned hereby appoints Anthony Viscusi and E. Donald
Shapiro, or either of them, attorneys and Proxies with full power of
substitution in each of them, in the name and stead of the
undersigned to vote as Proxy all the stock of the undersigned in
VASOMEDICAL, INC., a Delaware corporation, at the Annual Meeting of
Stockholders scheduled to be held on December 5, 1995 and any
adjournments thereof.
The Board of Directors recommends a vote FOR the following proposals:
1. Election of the following nominees, as set forth in the proxy statement:
Alexander G. Bearn, David S. Blumenthal, Kenneth W. Rind, Francesco Bolgiani
/ / FOR all nominees listed above / / WITHHOLD authority to vote
(Instruction: To withhold authority to vote for any individual nominee,
print the nominee's name on the line provided below)
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2. To ratify the appointment by the Board of Directors of Grant Thornton LLP as
the Company's independent certified public accountants for fiscal 1996.
3. Upon such other business as may properly come before the meeting or any
adjournment thereof.
(Continued and to be signed on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY PROXIES, AND EACH OF THEM, AS
SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING. SHAREHOLDERS MAY WITHHOLD THE VOTE FOR ONE OR MORE
NOMINEE(S) BY WRITING THE NOMINEE(S) NAME(S) IN THE BLANK SPACE PROVIDED ON THE
REVERSE HEREOF. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE
PROPOSALS SET FORTH ON THE REVERSE HEREOF.
Dated: _____________, 1995
__________________________________________/L.S./
__________________________________________/L.S./
(Note: Please sign exactly as your name appears
hereon. Executors, administrators, trustees,
etc. should so indicate when signing, giving
full title as such. If signer is a corporation,
execute in full corporate name by authorized
officer. If shares are held in the name of two
or more persons, all should sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
