<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
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.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than 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:
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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:
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4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
5) Total fee paid:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
[ ] 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.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
VASOMEDICAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 10, 1996
---------------
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 Thursday, October 10, 1996 at 10:00 a.m., or at any adjournment thereof, for
the following purposes:
1. To elect three 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 1997.
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 August 21, 1996 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: Westbury, New York
August 30, 1996
<PAGE> 3
VASOMEDICAL, INC.
180 LINDEN AVENUE
WESTBURY, NEW YORK, USA 11590
-----------------------------
PROXY STATEMENT
-----------------------------
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, OCTOBER 10, 1996
-----------------------------
The Annual Meeting of Stockholders of Vasomedical, Inc. (the "Company")
will be held on Thursday, October 10, 1996 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 August 30, 1996.
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 August 21, 1996 (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 46,312,749 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 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 has been increased to ten directors in accordance with the Company's
By-Laws. 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 1996 consisted of ten directors as set forth below.
<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 1998)
- -------------------------------------------------------------------------------------------------------
<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)
Francesco Bolgiani (2)(3)
</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 except the Medical Advisory
Committee
The three current directors in Class I are to be elected to hold office
until the 1999 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 I (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, 1996. Each director attended or participated in at least 75%
of such meetings of the Board of Directors, except for Dr. Zhen-sheng Zheng. For
the fiscal year ended May 31, 1996, there was one meeting of the Audit
Committee, one meeting of the Compensation Committee, five meetings of the
Executive Committee, and no formal meetings of the Medical Advisory 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 (73 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 (46) 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.
Francesco Bolgiani (57) has been director of the Company since December
5, 1995. Mr. Bolgiani has been President of Banca del Gottardo of Lugano,
Switzerland from 1980 to 1994 and Deputy Chairman of the Board of Directors of
Banca del Gottardo since 1994.
Abraham E. Cohen (60) 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 he had 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., Vion, Inc., The Population
Council and Travellers Series Fund, Inc.
Eugene H. Glicksman (56), 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.
Dr. John C.K. Hui (50) 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 (61) 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., ESC Medical Systems, Inc., Computer
Power, Inc., Alpha Technologies, Inc., VTX, Inc. and several private companies.
E. Donald Shapiro (64) 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.
3
<PAGE> 6
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 Space and
Communications, Inc. (formerly Loral Corporation), Bank Leumi Trust Co., Premier
Laser Systems, Inc., Eyecare Products PLC, Kranzco Realty Trust, Vion, Inc.,
Food Entertainment Network, Inc., Telepad Corporation and United Industrial
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 (66) 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 August 22, 1996 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, 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)(14) 112,903 shs. *
1230 York Avenue
New York, New York 10021
Dr. David S. Blumenthal (9)(11)(14) 112,903 shs. *
407 East 70th Street
New York, New York 10021
Francesco Bolgiani (15) 200,000 shs. *
viale Franscini 8
Lugano, Switzerland CH-6901
Abraham E. Cohen (4)(5)(8)(14) 637,903 shs. (1.4%)
100 United Nations Plaza
New York, New York 10017
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1)(2)
- --------------------------------------------------------------------------------
<S> <C>
Joseph A. Giacalone (6)(7) 223,000 shs. *
180 Linden Avenue
Westbury, New York 11590
Eugene H. Glicksman (3) 1,861,218 shs. (4.0%)
180 Linden Avenue
Westbury, New York 11590
Dr. John C. K. Hui (17) 1,060,000 shs. (2.3%)
180 Linden Avenue
Westbury, New York 11590
Anthony E. Peacock (16) 102,000 shs. *
180 Linden Avenue
Westbury, New York 11590
Dr. Kenneth W. Rind (10)(14) 162,903 shs. *
315 Post Road West
Westport, Connecticut 06880
E. Donald Shapiro (4)(5)(8)(14) 647,903 shs. (1.4%)
57 Worth Street
New York, New York 10013
Anthony Viscusi (13) 625,000 shs. (1.3%)
180 Linden Avenue
Westbury, New York 11590
Dr. Zhen-sheng Zheng (14) 112,903 shs. *
74 Zhangshan Road II
Guangzhou, 510089
P.R. China
Directors and executive officers
as a group (12 persons) 5,858,636 shs. (12.1%)
</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 which
are exercisable within 60 days.
(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.
(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 100,000 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.
5
<PAGE> 8
(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 150,000 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 500,000 shares of Common Stock at $.45 per
share expiring in June 2000.
(14) Includes currently exercisable options to purchase 12,903 shares of
Common Stock at $.78 per share expiring in May 2005 granted pursuant to
the Outside Director Stock Option Plan.
(15) Includes 200,000 shares of Common Stock owned by a company in which Mr.
Bolgiani and his wife have a 50% ownership interest.
(16) Includes warrants to purchase 100,000 shares of Common Stock at $.38 per
share expiring in January 2000.
(17) Includes warrants to purchase 100,000 shares of Common Stock at $.40 per
share expiring in February 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 56 Executive Vice President
Dr. John C. K. Hui 50 Senior Vice President, R&D and Manufacturing
Anthony E. Peacock 55 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, among
other positions, 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 multi-billion
dollar 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 of
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, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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 Compensation(3) Awards (2) Options Payout sation
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony Viscusi 1996 $150,000 - - - 250,000 - -
President & CEO 1995 $137,500 - - - - - -
1994 - - - - - - -
Eugene H. Glicksman 1996 $145,000 - - $169,813 - - -
Executive VP 1995 $133,333 - - $169,812 - - -
1994 $174,594 - - $169,812 - - -
John C.K. Hui 1996 $84,242 - $50,000 - 100,000 - -
Senior VP 1995 $28,081 - $16,667 - - - -
1994 - - - - - - -
Anthony E. Peacock 1996 $140,000 - - - 75,000 - -
VP 1995 $50,436 - - - - - -
1994 - - - - - - -
</TABLE>
- --------------------------
(1) Effective May 1, 1994, Mr. Glicksman voluntarily agreed to an annual salary
modification reducing his annual salary to $125,000. The reduction was for
an indefinite time period, at his discretion, subject to review based upon
future operations. In January 1995, Mr. Glicksman's annual salary was
increased to $145,000.
(2) Represents value of common stock issued in 1993 to Mr. Glicksman under a
stock bonus arrangement providing for vesting of 950,000 shares over five
years. See "Certain Relationships".
(3) Represents compensation paid to Dr. Hui by the Research Foundation of the
State University of New York at Stony Brook which the Company funds under a
research grant.
7
<PAGE> 10
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with its current
Executive Vice President for a term ending December 31, 1997. Pursuant to such
agreement, as amended, he is to receive compensation consisting of an annual
salary of $145,000. The employment agreement includes cumulative cost of living
adjustments, non-competition provisions during the term of the agreement and
makes 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 January 1999.
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 July 1994, the Company entered into a one-year employment agreement
with its President and Chief Executive Officer which currently provides for an
annual base salary of $170,000 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 January 1995, the Company entered into a one-year employment
agreement with its Vice President, Marketing and Clinical Affairs which
currently provides for an annual base salary of $150,000 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.
In February 1995, the Company entered into a three-year employment
agreement with its Senior Vice President of R&D and Manufacturing which
currently provides for an annual base salary of $140,000 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.
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 May 31,
1996, 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.
8
<PAGE> 11
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 August 22, 1996, options to
purchase an aggregate of 792,000 shares of Common Stock at $3.44 per share have
been granted, of which 787,000 are 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 August
22, 1996, options to purchase an aggregate of 109,093 shares of Common Stock at
exercise prices ranging from $.78 to $2.21 per share have been granted and are
outstanding 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 a date defined therein, 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.
DIRECTOR'S FEES
During fiscal 1996, 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 each
received monthly fees of $2,500 and did not receive per-meeting fees. 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
There were no options or warrants granted in fiscal 1996 to the
Company's executive officers included in the Summary Compensation Table.
CERTAIN TRANSACTIONS
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 to $.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".
9
<PAGE> 12
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
Vaso Interim Corp. 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Company's Compensation Committee consisted of
Messrs. Alexander G. Bearn, Francesco Bolgiani, E. Donald Shapiro and Abraham E.
Cohen. None of these persons were officers or employees of the Company during
fiscal 1996 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 1996 is furnished by the directors
who comprised the Compensation Committee during fiscal 1996.
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 business. To attain these
objectives, the Company's executive compensation program includes a competitive
base salary, cash incentive bonuses and stock-based compensation. See
"Employment Agreements".
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Stock options are granted to employees, including the Company's
executive officers, by the Compensation Committee under the Company's 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.
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.
In recognition of Mr. Viscusi's significant contribution to the growth
of the Company, the Compensation Committee extended his one-year employment
agreement for three additional years and, effective July 1, 1996, increased his
annual base salary to $170,000.
The Compensation Committee:
Alexander G. Bearn, Chairman
Francesco Bolgiani
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 1996, except that Mr. Bolgiani
filed his initial Form 3 several days late.
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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 Company for the fiscal
year ending May 31, 1997. Grant Thornton LLP acted as the Company's independent
public accountants for the fiscal years ended May 31, 1992 through May 31, 1996
and has been selected by the Board of Directors to continue to act as the
Company's independent public accountants for the Company's 1997 fiscal year.
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, 1996 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 June 17, 1997 to
be considered for inclusion in the Company's next Proxy Statement.
By Order of the Board of Directors,
JOSEPH A. GIACALONE
Secretary
Dated: Westbury, New York
August 30, 1996
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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 October 10, 1996 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:
Anthony Viscusi, E. Donald Shapiro, Dr. Zhen-sheng Zheng
[ ] 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)
2. To ratify the appointment by the Board of Directors of Grant Thornton LLP as
the Company's independent certified public accountants for fiscal 1997.
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: _____________, 1996
_____________________________[L.S.]
_____________________________[L.S.]
(Note: Please sign exactly as
your name appears hereon. Executors, admini-
strators, 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
