OPHTHALMIC IMAGING SYSTEMS
221 Lathrop Way, Suite I
Sacramento, California 95185
December 30, 1998
Dear Shareholder:
On behalf of the Board of Directors, we cordially invite you to attend
the Annual Meeting of Shareholders of Ophthalmic Imaging Systems (the "Company")
which will be held at the Company's offices, 221 Lathrop Way, Suite I,
Sacramento, California on Monday January 18, 1999, at 2:00 p.m., Pacific Time.
At the Annual Meeting, shareholders will be asked (i) to elect five
directors as members of the Board of Directors of the Company, (ii) to ratify
the appointment of Perry-Smith & Co., as the Company's independent auditors for
fiscal year 1999, and (iii) to transact such other business which is properly
brought up at the Annual Meeting or any adjournment thereof. On the following
pages you will find the Notice of the Annual Meeting of Shareholders and the
Proxy Statement giving information concerning matters to be acted upon at the
meeting. Of course, we will be present at the Annual Meeting to answer any
questions you might have.
YOUR VOTE IS IMPORTANT! The Company's management would greatly
appreciate your attendance at the Annual Meeting. HOWEVER, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, IT IS VERY IMPORTANT THAT YOUR SHARES BE
REPRESENTED. Accordingly, please sign, date, and return the enclosed proxy card
which will indicate your vote upon the various matters to be considered. If you
do attend the meeting and desire to vote in person, you may do so by withdrawing
your proxy at that time.
We sincerely hope you will be able to attend the Annual Meeting and
look forward to seeing you at the Annual Meeting of Shareholders.
Very truly yours,
/s/ Steven R. Verdooner
--------------------------------
Steven R. Verdooner
President and Chief Executive Officer
<PAGE>
OPHTHALMIC IMAGING SYSTEMS
221 Lathrop Way, Suite I
Sacramento, California 95185
----------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on January 18, 1999
----------------------------
TO THE SHAREHOLDERS OF OPHTHALMIC IMAGING SYSTEMS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of Ophthalmic
Imaging Systems, a California corporation (the "Company"), will be held at the
Company's offices, 221 Lathrop Way, Suite I, Sacramento, California on Monday,
January 18, 1999, at 2:00 p.m., Pacific Time, to act on the following matters:
1. To elect five directors as members of the Board of
Directors of the Company;
2. To ratify the appointment of Perry-Smith & Co., as
the Company's independent auditors for the 1999
fiscal year; and
3. To transact such other business as may properly come
before the meeting or adjournment thereof.
Only shareholders of record at 5:00 p.m., Pacific Time, on December 23,
1998 are entitled to receive notice of, and to vote at, the Annual Meeting or
any adjournments thereof. Each shareholder, even though he or she may presently
intend to attend the Annual Meeting, is requested to execute and date the
enclosed proxy card and to return it without delay in the enclosed postage-paid
envelope. Any shareholder present at the Annual Meeting may withdraw his or her
proxy and vote in person on each matter brought before the Annual Meeting.
By Order of the Board of Directors
/s/ Steven R. Verdooner
-----------------------
Steven R. Verdooner
Secretary
Sacramento, California
December 30, 1998
<PAGE>
OPHTHALMIC IMAGING SYSTEMS
221 Lathrop Way, Suite I
Sacramento, California 95185
-------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 18, 1999
-------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Ophthalmic Imaging Systems, a
California corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Shareholders to be held on Monday, January 18, 1999, at 2:00 p.m.
Pacific Time (the "Annual Meeting"), and at any adjournment thereof. The Annual
Meeting will be held at the Company's offices located at 221 Lathrop Way, Suite
I, Sacramento, California.
At the Annual Meeting, shareholders will be asked to consider and vote
on the election of five directors as members of the Board of Directors of the
Company, and to ratify the appointment of Perry-Smith & Co., as the Company's
auditors for the 1999 fiscal year.
This Proxy Statement and the enclosed form of proxy are first being
sent to shareholders, together with the Notice of Annual Meeting, on or about
December 30, 1998.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended August 31, 1998 ("the 1998 Annual Report"), including financial
statements, accompanies this Proxy Statement, but is not part of the proxy
solicitation materials.
Shareholders are urged to complete, date, and sign the accompanying
form of proxy and return it promptly in the envelope provided with these
materials. No postage is necessary if the proxy is mailed in the United States
in the accompanying envelope.
PROXIES AND VOTING AT THE MEETING
Record Date and Voting Rights
The Board of Directors has fixed 5:00 p.m., Pacific Time, on December
23, 1998 as the record date (the "Record Date") for the determination of the
shareholders of record entitled to receive notice of, and to vote at, the Annual
Meeting or any adjournment thereof. As of the Record Date, the Company had
issued and outstanding approximately 4,155,428 shares of Common Stock,
constituting the Company's only class of voting securities entitled to vote at
the Annual Meeting. The presence of a majority of the Company's outstanding
voting securities as of the Record Date, in person or represented by proxy, will
constitute a quorum at the Annual Meeting.
Generally, each share of Common Stock outstanding on the Record Date
entitles the record holder thereof to cast one vote with respect to each matter
to be voted upon. In the election of directors, however, every shareholder
entitled to vote in such election, or his or her proxy, may cumulate such
shareholder's votes. Each shareholder or proxy cumulating votes will have a
total number of votes equal to the number of directors to be elected multiplied
by the number of shares of Common Stock held by such shareholder, and all such
votes can be cast in favor of one candidate or distributed in any manner desired
by the shareholder among as many candidates
1
<PAGE>
as the shareholder may select, provided that the votes may not be cast for more
than five (5) candidates (a number equal to the total number of directors seats
to be filled). No shareholder or proxy will be entitled to cumulate votes for a
candidate unless such candidate's name has been placed into nomination prior to
the voting and the shareholder, or any other shareholder, has given notice at
the meeting, prior to voting, of the shareholder's intention to cumulate votes.
If any shareholder provides such notice, all shareholders may cumulate their
votes for candidates in nomination.
Assuming the presence of a quorum, the five (5) nominees receiving the
highest number of affirmative votes cast by holders of shares of Common Stock
present or represented and entitled to vote at the Annual Meeting shall be
elected as directors. In connection with the election of directors, votes may be
cast in favor of or withheld from each nominee. Votes withheld from director
nominees will be counted in determining whether a quorum has been reached.
However, since directors are elected by the highest number of votes received, a
vote against a director and votes withheld from a nominee or nominees will not
affect the outcome of the election and will be excluded entirely from the vote.
In order to take action on a matter submitted to shareholders at a
meeting where a quorum is present (other than the election of directors), the
affirmative vote of a majority of the "Votes Cast" (defined below) is required
for approval, unless the Articles of Incorporation or state law requires a
greater number of votes. For purposes herein, the "Votes Cast" are the shares of
Common Stock represented and voting in person or by proxy at the meeting. In
addition, the affirmative votes must constitute at least a majority of the
required quorum. Votes that are cast against a proposal will be counted for
purposes of determining (i) the presence or absence of a quorum, and (ii) the
total number of Votes Cast with respect to the proposal. While there is no
definitive statutory provision or case law in California with respect to the
proper treatment of abstentions, the Company believes that an abstention with
respect to any proposal coming before the Annual Meeting should be counted as
present for purposes of determining the existence of a quorum and the total
number of Votes Cast at the meeting with respect to a proposal. Since
shareholder approval of a proposed action requires the affirmative vote of the
Votes Cast, abstentions will have the same effect as a vote against the
proposal. In absence of a controlling precedent to the contrary, the Company
intends to treat abstentions in this manner.
In the event of a broker non-vote with respect to any matter coming
before the meeting, the proxy will be counted as present for determining the
presence of a quorum but will not be counted as a vote cast on any matter. A
broker non-vote generally occurs when a broker who holds shares in street name
for a customer does not have authority to vote on certain non-routine matters
because its customer has not provided any voting instructions on the matter.
Voting and Revocation of Proxies
All properly executed proxies received prior to or at the Annual
Meeting will be voted in accordance with the instructions indicated on such
proxies, if any. If no instructions are indicated with respect to any shares for
which properly executed proxies have been received, such proxies will be voted
FOR the election of the nominees for directors set forth herein and on the
enclosed proxy card, and FOR the ratification of Perry-Smith & Co., as its
auditors. The Company is not aware of any matter to be presented at the Annual
Meeting other than those matters described in the Notice of Annual Meeting. If,
however, any other matters are properly brought before the Annual Meeting for
consideration, the persons appointed as proxies will have the discretion to vote
or act thereon according to their best judgment.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by duly executing and submitting a later-dated proxy, by delivering
written notice of revocation to the Company which is received at or before the
Annual Meeting, or by voting in person at the Annual Meeting (although
attendance at the Annual Meeting will not, in and of itself, constitute a
revocation of the proxy). Any written notice revoking a proxy should be sent to
the Secretary of the Company at the Company's principal executive offices,
located at the address set forth above.
2
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall
not be less than three nor more than five as fixed by resolution of the Board of
Directors, from time to time as shall be determined. The Board of Directors has
fixed the size of the Board at five. Set forth below are five nominees standing
for election as directors of the Company to hold office until the next Annual
Meeting of Shareholders and until their successors have been duly elected and
qualified. These nominees include one current director, Mr. Steven R. Verdooner,
and four new candidates ("Premier Nominees") submitted to the Company by Premier
Laser Systems, Inc., a California corporation ("Premier") which holds
approximately 51.3% of the Company's outstanding Common Stock.
It is intended that proxies received from shareholders, unless contrary
instructions are given therein, will be voted FOR the election of the nominees
named below, each of whom has consented to being named herein and has indicated
his or her intention to serve if elected. If any nominee for any reason should
become unavailable for election or a vacancy should occur before the election,
it is intended that the shares represented by the proxies will be voted for such
other person as the Company's Board of Directors shall designate to replace such
nominee. The Board of Directors has no reason to believe that any of the
nominees will not be available or prove to be unable to serve if so elected.
Premier has advised the Company that is presently intends to vote its
shares of the Company's Common Stock in favor of the election of these five
nominees.
Nominees for Director and Current Directors
Nominees for Directors
The age of each nominee for director, their positions and offices with
the Company, their term as director of the Company, their business experience
during the past five years or more, and additional biographical data is set
forth below. Information with respect to the nominees is as of December 15,
1998, except as otherwise stated.
Steven R. Verdooner, 37, has been the Chief Executive Officer and
Secretary of the Company since May 1993 and has been a director of the Company
since its inception. From May 1993 to July, 1997, and since July, 1998, Mr.
Verdooner has served as President of the Company. He also has served as the
Company's Chief Financial Officer (from 1986 to 1987 and since 1988), and
Secretary (from 1987 to 1988 and since 1993), and previously served as Vice
President (from 1986 to May 1993). From 1983 to 1986, Mr. Verdooner directed the
activities of Ocular Graphics, a privately owned company engaged in the business
of fluorescein angiography. In 1983, Mr. Verdooner was a member of a research
team at the University of California-Davis, School of Medicine, Department of
Human Anatomy.
R. Joseph Allen, 54, is the Chairman of the Board of directors and
Chief Executive Officer of Allen & Caron, Inc., an investor relations firm. Mr.
Allen has served in these positions since 1988. Prior to 1998, Mr. Allen served
in management positions in General Automation, Inc., Allen and McGarvey, Borelle
Company, and Arco.
Daniel S. Durrie, M.D., 49, is a Board-certified ophthalmologist.
Dr. Durrie has been employed by the Kansas City, Missouri-based Hunkeler Eye
Centers ("Hunkeler") since 1990, and he has served as a Fellowship Director, for
both optometry and ophthalmology, at Hunkeler since 1993 and as its President
since 1997. Dr. Durrie also serves as an Associate Professor of Ophthalmology at
the University of Kansas Medical Center in Kansas City, Missouri.
3
<PAGE>
Randall C. Fowler, 59, is Chairman of the Board, President, and Chief
Executive Officer of Identix Corporation, a biometrics technology firm
specializing in fingerprint-based identification and security systems. Mr.
Fowler has served in these positions since he founded Identix Corporation in
1982. Mr. Fowler serves on the Boards of Directors of Identix, Inc., Amdec,
Fingerscan Corporation, and Sylvan Joint Venture He holds a number of technology
patents related to biometrics, is a former Assistant Professor at San Jose State
University from 1965 to 1968 and was named the Silicon Valley Entrepreneur of
the Year in 1997 by the San Jose Business Journal.
Walt Williams, 63, an attorney and entrepreneur, has managed a private
legal practice since 1996. From 1988 to 1995, Mr. Williams served as Division
Counsel to medical device subsidiaries of Pfizer, Inc., a health care products
company. Earlier in his career, Mr. Williams founded Diagnostic Services, Inc.,
a San Diego, California-based medical device company where he served as
President from 1981 to 1984.
Current Directors
Mark S. Blumenkranz, M.D., 48, has been a director of the Company since
1995. He also serves on the Company's Scientific Advisory Board. Since 1992 he
has been Clinical Professor of Ophthalmology and Co-Director of Retinal Service
at Stanford University, and a partner in California Vitreoretinal Associates, a
professional medical corporation specializing in diseases and surgery of the
retina and vitreous. From 1985 to 1992, he was a partner in Associated Retinal
Consultants, a professional medical corporation. Dr. Blumenkranz is currently a
director of Midlabs, Inc., a manufacturer of ophthalmic surgical instruments.
Dr. Blumenkranz is an associate examiner for the American Board of Ophthalmology
and a member of the Retina, Macula and Vitreous Societies.
Robert W. Medearis, 66, has been a director of the Company since August
1997. He has been the President, Chief Executive Officer and co-owner of Chalice
Investments Inc., a company engaged in joint ventures and related
entrepreneurial and international management consulting activities in the former
USSR, primarily the Republic of Georgia, since its formation in 1992. Since
1980, Mr. Medearis has served as director for a number of companies, both
private and public, engaged principally in engineering, real estate and banking.
Robert I. Schnuer, 65, has been a director of the Company since March
1996. He has been the President and Chief Executive Officer of RIS Consulting
Services, his own consulting firm which concentrates in the health care and
employee benefits industry, since its formation in 1995. From 1954 to 1995, Mr.
Schnuer was employed by CIGNA Corporation in the sales and account management
aspects of its health care and employee benefits operations, ultimately serving
as a Vice President.
Lawrence A. Yannuzzi, M.D., 61, has been a director of the Company
since March 1996. Dr. Yannuzzi is the founder and President of
Vitreous-Retina-Macula Consultants of New York, P.C., a professional medical
corporation specializing in diseases and surgery of the retina and vitreous, for
which he has been an officer, director, and practicing ophthalmologist for over
15 years. Dr. Yannuzzi also is Director of Retinal Services and Vice Chairman of
the Department of Ophthalmology at the Manhattan Eye, Ear, and Throat Hospital
and he is a professor of Clinical Ophthalmology at the College of Physicians and
Surgeons of Columbia University Medical School.
There is no family relationship between any of the directors, nominees
to serve as director, or executive officers. There are no arrangements between
any director or director nominee of the Company and any other person pursuant to
which he was, or will be, selected as director. Specifically, each Premier
Nominee has represented to the Company that they do not have any agreement or
other arrangements with Premier regarding their service as directors of the
Company, if so elected, or their compensation for such services. Mr. Allen's
firm, Allen & Caron, Inc., however, does serve as Premier's public relations
firm and also holds certain rights to acquire shares of common stock of Premier.
In addition, Allen & Caron, Inc. also has assisted the Company in certain public
relations matters.
4
<PAGE>
Director Meetings and Committees
During the fiscal year ended August 31, 1998 (the "1998 Fiscal Year"),
the Board of Directors of the Company held a total of 18 meetings. In addition,
certain directors attended meetings of standing committees. All directors
attended at least 75% of the total number of meetings of the Board of Directors
and the respective committees on which they serve.
The Board of Directors of the Company maintains three standing
committees: an Audit Committee, a Compensation Committee, and a Nominating
Committee.
The Audit Committee of the Board of Directors is responsible for
recommending to the Board of Directors the engagement or discharge of the
independent public accountants, meeting with the independent public accountants
to review the plans and results of the audit engagement, reviewing the
activities of the subsidiary Bank's examining committees, maintaining direct
reporting responsibility and regular communication with the Company's internal
audit staff, reviewing the scope and results of the internal audit procedures of
the Company and its subsidiary, approving the services to be performed by the
independent public accountants, considering the range of the audit and non-audit
fees, and reviewing the adequacy of the Company's system of internal accounting.
The Audit Committee, which is comprised of Dr. Blumenkranz and Mr. Medearis, met
once during the 1998 Fiscal Year.
The Compensation Committee of the Board of Directors makes
recommendations to the Board of Directors with respect to the Company's
compensation policies and the compensation of executive officers. The
Compensation Committee, which is comprised of Messrs. Schnuer and Medearis, met
five times during the 1998 Fiscal Year.
The Nominating Committee is responsible for selecting and recommending to
the Board of Directors nominees for election as directors. The Nominating
Committee, which is comprised of Drs. Blumenkranz and Yannuzzi, met once during
the 1998 Fiscal Year.
Compensation of Directors
During 1997, the Company implemented a directors fees policy. Under the
Company's policy, directors receive $1,000 for each meeting attended in person
and reimbursement of costs associated with such attendance. Each director who
attends a directors' meeting by telephone receives $500, which covers all
telephonic meetings for that particular quarter. In addition, each director who
is a member of the Board of Directors on August 31 each year receives an option
to purchase 5,000 shares of the Company's Common Stock.
The Board of Directors recommends a vote FOR
the election of Steven R. Verdooner
and makes no recommendation with
respect to the Premier Nominees.
____________________________
5
<PAGE>
PROPOSAL II
APPROVAL AND RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Perry-Smith & Co.,
independent public accountants, to be the Company's auditors for the fiscal year
ending August 31, 1999 and recommends that shareholders vote to ratify that
appointment. Although submission of this matter to shareholders is not required
by law, in the event of a negative vote the Board of Directors will reconsider
its selection. Ratification of the appointment will require approval by a
majority of the votes cast at the Annual Meeting, assuming a quorum is present.
Perry-Smith & Co., is expected to have a representative at the Annual Meeting
who will be available to respond to appropriate questions from shareholders
attending the meeting.
The Board of Directors recommends a vote FOR this proposal.
_____________________________
6
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company, their ages, and positions with
the Company are set forth below:
Name Age Positions with the Company
---- --- --------------------------
Steven R. Verdooner 37 President, Chief Executive Officer,
and Secretary
Officers are elected annually by the Board of Directors to hold office
until the earlier of their resignation, removal, or death. Mr. Verdooner's
business experience is summarized under "Election of Directors-Nominees for
Director."
COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation
The following summary compensation table sets forth the cash and
non-cash compensation paid to or accrued for the past three fiscal years for the
Company's Chief Executive Officer, and all other executive officers and certain
other individuals whose total compensation exceeded $100,000 for the fiscal year
ended August 31, 1998 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards (1)
Securities
Name and Fiscal Annual Compensation Underlying All Other
Principal Occupation Year Salary Bonus Options Compensation
- -------------------- ---- ------ ----- ------- ------------
<S> <C> <C> <C><C> <C> <C>
Steven R. Verdooner............. 1998 $ 149,712 $ 0 0 $ 518 (2)
President and Chief........ 1997 $ 123,750 $ 0 55,000 $ 768 (2)
Executive Officer, Chief... 1996 $ 120,000 $ 0 0 $ 3,768 (2)
Financial Officer and
Secretary
William L. Mince................ 1998 $ 118,192 $ 0 0 $ 138,739 (3)
President and Chief........ 1997 $ 17,500 (4) $ 5,250 (5) 100,000 $ 30,000 (6)
Operating Officer
Glenn W. Erickson............... 1998 $ 75,000 $ 0 0 $ 88,215 (7)
Regional Sales Manager..... 1997 $ 75,000 $ 0 0 49,827 (7)
and Product Specialist..... 1996 $ 75,000 $ 0 0 64,048 (7)
Vern Steffen.................... 1998 $ 57,926 $ 0 35,000 $ 71,222 (7)
National Sales Manager..... 1997 $ 50,192 $ 0 2,500 29,693 (7)
1996 $ 50,000 $ 0 0 35,271 (7)
- ----------------
<FN>
(1) The Company does not have a long-term compensation program that
includes long-term incentive payments. However, the Company's stock
option plans provide participants with compensation in the form of
stock options.
(2) Includes disability insurance premiums in the amount of $518 paid by
the Company on behalf of Mr. Verdooner for each of the fiscal years
ended in 1998, 1997, and 1996, and royalty payments to Mr. Verdooner in
the amount of $0, $250 and $3,250 for each of the fiscal years ended
1998, 1997, and 1996, respectively.
(3) Mr. Mince resigned from the Company on June 30, 1998. Amount includes
termination payment of $128,333 made under the terms of his employment
agreement and accrued vacation and sick pay through such termination.
(4) Mr. Mince was appointed as President for the Company in July 1997. This
figure reflects the portion of Mr. Mince's $140,000 annual salary that
accrued during fiscal year 1997. Mr. Mince was not an employee of the
Company in 1996.
(5) This amount represents the portion of Mr. Mince's annual bonus that
accrues for fiscal year 1997.
This amount represents the portion of Mr. Mince's annual bonus that
accrued for fiscal year 1997.
(6) Relocation allowance.
(7) Amounts represent commissions paid by the Company.
</FN>
</TABLE>
7
<PAGE>
Stock Options Granted
As of August 31, 1998, the Company did not have any long term incentive
plans nor had it awarded any restricted stock. The table set forth below
contains information with respect to the award of stock options during the
fiscal year ended August 31, 1998 to the executive officers covered by the
Summary Compensation Table.
<TABLE>
<CAPTION>
Number of Securities Percent of Total
Underlying Options Granted to Exercise or Market Price Expiration
Name Options Granted(#) Employees in 1998 Base Price On Date of Grant Date
---- ------------------ ------------------- ---------- ---------------- ------
<S> <C> <C> <C> <C> <C>
Steven R. Verdooner -- -- -- -- --
William L. Mince -- -- -- -- --
Glenn W. Erickson -- -- -- -- --
Vern Steffen 35,000 (1) 17% (2) $1.09 $1.09 10/23/2002
<FN>
(1) These options were granted to Mr. Steffen on October 23, 1997, pursuant to
the Company's 1997 Nonstatutory Stock Option Plan.
(2) Employees of the Company were granted options from the Company's 1992
Nonstatutory Stock Option Plan and 1997 Nonstatutory Stock Option Plan,
with an aggregate of 212,000 shares of common stock underlying such
options.
</FN>
</TABLE>
Aggregated Options Exercised in Last Fiscal Year and Fiscal Year-End Option
Values
No stock options or SARs were exercised during the fiscal year ended
August 31, 1998 by the Named Executive Officers covered by the Summary
Compensation Table. The following table sets forth, for each of the Named
Executive Officers in the Summary Compensation Table above who holds stock
options, the number of the stock options held at August 31, 1998, and the
realizable gain of the stock options that are "in-the-money". The in-the-money
stock options and SARs are those with exercise prices that are below the
year-end stock price because the stock value grew since the date of the grant.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year End at Fiscal Year End (1)
-------------------------- --------------------------
Acquired on Value Exercisable Unexercisable Exercisable Unexercisable
Name Exercise (#) Realized (#) (#) ($) ($)
- ---- ------------ -------- ---------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven R. Verdooner 0 0 163,333 25,000 $ 0 $ 0
William L. Mince 0 0 100,000 0 $ 0 $ 0
Glenn Erickson 0 0 48,000 15,000 $ 0 $ 0
Vern Steffen 0 0 37,364 1,302 $ 0 $ 0
- -----------
<FN>
(1) None of the options were in-the-money on August 31, 1998.
</FN>
</TABLE>
Employment Agreements
Mr. Verdooner's employment agreement, as amended in 1997, provides for
an annual salary of $150,000, incentive stock options covering 33,333 shares of
the Company's Common Stock pursuant to the Company's 1992 Stock Option Plan, and
a termination date of July 1999. On June 30, 1998, Mr. Mince resigned as
President of the Company and Mr. Verdooner was appointed to serve as President
and Chief Executive Officer of the Company.
In July 1997, the Company hired Mr. Mince to serve as the Company's
President and Chief Operating Officer. Pursuant to the terms of the employment
agreement, the Company granted stock options to Mr. Mince to purchase up to
100,000 shares of the Company's common stock.. Since Mr. Mince was terminated
before the expiration of the two -year term of the employment agreement, under
the terms of his employment agreement he received severance payments of
$128,333, plus accrued vacation and sick time.
401(k) Plan
In December 1992, the Company's Board of Directors approved a
tax-deferred investment plan (the "401(k) Plan") effective January 1, 1993. All
full-time employees on January 1, 1993 were immediately eligible to participate
in the 401(k) Plan. The 401(k) Plan originally required mandatory employer
contributions of 10% of the participants' contributions. The 401(k) Plan was
subsequently amended to provide for discretionary contributions by the Company.
8
<PAGE>
Stock Option Plans
1992 Nonstatutory Stock Option Plan. On March 27, 1992, the Board of
Directors and the shareholders of the Company approved the 1992 Nonstatutory
Stock Option Plan (the "Plan") pursuant to which 116,667 shares of Common Stock
(subject to certain anti-dilution adjustments) were reserved for issuance upon
exercise of options. Shares subject to options under the Plan that terminate or
expire will be available for subsequent option grants. The Plan is designed to
serve as a means of attracting and as an incentive to retaining qualified and
competent employees and consultants. A Committee of the Board of Directors
consisting of no less than two directors (the "Committee") administers and
interprets the Plan and is authorized to grant options thereunder to all
eligible employees of the Company, including officers and consultants.
The options granted under the Plan do not constitute incentive stock
options as defined under Section 422 of the Internal Revenue Code and as a
result are nonqualified stock options. Options can be granted under the Plan on
such terms and prices as determined by the Committee; provided, however, that
the per share exercise price of the options cannot be less than the fair market
value of the Common Stock on the date of grant. In the absence of a public
market for the Common Stock, the Committee would determine the fair market value
for the Common Stock by evaluating those criteria which it deemed relevant. As
the Common Stock is currently traded and quoted on the Nasdaq OTC Bulletin
Board, the fair market value shall be the average of the last bid and asked
price or the closing price of the Common Stock on the date of the grant of the
option. Each option is evidenced by an option agreement between the Company and
the optionee. The Plan limits the aggregate number of shares of Common Stock
that may be granted to directors of the Company, as a group, to 100,000 shares.
Each option granted shall be exercisable for a period of five years from the
date of grant and the exercise price payable upon exercise of the option is
payable in cash, check, notes, or a combination thereof. No options, however,
may be granted under the Plan later than ten years from the establishment of the
Plan. The Committee may establish vesting requirements to be satisfied prior to
an exercise of an option granted under the Plan. Options granted under the Plan
are not transferable other than by will or the laws of descent and distribution.
As of August 31, 1998, stock options to purchase approximately 65,000 shares at
exercise prices ranging from $1.00 to $2.75 were granted and outstanding under
the Plan. Of the stock options granted under the Plan, stock options to purchase
50,000 shares of Common Stock have been exercised as of August 31, 1998.
1992 Stock Option Plan. In December 1992 and January 1993, the Board of
Directors and shareholders, respectively, approved a second stock option plan
(the "Option Plan") under which all officers, employees, directors and
consultants to the Company are eligible to participate. The Option Plan expires
in December 2002. Options granted under the Option Plan may be either incentive
stock options or non-qualified stock options and will generally have a term of
ten years from the date of grant, unless otherwise specified in the option
agreement. The exercise prices of incentive stock options granted under the
Option Plan will be at 100% of the fair market value of the Company's Common
Stock on the date of grant. The exercise prices of non-qualified stock options
granted under the Option Plan will not be less than 85% of the fair market value
of the Company's Common Stock on the date of grant. The maximum number of shares
of the Company's Common Stock which may be optioned and sold under the Option
Plan is 150,000. As of August 31, 1998, stock options to purchase approximately
110,576 shares at exercise prices ranging from $0.94 to $4.25 were granted and
outstanding under the Stock Option Plan. As of August 31, 1998, 13,400 of the
granted options have been exercised.
1995 Nonstatutory Stock Option Plan. In August 1995, the Company's
Board of Directors approved and adopted a Nonstatutory Stock Option Plan (the
"1995 Nonstatutory Plan") under which all officers, employees, directors, and
consultants can participate. The 1995 Nonstatutory Plan expires November 2005.
Options granted under the 1995 Nonstatutory Plan are non-qualified stock options
and will generally be exercisable for a five year period commencing on the date
of grant, unless otherwise specified in the option agreement. The exercise
prices under the 1995 Nonstatutory Plan will be at 100% of the fair market value
of the Company's Common Stock on the date of the grant. The maximum number of
the Company's Common Stock which may be issued pursuant to the 1995 Nonstatutory
Plan is 1,035,000. As of August 31, 1998, stock options to purchase
approximately 1,030,000 shares at exercise prices ranging from $1.00 to $4.50
were granted and outstanding under the 1995 Nonstatutory Plan, and none of the
options granted thereunder have been exercised to date.
9
<PAGE>
1997 Nonstatutory Stock Option Plan. In October 1997, the Company's
Board of Directors approved a Nonstatutory Stock Option Plan (the "1997
Nonstatutory Plan") under which all officers, employees, directors and
consultants may participate. The 1997 Nonstatutory Plan expires October 2002.
Options granted under the 1997 Nonstatutory Plan are non-qualified stock options
and will have a term of not longer than ten years from the date of grant. The
exercise prices under the 1997 Nonstatutory Plan will be at 100% of the fair
market value of the Company's common stock on the date of grant, unless
otherwise specified in the option agreement. The maximum number of shares of the
Company's common stock which may be optioned and sold under the Plan is
1,000,000, of which 800,500 options remained available for granting as of August
31, 1998. As of August 31, 1998, stock options to purchase 199,500 shares at
exercise prices ranging from $1.09 to $1.94 were granted and outstanding under
the 1997 Nonstatutory Plan and none of the granted options were exercised.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's outstanding Common Stock as of November
30, 1998, by: (i) each director and nominee for director of the Company, (ii)
each Named Executive Officer, (iii) all directors and executive officers of the
Company as a group, and (iv) each person known to the Company beneficially
owning more than 5% of the outstanding Common Stock. Except as otherwise
indicated, the persons named in the table have sole voting and investment power
with respect to all of the Common Stock owned by them.
<TABLE>
<CAPTION>
Current Beneficial Ownership
Number Percent
Name and Address of Beneficial Owner of Shares (1) of Class (2)
- ------------------------------------ --------------------------------
Directors and Named Executive Officers
<S> <C> <C>
Steven R. Verdooner ................................. 252,040(3) 5.8%
Mark S. Blumenkranz, M.D. ................................. 95,417(4) 2.2%
Robert I. Schnuer ................................. 48,200(5) 1.1%
Lawrence A. Yannuzzi, M.D. ................................. 79,167(6) 1.9%
Robert W. Medearis ................................. 31,250(7) *
Glenn Erickson ................................. 62,100(8) 1.5%
Vern Steffen ................................. 46,974(9) 1.1%
All directors and executive officers as a group (5 persons) 506,073(10) 11.0%
Premier Nominees for Director
R. Joseph Allen ................................. 0 *
Daniel S. Durrie, M.D. ................................. 0 *
Randall C. Fowler ................................. 0 *
Walt Williams ................................. 0 *
Other Beneficial Holders
Premier Laser Systems, Inc. (11)................................. 2,131,758 51.3%
3 Morgan
Irvine, California 96128
- --------------
<FN>
*Less than 1%
(1) In accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange Act of 1934, a person is deemed to be the beneficial owner of a
security for purposes of the rule if he or she has or shares voting power
or dispositive power with respect to such security or has the right to
acquire such ownership within sixty days. As used herein, "voting power"
is the power to vote or direct the voting of shares, and "dispositive
power" is the power to dispose or direct the disposition of shares,
irrespective of any economic interest therein.
10
<PAGE>
(2) In calculating the percentage ownership for a given individual or group,
the number of shares of Common Stock outstanding includes unissued shares
subject to options, warrants, rights, or conversion privileges
exercisable within sixty days held by such individual or group, but are
not deemed outstanding by any other individual or group.
(3) Includes 208,000 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(4) Includes 95,417 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(5) Includes 40,000 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(6) Includes 79,167 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(7) Includes 31,250 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(8) Includes 60,100 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(9) Includes 43,474 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(10) Includes 453,833 shares of Common Stock which may be acquired pursuant
to options exercisable within 60 days held by such person.
(11) Based on Amendment No. 8 to Schedule 13D filed by Premier Laser Systems,
Inc., on November 25, 1998.
</FN>
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), all executive officers, directors, and persons who are the
beneficial owner of more than 10% of the common stock of a company which files
reports pursuant to Section 12 of the Exchange Act are required to report the
ownership of such common stock, options, and stock appreciation rights and any
changes in that ownership with the Securities and Exchange Commission (the
"SEC"). Specific due dates for these reports have been established, and the
Company is required to report in this Proxy Statement any failure to comply
therewith during the fiscal year ended August 31, 1998. The Company believes
that all of these filing requirements were satisfied by its executive officers,
directors, and by beneficial owners of more than 10% of the Common Stock, except
that Steven R. Verdooner failed to timely file a Form 4 to report the grant of
certain options during the 1998 Fiscal Year. In making this statement, the
Company has relied on copies of the reporting forms received by it or on the
written representations from certain reporting persons that no Form 5 (Annual
Statement of Changes in Beneficial Ownership) were required to be filed under
applicable rules of the SEC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The U.S. patent application relating to the Glaucoma-Scope(TM) was
originally filed on June 24, 1991 in the name of Dennis J. Makes, a former
officer and director of the Company, Mr. Verdooner and Ms. Patricia C. Meade.
Each of these individuals assigned all their U.S. and foreign rights in the
invention to the Company pursuant to an assignment dated October 23, 1990
recorded with the U.S. Patent and Trademark Office. Mr. Makes and Mr. Verdooner
each have been granted a royalty of $250 for each Glaucoma-Scope(TM) sold by the
Company. During the 1996 fiscal year, Mr. Verdooner received royalty payments of
$3,250. Ms. Meade assigned her patent rights to the Company pursuant to her
condition of employment by the Company and no additional compensation was paid
to her as a result of such assignment.
The Company also has an employment agreement with Mr. Verdooner. See
"Employment Agreements" above.
On February 25, 1998, the Company entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement") with Premier, pursuant to which, among other
things, Premier agreed to commence an offer to acquire those shares of the
Company's Common Stock not already owned by it. As a condition to the Stock
Purchase Agreement, the Company agreed to amend its Rights Agreement dated as of
December 31, 1997 by and between the Company and American Securities Transfer,
Inc., as rights agent, to permit Premier to acquire up to 51.3% of the Company's
outstanding Common Stock in private purchase agreements made simultaneously with
the execution of the Stock Purchase Agreement. Following the execution of the
Stock Purchase Agreement, the Company and Premier worked together with regard to
certain aspects of their respective businesses. In this regard, the Company
provided management of certain of Premier's sales and marketing efforts and
Premier assisted the Company in the
11
<PAGE>
manufacture of prototypes of certain of its new products and in the procurement
of its inventory and payment of certain other expenses. In August 1998, Premier
notified the Company that, due to a variety of factors, Premier would not be
able to close the transactions contemplated under the Stock Purchase Agreement.
On August 14, 1998, the Company issued a press release announcing the
termination of the Stock Purchase Agreement. As a result of such termination,
the Company has made demand to Premier for payment of the $500,000 termination
fee (the "Termination Fee") as provided for in the Stock Purchase Agreement. The
Termination Fee, however, among other things, is the subject of current
negotiations between the companies.
During the past year, until the Stock Purchase Agreement was
terminated, the Company had assisted in the sales and marketing efforts of
Premier with respect to the sale of its EyeSys products, principally in the
areas of marketing and sales management. In contrast to the Company's products,
the EyeSys product line includes corneal topography systems and devices used to
assist eye care practitioners in patient assessment for refractive surgery and
contact lens fitting. However, since the Stock Purchase Agreement has been
terminated, the Company has provided significantly limited assistance to Premier
and is currently negotiating with Premier as to whether these efforts will
continue and, if so, the terms of such arrangements.
Further, during the past year Premier assisted the Company the
procurement of its inventory components necessary for the manufacturing of its
products, including the advancement or assumption of certain costs. This
arrangement, however, is not currently in effect and is the subject of current
negotiations between the companies. In connection with these arrangements,
however, the Company entered into various financing arrangements with Premier.
On April 30, 1998, the Company executed a promissory note in favor of Premier
(the "Note") pursuant to which borrowings of up to $500,000 were made available
to the Company in the form of periodic advances. The principal amount the Note,
together and all accrued interest, is payable the earlier of (i) written demand
by Premier or (ii) April 30, 1999. Under the terms of the Note, borrowings bear
interest at the rate of 8 1/2% per annum, are secured by certain of the
Company's assets, and are subordinate to certain bank borrowings of the Company.
In addition, Premier also made advances to the Company which were not secured by
the Note. Approximately $1,487,000 in principal and interest was outstanding
under the Note and unsecured advances at August 31, 1998. The Company and
Premier are currently in negotiations, among other things, to reduce the
aggregate amount of the Company's debt to Premier by the $500,000 Termination
Fee, to increase the maximum principal amount available under the Note
accordingly and to establish mutually acceptable repayment terms.
All current and future transactions between the Company and its
officers and directors and principal shareholders or any affiliates thereof will
be on terms no less favorable than could be obtained from unaffiliated third
parties.
Except as described herein, none of the directors or officers of the
Company, and no shareholders holding over 5% of the Company's Common Stock and
no corporations or firms with which such persons or entities are associated,
currently maintains or has maintained since the beginning of the last fiscal
year, any significant business or personal relationship with the Company, other
than such as arises by virtue of such position or ownership interest in the
Company.
SHAREHOLDER PROPOSALS
Eligible shareholders who wish to present proposals for action at the
1999 Annual Meeting of Shareholders should submit their proposals in writing to
the Secretary of the Company at the address of the Company set forth on the
first page of this Proxy Statement. Proposals must be received by the Secretary
no later than August 30, 1999 for inclusion in next year's proxy statement and
proxy card. A shareholder is eligible to present proposals if, at the time he or
she submits the proposals, the shareholder owns at least 1% or $1,000 in market
value of Common Stock and has held such shares for at least one year, and the
shareholder continues to own such shares through the date of the 1999 Annual
Meeting.
12
<PAGE>
SOLICITATION COSTS
The Company will bear the costs of preparing, assembling, and mailing
the Proxy Statement, the form of proxy, and the 1998 Annual Report in connection
with the Annual Meeting. In addition to solicitation by use of mail, employees
of the Company may solicit proxies personally or by telephone, by facsimile
copy, or telegraph, but will not receive additional compensation therefor.
Arrangements may be made with banks, brokerage houses, and other institutions,
nominees, and fiduciaries to forward the solicitation materials to beneficial
owners and to obtain authorizations for the execution of proxies. The Company
will, upon request, reimburse those persons and entities for expenses incurred
in forwarding proxy materials for the Annual Meeting to beneficial owners.
ANNUAL REPORT
The Company's 1998 Annual Report for the fiscal year ended August 31,
1998, which includes financial statements, was mailed to shareholders together
with the Notice of the Annual Meeting of Shareholders and Proxy Statement.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Board of
Directors of the Company had not been informed of any matters which would be
presented for action at the Annual Meeting other than the proposals specifically
set forth in the Notice of Annual Meeting and referred to herein. If any other
matters are properly presented for action at the Annual Meeting, it is intended
that the persons named in the accompanying proxy card will vote or refrain from
voting in accordance with their best judgment on such matters after consultation
with the Board of Directors.
By Order of the Board of Directors
/s/ Steven R. Verdooner
--------------------------------
STEVEN R. VERDOONER
Secretary
Sacramento, California
December 30, 1998
13
<PAGE>
PROXY OPHTHALMIC IMAGING SYSTEMS PROXY
Annual Meeting of Shareholders, January 18, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock of Ophthalmic Imaging Systems, a
corporation organized under the laws of the state of California, does hereby
appoint Steven R. Verdooner and Robert I. Schnuer, and each of them, as due and
lawful attorneys-in-fact (each of whom shall have full power of substitution),
to represent and vote as designated below all of the shares of Ophthalmic
Imaging Systems Common Stock that the undersigned held of record at 5:00 p.m.,
Pacific Time, on December 23, 1998, at the Annual Meeting of Shareholders of
Ophthalmic Imaging Systems to be held at the Company's offices located at 221
Lathrop Way, Suite I, Sacramento, California 95185, on January 18, 1999 at 2:00
p.m., Pacific Time, or any adjournment thereof, on the following matters, and on
such other business as may properly come before the meeting:
1. ELECTION OF DIRECTORS
Nominees:Steven R. Verdooner ____; R. Joseph Allen ____;
Daniel S. Durrie, M.D. ____; Randall C. Fowler ____; Walt Williams ____
You may vote cumulatively:
[ ] FOR ALL NOMINEES LISTED ABOVE IN SUCH [ ] WITHHOLD AUTHORITY TO VOTE FOR
PROPORTION AS PROXIES SEE FIT ALL NOMINEES LISTED ABOVE
(except as marked to the contrary below)
______________________________________________________________________
(Instructions: to withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
DISTRIBUTE your votes (the total number of which equals the numbers of shares
you own multiplied by 5) among one or more nominees by writing the number of
votes you desire to cast for each nominee on the line next to his name.
2. Ratification of Appointment of Auditors. Proposal to ratify the
appointment of Perry-Smith & Co., as the Company's auditors for
the 1999 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please Sign and Date on Reverse Side)
<PAGE>
3. In their discretion, on such other business as may properly come
before the meeting (the Board of Directors is not aware of any
matter other than the above proposals which is to be presented
for action at the Annual Meeting).
All of the above proposals are described in greater detail in the accompanying
Proxy Statement dated December 30, 1998, which descriptions are incorporated
herein by reference.
PLEASE SIGN AND RETURN PROMPTLY.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER. If no direction is given, this proxy will be voted FOR the
election of all nominees as directors, and FOR the ratification of the Company's
auditors.
PLEASE ENTER THE NUMBER OF SHARES OF OPHTHALMIC IMAGING SYSTEMS COMMON STOCK YOU
OWN: ____________________________
(Please sign, date, and return this proxy form exactly as your name or names
appear below whether or not you plan to attend the meeting.)
[ ] I plan to attend the Annual Meeting
[ ] I do not plan to attend the Annual Meeting.
Date ______________________, 199___
___________________________________
Signature(s):
___________________________________
Signature(s):
___________________________________
Title or Authority (if applicable)
Please sign your name here exactly as it appears hereon. Joint owners should
each sign. When signing as an attorney, executor, administrator, trustee,
guardian, corporate officer or other similar capacity, so indicate. If the owner
is a corporation, an authorized officer should sign for the corporation and
state his or her title. If shares are held in more than one capacity, this Proxy
shall be deemed valid for all shares held in all capacities.
