SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12.
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 ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
(5) Total fee paid:
_________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________________________________
(3) Filing Party:
_________________________________________________________________________
(4) Date Filed:
_________________________________________________________________________
<PAGE>
VASOMEDICAL, INC.
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 11, 2000
---------------
To our Stockholders:
An annual meeting of stockholders will be held at the Griffis Faculty
Club, New York Hospital-Cornell Medical Center, 521 East 68th Street, New York,
New York 10021 on Wednesday, October 11, 2000 beginning at 10:00 a.m. At the
meeting, you will be asked to vote on the following matters:
1. Election of five directors.
2. Ratification of the appointment by the Board of Directors of Grant
Thornton LLP as our independent certified public accountants for
fiscal year 2001.
3. Any other matters that properly come before the meeting.
The above matters are set forth in the proxy statement attached to this
notice to which your attention is directed.
If you are a stockholder of record at the close of business on August
18, 2000, you are entitled to vote at the meeting or at any adjournment or
postponement of the meeting. This notice and proxy statement are first being
mailed to stockholders on or about September 8, 2000.
By Order of the Board of Directors,
JOSEPH A. GIACALONE
Secretary
Dated: September 8, 2000
Westbury, New York
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
PRE-ADDRESSED POSTAGE-PAID ENVELOPE AS DESCRIBED ON THE ENCLOSED PROXY CARD.
YOUR PROXY, GIVEN THROUGH THE RETURN OF THE ENCLOSED PROXY CARD, MAY BE REVOKED
PRIOR TO ITS EXERCISE BY FILING WITH OUR CORPORATE SECRETARY PRIOR TO THE
MEETING A WRITTEN NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER
DATE, OR BY ATTENDING THE MEETING, FILING A WRITTEN NOTICE OF REVOCATION WITH
THE SECRETARY OF THE MEETING AND VOTING IN PERSON.
<PAGE>
VASOMEDICAL, INC.
180 Linden Avenue
Westbury, New York 11590 USA
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, October 11, 2000
---------------
Our Annual Meeting of Stockholders will be held on Wednesday, October 11,
2000 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. This proxy statement
contains information about the matters to be considered at the meeting or any
adjournments or postponements of the meeting.
ABOUT THE MEETING
What is being considered at the meeting?
You will be voting on the following:
-- election of directors;
-- ratification of the appointment of independent certified public
accountants.
In addition, our management will report on our performance during fiscal 2000
and respond to your questions.
Who is entitled to vote at the meeting?
You may vote if you owned stock as of the close of business on August
18, 2000. Each share of stock is entitled to one vote.
How do I vote?
You can vote in two ways:
-- by attending the meeting or
-- by completing, signing and returning the enclosed proxy card.
Can I change my mind after I vote?
Yes, you may change your mind at any time before the vote is taken at
the meeting. You can do this by (1) signing another proxy with a later date and
returning it to us prior to the meeting or filing with our corporate secretary a
written notice revoking your proxy, or (2) voting again at the meeting.
What if I return my proxy card but do not include voting instructions?
Proxies that are signed and returned but do not include voting
instructions will be voted FOR the election of the nominee directors and FOR the
appointment of our company's independent certified public accountants.
<PAGE>
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts with brokers and/or our
transfer agent. Please vote all of these shares. We recommend that you contact
your broker and/or our transfer agent to consolidate as many accounts as
possible under the same name and address. Our transfer agent is American Stock
Transfer & Trust Co. (718) 921- 8200.
Will my shares be voted if I do not provide my proxy?
If you hold your shares directly in your own name, they will not be
voted if you do not provide a proxy. Your shares may be voted under certain
circumstances if they are held in the name of a brokerage firm. Brokerage firms
generally have the authority to vote customers' unvoted shares on certain
"routine" matters, including the election of directors. When a brokerage firm
votes its customer's unvoted shares, these shares are counted for purposes of
establishing a quorum. At our meeting these shares will be counted as voted by
the brokerage firm in the election of directors and appointment of auditors, but
will not be counted for any matters to be voted on because these other matters
would not be considered "routine" under the applicable rules.
How many votes must be present to hold the meeting?
Your shares are counted as present at the meeting if you attend the
meeting and vote in person or if you properly return a proxy by mail. In order
for us to conduct our meeting, a majority of our outstanding shares as of August
18, 2000 must be present at the meeting. This is referred to as a quorum. On
August 18, 2000, there were 56,339,042 shares outstanding and entitled to vote.
What vote is required to approve each item?
The affirmative vote of a majority of the votes cast at the Annual
Meeting is required for approval of the election of directors and the
appointment of our independent certified public accountants. A properly executed
proxy marked "ABSTAIN" with respect to any such matter will not be voted,
although it will be counted for purposes of determining whether there is a
quorum. Accordingly, an abstention will have the effect of a negative vote.
STOCK OWNERSHIP
The following information, including stock ownership, is submitted with
respect to our directors, each executive officer named in the "Summary
Compensation Table," for all executive officers and directors as a group, and,
based solely on filings with the Securities and Exchange Commission, except as
otherwise indicated, for each holder of more than five percent of our common
stock as of August 20, 2000.
<TABLE>
<CAPTION>
Common Stock % of Outstanding
Name of Beneficial Owner Beneficially Owned (1)(2)(3) Shares
------------------------ --------------------------- ----------------
<S> <C> <C>
Dr. Alexander G. Bearn (8)(9)(10)(16) 53,508 shs. *
150 South Independence Mall East
Philadelphia, Pennsylvania 19106
Dr. David S. Blumenthal (5)(9)(10)(16) 91,411 shs. *
407 East 70th Street
New York, New York 10021
Abraham E. Cohen (5)(8)(9)(11)(12) 687,078 shs. 1.2%
444 Madison Avenue
New York, New York 10022
D. Michael Deignan (23) 50,000 shs. *
180 Linden Avenue
Westbury, New York 11590
<PAGE>
Joseph A. Giacalone (7)(13)(19)(20) 354,528 shs. *
180 Linden Avenue
Westbury, New York 11590
Dr. John C. K. Hui (6)(13)(17) 1,212,655 shs. 2.1%
180 Linden Avenue
Westbury, New York 11590
Photios T. Paulson - *
615 Franklin Turnpike
Ridgewood, New Jersey 07450
Anthony E. Peacock (14)(21) 144,307 shs. *
180 Linden Avenue
Westbury, New York 11590
Dr. Kenneth W. Rind (5)(8)(9)(10) 383,078 shs. *
750 Lexington Avenue
New York, New York 10022
E. Donald Shapiro (5)(8)(9)(11)(12) 600,578 shs. 1.1%
57 Worth Street
New York, New York 10013
Anthony Viscusi (4)(6)(15)(18)(22) 1,421,667 shs. 2.5%
380 Lexington Avenue, Suite 1700
New York, New York 10168
Forrest R. Whittaker - *
675 McDonnell Boulevard
St. Louis, Missouri 63134
Dr. Zhen-sheng Zheng (5)(8)(9)(10) 133,078 shs. *
74 Zhangshan Road II
Guangzhou, 510089
P.R. China
Directors and executive officers
as a group (13 persons) 5,131,888 shs. 8.7%
<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 750,000 shares of Common Stock at $.45 per
share expiring five years after vesting commencing in June 2001.
(5) Includes currently exercisable options to purchase 12,903 shares of Common
Stock at $.775 per share expiring in May 2005 granted pursuant to the
Outside Director Stock Option Plan.
(6) Includes options to purchase 150,000 shares of Common Stock at $3.4375 per
share expiring in May 2006.
(7) Includes options to purchase 105,000 shares of Common Stock at $3.4375 per
share expiring in May 2006.
(8) 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.
<PAGE>
(9) 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.
(10) 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.
(11) 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.
(12) 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.
(13) Includes currently exercisable options to purchase 23,333 shares of Common
Stock at $.875 per share expiring in January 2009 granted pursuant to the
1997 Stock Option Plan.
(14) Includes currently exercisable options to purchase 333 shares of Common
Stock at $.875 per share expiring in January 2009 granted pursuant to the
1997 Stock Option Plan.
(15) Includes currently exercisable options to purchase 46,667 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 1,858 shares of Common
Stock at $1.90625 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(17) Includes currently exercisable options to purchase 250,000 shares of Common
Stock at $1.90625 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(18) Includes currently exercisable options to purchase 66,667 shares of Common
Stock at $1.90625 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(19) Includes currently exercisable options to purchase 35,000 shares of Common
Stock at $1.90625 per share expiring in March 2008 granted pursuant to the
1997 Stock Option Plan.
(20) Includes currently exercisable options to purchase 3,333 shares of Common
Stock at $1.6875 per share expiring in July 2009 granted pursuant to the
1999 Stock Option Plan.
(21) Includes currently exercisable options to purchase 21,667 shares of Common
Stock at $1.6875 per share expiring in July 2009 granted pursuant to the
1999 Stock Option Plan.
(22) Includes currently exercisable options to purchase 33,333 shares of Common
Stock at $1.6875 per share expiring in July 2009 granted pursuant to the
1999 Stock Option Plan.
(23) Includes currently exercisable options to purchase 50,000 shares of Common
Stock at $5.15 per share expiring in January 2010 granted pursuant to the
1999 Stock Option Plan.
</FN>
</TABLE>
ELECTION OF DIRECTORS
Our 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 our by-laws. Our Board of
Directors is divided into three classes, as nearly equal in number as possible,
whose terms of office expire in successive years. Our Board of Directors for
fiscal 2000 consists of eleven 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 2002) Stockholders in 2000) Stockholders in 2001)
---------------------------------------------------------------------------------------
<S> <C> <C>
E. Donald Shapiro (1)(2)(3) Abraham E. Cohen (5) Alexander G. Bearn, MD (4)
Anthony Viscusi (1)(2)(3) John C.K. Hui, PhD (4) David S. Blumenthal, MD (3)(4)
Zhen-sheng Zheng, MD (4) Photios T. Paulson (3) D. Michael Deignan
Forrest R. Whittaker (2) Kenneth W. Rind, PhD (1)(2)
<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>
<PAGE>
Messrs. Cohen, Hui, Paulson and Whittaker, current directors in Class
II, are to be elected to serve until the 2003 Annual Meeting of Stockholders or
until their successors are duly elected and qualified and Mr. Deignan, a current
director in Class III, is to be elected to serve until the 2001 Annual Meeting
of Stockholders or until his successor is 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
Classes II and III 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.
Our Board of Directors held five meetings during our fiscal year ended
May 31, 2000. Each director attended or participated in at least 75% of such
meetings of the Board of Directors, except Mr. Francesco Bolgiani, a former
director, and Drs. Bearn and Zheng. During the fiscal year ended May 31, 2000,
there were
-- three meetings of the Audit Committee,
-- two meetings of the Compensation Committee,
-- four meetings of the Executive Committee, and
-- no formal meetings of the Medical Advisory Committee.
Our Audit Committee is involved in discussions with our independent
public accountants with respect to the quarterly and year-end audited financial
statements, our internal accounting controls and the professional services
furnished by our independent public accountants. Our Compensation Committee
recommends executive compensation and the granting of stock options to key
employees. See "Compensation Committee Report on Executive Compensation." Our
Executive Committee was established to advise the Board of Directors and make
recommendations on matters relating to our business and operations. Our Medical
Advisory Committee acts in an oversight capacity with respect to medical issues
and our ongoing clinical programs.
Principal Occupations of Directors
The following is a brief account of the business experience for the past
five years of our directors:
Dr. Alexander G. Bearn (77 years of age) has been a director since November
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 boards of Biogen, Inc.
and Nutraceutical, Inc., both of which are public companies.
Dr. David S. Blumenthal (50) has been a director since June 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.
Abraham E. Cohen (64) has been Chairman of the Board since June 1994 and a
director since June 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., Axonyx Inc., Chugai Pharmaceutical
Co., Ltd., Neurobiological Technologies, Inc., Pharmaceutical Product
Development, Inc., Teva Pharmaceutical Industries, Ltd. and Travellers Series
Fund, Inc.
D. Michael Deignan (56) has been President, Chief Executive Officer and
director since his employment in January 2000. Mr. Deignan was President and CEO
of Medical Sterilization Inc. (now known as Surgical Services, Inc.) (September
1995 to January 1999) and President and CEO of Tonometrics, Inc. (January 1993
to March 1995). Prior to 1993, Mr. Deignan held various executive positions at
C.R. Bard, G.D. Searle and Baxter Healthcare International. Mr. Deignan is a
director of Surgical Services, Inc.
<PAGE>
Dr. John C.K. Hui (54) has been a director and Senior Vice President since
February 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 us in January 1995.
Photios T. Paulson (61) has been a director since April 2000. Mr. Paulson
has been Vice President of Biomerieux Alliance S.A. since 1995. Between 1990 and
1995, Mr. Paulson was Chairman of Biomerieux N.A. Mr. Paulson is a director of
Novametrix, Inc., a public company, as well as Biomerieux N.A. and Silliker,
Inc.
Dr. Kenneth W. Rind (65) has been a director since February 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 Alpha Technologies, Inc. and
several private companies.
E. Donald Shapiro (68) has been a director since June 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.
Anthony Viscusi (67) has been a director since June 1994 and was our
President and Chief Executive Officer from June 1994 to January 2000. 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.
Forrest R. Whittaker (50) has been a director since April 2000. Mr.
Whittaker has been President of the Respiratory Group of Mallinckrodt, Inc.
since June 2000. Prior thereto, Mr. Whittaker was President and CEO of Paidos
Health Management Services, Inc. (between 1993 and 2000) and President of Baxter
Healthcare Corporation's V. Mueller Division (1989 through 1993).
Dr. Zhen-sheng Zheng (70) has been a director since February 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.
MANAGEMENT
Our Officers are:
<TABLE>
<CAPTION>
Position Held
Name Age With the Company
---- --- ----------------
<S> <C> <C>
D. Michael Deignan 56 President and Chief Executive Officer
John C. K. Hui, PhD 54 Senior Vice President, R&D and
and Manufacturing
Joseph A. Giacalone 36 Chief Financial Officer and Secretary
</TABLE>
-------
Joseph A. Giacalone, a certified public accountant, has been Chief
Financial Officer of the Company since January 2000, Secretary since February
1994, Treasurer from February 1994 to January 2000, 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
our Chief Executive Officer and each of our most highly compensated officers
other than the Chief Executive Officer (the "named executives officers") for the
fiscal years ended May 31, 2000, 1999 and 1998.
<TABLE>
<CAPTION>
Summary Compensation Table
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>
D. Michael Deignan (2) 2000 $75,000 - - - 650,000 - -
President & CEO
Anthony Viscusi (2) 2000 $99,167 - - - 100,000 - -
Former President & CEO 1999 $170,000 - $121,875 - 140,000 - -
1998 $170,000 - - - 100,000 - -
John C.K. Hui 2000 $140,000 - $489,000 - - - -
Senior VP 1999 $140,000 - - - 70,000 - -
1998 $140,000 - - - 375,000 - -
Anthony E. Peacock (3) 2000 $150,000 - $2,072,418 - 65,000 - -
VP 1999 $150,000 - $79,688 - 70,000 - -
1998 $150,000 - - - 75,000 - -
Joseph A. Giacalone 2000 $113,596 - $1,432,500 - 70,000 - -
CFO/Secretary 1999 $109,200 - $62,031 - 190,000 - -
1998 $109,200 - - - 52,500 - -
<FN>
(1) Represents the difference between the closing price of our common stock and
the exercise price of the options on the date of exercise multiplied by the
number of shares acquired upon exercise. The calculation does not reflect
the effects of any income taxes that may be due on the value realized.
(2) Mr. Viscusi resigned his position as an officer of our company in January
2000, at which time the Board of Directors appointed D. Michael Deignan as
President and Chief Executive Officer.
(3) Mr. Peacock resigned his position as an officer of our company in July
2000.
</FN>
</TABLE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth the number of options granted to our
named executive officers during the fiscal year ended May 31, 2000.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------------------------------------------------------------------------
Total Number
of Securities % of Total
Underlying Options/SARs Exercise
Options/SARs to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/share) Date 5% 10%
---- ----------- -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
D. Michael Deignan 600,000 (1) 47% $1.21875 1/5/10 $459,879 $1,165,424
D. Michael Deignan 50,000 (2) 4% $5.15000 3/9/10 $161,940 $410,389
Anthony Viscusi 100,000 (3) 8% $1.68750 7/12/09 $106,126 $268,944
Anthony E. Peacock 65,000 (3) 5% $1.68750 7/12/09 $68,982 $174,814
Joseph A. Giacalone 10,000 (3) 1% $1.68750 7/12/09 $10,613 $26,894
Joseph A. Giacalone 60,000 (4) 5% $1.21875 1/5/10 $45,988 $116,542
<FN>
(1) Represents ten-year, non-qualified stock options under the 1999 Stock
Option Plan that vest over five years commencing January 1, 2001 as
follows: 150,000 shares, 100,000 shares, 100,000 shares, 100,000 shares and
150,000 shares. Such vesting is contingent upon continued employment or
service with us.
(2) Represents ten-year, non-qualified stock options under the 1999 Stock
Option Plan that vested immediately.
(3) Represents ten-year, non-qualified stock options under the 1999 Stock
Option Plan that vest equally over three years commencing July 13, 2000.
Such vesting is contingent upon continued employment or service with us.
(4) Represents ten-year, non-qualified stock options under the 1999 Stock
Option Plan that vest equally over three years commencing January 6, 2001.
Such vesting is contingent upon continued employment or service with us.
</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, 2000 and the value of outstanding and
unexercised options or warrants held as of May 31, 2000, based upon the market
value of the common stock of $4.00 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 - - 1,013,333 226,667 $3,032,292 $592,708
D. Michael Deignan - - 50,000 600,000 $- $1,668,750
John C.K. Hui 300,000 $489,000 423,333 171,667 $680,729 $407,552
Anthony E. Peacock 373,000 $2,072,418 333 140,000 $1,042 $358,906
Joseph A. Giacalone 195,000 $1,432,500 163,333 134,167 $205,260 $372,474
<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, 2000 of $4.00 per share and the exercise price per share
multiplied by the number of in-the-money options at May 31, 2000.
</FN>
</TABLE>
Employment Agreements
We maintain employment agreements with each of Messrs. Deignan, 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 our control, as defined therein, or in any person
directly or indirectly controlling us, 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, our stockholders approved the 1995 Stock Option Plan for
our officers and employees, for which we reserved an aggregate of 1,500,000
shares of common stock. In December 1997, our Board of Directors terminated the
1995 Stock Option Plan. At May 31, 2000, 972,000 options had been granted, of
which 616,000 are outstanding under the 1995 Option Plan.
Outside Director Stock Option Plan
In May 1995, our stockholders approved an Outside Director Stock Option
Plan for our non-employee directors, for which we 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. In December 1997, our Board of Directors
terminated the Outside Director Stock Option Plan. At May 31, 2000, 121,040
options are outstanding under the Outside Director Stock Option Plan.
1997 Stock Option Plan
In December 1997, our stockholders approved the 1997 Stock Option Plan
(the "1997 Plan") for our officers, directors, employees and consultants, for
which we have 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 our
Board of Directors 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 value of the common stock on the date of the grant (or in the
<PAGE>
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 of our voting stock, 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, 2000, 2,838,000 options had been
granted, of which 2,241,694 are outstanding under the 1997 Plan.
1999 Stock Option Plan
In July 1999, our Board of Directors authorized the 1999 Stock Option
Plan (the "1999 Plan") for our officers, directors, employees and consultants,
for which we have reserved, as amended, an aggregate of 3,000,000 shares of
common stock. The 1999 Plan provides that it will be administered by a committee
of our Board of Directors 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 of our voting stock, 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. At May 31, 2000, 1,240,000 options
had been granted, of which 1,165,000 are outstanding under the 1999 Plan.
Shareholder Rights Plan
In March 1995, our Board of Directors approved a Shareholder Rights
Plan, under which a dividend distribution of one Right for each outstanding
share of our common stock is authorized. Each Right will entitle stockholders 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 our
outstanding stock. At present, we are not aware of any such person or group
seeking to acquire 20% or more of our outstanding common stock.
Director's Compensation
It has been our policy to grant fees of $1,500 per meeting to each
outside director who attends a regularly scheduled or special meeting of its
Board of Directors. Messrs. Cohen, Shapiro and Viscusi do not receive per-
meeting fees but monthly fees of $2,500. Fees for committee meetings are $1,000
per meeting. In addition, we reimburse out-of-state directors for their cost of
travel and lodging to attend such meetings.
In January 2000, we revised our compensation structure for outside
directors to provide for the issuance of
-- a one-time grant of 30,000 non-qualified stock options to outside
directors issued on the date of their initial appointment to our Board
of Directors at the closing price on the issue date and vesting in
three equal annual increments commencing on the first anniversary of
the grant and contingent upon their continued service on our Board;
and
-- an automatic annual grant of 15,000 non-qualified stock options to
outside directors issued on the date of our Annual Meeting of
Stockholders at the closing price on the issue date and vesting in
three equal annual increments commencing on the first anniversary of
the grant and contingent upon their continued service on our Board.
Limitation on Liability of Officers and Directors
We have entered into indemnification agreements with each of our current
officers and directors pursuant to which we have agreed, among other things, to
indemnify these officers and directors to the fullest extent permitted by
Delaware law.
<PAGE>
Certain Transactions
There were no reportable transactions during our last fiscal year.
Compensation Committee Interlocks and Insider Participation
During fiscal 2000, our Compensation Committee consisted of Messrs.
Blumenthal, Paulson, Shapiro, Viscusi and Cohen (ex-officio). Except for Mr.
Viscusi, who was appointed to serve on our Compensation Committee after his
resignation as our President and Chief Executive Officer, none of these persons
were our officers or employees during fiscal 2000 and, 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 our executive officers is generally determined by
the Compensation Committee of our Board of Directors, subject to applicable
employment agreements. Each member of the Compensation Committee is a director
who is not our employee or any of our affiliates. The following report with
respect to certain compensation paid or awarded to our executive officers during
fiscal 2000 is furnished by the directors who comprised the Compensation
Committee during fiscal 2000.
General Policies
Our compensation programs are intended to enable us to attract,
motivate, reward and retain the management talent required to achieve corporate
objectives and thereby increase shareholder value. It is our 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 our business. To attain these objectives, our executive
compensation program includes a competitive base salary, cash incentive bonuses
and stock-based compensation.
Stock options are granted to employees, including our executive
officers, by the Compensation Committee under our 1999 Stock Option Plan. The
Committee believes that stock options provide an incentive that focuses the
executive's attention on managing us 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 our 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 our 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 our 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 us, and qualitative factors bearing
on an individual's experience, responsibilities, management and leadership
abilities, and job performance.
<PAGE>
In recognition of Mr. Viscusi's significant contribution to our growth,
in July 2000, the Compensation Committee granted to him ten-year, non-qualified
stock options to purchase 100,000 shares of our common stock at $1.6875 per
share, vesting in three equal annual installments commencing July 12, 2000.
In January 2000, the Board of Directors appointed a new President and
CEO, D. Michael Deignan, and approved a one-year employment agreement for annual
compensation of $180,000, including a grant of non- qualified stock options to
purchase 600,000 shares of common stock at $1.21 per share, subject to vesting
provisions, as defined. Mr. Deignan's employment agreement provides, among other
things, that in the event there is a change in our control, as defined therein,
or in any person directly or indirectly controlling us, as also defined therein,
Mr. Deignan 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 addition, in March 2000, the Committee granted additional
non-qualified stock options to Mr. Deignan to purchase 50,000 shares of common
stock at $5.15 per share.
Our Compensation Committee:
David S. Blumenthal Abraham E. Cohen (ex-officio)
Photios T. Paulson E. Donald Shapiro, Chairman
Anthony Viscusi
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires our executive officers,
directors and persons who own more than ten percent of a registered class of our
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
"NASD"). These Reporting Persons are required by SEC regulation to furnish us
with copies of all Forms 3, 4 and 5 they file with the SEC and the NASD. Based
solely upon our review of the copies of the forms it has received, we believes
that all Reporting Persons complied on a timely basis with all filing
requirements applicable to them with respect to transactions during fiscal 2000.
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the cumulative total return* to the
Company's stockholders during the five-year period ended May 31, 2000 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>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG VASOMEDICAL, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX,
AND THE S & P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
Cumulative Total Return *
5/31/95 5/31/96 5/31/97 5/31/98 5/31/99 5/31/00
------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Vasomedical, Inc. 100.00 307.69 207.69 192.31 157.69 492.31
NASDAQ Stock Market (US) 100.00 145.34 163.76 207.72 293.58 402.12
S&P Health Care (Medical
Products and Supplies) 100.00 136.16 168.70 223.98 280.21 312.61
</TABLE>
* $100 INVESTED ON 5/31/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31.
<PAGE>
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the stockholders approve the
appointment of Grant Thornton LLP as our independent public accountants to
examine our financial statements for the fiscal year ending May 31, 2001. Grant
Thornton LLP acted as our independent public accountants for the fiscal years
ended May 31, 1992 through May 31, 2000 and has been selected by the Board of
Directors to continue to act as our independent public accountants for our 2001
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 our Annual Report to Stockholders for the fiscal year ended
May 31, 2000 has been provided to all stockholders as of the Record Date.
Stockholders are referred to the report for financial and other information
about us, 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.
FORWARD-LOOKING STATEMENTS
Except for historical information contained in this proxy statement, the
matters discussed are forward looking statements that involve risks and
uncertainties. When used herein, words such as "anticipate", "believe",
"estimate", "expect" and "intend" and similar expressions, as they relate to the
Company or its management, identify forward-looking statements. Such
forward-looking statements are based on the beliefs of the Company's management,
as well as assumptions made by and information currently available to the
Company's management. Among the factors that could cause actual results to
differ materially are the following: the effect of business and economic
conditions; the impact of competitive products and pricing; capacity and supply
constraints or difficulties; product development, commercialization or
technological difficulties; the regulatory and trade environment; and the risk
factors reported from time to time in the Company's SEC reports. The Company
undertakes no obligation to update forward-looking statements as a result of
future events or developments.
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.
We will pay the cost of soliciting proxies in the accompanying form. In
addition to solicitation by use of the mails, certain of our officers and
regular employees may solicit proxies by telephone, telegraph or personal
interview. We 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 our next Annual Meeting of
Stockholders must be received by us no later than June 1, 2001 to be considered
for inclusion in our next Proxy Statement.
By Order of the Board of Directors,
JOSEPH A. GIACALONE
Secretary
Dated: September 8, 2000
Westbury, New York
<PAGE>
VASOMEDICAL, INC.
The undersigned hereby appoints D. Michael Deignan and
Anthony Viscusi, 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 11, 2000 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:
Abraham E. Cohen D. Michael Deignan John C.K. Hui
Photios T. Paulson Forrest R. Whittaker
[ ] 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 2001.
[ ] 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. STOCKHOLDERS 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: _____________, 2000
_____________________________________________[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
