PARADIGM MEDICAL INDUSTRIES, INC.
1772 West 2300 South
Salt Lake City, Utah 84119
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of
Directors of Paradigm Medical Industries, Inc., a Delaware
corporation (the "Company") for use at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Monday, June 9,
1997, beginning at 10:00 a.m., local time, or at any
adjournment(s) thereof. The purposes of the meeting are set
forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the DoubleTree
Hotel, 255 South West Temple, Salt Lake City, Utah. This Proxy
Statement and accompanying materials are being mailed to
shareholders of record on or about May 9, 1997. The Company will
bear the cost of this solicitation.
Record Date
Shareholders of record of the Company's Common Stock at the
close of business on April 30, 1997 are entitled to notice of and
to vote at the meeting. At the record date, 3,705,760 shares of
the Company's Common Stock, $.001 par value, 84,604 shares of the
Company's Series A Preferred Stock, $.001 par value, and 77,108
shares of Series B Preferred Stock, $.001 par value, were issued
and outstanding. Shareholders of Series A and Series B Preferred
Stock are not entitled to vote at the Annual Meeting.
Shareholders holding at least a majority of the outstanding
shares of Common Stock represented in person or by proxy, shall
constitute a quorum for the transaction of business at the Annual
Meeting.
Revocability of Proxies
Shareholders may revoke any appointment of proxy given
pursuant to this solicitation by delivering the Company a written
notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person. An
appointment of proxy is revoked upon the death or incapacity of
the shareholder if the Secretary or other officer of the Company
authorized to tabulate votes receives notice of such death or
incapacity before the proxy exercises its authority under the
appointment.
Voting and Solicitation
Each shareholder will be entitled to one vote for each
share of Common Stock held at the record date. Assuming a quorum
is present, a plurality of votes cast by the shares entitled to
vote in the election of directors will be required to elect each
director. Because the shares of Series A and Series B Preferred
Stock are non-voting securities, the holders thereof will not be
entitled to vote at the Annual Meeting. To approve the amendment
to the Company's 1995 Stock Option Plan, holders of a majority of
the shares entitled to vote at the Annual Meeting must vote in
favor of the amendment to the plan. The principal executive
offices of the Company are located at 1772 West 2300 South, Salt
Lake City, Utah. In addition to the use of the mails, proxies
may be solicited personally, by telephone, or by facsimile, and
the Company may reimburse brokerage firms and other persons
holding shares in the Company in their names or those of their
nominees for their reasonable expenses in forwarding soliciting
materials to the beneficial owners.
ELECTION OF DIRECTORS
Proposal 1
Nominees
The Company's Bylaws do not limit the number of persons
serving on the Company's Board of Directors, and it is
contemplated that a Board of eight directors will be elected at
the Annual Meeting. The Board of Directors recommends that the
shareholders vote "FOR" the election of the director nominees
listed below. Assuming a quorum is present, a plurality of votes
cast by the shares entitled to vote in the election of directors
will be required to elect each director. Unless otherwise
instructed, the proxy holders will vote the proxies received by
them for management's eight nominees named below, all of whom are
presently directors of the Company.
In the event that any management nominee is unable or
declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy.
In the event that additional persons are nominated as directors,
the proxy holders intend to vote all proxies received by them in
such a manner as will ensure the election of as many of the
nominees listed below as possible. It is not expected that any
nominee will be unable or will decline to serve as a director.
The term of office of each person elected as a director will
continue until the next annual meeting of shareholders and until
such person's successor has been elected and qualified. Officers
are appointed by the Board of Directors and serve at the
discretion of the board.
The name and certain information regarding each nominee is
set forth below. See also "Certain Relationships and Related
Transactions."
<TABLE>
<CAPTION>
Director of Position with
Name Age Office Since the Company
- ---- --- ------------ -------------
<S> <C> <C> <C>
Thomas F. Motter 48 April 1993 Chairman of the
Board, President
and Chief Executive
Officer
Robert W. Millar 40 April 1993 Vice President and
Director
John W. Hemmer 69 August 1995 Treasurer, Chief
Financial Officer
and Director
Randall A. Mackey 51 August 1995 Secretary and
Director
Michael W. Stelzer 49 April 1993 Director
William C. Fitzhugh 47 November 1995 Director
David M. Silver 55 November 1995 Director
George J. Barenholtz 60 March 1997 Director
</TABLE>
The following biographical information is furnished with
respect to each of the eight nominees:
Thomas F. Motter has served as Chairman of the Board,
President and Chief Executive Officer of the Company since April
1993. From June 1989 to April 1993, Mr. Motter served as Chief
Executive Officer of Paradigm Medical, Inc., which merged with
the Company in May 1994. From September 1990 to April 1992, he
was employed by HGM Medical Laser Systems as General Manager of
their International Division. From October 1978 to June 1989,
Mr. Motter was employed by SmithKline Beecham's Humphrey
Instruments Division, which develops and manufactures advanced
ophthalmic diagnostic instruments, serving last as National Sales
Manager overseeing all domestic sales in its ophthalmic computer
division. Mr. Motter received a B.A. degree in English from
Stephen's College in 1970 and a M.B.A. degree from Pepperdine
University in 1975.
Robert W. Millar has served as Vice President of the
Company since August 1995 and a director of the Company since
April 1993. From January 1991 to April 1993, Mr. Millar was
employed as President of Paradigm Medical, Inc., which merged
with the Company in May 1994. From January 1990 to January 1991,
Mr. Millar was employed by HGM Medical Laser Systems as Director
of Marketing and Product Management for all ophthalmic and
surgical markets. From October 1988 to December 1989, Mr. Millar
was employed as Group Products Manager for the Consumer Products
Division of Esselte Pendaflex Corporation, a manufacturer and
distributor of office supply products. Mr. Millar received a
B.S. degree in industrial design from the College of Design in
Detroit, Michigan in 1979.
Randall A. Mackey has served as Secretary and a director of
the Company since August 1995. Mr. Mackey has been a shareholder
and a director of the Salt Lake City law firm of Mackey Price &
Williams and its predecessor firms since 1989. Mr. Mackey
received a B.S. degree in economics from the University of Utah
in 1968, an M.B.A. degree from Harvard University in 1970, a
Juris Doctor degree from Columbia University in 1975 and a B.C.L.
degree from Oxford University in 1977.
John W. Hemmer has served as Treasurer, Chief Financial
Officer and a director of the Company since November 1995.
Before that he was a consultant to the Company since August 1995.
From March 1992 to July 1994, Mr. Hemmer was Vice President and
Secretary of Finance of Advance Electronics, Inc., a retail
distributor of health and beauty products. From November 1991 to
December 1994, Mr. Hemmer was Treasurer and Secretary of Belize
Agro Industrial Development, Ltd., which established a Free Trade
Zone in Belize engaged in the production and export of seafood.
Since October 1989, Mr. Hemmer has been a director and consultant
for Sea Pride Industries, Inc. and subsidiaries in Gulf Breeze,
Florida, which developed the first offshore marine production
system licensed and permitted for use in the Gulf of Mexico.
Since February 1997, Mr. Hemmer has also been a director of
International Heritage, Inc., a distributor of jewelry and fine
collectibles. Mr. Hemmer received a B.A. degree in economics
from Queens College in 1951 and an M.S. degree in banking and
finance from Columbia University in 1952.
Michael W. Stelzer has served as a director of the Company
since October 1989. He is an attorney who has practiced law in
California since 1980 and has been Chief Executive Officer of
Prime Time Sports TV, Inc., which provides advertising for
televised sporting events, since January 1997. From January 1995
to December 1996, Mr. Stelzer was Executive Vice President and
General Counsel of Rhino Marketing, Inc. He received a B.S.
degree in business administration from the University of
California, Davis in 1970 and a Juris Doctorate from Humphrey's
College of Law in 1979.
William C. Fitzhugh has served as a director of the Company
since November 1995. He is a physician who currently operates a
private ophthalmology practice in Twin Falls, Idaho. Dr.
Fitzhugh is the past president of the Idaho Society of
Ophthalmology. Dr. Fitzhugh received a B.S. degree in
pre-medicine from the University of Idaho in 1971 and an M.D.
degree from the University of Oregon Medical School in 1976.
David M. Silver has served as a director of the Company
since November 1995. He is a member of the Principal Staff of
the Johns Hopkins University Applied Physics Laboratory. He
received a B.S. degree in chemistry from Illinois Institute of
Technology in 1962, an M.A. degree from Johns Hopkins University
in 1964 and a Ph.D. degree from Iowa State University in 1968.
After a postdoctoral fellowship at Harvard University and a
visiting scientist position at the University of Paris, Dr.
Silver returned to Johns Hopkins University in 1970. Currently,
he is Senior Scientist in the Milton S. Eisenhower Research
Center at the Johns Hopkins University Applied Physics
Laboratory.
George J. Barenholtz was appointed to fill a newly-created
position on the Company's Board of Directors in March of 1997.
Mr. Barenholtz is currently a business consultant. As a
consultant, Mr. Barenholtz prepared a market entry and business
analysis study of the orthopedic market for C.S. Bard, Inc. and
planned and led an extensive Long Range Planning program for
Howmedical, Inc., a division of Pfizer, Inc. From 1987 to 1990,
Mr. Barenholtz was Chairman of the Board, Chief Executive Officer
and principal of Merocel Corporation. Mr. Barenholtz has also
been adjunct professor of marketing at Pace University and
Rutgers University. He received a B.S. degree in engineering
from the University of Alberta in 1959, an M.S. degree in
chemistry from Case Weston Reserve University in 1961 and an
M.B.A. degree in marketing from Baruch School of Business in
1973.
Board Meetings and Committees
The Board of Directors held a total of five meetings during
the fiscal year ended September 30, 1996. The Audit Committee of
the Board of Directors consisting of directors Hemmer, Mackey and
Stelzer was formed on October 27, 1996 and, as a consequence, did
not meet during the 1996 fiscal year. The Audit Committee is
primarily responsible for reviewing the services performed by the
Company's independent public accountants and internal audit
department and evaluating the Company's accounting practices and
procedures and its system of internal accounting controls. The
Compensation Committee of the Board of Directors consisting of
directors Hemmer, Mackey and Stelzer was also formed on October
27, 1996 and, as a consequence, did not meet during the 1996
fiscal year. The Compensation Committee is primarily responsible
for reviewing compensation of executive officers, evaluating the
Company's compensation policies and programs and overseeing the
granting of stock options. No director attended fewer than 75%
of all meetings of the Board of Directors during the 1996 fiscal
year.
EXECUTIVE OFFICERS
The following table sets forth certain biographical
information with respect to the executive officers of the Company
(biographical information for the first four individuals are set
forth above):
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Thomas F. Motter 48 President and Chief Executive
Officer
Robert W. Millar 40 Vice President
John W. Hemmer 69 Treasurer and Chief Financial
Officer
Randall A. Mackey 51 Secretary
Daniel J. McGraw 38 Director of Research and
Development
Todd H. Smith 36 Director of Engineering
Ricardo Miranda 36 Director of Business Development
Richard D. Dirkson 46 Director of Regulatory Affairs and
Quality Control
</TABLE>
Daniel J. McGraw has been Director of Research and
Development of the Company since October 1996. Prior to joining
the Company, he was Project Manager and Project Engineer for
Clinical Innovations Associates, Inc., a medical technology
company. Dr. McGraw received a B.S. degree in Engineering
Physics from the University of Maine in 1980 and a Ph.D. degree
in Physics from the University of Utah in 1986. He also was a
post-doctoral fellow at Stanford University and Assistant
Professor of Physics at the University of New Mexico. Dr. McGraw
is a member of the Optical Society of America.
Todd H. Smith has served as Director of Engineering of the
Company since October 1996. Prior to joining the Company, he was
a Principal Designer for Eaton-Kenway, Inc., an engineering firm.
Mr. Smith received a B.S. degree in manufacturing from Weber
State University in 1985.
Ricardo Miranda has been Director of Business Development
since October 1996. Prior to joining the Company, he was
Director of Investment Banking Services of the American Stock
Exchange. Mr. Miranda received a B.A. degree from St. Lawrence
University in 1982 and a M.A.L.D. degree from the Fletcher School
of Law and Diplomacy in 1990.
Richard D. Dirkson has been Director of Regulatory Affairs
and Quality Assurance since October 1996. Prior to joining the
Company, he was Product Quality Managing Director at HydraPak
Aerospace, Inc., an aerospace company. Mr. Dirkson received an
engineering degree from Coastline Community College in 1983.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Officer Compensation
The following table sets forth, for each of the last three
fiscal years, the compensation received by Thomas F. Motter, the
Company's President and Chief Executive Officer, and all other
executive officers (collectively, the "Named Executive Officers")
at September 30, 1996 whose salary and bonus for all services in
all capacities exceed $100,000 for the fiscal year ended
September 30, 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
-----------------------------------------
Other
Annual
Name and Compensa-
Principal Position Year Salary($) Bonus($) tion($)<F2>
- ------------------ ---- --------- -------- ----------
<S> <C> <C> <C> <C>
Thomas F. Motter 1996 $111,042 $1,000 $3,600
Chairman of the 1995 72,000 300 0
Board, President 1994 68,352 0 0
and Chief Executive
Officer
Robert W. Millar 1996 99,792 1,000 3,600
Vice President and 1995 60,265 300 0
Director 1994 42,500 0 0
John W. Hemmer 1996 80,000 0 3,600<F3>
Treasurer, Chief 1995 20,000 0 0<F3>
Financial Officer 1994 0 0 0
and Director
(Continued)
<CAPTION>
Long-Term Compensation
-----------------------------------------
Awards Payouts
---------------------- -----------------
All
Securities Other
Restricted Underlying Long-term Compen-
Name an Stock Options/ Incentive sation
Principal Position Awards($) SARs(#) Payout($) ($)<F1>
- ------------------ --------- --------- --------- -------
<S> <C> <C> <C> <C>
Thomas F. Motter 0 0 0 $6,000
Chairman of the 0 106,000<F2> 0 0
Board, President 0 0 0 0
and Chief Executive
Officer
Robert W. Millar 0 0 0 6,000
Vice President and 0 84,000<F2> 0 0
Director 0 0 0 0
John W. Hemmer 0 0 0 4,000
Treasurer, Chief 0 0 0 0
Financial Officer 0 0 0 0
and Director
________________
<FN>
<F1> The amounts indicated under "Other Annual Compensation" for
1996 consist of payments related to the operation of
automobiles by the named executive.
<F2> On February 16, 1996, the Company granted Mr. Motter and
Mr. Millar options to purchase 106,000 and 84,000 shares,
respectively, of the Company's Common Stock at an exercise
price of $5.00 per share. These options expire on February
15, 2001.
<F3> On November 30, 1995, the Company issued Mr. Hemmer 50,513
shares of the Company's Common Stock as part of his
compensation for past and future services.
</TABLE>
The following table sets forth information concerning the
exercise of options to acquire shares of the Company's Common
Stock by the Named Executive Officers during the fiscal year
ended September 30, 1996, as well as the aggregate number and
value of unexercised options held by the Named Executive Officers
on September 30, 1996.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
Shares Acquired Value
on Exercise (#) Realized($)
--------------- -----------
<S> <C> <C>
Thomas F. Motter -0- -0-
Robert W. Millar -0- -0-
(Continued)
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
September 30, 1996(#) September 30, 1996($)
---------------------- --------------------
Exer- Unexer- Exer- Unexer-
cisable cisable cisable cisable
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Thomas F. Motter 106,000 -0- -0- -0-
Robert W. Millar 84,000 -0- -0- -0-
</TABLE>
Director Compensation
Directors of the Company (but not including directors who
are employees) are paid a director's fee of $10,000 per year by
the Company for their services and are reimbursed for their
expenses in attending board and committee meetings.
Employee 401(k) Plan
In October 1996, the Company's Board of Directors adopted
a 401(k) Retirement Savings Plan. Under the terms of the 401(k)
plan, effective as of November 1, 1996, the Company may make
discretionary employer matching contributions to its employees
who choose to participate in the plan. The plan allows the board
to determine the amount of the contribution at the beginning of
each year. The board adopted a contribution formula specifying
that such discretionary employer matching contributions would
equal 100% of the participating employee's contribution to the
plan up to a maximum discretionary employee contribution of 3% of
a participating employee's compensation, as defined by the plan.
All persons who have completed at least six months' service with
the Company and satisfy other plan requirements are eligible to
participate in the 401(k) plan.
Employment Agreements
The Company has entered into employment agreements with
each of Thomas F. Motter, Robert W. Millar and Jack W. Hemmer,
which expire on February 1, 2001. The agreements require each
employee to devote substantially all of his working time to the
Company, provide that each of them may be terminated for "cause"
(as provided in the agreements) and prohibit each of them from
competing with the Company for two years following the
termination of his employment agreement. The agreements provide
for the payment of an initial base salary of $135,000 to Mr.
Motter, $125,000 to Mr. Millar and $120,000 to Mr. Hemmer,
effective upon the completion of the Company's initial public
offering. Messrs. Motter and Millar also each received a grant
by the Company of incentive stock options to purchase 106,000 and
84,000 shares, respectively, of the Company's Common Stock at a
price of $5.00 per share under the Company's Option Plan. The
agreements provide for salary increases and bonuses as determined
at the discretion of the Board of Directors.
Profit Sharing Plan
On February 16, 1996, the Company adopted a Profit Sharing
Plan, pursuant to which an amount equal to 10% of the pretax
profits of the Company will be set aside for the benefit of the
Company's officers and key employees. This funding will be paid
to the Company's officers and key employees as follows: Thomas
W. Motter, the Company's President and Chief Executive
Officer--30%; Robert W. Millar, the Company's Vice
President--25%; John W. Hemmer, the Company's Chief Financial
Officer and Treasurer--20%; and a pool of 25% to be allocated
among the other officers and key employees as determined by the
Compensation Committee and approved by the Board of Directors.
This funding will only be paid if the Company's qualified pretax
profits exceed $10,000,000 for any fiscal year beginning October
1, 1996 and ending September 30, 2001. If the Company's pretax
profits reach $10,000,000 for any fiscal year, the entire pretax
profits for that year will qualify for the funding. The plan
expires at the end of its fifth fiscal year on September 30,
2001.
1995 Stock Option Plan
The Company adopted a 1995 Stock Option Plan (the "Plan"),
for officers, employees, directors and consultants of the Company
on November 7, 1995. The Plan authorized the granting of stock
options ("Plan Options") to purchase an aggregate of not more
than 300,000 shares of the Company's Common Stock. On February
16, 1996, options for all 300,000 shares were granted. On May
20, 1996, however, when an employee terminated her employment
with the Company, 2,000 options were returned to the Plan. An
additional 500 options were returned to the Plan when the same
employee did not exercise previously vested options on or before
August 18, 1996 as required by the Plan. Accordingly, there are
presently 2,500 options to be granted under the Plan. No Plan
Options have been exercised.
The Plan is administered by the Board of Directors or a
Compensation Committee of not less than two disinterested members
of the Board of Directors. In general, the Board of Directors or
the Compensation Committee, as the case may be, will select the
person to whom options will be granted and will determine,
subject to the terms of the Plan, the number, exercise, and other
provisions of such options. Options granted under the Plan will
become exercisable at such times as may be determined by the
Board of Directors or the Compensation Committee, as the case may
be.
Plan Options may be either incentive stock options
("ISOs"), as such term is defined in the Internal Revenue Code,
or non-ISOs. ISOs may only be granted to persons who are
employees of the Company. Non-ISOs may be granted to any person,
including, but not limited to, employees of the Company,
independent agents, consultants, as the Board of Directors or the
Compensation Committee, as the case may be, believes has
contributed, or will contribute, to the success of the Company.
The Board of Directors or the Compensation Committee as the case
may be, shall determine the exercise price of options granted
under the Plan, provided that, in the case of ISOs, such price
may not be less than 100% (110% in the case of ISOs granted to
holders of 10% of voting power of the Company's stock) of the
fair market value (as defined in the Plan) of the Common Stock on
the date of grant. The aggregate fair market value (determined
at the time of option grant) of stock with respect to which ISOs
become exercisable for the first time in any year cannot exceed
$100,000.
Plan Options are evidenced by written agreements containing
the terms described above which are applicable and such other
terms and conditions consistent with the Plan as the Board of
Directors or the Compensation Committee, as the case may be, may
impose. The term of each Plan Option shall not be more than 10
years (five years in the case of ISOs granted to holders of 10%
of the voting power of the Company's stock) from the date of
grant. The Board of Directors has a right to amend, suspend or
terminate the Plan at any time; provided, however, that unless
ratified by the Company's shareholders, no amendment or change in
the Plan will be effective which would increase the total number
of shares which may be issued under the Plan, materially increase
the benefits accruing to persons granted under the Plan or
materially modify the requirements as to eligibility and
participation in the Plan. No amendment, supervision or
termination of the Plan shall, without the consent of an employee
to whom an option shall heretofore have been granted, affect the
rights of such employee under such option.
All Plan Options were granted to award certain officers and
key employees who are employed by the Company and to help the
Company retain these officers and key employees by providing them
with additional incentives to contribute to the success of the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth herein describes certain
transactions between the Company and certain affiliated parties.
Future transactions, if any, will be approved by a majority of
the disinterested members of the Company and will be on terms no
less favorable to the Company than those that could be obtained
from unaffiliated parties.
The Company purchases the laser cavity, optical train and
power source for the Photon(trademark) laser cataract system from Sunrise
Technologies, Inc. ("Sunrise"), of which David Light, a director
of the Company since November 1995, serves as its President and
Chief Executive Officer. These materials have been purchased
pursuant to a Manufacturing Agreement entered into by Sunrise and
the Company before Mr. Light joined the Company's Board of
Directors, which expired on June 1, 1996. However, the agreement
was renewed as of January 8, 1997, when the Company entered into
an Engineering and Manufacturing Agreement with Sunrise. For the
fiscal years ended September 30, 1995 and 1996, the Company paid
Sunrise $263,000 and $5,284, respectively, for materials
purchased.
The Company subcontracts the manufacture of its
Precisionist(trademark) and Photon(trademark) laser cataract
systems to one of its shareholders, Zevex, Inc. ("Zevex")
which is located in Salt Lake City, Utah. On September 22, 1996, the
Company entered into a Design, Engineering and Manufacturing Agreement
with Zevex for the engineering and manufacture of the Photon(trademark)
laser cataract system, except for the laser cavity and surgical probes.
The agreement prohibits Zevex from manufacturing invasive ophthalmic
medical lasers for any other company until September 21, 2001.
For the fiscal year ended September 30, 1995 and 1996, the
Company purchased design and manufacturing services in the
amounts of $509,837 and $353,949, respectively, from Zevex.
On December 19, 1995, the Company entered into a settlement
and release agreement (the "Settlement Agreement") with Douglas
A. MacLeod, a significant shareholder of the Company, with
respect to certain anti-dilution rights previously granted to him
by the Company. Pursuant to this agreement, Mr. MacLeod agreed
to terminate his anti-dilution rights in consideration for the
following: (i) Mr. Motter agreeing to sell to Mr. MacLeod from
his personal holdings 61,111 shares of the Company's Common Stock
at a purchase price of $611.11, (ii) Mr. Millar agreeing to sell
to Mr. MacLeod from his personal holdings 38,889 shares of the
Company's Common Stock at a purchase price of $388.89, and (iii)
the Company agreeing to issue to MacLeod an additional 20,000
shares of Common Stock. Based on the value assigned by the
Company's investment banker, Kenneth Jerome & Company, Inc., of
$1.50 per share, the Company recognized $30,000 of expense for
the 20,000 shares issued by the Company and $149,000 of expense
and additional paid-in-capital for the 100,000 shares sold by Mr.
Motter and Mr. Millar.
Mr. Mackey, a director of the Company since September 1995,
is President and a shareholder of the law firm of Mackey Price &
Williams, which has rendered legal services to the Company since
February 1995 in connection with its public stock offering and
other corporate matters. Legal fees and expenses paid to Mackey
Price & Williams for the fiscal year ended September 30, 1995 and
1996 totaled $7,500 and $234,504, respectively, which was
primarily for legal services related to the public stock
offering. The Company also granted Mackey Price & Williams
warrants to purchase 25,000 shares of Common Stock at $3.33 per
share in partial payment for legal services relating to the
public stock offering.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
Effective May 1, 1991, the Securities and Exchange
Commission adopted revised rules regarding reporting of
beneficial ownership of securities by officers, directors and
owners of more than 10% of any class of a company's equity
securities. During fiscal 1996, the Company's officers and
directors holding shares of the Company's Common Stock, through
an oversight, filed late Form 3 reports. The Company's officers
and directors are otherwise current in their reporting
requirements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with
respect to beneficial ownership of the Company's Common Stock as
of March 31, 1997 for (i) each executive officer of the Company,
(ii) each director of the Company, (iii) each person known to the
Company to be the beneficial owner of more than 5% of the
outstanding shares, and (iv) all directors and executive officers
as a group:
<TABLE>
<CAPTION>
Number of Percent of
Name and Address<F1> Shares Ownership<F2>
- ------------------- --------- ------------
<S> <C> <C>
Thomas F. Motter<F3> 588,666 18.6%
Douglas MacLeod 418,451 13.2%
Robert W. Millar<F4> 374,605 11.8%
William C. Fitzhugh 63,071 2.0%
Michael W. Stelzer 59,071 1.9%
John W. Hemmer 50,513 1.6%
Randall A. Mackey 50,512 1.6%
David M. Silver 1,000 *
George J. Barenholtz -- *
All directors and 1,187,438 37.4%
executive officers
as a group (8
persons)
_______________
* Less than 1%.
<FN>
<F1> The address for Mr. Motter is 11634 South 2220 East, Sandy,
Utah 84092. The address for Mr. MacLeod is 1002 South 10th
Street, Tacoma, Washington 98405. The address for Mr.
Millar is 8557 S. Kings Hill Drive, Salt Lake City, Utah
84121. The address for Mr. Fitzhugh is 589 Sharp Avenue
West, Twin Falls, Idaho 83301. The address for Mr. Stelzer
is 12450 Santa Ana, Atascadero, California 93422. The
address for Mr. Hemmer is 88 Meadow Road, Briarcliff Manor,
New York 10510. The address for Mr. Mackey is 1474 East
Harvard Avenue, Salt Lake City, Utah 84105. The address
for Mr. Silver is 17 Avalon Court, Bethesda, Maryland
20816. The address for Mr. Barenholtz is 57 Union Street,
Montclair, New Jersey 07042.
<F2> Assumes no exercise of the Class A Warrants and no
conversion of shares of the Company's Series A and Series
B Preferred Stock into Common Stock.
<F3> Does not include 106,000 options granted to Mr. Motter
under the Company's 1995 Option Plan.
<F4> Includes 2,000 shares held by William E. Millar, Mr.
Millar's father, 1,000 shares held by Michael S. Millar,
Mr. Millar's brother, and 100 shares to Nathan Glynn, Mr.
Millar's nephew. Mr. Millar disclaims beneficial ownership
of these 3,100 shares. Does not include 84,000 options
granted to Mr. Millar under the Company's 1995 Option Plan.
</TABLE>
PROPOSED AMENDMENT TO THE 1995 STOCK OPTION PLAN
Proposal 2
The proposed amendment would revise the 1995 Stock Option
Plan to increase the number of shares of the Company's Common
Stock reserved for issuance under the Plan from 300,000 shares to
600,000 shares. Of the 300,000 shares of Common Stock currently
reserved for issuance under the Plan, the Board of Directors has
granted options to certain executive officers and employees of
the Company to purchase 297,500 shares of Common Stock. The
Board of Directors believes that this amendment will further
assist the Company in attracting and retaining the best possible
persons for positions of substantial responsibility by providing
its officers, directors and key employees with additional
incentives to contribute the Company's success.
The Board of Directors recommends that shareholders vote
"FOR" the amendment to the 1995 Stock Option Plan to increase the
number of shares of Common Stock reserved for issuance thereunder
by 300,000 shares.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Proposal 3
The independent public accounting firm of Coopers & Lybrand
L.L.P. has been the Company's independent accountants since
fiscal year 1995. The Audit Committee has recommended and the
Board of Directors has appointed Coopers & Lybrand L.L.P. to
audit the consolidated financial statements of the Company for
the transition period for the change in fiscal year end of the
Company from September 30 to December 31 and for the fiscal year
ending December 31, 1997. It is anticipated that representatives
of Coopers & Lybrand L.L.P. will be present at the Annual Meeting
and will be provided an opportunity to make a statement, if they
so desire to do so, and to be available to respond to appropriate
questions.
The Board of Directors recommends that shareholders vote
"FOR" ratification of the appointment of Coopers & Lybrand L.L.P.
as the Company's independent accountants for fiscal 1997.
PROPOSALS OF SHAREHOLDERS
Any proposal of a shareholder intended to be presented at
the Company's 1998 annual meeting of shareholders must be
received by the Company no later than April 30, 1998 in order to
be included in the Company's proxy statement relating to the 1998
annual meeting.
ADDITIONAL INFORMATION
The Company will provide without charge to any person from
whom a Proxy is solicited by the Board of Directors, upon the
written request of such person, a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996,
excluding certain exhibits thereto, as filed with the Securities
and Exchange Commission. Written requests for such information
should be directed to John W. Hemmer, Treasurer and Chief
Financial Officer, Paradigm Medical Industries, Inc., 1772 West
2300 South, Salt Lake City, Utah 84119.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows
of no business that will be presented for consideration at the
Annual Meeting other than the items referred to above. However,
if any other matters are properly brought before the meeting, it
is the intention of the persons named as proxies in the
accompanying Proxy to vote the shares they represent on such
business in accordance with their best judgment.
In order to assure the presence of the necessary quorum and
to vote on the matters to come before the Annual Meeting, please
indicate your choices on the enclosed Proxy and date, sign, and
return it promptly in the envelope provided. The signing of a
Proxy by no means prevents you from attending the Annual Meeting.
By order of the Board of Directors,
Randall A. Mackey
Corporate Secretary
May 9, 1997
<PAGE>
PARADIGM MEDICAL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
June 9, 1997
THIS PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF
PARADIGM MEDICAL INDUSTRIES, INC.
The undersigned hereby appoints Thomas F. Motter and Robert W.
Millar or either of them, each with full power of substitution,
as proxies to vote at the Annual Meeting of Shareholders to be
held on Monday, June 9, 1997, beginning at 10:00 a.m., local
time, in the DoubleTree Hotel, 255 South West Temple, Salt Lake
City, Utah, and at all adjournments thereof, all shares of common
stock which the undersigned would be entitled to vote on matters
set forth below, if personally present:
1. ELECTION OF DIRECTORS, NOMINEES: THOMAS F. MOTTER, ROBERT
W. MILLAR, JOHN W. HEMMER, RANDALL A. MACKEY, MICHAEL W. STELZER,
WILLIAM C. FITZHUGH, DAVID M. SILVER AND GEORGE J. BARENHOLTZ.
[ ] FOR all nominees listed (except as indicated in writing to
the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name here:
- -------------------------------------------------------------
2. APPROVAL OF AMENDMENT TO THE 1995 STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, ON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
- -------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR,
IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3. In their discretion, the proxies are
authorized to vote upon such other matters as may properly come
before the meeting or any adjournment(s) thereof.
Dated , 1997
----------------------------------------------------
- ----------------------------------------------------------------
Signature
- ----------------------------------------------------------------
(This proxy should be marked, dated and signed by each
shareholder exactly as such shareholder's name appears hereon and
returned promptly. Persons signing in a fiduciary capacity
should so indicate. If shares are held by joint tenants or as
community property, both should sign. If a corporation, please
sign in full corporation name by the President or by an
authorized corporate officer. If a partnership, please sign in
partnership name by an authorized person.)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 9, 1997
To our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Annual Meeting") of Paradigm Medical
Industries, Inc. (the "Company"), to be held on Monday, June 9,
1997, beginning at 10:00 a.m., local time, in the DoubleTree
Hotel, 255 South West Temple, Salt Lake City, Utah. At the
Annual Meeting, shareholders will act on the following matters:
1. To elect eight directors to serve until the next
annual meeting of shareholders and until their respective
successors are elected and qualified;
2. To approve an amendment to the 1995 Stock Option Plan
to increase the number of shares of Common Stock reserved for
issuance thereunder by an aggregate of 300,000 shares;
3. To ratify the appointment of Coopers & Lybrand L.L.P.
as the Company's independent accountants for the fiscal year
ending December 31, 1997; and
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice. Also included is
a postage prepaid, return Proxy/Voting Instruction Card. Only
shareholders of record at the close of business on April 30, 1997
are entitled to notice of and to vote at the Annual Meeting or
any adjournment thereof.
It is important that your shares be represented at the
Annual Meeting. Whether or not you plan to attend, we hope that
you will complete and return your postage prepaid Proxy/Voting
Instruction Card as promptly as possible.
By Order of the Board of Directors,
Thomas F. Motter
Chairman of the Board, President
and Chief Executive Officer
May 9, 1997
Salt Lake City, Utah
