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
[ ] 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 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] 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:
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2) Aggregate number of securities to which transaction applies:
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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:
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5) Total fee paid:
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[ ] 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:
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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>
VASOMEDICAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 6, 1999
---------------
To the Stockholders of
VASOMEDICAL, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Vasomedical, Inc. will be held at the Long Island Marriott Hotel, 101 James
Doolittle Boulevard, Uniondale, New York 11553 on Wednesday, October 6, 1999 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
2000.
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 17, 1999 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
September 8, 1999
<PAGE>
VASOMEDICAL, INC.
180 Linden Avenue
Westbury, New York, USA 11590
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
Wednesday, October 6, 1999
-------------------------------
The Annual Meeting of Stockholders of Vasomedical, Inc. (the "Company")
will be held on Wednesday, October 6, 1999 at the Long Island Marriott Hotel,
101 James Doolittle Boulevard, Uniondale, New York 11553 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 September 8, 1999.
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 17, 1999 (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 50,978,568 shares of Common Stock, $.001 par value ("Common Stock"). 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, nor will shares for which brokers are prohibited
from exercising discretionary authority for beneficial owners who have not
returned a proxy (so called "broker non-votes"). Abstentions and broker
non-votes will, therefore, have no effect on the vote, but will be counted in
the determination of a quorum.
<PAGE>
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 eleven 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.
The Company's Board of Directors for fiscal 1999 consisted of nine 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 1999) Stockholders in 2000) Stockholders in 2001)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Anthony Viscusi (1) Abraham E. Cohen (5) Alexander G. Bearn, MD(3)(4)
E. Donald Shapiro (1)(2)(3) John C.K. Hui, PhD (4) David S. Blumenthal, MD (4)
Zhen-sheng Zheng, MD (4) Kenneth W. Rind, PhD (2)(1)
Francesco Bolgiani (2)(3)
- ---------------------
<FN>
(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
</FN>
</TABLE>
Messrs. Viscusi and Shapiro and Dr. Zheng, current directors in Class I,
are to be elected to serve until the 2002 Annual Meeting of Stockholders or
until their successors are duly elected 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 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 five meetings during the Company's fiscal
year ended May 31, 1999. Each director attended or participated in at least 75%
of such meetings of the Board of Directors. During the fiscal year ended May 31,
1999, there were two meetings of the Audit Committee, one meeting of the
Compensation Committee, two 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 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.
<PAGE>
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 (76 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. Dr. Bearn is presently
Executive Officer of the American Philosophical Society. 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 (49) 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 (60) has been director of the Company since December 5,
1995. Mr. Bolgiani has been Deputy Chairman of the Board of Directors of Banca
del Gottardo of Lugano, Switzerland since 1994 and, from 1980 to 1994, he was
President of Banca del Gottardo. Mr. Bolgiani serves on the board of
Parkervision Ltd., a public company.
Abraham E. Cohen (63) 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 was elected in 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: Akzo Nobel Nv.,
Teva Pharmaceutical Industries, Ltd., Neurobiological Technologies, Inc.,
Pharmaceutical Product Development, Inc. and Travellers Series Fund, Inc.
Dr. John C.K. Hui (53) 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 at 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 (64) 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 ESC Medical Systems, Inc., Alpha Technologies, Inc. and several
private companies.
E. Donald Shapiro (67) 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 Space and
Communications, Inc., Kranzco Realty Trust, Frequency Electronics, Inc. and
United Industrial Corporation.
<PAGE>
Anthony Viscusi (66) 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 Mallinckrodt, Inc.
Dr. Zhen-sheng Zheng (69) 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 1955 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 20, 1999 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 each 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)(3)
- ----------------------------------------------------------------------------
<S> <C> <C>
Dr. Alexander G. Bearn (7)(13)(14)(15)(19) 99,745 shs. *
150 South Independence Mall East
Philadelphia, Pennsylvania 19106
Dr. David S. Blumenthal (7)(13)(14)(15)(19) 74,745 shs. *
407 East 70th Street
New York, New York 10021
Francesco Bolgiani (8) 170,175 shs. *
viale Franscini 8
Lugano, Switzerland CH-6901
Abraham E. Cohen (7)(13)(14)(16)(17) 687,078 shs. (1.3%)
444 Madison Avenue
New York, New York 10022
Joseph A. Giacalone (4)(12)(18)(23) 445,500 shs. *
180 Linden Avenue
Westbury, New York 11590
Dr. John C. K. Hui (10)(11)(20) 1,515,000 shs. (2.9%)
180 Linden Avenue
Westbury, New York 11590
Anthony E. Peacock (9)(11)(22) 504,000 shs. *
180 Linden Avenue
Westbury, New York 11590
Dr. Kenneth W. Rind (5)(7)(13)(14)(15) 383,078 shs. *
750 Lexington Avenue
New York, New York 10022
E. Donald Shapiro (7)(13)(14)(16)(17) 688,078 shs. (1.3%)
57 Worth Street
New York, New York 10013
Anthony Viscusi (6)(11)(21) 1,358,333 shs. (2.6%)
180 Linden Avenue
Westbury, New York 11590
Dr. Zhen-sheng Zheng (7)(13)(14)(15) 133,078 shs. *
74 Zhangshan Road II
Guangzhou, 510089
P.R. China
Directors and executive officers
as a group (11 persons) 6,058,810 shs. (11.1%)
<PAGE>
<FN>
- ----------
* 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.
(2) Ownership represents sole voting and investment power.
(3) Includes Common Stock issuable under stock options and warrants that are
exercisable within 60 days.
(4) Includes warrants to purchase 75,000 shares of Common Stock at $.41 per
share expiring in February 2000.
(5) Includes warrants to purchase 350,000 shares of Common Stock at $.40 per
share expiring in February 2000.
(6) Includes warrants to purchase 750,000 shares of Common Stock at $.45 per
share expiring five years after vesting commencing in June 2000.
(7) 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.
(8) Includes 150,000 shares of Common Stock owned by a company in which Mr.
Bolgiani and his wife have a 50% ownership interest.
(9) Includes warrants to purchase 150,000 shares of Common Stock at $.38 per
share expiring in January 2000.
(10) Includes warrants to purchase 300,000 shares of Common Stock at $.40 per
share expiring in February 2000.
(11) Includes options to purchase 150,000 shares of Common Stock at $3.44 per
share expiring in May 2006.
(12) Includes options to purchase 105,000 shares of Common Stock at $3.44 per
share expiring in May 2006.
(13) Includes currently exercisable options to purchase 4,525 shares of Common
Stock at $2.21 per share expiring in May 2006 granted pursuant to the
Outside Director Stock Option Plan.
(14) Includes currently exercisable options to purchase 5,650 shares of Common
Stock at $1.77 per share expiring in May 2007 granted pursuant to the
Outside Director Stock Option Plan.
(15) Includes currently exercisable options to purchase 10,000 shares of Common
Stock at $.875 per share expiring in January 2009 granted pursuant to the
1997 Stock Option Plan.
(16) Includes currently exercisable options to purchase 350,000 shares of Common
Stock at $.875 per share expiring in January 2004 granted pursuant to the
1997 Stock Option Plan.
(17) Includes currently exercisable options to purchase 40,000 shares of Common
Stock at $.875 per share expiring in January 2009 granted pursuant to the
1997 Stock Option Plan.
(18) Includes currently exercisable options to purchase 120,000 shares of Common
Stock at $.875 per share expiring in January 2004 granted pursuant to the
1997 Stock Option Plan.
(19) Includes currently exercisable options to purchase 16,667 shares of Common
Stock at $1.91 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(20) Includes currently exercisable options to purchase 125,000 shares of Common
Stock at $1.91 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(21) Includes currently exercisable options to purchase 33,333 shares of Common
Stock at $1.91 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(22) Includes currently exercisable options to purchase 25,000 shares of Common
Stock at $1.91 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(23) Includes currently exercisable options to purchase 17,500 shares of Common
Stock at $1.91 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
</FN>
</TABLE>
<PAGE>
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 66 President and Chief Executive Officer
Dr. John C. K. Hui 53 Senior Vice President, R&D and Manufacturing
Anthony E. Peacock 58 Vice President, Marketing and
Clinical Affairs
Joseph A. Giacalone 35 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, becoming a manager in
1990.
<PAGE>
Executive Compensation
The following table sets forth the annual and long-term compensation of
the Chief Executive Officer and each of the Company's four most highly
compensated officers other than the Chief Executive Officer (the "named
executive officers") for the fiscal years ended May 31, 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
---------------------------------------------------------- -------------
Other Restricted Shares Covered Long Term
Name and Annual Stock By Option Incentive Plan All Other
Principal Position Year Salary Bonus Compensation (1) Awards Grants Payout Compensation
- ------------------ ---- ------ ----- --------------- ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony Viscusi 1999 $170,000 - $121,875 - 140,000 - -
President & CEO 1998 $170,000 - - - 100,000 - -
1997 $168,333 - - - 150,000 - -
John C.K. Hui 1999 $140,000 - - - 70,000 - -
Senior VP 1998 $140,000 - - - 375,000 - -
1997 $139,167 - - - 150,000 - -
Anthony E. Peacock 1999 $150,000 - $79,688 - 70,000 - -
VP 1998 $150,000 - - - 75,000 - -
1997 $149,167 - - - 150,000 - -
Joseph A. Giacalone 1999 $109,200 - $62,031 - 190,000 - -
Secretary/Treasurer 1998 $109,200 - - - 52,500 - -
1997 $107,183 - - - 105,000 - -
<FN>
(1) Represents the difference between the closing price of the Common Stock and
the exercise price of the options on the date of exercise multiplied by the
number of shares acquired upon exercise. The calculation does not reflect the
effects of any income taxes that may be due on the value realized.
</FN>
</TABLE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth the number of options granted to the
Company's named executive officers during the fiscal year ended May 31, 1999.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
-------------------------------------------------------------------------
Total Number
of Securities % of Total
Underlying Options/SARs Exercise
Options/SARs to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/share) Date 5% 10%
- ---- -------------- -------------- --------- ----------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Anthony Viscusi 140,000 (1) 8% $.875 1/4/09 $77,040 $195,233
John C.K. Hui 70,000 (1) 4% $.875 1/4/09 $38,520 $97,617
Anthony E. Peacock 70,000 (1) 4% $.875 1/4/09 $38,520 $97,617
Joseph A. Giacalone 70,000 (1) 4% $.875 1/4/09 $38,520 $97,617
Joseph A. Giacalone 120,000 (2) 6% $.875 1/4/04 $29,010 $64,104
<FN>
(1) Represents ten-year, non-qualified stock options under the 1997 Stock Option
Plan that vest equally over three years commencing January 5, 2000. Such vesting
is contingent upon continued employment with the Company.
(2) Represents five-year, non-qualified stock options under the 1997 Stock
Option Plan that vested upon issuance.
</FN>
</TABLE>
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and F/Y-End Option Values
The following table sets forth information for each of the named
executive officers with respect to the value of options or warrants exercised
during the fiscal year ended May 31, 1999 and the value of outstanding and
unexercised options or warrants held as of May 31, 1999, based upon the market
value of the Common Stock of $1.281 per share on that date.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Options at In-the-Money Options
Shares Acquired Value Fiscal Year End at Fiscal Year End (2)
Name on Exercise (#) Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Anthony Viscusi 250,000 $121,875 933,333 206,667 $623,250 $56,840
John C.K. Hui - - 575,000 320,000 $261,300 $28,420
Anthony E. Peacock 150,000 $79,688 325,000 120,000 $135,900 $28,420
Joseph A. Giacalone 125,000 $62,031 317,500 105,000 $114,045 $28,420
<FN>
(1) Represents the difference between the closing price of the Common Stock and
the exercise price of the options on the date of exercise multiplied by the
number of shares acquired upon exercise. The calculation does not reflect the
effects of any income taxes that may be due on the value realized.
(2) Represents the difference between the closing market price of the Common
Stock at May 31, 1999 of $1.281 per share and the exercise price per share
multiplied by the number of in-the-money options at May 31, 1999.
</FN>
</TABLE>
Employment Agreements
The Company maintains employment agreements with each of Messrs.
Viscusi, Peacock and Giacalone, expiring December 31, 2000, and with Dr. Hui,
expiring January 31, 2002. Such employment agreements provide, among other
things, 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 or upon any other termination of such
employment in breach of the agreement, the employee 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.
1995 Stock Option Plan
In May 1995, the Company's stockholders approved the 1995 Stock Option
Plan for officers and employees of the Company, for which the Company reserved
an aggregate of 1,500,000 shares of common stock. In December 1997, the
Company's Board of Directors terminated the 1995 Stock Option Plan. At May 31,
1999, 972,000 options had been granted, of which 947,000 are outstanding under
the 1995 Option Plan.
Outside Director Stock Option Plan
In May 1995, the Company's stockholders approved an Outside Director
Stock Option Plan for non-employee directors of the Company, for which the
Company reserved an aggregate of 300,000 shares of common stock. On June 1,
1997, 1996 and 1995, options to purchase an aggregate of 39,550 shares, 31,675
shares, and 77,418 shares of Common Stock, respectively, at $1.77, $2.21, and
$.78 per share, respectively, were granted to outside directors and remain
outstanding as of May 31, 1999. In December 1997, the Company's Board of
Directors terminated the Outside Director Stock Option Plan.
1997 Stock Option Plan
In December 1997, the Company's stockholders approved the 1997 Stock
Option Plan (the "1997 Plan") for officers, directors, employees and consultants
of the Company, for which the Company has reserved, as amended, an aggregate of
2,800,000 shares of common stock. The 1997 Plan provides that it will be
administered by a committee of the Board of Directors of the Company and that
the committee will have full authority to determine the identity of the
recipients of the options and the number of shares subject to each option.
Options granted under the 1997 Plan may be either incentive stock options or
non-qualified stock options. The option price shall be 100% of the fair market
<PAGE>
value of the common stock on the date of the grant (or in the case of incentive
stock options granted to any individual principal stockholder who owns stock
possessing more than 10% of the total combined voting power of all voting stock
of the Company, 110% of such fair market value). The term of any option may be
fixed by the committee but in no event shall exceed ten years from the date of
grant. Options are exercisable upon payment in full of the exercise price,
either in cash or in common stock valued at fair market value on the date of
exercise of the option. The term for which options may be granted under the 1997
Plan expires August 6, 2007. At May 31, 1999, 2,808,000 options had been
granted, of which 2,759,500 are outstanding under the 1997 Plan.
1999 Stock Option Plan
In July 1999, the Company's Board of Directors authorized the 1999 Stock
Option Plan (the "1999 Plan") for officers, directors, employees and consultants
of the Company, for which the Company has reserved an aggregate of 2,000,000
shares of common stock. The 1999 Plan provides that it will be administered by a
committee of the Board of Directors of the Company and that the committee will
have full authority to determine the identity of the recipients of the options
and the number of shares subject to each option. Options granted under the 1999
Plan may be either incentive stock options or non-qualified stock options. The
option price shall be 100% of the fair market value of the common stock on the
date of the grant (or in the case of incentive stock options granted to any
individual principal stockholder who owns stock possessing more than 10% of the
total combined voting power of all voting stock of the Company, 110% of such
fair market value). The term of any option may be fixed by the committee but in
no event shall exceed ten years from the date of grant. Options are exercisable
upon payment in full of the exercise price, either in cash or in common stock
valued at fair market value on the date of exercise of the option. The term for
which options may be granted under the 1999 Plan expires July 12, 2009.
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.
Director's Fees
It has been the policy of the Company to grant fees of $1,000 per
meeting to each outside director who attends a regularly scheduled or special
meeting of its Board of Directors. Messrs. Cohen and Shapiro do not receive
per-meeting fees but monthly fees of $2,500. In addition, the Company reimburses
out-of-state directors for their cost of travel and lodging to attend such
meetings.
Limitation on Liability of Officers and Directors
The Company has entered into indemnification agreements with each of its
current officers and directors pursuant to which it has agreed, among other
things, to indemnify these officers and directors to the fullest extent
permitted by Delaware law.
Certain Transactions
There were no reportable transactions during the Company's last fiscal
year.
Compensation Committee Interlocks and Insider Participation
During fiscal 1999, the Company's Compensation Committee consisted of
Messrs. Alexander G. Bearn, Francesco Bolgiani, E. Donald Shapiro and Abraham E.
Cohen (ex-officio). None of these persons were officers or employees of the
Company during fiscal 1999 and, except as otherwise disclosed, had any
relationship requiring disclosure in this Proxy Statement.
<PAGE>
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 1999 is furnished by the directors
who comprised the Compensation Committee during fiscal 1999.
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.
Stock options are granted to employees, including the Company's
executive officers, by the Compensation Committee under the Company's 1997 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, in whole or
in part, starting 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 has so far been retained.
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
that 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, in January 1999, the Compensation Committee granted to him
ten-year, non-qualified stock options to purchase 140,000 shares of the
Company's common stock at $.875 per share, vesting in three equal annual
installments commencing January 5, 2000.
The Compensation Committee:
Alexander G. Bearn, Chairman Francesco Bolgiani
Abraham E. Cohen (ex-officio) E. Donald Shapiro
<PAGE>
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 1999.
PERFORMANCE GRAPH
The following graph sets forth the cumulative total return* to the
Company's stockholders during the five-year period ended May 31, 1999 as well as
an overall stock market index (NASDAQ Stock Market Index) and the Company's peer
group index (S&P Medical Products and Supplies):
<TABLE>
<CAPTION>
Cumulative Total Return
5/31/94 5/31/95 5/31/96 5/31/97 5/31/98 5/31/99
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Vasomedical, Inc. 100 137 421 284 263 216
NASDAQ Stock Market (US) 100 119 173 195 247 347
S&P Health Care (Medical
Products and Supplies) 100 147 200 248 330 413
</TABLE>
<PAGE>
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, 2000. Grant Thornton LLP acted as the Company's independent
public accountants for the fiscal years ended May 31, 1992 through May 31, 1999
and has been selected by the Board of Directors to continue to act as the
Company's independent public accountants for the Company's 2000 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 AND INCORPORATION BY REFERENCE
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1999 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, other than the Selected Financial Data,
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 1, 2000 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
September 8, 1999
<PAGE>
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 6,
1999 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 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 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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: _____________, 1999
_____________________________________________________[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
