UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant[ ]
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[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12.
VASOMEDICAL, INC.
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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previously. Identify the previous filing by registration statement number, or
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Copies of all communications to:
David H. Lieberman, Esq.
Beckman, Lieberman & Barandes, LLP
227 Michael Drive
Syosset, New York 11791
(516) 921-1131
TABLE OF CONTENTS
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GENERAL INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING 2
Distribution and Electronic Availability of Proxy Materials 2
Voting Information 2
EXECUTIVE OFFICERS 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 5
PROPOSAL ONE - ELECTION OF DIRECTORS 8
DIRECTOR INDEPENDENCE 9
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES 10
Committee Autonomy 10
Audit Committee and Audit Committee Financial Expert 11
Compensation Committee 11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION 11
Executive Compensation Objectives 12
Relationship of Compensation to Performance and Compensation of
Chief Executive Officer and Chief Financial Officer 12
Corporate Governance Committee 13
Director Nominations and Qualifications 13
Stockholder Communications with the Board 13
DIRECTOR COMPENSATION 14
Director's Compensation 14
Other 15
Certain Relationships and Related Transactions 15
Indemnification Agreements 16
Executive Compensation Tables 16
Grants of Plan-Based Awards in Fiscal 2009 17
Outstanding Equity Awards at Last Fiscal Year End 18
Option Exercises in Fiscal 2009 18
Employment Agreements 18
Equity Compensation Plan Information 19
Deferred Compensation Program 20
Board Member Attendance at Annual Meetings 20
PROPOSAL TWO - PROPOSAL TO AMEND THE CERTIFICATE OF 21
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
General 21
Purpose 21
Effect on Rights of Shareholders 22
Board Position and Required Vote 22
PROPOSAL THREE - PROPOSAL FOR APPOINTMENT OF INDEPENDENT 23
REGISTERED ACCOUNTING FIRM
General 23
Board Position and Required Vote 23
AUDIT COMMITTEE REPORT 23
Audit Fees 24
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS 24
CORPORATE GOVERNANCE - CODE OF ETHICS 25
FINANCIAL STATEMENTS AND INCORPORATION BY REFERENCE 25
COMMON STOCK PERFORMANCE 26
HOUSEHOLDING OF PROXY MATERIALS 27
MISCELLANEOUS INFORMATION 27
VASOMEDICAL, INC.
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NOTICE OF THE 2009 ANNUAL MEETING OF STOCKHOLDERS
September 30, 2009
To our Stockholders:
An annual meeting of stockholders will be held at__________________________
________________________________ on Wednesday, September 30, 2009, beginning at
9:30 a.m. At the meeting, you will be asked to vote on the following matters:
1. Election of eight directors to serve for a term of one year.
2. Amendment of our certificate of incorporation to increase the number
of authorized shares of our common stock from 110,000,000 to
250,000,000.
3. Ratification of the appointment of Rothstein, Kass & Company, P.C. as
our independent registered public accountants for the year ending May
31, 2010.
4. Any other matters that properly come before the meeting.
The above matters are set forth in the proxy statement attached to this
notice to which your attention is directed.
If you are a stockholder of record at the close of business on August 4,
2009, you are entitled to vote at the meeting or at any adjournment or
postponement of the meeting. This notice and proxy statement are first being
mailed to stockholders on or about ________, 2009.
By Order of the Board of Directors,
JUN MA
President and Chief Executive Officer
Dated: ___________, 2009
Westbury, New York
All stockholders are urged to attend the Annual Meeting in person. However, to
ensure that your vote is counted at the Annual Meeting, please vote as promptly
as possible. You have three options for submitting your vote before the Annual
Meeting: the Internet, by telephone, or by mailing your proxy or voting
instruction card.
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VASOMEDICAL, INC.
180 Linden Avenue
Westbury, New York 11590
PROXY STATEMENT
FOR THE 2009 ANNUAL MEETING OF STOCKHOLDERS
To be held on
September 30, 2009
GENERAL INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING
This proxy statement is being sent to you in connection with the
solicitation of proxies by the Board of Directors of Vasomedical, Inc. for the
2009 Annual Meeting of Stockholders to be held at ______________________________
________________________________ New York, at 9:30 a.m., local time, on
September 30, 2009. We invite you to attend in person.
Distribution and Electronic Availability of Proxy Materials
In accordance with the SEC's proxy delivery rules, we intend to commence
distribution on or about August 20, 2009 of the Notice of Internet Availability
of Proxy Materials (the "Notice of Internet Availability") indicating that our
Notice of the 2009 Annual Meeting of Stockholders, our Proxy Statement and our
Annual Report on Form 10K for the year ended May 31, 2009 will be made available
at [www.proxyvote.com.] This website will also provide stockholders with
instructions on how to vote their shares. The Notice of Internet Availability
also indicates how you may request printed copies of our proxy materials,
including a proxy card or voting instruction card. We believe that this new
process will reduce the environmental impact and lower our costs of printing and
distributing our proxy materials.
Voting Information
Record date
The record date for the Annual Meeting is August 4, 2009. You may vote all
shares of our common stock that you owned as of the close of business on that
date. On August 4, 2009, there were 99,843,004 shares of common stock
outstanding. Each share of common stock is entitled to one vote on each matter
to be voted on at the Annual Meeting.
How to vote
There are four different ways you may cast your vote this year. You may
vote by:
(1) the Internet, at the address provided on the Notice of Internet
Availability, or on each proxy card or vote instruction card;
(2) telephone, using the toll-free number listed on each proxy card (if
you are a stockholder of record) or vote instruction card (if your
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shares are held by a bank, broker or other nominee);
(3) marking, signing, dating and mailing each proxy card or vote
instruction card and returning it in the envelope provided. If you
return your signed proxy card or vote instruction card but do not mark
the boxes showing how you wish to vote, your shares will be voted FOR
proposals 1 through 3; or
(4) attending the meeting (if your shares are registered directly in your
name on our books and not held through a broker, bank or other
nominee).
If you are the registered shareholder (that is, if you hold your stock in
your name), you can vote by telephone or electronically through the Internet by
following the instructions provided on the Notice of Internet Availability or on
the proxy card.
If your shares are held in "street name" (that is, they are held in the
name of a broker, bank or other nominee), you will receive instructions with
your materials that you must follow in order to have your shares voted. Please
review your proxy or vote instruction card to determine whether you will be able
to vote by telephone or electronically.
Revoking your proxy
You can revoke your proxy at any time before your shares are voted at the
meeting by (i) sending a written notice to Tarachand Singh, Secretary,
Vasomedical, Inc., 180 Linden Avenue, Westbury, New York 11590, (ii) submitting
by mail, telephone or the Internet another proxy dated as of a later date, or
(iii) voting in person at the Annual Meeting. Merely attending the Annual
Meeting will not revoke your proxy. Voting in person at the Annual Meeting will
replace any previous votes submitted by proxy.
Voting Instructions
If you complete and submit your proxy voting instructions, the persons
named as proxies will follow your instructions. If you submit proxy voting
instructions but do not direct how to vote on each item, the persons named as
proxies will vote as the Board recommends on each proposal. The persons named as
proxies will vote on any other matters properly presented at the Annual Meeting
in accordance with their best judgment. We have not received notice of other
matters that may be properly presented for voting at the Annual Meeting.
Withholding your vote, voting to "abstain" and "broker nonvotes"
In the election of directors, you can withhold your vote for any of the
nominees. Withheld votes will be excluded entirely from the vote and will have
no effect on the outcome. With regard to the other proposals, you can vote to
"abstain." If you vote to "abstain," your shares will be counted as present at
the meeting for purposes of that proposal and your vote will have the effect of
a vote against the proposal. "Broker nonvotes" are proxies received from brokers
who, in the absence of specific voting instructions from beneficial owners of
shares held in brokerage name, have declined to vote such shares in those
instances where discretionary voting by brokers is permitted. Broker nonvotes
will not be counted for purposes of determining whether a proposal has been
approved.
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Votes required to hold the Annual Meeting
We need a majority of the shares of our common stock outstanding on August
4, 2009 present, in person or by proxy, to hold the Annual Meeting.
Votes required to elect directors and to adopt other proposals
Directors will be elected by a plurality of votes cast at the Annual
Meeting. The affirmative vote of a majority of the shares of our common stock
outstanding on August 4, 2009 is required to amend our Certificate of
Incorporation. The affirmative vote of a majority of the shares of our common
stock, that are present in person or by proxy at the Annual Meeting is required
to ratify the appointment of Rothstein Kass & Company, P.C. as our independent
auditors for 2009.
Other matters to be decided at the Annual Meeting
If any matters were to properly come before the Annual Meeting that are not
specifically set forth on your proxy and in this proxy statement, the persons
appointed to vote the proxies would vote on such matters in accordance with
their best judgment.
Postponement or adjournment of the Annual Meeting
If the Annual Meeting were to be postponed or adjourned, your proxy would
still be valid and might be voted at the postponed or adjourned meeting. You
would still be able to revoke your proxy until it was voted.
Cost of Proxy Solicitation
We will pay the expenses of the preparation of our proxy materials and the
solicitation by the Board of Directors of your proxy. Our directors, officers
and employees, who will receive no additional compensation for soliciting, may
solicit your proxy by telephone or other means.
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EXECUTIVE OFFICERS
Name Age Position
---- --- --------
Jun Ma 45 President, Chief Executive Officer,
and Director
John C. K. Hui 63 Chief Technology Officer and
Director
Tarachand Singh 56 Chief Financial Officer
-----------
Jun Ma, PhD was appointed Chief Executive Officer and President of the
Company on October 16, 2008. Mr. Ma has served as a director of the Company
since June 2007. Mr. Ma holds a BS degree in precision machinery and
instrumentation from University of Science and Technology of China, an MS degree
in biomedical instrumentation from Shanghai University, and a PhD degree in
mechanical engineering from Columbia University in the City of New York. He has
been an associate professor in engineering at New York Institute of Technology
since 1997 and an assistant professor from 1993 to 1997. Previously Mr. Ma
provided consulting services to several companies in various industries,
including Kerns Manufacturing Corp. and Living Data Technology Corp., both of
which are shareholders of our Company.
John C. K. Hui, PhD has been our Vice Chairman and Chief Technology Officer
since October 16, 2008, our President, Chief Executive Officer and Chief
Technology Officer from April 1, 2007 through October 15, 2008, as well as a
director since February 1995. From February 1995 until April 2007, he was a
Senior Vice President. Dr. Hui has been an Assistant Professor in the Department
of Surgery and Division of Cardiology at the State University of Stony Brook,
New York since 1978. He has also been a scientist in the medical department of
Brookhaven National Laboratories. Dr. Hui was CEO and president of and a
principal stockholder in Vasogenics, Inc. at the time of its acquisition by us
in January 1995.
Tarachand David Singh was appointed Chief Financial Officer on March 11,
2009. He has been employed by us in various executive capacities and as Chief
Accountant of the Company since October, 2008. Mr. Singh was Director of Cost
Accounting for Del Laboratories, Inc. from August 2005 to December 2007. From
March 1991 to August 1999 he was Cost Accounting Manager and from September 1999
to August 2005 he was Financial Operations Manager, of George Weston Bakeries.
Mr. Singh holds an MBA in general management from Dowling College and a BA in
accounting from Queens College.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding the beneficial
ownership of our common stock as of August 4, 2009 by (a) each beneficial owner
of 5% or more of our outstanding common stock known to us, based solely on
filings with the Securities and Exchange Commission, (b) each of our directors,
(c) each of our Named Executive Officers and (d) all of our directors and
executive officers as a group.
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The percentage of beneficial ownership for the table is based on 99,843,004
shares of our common stock outstanding as of August 4, 2009. To our knowledge,
except under community property laws or as otherwise noted, the persons and
entities named in the table have sole voting and sole investment power over
their shares of our common stock. Unless otherwise indicated, each beneficial
owner listed below maintains a mailing address of c/o Vasomedical, Inc., 180
Linden Avenue, Westbury, New York 11590.
The number of shares beneficially owned by each shareholder is determined
under SEC rules and is not necessarily indicative of beneficial ownership for
any other purpose. Under these rules, beneficial ownership includes those shares
of common stock over which the shareholder has sole or shared voting or
investment power and those shares of common stock that the shareholder has the
right to acquire within 60 days after August 4, 2009 through the exercise of any
stock option. The "Percentage of Shares" column treats as outstanding all shares
underlying such options held by the shareholder, but not shares underlying
options held by other shareholders.
Common Stock % of
Beneficially Common
Name of Beneficial Owner Owned (1) Stock (2)
------------------------------------------------------ ----------------- -----------------
Abraham E. Cohen ** ................................. 1,745,254 1.74%
Derek Enlander **.................................... 400,000 *
John C.K. Hui, PhD (3) ** ........................... 1,158,880 1.16%
Jun Ma **............................................ 900,000 *
Benham Movaseghi **.................................. 400,000 *
Photios T. Paulson **................................ 870,000 *
Tarachand David Singh................................ 200,000 *
Simon Srybnik (4) (5) **............................. 36,105,126 33.68%
Louis Srybnik (4) (5)................................ 35,705,126 33.27%
Martin Zeiger **..................................... 565,000 *
** Directors and executive officers as a group
(8 persons)....................................... 39,344,260 36.91%
*Less than 1% of the Company's common stock
(1) No officer or director owns more than one percent of the issued and
outstanding common stock of the Company unless otherwise indicated.
Includes beneficial ownership of the following numbers of shares that may
be acquired within 60 days of August 4, 2009 pursuant to a warrant awarded
under the Securities Purchase Agreement with Kerns Manufacturing Corp.
("Kerns") and stock options awarded under our stock option plans:
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Abraham E. Cohen 670,000 Photios T. Paulson 595,000
Derek Enlander 150,000 Simon Srybnik 4,435,714
John C.K. Hui, PhD 439,558 Martin Zeiger 265,000
Jun Ma 150,000
Tarachand David Singh 200,000 Directors and executive
Behnam Movaseghi 150,000 officers as a group 6,855,272
(2) Applicable percentages are based on 93,868,004 shares of common stock
outstanding on August 4, 2009, adjusted as required by rules promulgated by
the SEC, which does not include stock awards to the Board of Directors for
fiscal 2009 compensation earned that were approved but not issued as of
August 4, 2009. The beneficially owned shares include stock awards to the
Board of Directors for fiscal 2000 compensation that were approved and
earned but not issued by August 4, 2009.
(3) Includes 789,322 shares that are held in a trust for the benefit of Dr.
Hui's child. Dr. Hui and his wife are the trustees of this trust.
(4) Simon Srybnik and his brother Louis Srybnik are the sole directors and the
Chairman of the Board and President, respectively of Kerns, which is the
record holder of 25,714,286 shares (of which 4,285,714 shares are not
issuable until a restricted warrant is exercised). They are the sole
shareholders of Kerns, each holding 50% of the shares. The reporting
persons, accordingly, share voting and dispositive powers over the
21,428,572 shares held by Kerns and share dispositive power over the
4,285,714 shares underlying the restricted warrant. As a result, they may
be deemed to be the co-beneficial owners of an aggregate of 25,714,286
shares. Mr. Srybnik also holds sole dispositive power over the 150,000
shares underlying the option he was granted upon being appointed to the
Board of Directors, as well as 250,000 shares of common stock awarded to
the Board of Directors for fiscal 2009 compensation earned that were
approved but not issued as of August 4, 2009.
(5) Simon Srybnik and his brother Louis Srybnik are the sole directors and
officers of Living Data Technology Corporation ("Living Data"). They also
each own 35% of the outstanding shares of Living Data. The reporting
persons, accordingly, share voting and dispositive powers over the
6,990,840 shares of our common stock owned by Living Data and, as a result,
may be deemed to be the co-beneficial owners thereof.
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PROPOSAL ONE - ELECTION OF DIRECTORS
Eight directors will be elected at the Annual Meeting. Each director will
serve until the next annual meeting of stockholders and until their successors
have been elected and qualified. At the meeting, the persons named in the proxy
will vote the shares covered thereby for the elections of the nominees named
below to our Board of Directors unless instructed to the contrary.
Each nominee is currently a director of the Company.
The following table sets forth the names and ages of the nominees:
Nominee Age
------- ---
Abraham E. Cohen 73
Derek Enlander (1) (4) 63
John C.K. Hui (2) 63
Jun Ma 45
Behnam Movaseghi 56
Photius T. Paulson (1) (4) 70
Simon Srybnik (2) 93
Martin Zeiger (1) (2) (4) 72
-----------
(1) Member of Compensation Committee
(2) Member of Corporate Governance Committee
(3) Member of Nominating Committee
(4) Member of Audit Committee
The following is a brief account of the business experience for at least
the past five years of our directors (other than that of John C.K. Hui and Jun
Ma, whose business experience is set forth on Page 5 under "Executive
Officers"):
Abraham E. Cohen has been our Chairman of the Board since June 1994 and is
presently an independent consultant. He retired in 1992 as Senior Vice President
of Merck & Co., Inc., a position he was elected to in 1985. From 1979 to 1989,
Mr. Cohen was also President of Merck Sharp & Dohme International, a division of
Merck & Co., Inc. Mr. Cohen is a director of the following public companies:
Akzo Nobel Nv., Chugai Pharmaceutical Co., Ltd., Neurobiological Technologies,
Inc. and Teva Pharmaceutical Industries, Ltd.
Derek Enlander M.D. has been a director since July 2007. He is an attending
physician at the Mount Sinai Medical Center New York, and a clinical instructor
at the Mount Sinai Medical School. He is in private practice in Internal
Medicine in Manhattan. He is the author of six books on medicine and over twenty
research papers. He has invented a new drug to treat immune dysfunction and is
the President of Computer Medica Inc., where he invented a Medical History card
to store a patient's medical files including X-rays, MRIs, etc. on a credit card
size computer readable card.
Behnam Movaseghi has been a director since July 2007. Mr. Movaseghi has
been treasurer of Kerns Manufacturing Corporation since 2000, and controller
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from 1990 to 2000. For approximately ten years prior thereto, Mr. Movaseghi was
a tax and financial consultant. Mr. Movaseghi is a Certified Public Accountant.
Photios T. Paulson has been a director since April 2000 and served as our
Chief Executive Officer from October 2002 through June 2003 and from March to
October 2004. Mr. Paulson has been an advisor to the health-care industry and
was Vice President of bioMerieux N.A. Inc. from 1995 to 2002. Between 1992 and
1995, Mr. Paulson was Chairman of bioMerieux Vitek Inc. Between 1987 and 1990,
he was Senior Advisor, Health Care Industry, for Prudential Securities. Mr.
Paulson previously held senior positions with Becton Dickinson and Company
through 1987. Mr. Paulson is a director of bioMerieux N.A. Inc. and Silliker
Group Inc.
Simon Srybnik has been a director since June 2007 and is Chairman of the
Board of Kerns Manufacturing Corp. and Living Data Technology Corp. A lifetime
entrepreneur and industrialist, Mr. Srybnik has founded and managed many
companies in various industries including machinery and process equipment,
aerospace and defense, biology and healthcare.
Martin Zeiger has been a director since October 2001. He is an independent
consultant to the pharmaceutical industry. Mr. Zeiger was Senior Vice President
of Strategic Business Development for Barr Laboratories, a drug manufacturer,
from 1999 through August 2003. From 1987 through 1999, Mr. Zeiger was Executive
Vice President and General Counsel for Rugby Laboratories. In 1993 Marion
Merrill Dow acquired Rugby Laboratories. Mr. Zeiger was a Vice President of
Marion Merrill Dow, Inc. and its successor, Hoechst Marion Roussell, Inc. Mr.
Zeiger is a founding director of the Larry King Cardiac Foundation and was a
member of the Heritage Board of Directors of the American Heart Association in
New York.
DIRECTOR INDEPENDENCE
We have adopted the NASDAQ Stock Market's standards for determining the
independence of directors. Under these standards, an independent director means
a person other than an executive officer or one of our employees or any other
individual having a relationship which, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. In addition, the following persons shall
not be considered independent:
o a director who is, or at any time during the past three years was,
employed by us;
o a director who accepted or who has a family member who accepted any
compensation from us in excess of $100,000 during any period of twelve
consecutive months within the three years preceding the determination
of independence, other than the following:
o compensation for service on the Board of Directors or any
committee thereof;
o compensation paid to a family member who is one of our employees
(other than an executive officer); or
o under a tax-qualified retirement plan, or non-discretionary
compensation;
o a director who is a family member of an individual who is, or at any
time during the past three years was, employed by us as an executive
officer;
o a director who is, or has a family member who is, a partner in, or a
controlling shareholder or an executive officer of, any organization
to which we made, or from which we received, payments for property or
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services in the current or any of the past three fiscal years that
exceed 5% of the recipient's consolidated gross revenues for that
year, or $200,000, whichever is more, other than the following:
o payments arising solely from investments in our securities; or
o payments under non-discretionary charitable contribution matching
programs;
o a director who is, or has a family member who is, employed as an
executive officer of another entity where at any time during the past
three years any of our executive officers served on the compensation
committee of such other entity; or
o a director who is, or has a family member who is, a current partner of
our outside auditor, or was a partner or employee of our outside
auditor who worked on our audit at any time during any of the past
three years.
For purposes of the NASDAQ independence standards, the term "family member"
means a person's spouse, parents, children and siblings, whether by blood,
marriage or adoption, or anyone residing in such person's home.
The Board of Directors has assessed the independence of each non-employee
director under the independence standards of the NASDAQ Stock Market set forth
above, and has affirmatively determined that four of our non-employee directors
(Mr. Cohen, Dr. Enlander, Mr. Paulson and Mr. Zeiger) are independent.
We expect each director to attend every meeting of the Board and the
committees on which he serves as well as the annual meeting. In 2009, all
directors attended at least 75% of the meetings of the Board and the committees
on which they served in 2009.
Our Board of Directors has an Audit Committee, Compensation Committee and
Corporate Governance Committee. Although we have an independent Audit Committee
and Compensation Committee, our Board has determined not to establish a
Nominating Committee, nominees for election as directors are selected by our
Board of Directors. The Board believes that, given its relatively frequent
meetings and the participation of all directors in the consideration of director
nominees, it is appropriate for the Company not to have a Nominating Committee
of its Board.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended May 31, 2009 there were:
o 6 meetings of the Board of Directors
o 6 meetings of the Audit Committee
o 2 meetings of the Compensation Committee
The Corporate Governance Committee did not hold any meetings during the
fiscal year ended May 31, 2009.
Committee Autonomy
Each committee has the power to engage independent legal, financial or
other advisors, as it may deem necessary, without consulting or obtaining the
approval of our Board of Directors or any officer of the Company.
10
Audit Committee and Audit Committee Financial Expert
The Board has a standing Audit Committee. The Board has affirmatively
determined that each director who serves on the Audit Committee is independent,
as the term is defined by applicable Nasdaq and Securities and Exchange
Commission ("SEC") rules. During fiscal 2009 the Audit Committee consisted of
Joseph A. Giacalone, who served as the committee chair through April 8, 2009,
Photios T. Paulson and Martin Zeiger who became committee chairman following Mr.
Giacalone's resignation as a director. Subsequent to the close of the fiscal
year, Derek Enlander was appointed to the Audit Committee on June 16, 2009. The
members of the Audit Committee have substantial experience in assessing the
performance of companies, gained as members of the Company's Board of Directors
and Audit Committee, as well as by serving in various capacities in other
companies or governmental agencies. As a result, they each have an understanding
of financial statements. However, Mr. Giacalone has kept current on generally
accepted accounting principles and was considered to be a financial expert as
that term is defined in applicable regulations. Currently, the Audit Committee
does not have a member whom the Board considers a financial expert. The Board is
seeking to add to its membership a director who is a financial expert. In view
of the uncertainty of current economic conditions and caution shown by
prospective candidates for Board membership who are financial experts, the Board
is uncertain as to when it will find a candidate for membership who is a
financial expert.
The Audit Committee regularly meets with our independent registered public
accounting firm outside the presence of management.
The Audit Committee operates under a charter approved by the Board of
Directors. The Audit Committee charter is available on our website.
Compensation Committee
Our Compensation Committee annually establishes, subject to the approval of
the Board of Directors and any applicable employment agreements, the salaries
which will be paid to our executive officers during the coming year, and
administers our stock-based benefit plans. There were no meetings of this
committee held in fiscal 2000. During fiscal 2009, the Compensation Committee
consisted of Martin Zeiger, who serves as the committee chair, Derek Enlander
and Photios T. Paulson. None of these persons were our officers or employees
during fiscal 2009 or, except as otherwise disclosed, had any relationship
requiring disclosure in this Proxy Statement. Each member of the Compensation
Committee is a director who is not employed by us or any of our affiliates, and
are independent directors under NASDAQ listing standards.
The Compensation Committee operates under a charter approved by the Board
of Directors. The Compensation Committee charter is available on our website.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of our executive officers is generally determined by the
Compensation Committee of our Board of Directors, subject to applicable
employment agreements. Each member of the Compensation Committee is a director
who is not our employee or an employee of any of our affiliates. The following
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report with respect to certain compensation paid or awarded to our executive
officers during fiscal 2009 is furnished by the directors who comprised the
Compensation Committee during fiscal 2009.
Executive Compensation Objectives
Our compensation programs are intended to enable us to attract, motivate,
reward and retain the management talent required to achieve corporate objectives
and thereby increase shareholder value. It is our policy to provide incentives
to its senior management to achieve both short-term and long-term objectives and
to reward exceptional performance and contributions to the development of our
business. To attain these objectives, our executive compensation program
includes a competitive base salary, cash incentive bonuses and stock-based
compensation.
Stock options are granted to employees, including our executive officers,
by the Compensation Committee under our stock option plans. The Committee
believes that stock options provide an incentive that focuses the executive's
attention on managing us from the perspective of an owner with an equity stake
in the business. Options are awarded with an exercise price equal to the market
value of common stock on the date of grant, have a maximum term of ten years and
generally become exercisable, in whole or in part, starting one year from the
date of grant. Among our executive officers, the number of shares subject to
options granted to each individual generally depends upon the level of that
officer's responsibility. The largest grants are awarded to the most senior
officers who, in the view of the Compensation Committee, have the greatest
potential impact on our profitability and growth. Previous grants of stock
options are reviewed but are not considered the most important factor in
determining the size of any executive's stock option award in a particular year.
From time to time, the Compensation Committee intends to utilize the
services of independent consultants to perform analyses and to make
recommendations to the Committee relative to executive compensation matters. No
compensation consultant has so far been retained.
Relationship of Compensation to Performance and Compensation of Chief Executive
Officer and Chief Financial Officer
The Compensation Committee annually establishes, subject to the approval of
the Board of Directors and any applicable employment agreements, the salaries
that will be paid to our executive officers during the coming year. In setting
salaries, the Compensation Committee takes into account several factors,
including competitive compensation data, the extent to which an individual may
participate in the stock plans maintained by us, and qualitative factors bearing
on an individual's experience, responsibilities, management and leadership
abilities, and job performance.
Our Compensation Committee:
Martin Zeiger, Chairman
Derek Enlander
Photios T. Paulson
12
Corporate Governance Committee
The Board of Directors has established a Corporate Governance Committee.
There were no meetings of this committee held in fiscal 2009. During fiscal
2009, the Corporate Governance Committee consisted of John C.K. Hui, who serves
as committee chair, Simon Syrbnik and Martin Zeiger. The Corporate Governance
Committee monitors developments in corporate governance principles and other
corporate governance matters and makes recommendations to the Board of Directors
regarding the adoption of additional corporate governance principles.
The Corporate Governance Committee operates under a charter approved by the
Board of Directors. The Corporate Governance Committee Charter is available on
our website.
Director Nominations and Qualifications
Our Board of Directors has determined that given there have historically
been very few vacancies on the Board, director nominees could be selected, or
recommended for our Board's selection, by a majority of independent directors
voting alone. As such, the Board has no nominating committee. The Board does not
currently have a charter with regard to the nomination process. The nominations
of the directors standing for election at the 2009 annual meeting were
recommended for our Board's determination by our independent directors and
unanimously approved by our Board of Directors.
Historically, we have not received recommendations from the stockholders
and the costs of establishing and maintaining procedures for the consideration
of stockholder nominations would be unduly burdensome. Consequently, at this
time, we do not have a formal policy with regard to the consideration of any
director nominees recommended by our stockholders. However, any recommendations
received from stockholders will be evaluated in the same manner that potential
numinees recommended by Board members, management or other parties are
evaluated. Any stockholder nominations proposed for consideration should include
the nominee's name and qualifications for board membership and should be
addressed to Jun Ma, Chief Executive Officer, Vasomedical, Inc., 180 Linden
Avenue, Westbury, New York 11590. We do not intend to treat stockholder
recommendations in any manner different from other recommendations.
Qualifications for consideration as a director nominee may vary according
to the particular areas of expertise being sought as complement to the existing
board composition. However, in making its nominations, our independent directors
and Board of Directors as a whole considers, among other things, an individual's
business experience, industry experience, financial background, breadth of
knowledge about issues affecting our Company, time available for meetings and
consultation regarding Company matters and other particular skills and
experience possessed by the individual.
We do not currently employ an executive search firm, or pay a fee to any
other third party, to locate qualified candidates for director positions.
Stockholder Communications with the Board
We have not developed to date a formal process by which stockholders may
communicate directly with directors. However, in recent years an informal
process has developed in which communications sent to the Board of Directors or
in care of an officer or our other representative is forwarded to the Chief
Executive Officer, who is also a director. We believe this process has
13
adequately served the needs of the Board of Directors and our stockholders. In
light of SEC disclosure rules on this matter, the Board of Directors may
consider the development and adoption of more formal procedures. Until such
procedures are adopted and disclosed to our stockholders, stockholders may
direct communications intended for the Board of Directors to the Secretary of
the Company, at 180 Linden Avenue, Westbury, New York 11590. The envelope
containing such communication must contain a clear notation indicating that the
enclosed letter is a "Stockholder-Board Communication" or "Stockholder-Director
Communication" or similar statement that clearly and unmistakably indicates the
communication is intended for the Board of Directors. All such communications
must clearly indicate the author as a stockholder and state whether the intended
recipients are all members of the Board of Directors or just certain specified
directors. The Secretary will make copies of all such communications and
circulate them to the appropriate director or directors.
DIRECTOR COMPENSATION
Directors who are also employees of the Company are not separately
compensated for their services as directors.
Director's Compensation
Non-employee Directors received a fee of $1,500 for each Board of Directors
and Committee meetings attended and $2,500 for each Audit Committee meeting
attended, payable at each director's option in cash or common stock. Directors
also receive annually $15,000 of common stock valued at the fair market value of
the common stock on the date of grant for serving as a board member during the
fiscal year. New non-employee directors also received one of the following
during fiscal 2009:
o A grant of a non-qualified stock option to purchase 150,000 shares
which vested immediately.
or
o A grant of 150,000 shares of common stock.
The following table provides the compensation earned by our non-employee
directors for fiscal 2009 [preliminary]:
------------------------------------------------------------------------------------------------------------------------
Director Compensation
------------------------------------------------------------------------------------------------------------------------
Nonqualified
Non-equity Deferred
Fees Earned Stock Option Incentive Plan Compensation All Other
or Paid in Awards Awards Compensation Earnings Compensation Total
Name Cash ($) ($) (1) ($) ($) ($) ($) ($)
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Abraham E. Cohen $ 6,000 $16,500 -- -- -- -- $22,500
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Derek Enlander $ 7,500 $15,000 $14,475 -- -- -- $36,975
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Joseph Giacalone $13,500 $24,000 -- -- -- -- $37,500
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Jun Ma $ 4,500 $15,000 $14,475 -- -- -- $33,975
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Behnam Movaseghi $ 6,000 $15,000 $14,475 -- -- -- $35,475
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Photios T. Paulson $14,500 $15,000 -- -- -- -- $29,500
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Simon Srybnik $ 6,000 $15,000 $14,475 -- -- -- $35,475
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
Martin Zeiger $16,000 $15,000 -- -- -- -- $31,000
---------------------- ------------- --------- ------------- ---------------- ---------------- ---------------- --------
14
(1) Stock awards for fiscal 2009 Board of Directors' compensation were
earned and approved, but not issued in fiscal 2009.
Other
Board members are reimbursed for reasonable expenses in attending meetings
of the Board of Directors and for expenses incurred in connection with their
complying with our corporate governance policies. The Company also provides
directors' and officers' liability insurance and indemnity agreements for our
directors. No other compensation is provided to our directors.
Certain Relationships and Related Transactions
On June 21, 2007 we entered into a Securities Purchase Agreement with
Kerns. Concurrently with our entry into the Securities Purchase Agreement, we
also entered into a Distribution Agreement and a Supplier Agreement with Living
Data, an affiliate of Kerns.
We sold to Kerns, pursuant to the Securities Purchase Agreement, 21,428,572
shares of our common stock at $.07 per share for an aggregate of $1,500,000, as
well a five-year warrant to purchase 4,285,714 shares of our common stock at an
initial exercise price of $.08 per share (the "Warrant"). The agreement further
provided for the appointment to our Board of Directors of two representatives of
Kerns. In furtherance thereof, Jun Ma and Simon Srybnik, Chairman of both Kerns
and Living Data, have been appointed members of our Board of Directors. Mr. Ma,
since October 16, 2008, has served as our President and Chief Executive Officer.
Pursuant to the Distribution Agreement, we have become the exclusive
distributor in the United States of the AngioNew ECP systems manufactured by
Living Data. As additional consideration for such agreement, we agreed to issue
an additional 6,990,840 shares of our common stock to Living Data. Pursuant to
the Supplier Agreement, Living Data now is the exclusive supplier to us of the
ECP therapy systems that we market under the registered trademark EECP(R). The
Distribution Agreement and the Supplier Agreement each have an initial term
extending through May 31, 2012.
Pursuant to a Registration Rights Agreement, we granted to Kerns and Living
Data, subject to certain restrictions, "piggyback registration rights" covering
the shares sold to Kerns as well as the shares issuable upon exercise of the
Warrant and the shares issued to Living Data.
On July 10, 2007, the Board of Directors appointed Behnam Movaseghi,
Treasurer and Chief Financial Officer of Kerns Manufacturing Corporation, to our
Board of Directors.
As affiliates of Living Data and Kerns, Mr. Ma, Mr. Movaseghi and Mr.
Srybnik have each been directly involved in the transactions between Living Data
or Kerns, on the one hand, and the Company, on the other hand, with respect to
the Securities Purchase Agreement, the Distribution Agreement and the Supplier
Agreement, as well as providing consulting services to the Company with no
compensation.
During fiscal 2008, the Company purchased ECP therapy systems under the
Supplier Agreement for $120,000 from Living Data, which was paid in full by the
Company as of June 2008. In addition, Living Data purchased $5,000 worth of ECP
therapy system components from the Company, which was paid in full by Living
Data as of June 2008.
15
During fiscal 2009, Living Data assigned to the Company all of its rights
and interests under its Distributorship Agreement with a corporation organized
and existing under the laws of the People's Republic of China that manufactures
Ambulatory Blood Pressure Monitors, Ambulatory ECG Recorders and Holter & ABPM
Combiner Recorders, for $20,000 payable to Living Data based on certain terms
and conditions. The Company has also agreed to pay to Living Data 5% of the
selling price or 5% of the cost of all goods sold (whichever is higher), and 5%
of the cost of all goods transferred but not sold under the Assignment Agreement
to Living Data based on sales of this equipment. The Company intends to sell
these systems in the United States and other countries subject to obtaining
regulatory clearance.
During fiscal 2009, Living Data assigned to the Company all of its rights
and interests under its Distributorship Agreement with a corporation organized
and existing under the laws of the People's Republic of China that manufactures
Ultrasound Scanners, for $20,000 payable to Living Data based on certain terms
and conditions. The Company has also agreed to pay to Living Data 5% of the
selling price or 5% of the cost of all goods sold (whichever is higher) and 5%
of the cost of all goods transferred but not sold under the Assignment Agreement
to Living Data based on sales of this equipment. The Company intends to sell
these systems in the United States and other countries subject to obtaining
regulatory clearance.
In July of 2008, the Company agreed to purchase ECP therapy systems under
its Distributorship Agreement with Living Data for $360,000 payable over 18
months.
Further, Kerns provides the Company, free of charge, part-time use of one
of its Information Technology (IT) employees as well one of their IT consultants
to provide the Company with IT and database support services. In addition, a
clinical applications support specialist and a service engineer from Living Data
may be used by the Company to provide customers with clinical training and
technical service.
Indemnification Agreements
We have entered into separate indemnification agreements with our officers
and directors. We have agreed to provide indemnification with regard to certain
legal proceedings so long as the indemnified officer or director has acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, our best interests and with respect to any criminal proceeding, had
no reasonable cause to believe his or her conduct was unlawful. We only provide
indemnification for expenses, judgments, fines and amounts paid in settlement
actually incurred by the relevant officer or director, or on his or her behalf,
arising out of proceedings brought against such officer or director by reason of
his or her corporate status.
Executive Compensation Tables
The following table sets forth the annual and long-term compensation of our
Chief Executive Officer and each of our most highly compensated officers other
than the Chief Executive Officer who were serving as executive officers at the
end of the last completed fiscal year, and certain former executive officers as
required under SEC rules (collectively, the "Named Executive Officers") for
services rendered for the year ended May 31, 2009 and the year ended May 31,
2007 ("fiscal 2008").
16
Summary Compensation Table [Preliminary]
-------------------------- ----- ---------- --------- ------------ ---------- ------------- ------------- ------------ ----------
Nonqualified
Non-Equity Deferred
Name and Principal Option Incentive Compensation All Other
Position Stock Awards Plan Earnings Compensation Total
Year Salary ($) Bonus ($) Awards ($) ($) (2) Compensation($) ($) ($) (1) ($)
-------------------------- ----- ---------- --------- ------------ ---------- ------------- ------------- ------------ ----------
Jun Ma 2009 $97,817 $10,000 $583 $108,400
Chief Executive Officer
(3)
-------------------------- ----- ---------- --------- ------------ ---------- ------------- ------------- ------------ ----------
John C. K. Hui 2009 $178,525 -- -- -- -- -- $19,104 $197,629
Senior Vice President 2008 187,485 -- -- -- -- -- $21,088 $208,573
and Chief Technology
Officer (Chief Executive
Officer) (4)
-------------------------- ----- ---------- --------- ------------ ---------- ------------- ------------- ------------ ----------
Tarachand Singh 2009 $26,630 -- $4,000 -- -- -- $2,858 $33,488
Chief Financial Officer
(5)
-------------------------- ----- ---------- --------- ------------ ---------- ------------- ------------- ------------ ----------
Tricia Efstathiou (6) 2009 $ 78,953 -- -- -- -- -- $ 8,404 $87,357
(Chief Financial 2008 132,600 -- -- -- -- -- $19,854 $152,454
-------------------------- ----- ---------- --------- ------------ ---------- ------------- ------------- ------------ ----------
(1) Represents premiums paid on medical, dental, life and disability group
benefit plans, as well as amounts matched in the Company's 401(k) Plan.
(2) Option awards are valued at the fair market value times the number of
shares (which represent the fair market value of the underlying common
stock at the time of the respective grants).
(3) Mr. Ma has served as President and Chief Executive Officer since October
16, 2008.
(4) Dr. Hui was President and Chief Executive Officer from April 30, 2007 to
October 15, 2008.
(5) Mr. Singh has served as Chief Financial Officer since March 11, 2009.
(6) Ms. Efstathiou was Chief Financial Officer from September 20, 2006 to
November 5, 2008.
The following table describes each component of the "All Other
Compensation" column in the "Summary Compensation Table" above.
Other
Personal
Including
Matching Medical Personal
Fiscal Contribution Supplemental Insurance Use of
Year to 401K Plan Life Insurance Benefits Auto Total
---------------------------------------------------------------------------------------------
John C. K. Hui 2009 $1,038 $1,156 $16,855 - $19,104
2008 $1,084 $546 $20,542 - $22,172
---------------------------------------------------------------------------------------------
Jun Ma 2009 - $583 - - $583
---------------------------------------------------------------------------------------------
Tarachand Singh 2009 $475 $216 $2,167 - $2,858
---------------------------------------------------------------------------------------------
Tricia Efstathiou 2009 $474 $514 $7,417 - $8,405
2008 $828 $546 $18,480 - $19,854
---------------------------------------------------------------------------------------------
Grants of Plan-Based Awards in Fiscal 2009
No stock options were granted to the Named Executive Officers during fiscal
2009.
17
Outstanding Equity Awards at Last Fiscal Year End
The following table provides information concerning outstanding options,
unvested stock and equity incentive plan awards for our Named Executive Officers
during fiscal 2009:
------------- --------------------------------------------------------------------- ------------------------------------------------
Option Awards Stock Awards
------------- --------------------------------------------------------------------- ------------------------------------------------
Equity Equity
Incentive Incentive
Plan Plan
Awards: Awards:
Number of Market or
Market Unearned Payout
Equity Value of Shares, Value of
Incentive Shares Units or Unearned
Number of Number of Plan Awards: Number of or Units Other Shares,
Securities Securities Number of Shares or of Stock Rights Units or
Underlying Underlying Underlying Units of That That Other
Unexercised Unexercised Unexercised Option Option Stock That Have Have Rights
Options - Options - Unearned Exercise Expiration Have Not Not Not That Have
Name Exercisable Unexercisable Options Price Date Vested Vested Vested Not Vested
-------------- -------------- --------------- -------------- ---------- ------------ ------------ ---------- ----------- -----------
Jun Ma -- -- -- -- -- -- -- -- --
-------------- -------------- --------------- -------------- ---------- ------------ ------------ ---------- ----------- -----------
John C.K. 375,000 -- -- $1.91 03/11/2008 -- -- -- --
-------------- -------------- --------------- -------------- ---------- ------------ ------------ ---------- ----------- -----------
Tarachand Singh -- -- -- -- -- -- -- -- --
-------------- -------------- --------------- -------------- ---------- ------------ ------------ ---------- ----------- -----------
Option Exercises in Fiscal 2009
No stock options were exercised during fiscal 2009 by the Named Executive
Officers.
Employment Agreements
As of May 31, 2009 the Company does not have any employment agreements.
18
Equity Compensation Plan Information
The following table sets forth the indicated information as of May 31, 2009
with respect to our equity compensation plans:
(c)
Number of securities
(a) remaining available
Number of securities (b) for future issuance
to be issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a))
------------- ------------------- ------------------- ------------------------
Equity compensation 1,196,769 $.76 1,286,329
plans approved by
security holders
Equity compensation 8,336,722 $.29 1,068,532
plans not approved
by security holders
Total 9,533,491 2,354,931
2004 Stock Option and Stock Issuance Plan
In October 2004, our stockholders approved the 2004 Stock Option and Stock
Issuance Plan (the "2004 Stock Plan") for our officers, directors, employees,
and consultants [and other independent advisors], for which we reserved an
aggregate of 2,500,000 shares of common stock. The 2004 Stock Plan is
administered by a committee of our Board of Directors, which has full authority
to determine the identity of the recipients of the options and the number of
shares subject to each option. The 2004 Stock Plan is divided into two separate
equity programs: an option grant program and a stock issuance program. Options
granted under the 2004 Stock Plan shall be non-qualified or incentive stock
options and the exercise price is the fair market value of the common stock on
the date of grant except that for incentive stock options it shall be 110% of
the fair market value if the participant owns 10% or more of our common stock.
Under the stock issuance program, the purchase price per share shall be fixed by
the Board of Directors or committee but cannot be less than the fair market
value of the common stock on the issuance date. Payment for the shares may be
made in cash or check payable to us, or for past services rendered to us and all
shares of common stock issued thereunder shall vest upon issuance unless
otherwise directed by the board or committee. The number of shares issuable is
also subject to adjustments upon the occurrence of certain events, including
stock dividends, stock splits, mergers, consolidations, reorganizations,
recapitalizations, or other capital adjustments. At May 31, 2009, [2,918,045]
shares had been granted (including options previously granted but subsequently
cancelled), of which options to purchase 1,681,072 shares are outstanding under
the 2004 Stock Plan.
401(k) Plan
In April 1997, we adopted the Vasomedical, Inc. 401(k) Plan to provide
retirement benefits for our employees. As allowed under Section 401(k) of the
Internal Revenue Code, the plan provides tax-deferred salary deductions for
eligible employees. Employees are eligible to participate in the next quarter
19
enrollment period after employment. Participants may make voluntary
contributions to the plan up to 100% of their compensation subject to 401(k)
maximum limitations. In fiscal years 2009 and 2008, the Company made
discretionary contributions of approximately $[ ] and $9,000, respectively, to
match a percentage of employee contributions.
Deferred Compensation Program
In April 2006, the Company approved a program to defer compensation of
certain senior executives of the company and provided incentives to them for
these deferrals. The Company agreed to repay monies deferred from zero to six
months at 1.5 times the amount deferred; for deferrals of six months to twelve
months, the repaid amount shall be two times the amount deferred; and for
deferrals in excess of twelve months, the amount shall be 2.5 times the amount
deferred. As of May 31, 2009 and 2008 there was no deferred compensation or
incentives due to any senior executive under this program.
Board Member Attendance at Annual Meetings
Our Board of Directors does not have a formal policy regarding attendance
of directors at our annual stockholder meetings.
The Board of Directors recommends a vote FOR the election of each of the
director nominees named herein.
20
PROPOSAL TWO - PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
General
The Board of Directors has proposed and recommended to our stockholders a
proposal which authorizes the Board, following stockholder approval, to file an
amendment to our Certificate of Incorporation to increase the total number of
shares of common stock which we have authority to issue from 110,000,000 shares
to 250,000,000 shares, par value $.001 per share. Our Certificate of
Incorporation authorizes the issuance of a total of 111,000,000 shares of
capital stock, consisting of 110,000,000 shares of common stock, par value of
$.001 per share, and 1,000,000 shares of preferred stock, par value of $.01 per
share. As of the date of this Proxy Statement, 99,843,004 shares of common stock
were outstanding and no shares of Preferred Stock were outstanding. In addition,
as of the date of this Proxy Statement, we had 7,122,670 shares of common stock
subject to outstanding stock options and 1,662,460 shares of common stock
reserved for issuance pursuant to future grants under our equity compensation
plans. Additionally, pursuant to the Securities Purchase Agreement dated June
21, 2007 with Kerns Manufacturing Corp. ("Kerns"), we issued warrants to
purchase 4,285,714 shares of common stock at an exercise price of $.08 per
share.
The following table sets forth as of August 4, 2009, the approximate number
of shares of common stock authorized, outstanding, reserved and available for
issuance. The table further sets forth the approximate number of shares which
will be available for issuance if this amendment is approved:
----------------------- ---------------- ------------------- ------------------ ------------------- ---------------
Available for
Issuance upon
Available for Approval of
Authorized Outstanding Reserved (1) Issuance (1) Amendment
----------------------- ---------------- ------------------- ------------------ ------------------- ---------------
Common Stock 110,000,000 99,843,004 11,388,22 (1,231,233) 138,768,767
----------------------- ---------------- ------------------- ------------------ ------------------- ---------------
(1) We have contractual obligations, subject to stockholder approval, to
issue more shares than are available for issuance.
The proposal is now being placed before stockholders. The form of amendment
is attached hereto as Appendix A.
Purpose
The Board of Directors believes that it is in our best interest to increase
the total number of authorized shares of common stock so that we may have
flexibility in issuance of shares of common stock. The Board of Directors also
believes that it is in our best interest to increase the total number of
authorized shares of common stock so that we may issue all additional shares of
common stock issued under the terms of our existing option agreements and
warrants held by Kerns.
The proposed amendment would increase the number of shares of common stock
that we are authorized to issue from 110,000,000 to 250,000,000 shares.
21
If this proposal is approved, in addition to the shares issuable under the
terms of our existing option agreements and warrants held by Kerns, we may use
such additional shares of common stock for, among other things:
o Raising working capital;
o Providing equity incentives to employees, officers or directors;
o Establishing strategic relationships with other companies;
o Expanding our business through acquisitions and other investment
opportunities;
o Paying existing and future obligations and commitments; and
o For general corporate purposes.
Currently, we have no definitive plans or arrangements to issue any such
shares.
The holders of our common stock are not entitled to preemptive rights with
respect to the issuance of additional common stock or securities convertible
into or exercisable for common stock. Stockholders should recognize that the
issuance of additional shares of common stock might dilute the ownership and
voting rights of stockholders and, depending upon the price at which the shares
are issued, could be dilutive to existing stockholders and have a negative
effect on the trading price of our common stock.
Effect on Rights of Shareholders
The additional shares of authorized common stock, when issued, would have
the same rights and privileges as the shares of common stock currently issued
and outstanding. The Board of Directors has no immediate plans, understandings,
agreements or commitments to issue additional shares of Common Stock for any
purposes other than discussed above. The Board of Directors does not presently
intend to solicit, by a vote of stockholders, further authorization for the
issuance of the additional shares of authorized common stock.
Board Position and Required Vote
The proposal will be adopted only if it receives the affirmative vote of a
majority of the outstanding shares of common stock. Kerns and Living Data
Technology Corp., which own 21,678,572 shares and 6,990,840 shares of our common
stock, respectively, representing an aggregate of 28,669,412 shares or 28.7% of
our issued and outstanding common stock, have advised us that they intend to
vote their shares in favor of this proposal. The Board of Directors believes
that the proposed amendment is in our best interests and recommends a vote FOR
its adoption. Proxies received will be voted in favor of the proposed amendment
unless otherwise indicated.
22
PROPOSAL THREE - PROPOSAL FOR APPOINTMENT OF INDEPENDENT
REGISTERED ACCOUNTING FIRM
General
The Board of Directors, upon the recommendation of the Audit Committee,
recommends that the stockholders approve the appointment of Rothstein Kass &
Company, P.C. as our Company's independent certified public accounting firm to
audit our financial statements for the fiscal year ending May 31, 2010.
Board Position and Required Vote
The proposal will be adopted only if it receives the affirmative vote of a
majority of the issued and outstanding shares of common stock in person or by
proxy and entitled to vote at the Annual Meeting on this proposal. Kerns and
Living Data Technology Corp., which own 21,678,572 shares and 6,990,840 shares
of our common stock, respectively, representing an aggregate of 28,669,412
shares or 28.7% of our issued and outstanding common stock, have advised us that
they intend to vote their shares in favor of this proposal. The Board of
Directors recommends a vote FOR the ratification of the appointment of Rothstein
Kass & Company, P.C. as our independent registered public accounting firm.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements with our management. The Audit Committee also discussed with
Rothstein Kass & Company, P.C., our independent auditors for the fiscal year
ended May 31, 2009, the matters required to be discussed by Statement on
Auditing Standards No. 61, "Communication with Audit Committees," as may be
modified or supplemented. The Audit Committee has received the written
disclosures and the letter from Rothstein Kass & Company, P.C. required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," as may be modified or supplemented, and has discussed with
Rothstein Kass & Company, P.C. its independence. Based upon the review and
discussions referred to above, the Audit Committee recommended to our Board of
Directors that the audited financial statements be included in our Annual Report
on Form 10-K for the fiscal year ended May 31, 2009 for filing with the SEC.
The Audit Committee has also reviewed and discussed the fees paid to
Rothstein Kass & Company, P.C. during the last fiscal year for audit and
non-audit services, which are set forth under "Audit Fees" and has considered
whether the provision of the non-audit services is compatible with the firm's
independence and has concluded that it is.
This Audit Committee report shall not be deemed incorporated by reference
in any document previously or subsequently filed with the SEC that incorporates
by reference all or any portion of this proxy statement, except to the extent
that we specifically request that this report be specifically incorporated by
reference.
The Audit Committee for fiscal 2009:
Martin Zeiger, Chairman
Photios T. Paulson
23
Audit Fees
Rothstein Kass & Company, P.C. is our independent registered public
accounting firm and performed the audit of our consolidated financial statements
for the fiscal year ended May 31, 2009. Miller Ellin & Company, LLP is our
former independent registered public accounting firm and performed the audit of
our consolidated financial statements for fiscal year 2008. The following table
sets forth approximate fees for the audits of the fiscal year ended May 31, 2009
performed by Rothstein Kass & Company, P.C. and for fiscal year ended May 31,
2008 performed by Miller Ellin & Company, LLP:
2009 2008
---- ----
Audit Fees (1) $169,382 $148,625
Audit related fees (2) $ 12,800 $ 33,000
---------------
(1) Audit Fees includes fees for professional services provided in connection
with the audits of our financial statements, the review of our quarterly
financial statements included in our reports on Form 10Q, Sarbanes-Oxley
404 related services, consents, and audit services provided in connection
with other statutory or regulatory filings. All such services were
pre-approved by the Audit committee.
(2) Audit related fees includes the audit of our 401k plan.
The Audit Committee has adopted a policy that requires advance approval of
all audit, audit-related, tax services, and other services performed by the
Company's independent auditor. Accordingly, the Audit Committee must approve the
permitted service before the independent auditor is engaged to perform it. In
accordance with such policies, the Audit Committee approved 100% of the services
described above under "Audit Fees," and "Audit-Related Fees".
Rothstein Kass & Company, P.C. did not render any other non-audit related
services during fiscal year 2009. We expect that a representative of Rothstein
Kass & Company, P.C. will attend the annual meeting and the representative will
have an opportunity to make a statement if he or she so chooses. The
representative will also be available to respond to questions from stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and persons who beneficially own more than 10% of our common
stock (collectively, "Reporting Persons") to file initial reports of ownership
and reports of changes in ownership of our common stock with the Securities and
Exchange Commission. Reporting Persons are required by SEC regulations to
furnish us with copies of all Section 16(a) reports they file. To our knowledge,
based solely on our review of the copies of such reports received or written
representations from certain Reporting Persons that no other reports were
required, we believe that during fiscal 2009, all Reporting Persons timely
complied with all applicable filing requirements.
24
CORPORATE GOVERNANCE - CODE OF ETHICS
We have adopted a Corporate Code of Business Ethics (the "Code") that
applies to all employees, including our principal executive officer, principal
financial officer, and directors of the Company. The Code is broad in scope and
is intended to foster honest and ethical conduct, including accurate financial
reporting, compliance with laws and the like. If any substantive amendments are
made to the Code or if there is any grant of waiver, including any implicit
waiver, from a provision of the Code to our Chief Executive Officer or Chief
Financial Officer, we will disclose the nature of such amendment or waiver in a
report on Form 8-K. We have made the Code available on our website at
www.vasomedical.com under the heading "Governance-Corporate Governance
Documents" found under "Vasomedical - Investor Relations."
FINANCIAL STATEMENTS AND INCORPORATION BY REFERENCE
A copy of our Annual Report to Stockholders on Form 10K for the year ended
May 31, 2009 has been provided to all stockholders as of the Record Date.
Stockholders are referred to the report for financial and other information
about us, but such report, is not incorporated in this proxy statement and is
not a part of the proxy soliciting material.
25
COMMON STOCK PERFORMANCE
The following graph sets forth the cumulative total stockholder return to
our stockholders during the five year period ended May 31, 2009 as well as an
overall stock market index (NASDAQ Stock Market-US) and the Company's peer group
index (S&P Health Care Equipment):
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Vasomedical, Inc., The NASDAQ Composite Index
And The S&P Health Care Equipment Index
----------------------------------------------------------------------------------------------------------------
5/04 5/05 5/06 5/07 5/08 5/09
----------------------------------------------------------------------------------------------------------------
Vasomedical, Inc. 100.00 51.72 9.05 6.03 6.29 6.47
NASDAQ Composite 100.00 104.91 113.05 136.62 132.68 92.64
S&P Health Care Equipment 100.00 101.99 98.45 115.75 116.47 85.87
*$100 invested on 5/31/04 in stock or index, including reinvestment of
dividends. Fiscal year ending May 31.
Copyright(c) 2009 S&P, a division of The McGraw-Hill Companies Inc. All
rights reserved.
26
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements and annual
reports with respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those stockholders. This
process, which is commonly referred to as "householding," potentially means
extra convenience for stockholders and cost savings for companies.
This year, we expect that a number of brokers with account holders who are
our stockholders will be "householding" our proxy materials. A single proxy
statement will be delivered to multiple stockholders sharing an address unless
contrary instructions have been received from the affected stockholders. Once
you have received notice from your broker that they will be "householding"
communications to your address, "householding" will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in "householding" and would prefer to receive a
separate proxy statement and annual report, please notify your broker.
Stockholders who currently receive multiple copies of the proxy statement at
their address and would like to request "householding" of their communications
should contact their broker. In addition, we will promptlydeliver, upon written
or oral request to our address or telephone number below, a separate copy of the
proxy materials to a stockholder at a shared address to which a single copy of
the document was delivered. Direct your written request to us at Vasomedical,
Inc., 180 Linden Avenue, Westbury, New York 11590; Attention: Corporate
Secretary, or contact us at (516) 997-4600.
MISCELLANEOUS INFORMATION
As of the date of this Proxy Statement, the Board of Directors does not
know of any business other than that specified above to come before the meeting,
but, if any other business does lawfully come before the meeting, it is the
intention of the persons named in the enclosed Proxy to vote in regard thereto
in accordance with their judgment.
We will pay the cost of soliciting proxies in the accompanying form. In
addition to solicitation by use of the mails, certain of our officers and
regular employees may solicit proxies by telephone, telegraph or personal
interview. We may also request brokerage houses and other custodians and
nominees and fiduciaries, to forward soliciting material to the beneficial
owners of stock held of record by such persons, and may make reimbursement for
payments made for their expense in forwarding soliciting material to such
beneficial owners.
Proposals of stockholders intending to be presented at the next Annual
Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at our
principal office not later than _______, 2010 to be included in the proxy
statement for that meeting.
By Order of the Board of Directors,
JUN MA
President and Chief Executive Officer
Dated: ____________, 2009
Westbury, New York
27
Appendix A
PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing Article IV of the Company's
Certificate of Incorporation, so that, as amended said Article
shall be and read as follows:
ARTICLE IV. CAPITAL STOCK. The authorized capital stock
of the Corporation shall consist of 250,000,000 shares of
Common Stock, $.001 par value per share, (hereinafter
referred to as either the "Common Shares" or "Common Stock")
and 1,000,000 shares of Preferred Stock, $.01 par value per
share (hereinafter referred to as either "Preferred Shares"
or "Preferred Stock").
A-1
PROXY
VASOMEDICAL, INC.
SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING
September 30, 2009
The undersigned hereby appoints __________________ and ________________________,
or either of them, attorneys and Proxies with full power of substitution in each
of them, in the name and stead of the undersigned to vote as Proxy all the stock
of the undersigned in VASOMEDICAL, INC., a Delaware corporation, at the Annual
Meeting of Stockholders scheduled to be held on September 30, 2009 and any
adjournments thereof.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY PROXIES, OR EITHER OF THEM, AS
SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR
THE PROPOSALS SET FORTH.
(Continued and to be signed on reverse side)
SEE REVERSE SIDE
1. Election of Directors
The nominees for the Board of Directors are:
01 Abraham E. Cohen
02 Derek Enlander
03 John C.K. Hui
04 Jun Ma
05 Behnam Movaseghi
06 Photios T. Paulson
07 Simon Srybnik
08 Martin Zeiger
[ ] FOR all nominees listed above [ ] WITHHOLD authority to vote [ ] EXCEPTIONS
--------------------------------------------------------------------------------
(Instruction: To withhold authority to vote for any individual nominee, print
the nominee's name on the line provided above).
2. To amend our Certificate of Incorporation to increase the number of shares
of our common stock authorized for issuance from 110,000,000 to 250,000,000
The Board of Directors recommends a vote FOR the following proposal:
3. To ratify the selection of Rothstein Kass & Company, P.C.
Ratification of the appointment of Rothstein, Kass & Company, P.C. as the
Company's independent registered public accountants for the year ending May
31, 2010.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
Yes, I plan to attend the 2009 Annual Stockholders Meeting [ ]
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
Mark Here for Address Change or Comments [ ]
SEE REVERSE
Signature______________________ Signature________________________ Date _________
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by an authorized person.
--------------------------------------------------------------------------------
^FOLD AND DETACH HERE^
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK
Internet and telephone voting is available through 11:59 PM Eastern Time
The day prior to the date of the annual meeting.
INTERNET
[http://www.proxyvoting.com/vaso]
Use the Internet to vote your proxy. Have
Your proxy card in hand when you access
The web site.
VASOMEDICAL, INC. OR
TELEPHONE
[1-866-540-5760]
Use any touch-tone telephone to vote your
Proxy. Have your proxy card in hand when
You call.
If you vote your proxy by Internet or by
telephone, you do NOT need to mail back
your proxy card.
To vote by mail, mark sign and date your
proxy Card and return it in the enclosed
postage-paid Envelope.
Important notice regarding the Internet Your Internet or telephone vote
availability of proxy materials for the authorized the named proxies to
2009 Meeting of shareholders: vote your shares in the same manner
The Proxy Statement and the 2009 Annual as if you marked, signed and
Report to Stockholders are available at: returned your proxy card.
http://www.vasomedical.com/pdf/2009ar.pdf
VASOMEDICAL, INC.
2009 ANNUAL MEETING OF STOCKHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints ________________________________________ as
proxies, each with the power to appoint his substitute, and hereby authorized
them and each of them, to vote all shares of common stock of Vasomedical, Inc.
held of record by the undersigned at the 2009 Annual Meeting of Stockholders, to
be held at ___________________________________, New York, at 9:30 a.m. local
time on September 30, 2009, or any adjournment or postponement thereof.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, the proxy will
be voted "FOR" each of the proposals set forth on the reverse side.
(Continued and to be Completed on Reverse Side)
Address Change/Comments
(Mark the corresponding box on the reverse side)
--------------------------------------------------------------------------------
^FOLD AND DETACH HERE^
To commence printing on this proxy card please sign, date and fax this card to:
____________________________________
SIGNATURE:___________________________________________________DATE: ____________
(THIS BOXED AREA DOES NOT PRINT) Registered Quantity _____