SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
LASERSIGHT INCORPORATED
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies: ______________________________
2) Aggregate number of securities to which transaction
applies: ______________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_________________________________________________________________________
4) Proposed maximum aggregate value of transaction: ______________________
5) Total fee paid: _______________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------
3) Filing Party:
-----------------------------------------------------------
4) Date Filed:
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LaserSight Incorporated
3300 University Blvd., Suite 140
Winter Park, Florida 32792
Dear Fellow Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of
Stockholders of LaserSight Incorporated to be held at the Hyatt Regency Orlando
International Airport, Orlando, Florida, telephone (407) 825-1234, on Thursday,
July 12, 2001 at 10:00 a.m. local time. We are pleased to enclose the notice of
our 2001 Annual Stockholders' meeting, together with the attached Proxy
Statement, a proxy card and an envelope for returning the proxy card. Also
enclosed is LaserSight's 2000 Annual Report to Stockholders.
Please carefully review the Proxy Statement and then complete, date and
sign your Proxy and return it promptly. If you attend the meeting and decide to
vote in person, you may withdraw your Proxy at the meeting.
If you have any questions or need assistance in how to vote your
shares, please call William Kern, Vice President, Corporate Development, at
(407) 678-9900, ext. 163. Your time and attention are appreciated.
Sincerely,
/s/Michael R. Farris
-------------------------------------
Michael R. Farris
President and Chief Executive Officer
June 5, 2001
LASERSIGHT INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2001 Annual Meeting of Stockholders of LaserSight Incorporated, a
Delaware corporation, will be held on Thursday, July 12, 2001 at 10:00 a.m.
local time, at the Hyatt Regency Orlando International Airport, Orlando,
Florida, for:
1. The holders of LaserSight's common stock and Series C Preferred
Stock, or the Voting Holders, voting together, to elect six
directors, all of such persons to serve until the next annual meeting
of stockholders and until their respective successors are duly
elected and qualified. We refer to this Proposal No. 1 as the
Election of Directors Proposal in this Proxy Statement;
2. The Voting Holders to consider and vote on a proposal to approve an
amendment to LaserSight's 1996 Equity Incentive Plan, or Equity
Incentive Plan, to increase the aggregate number of shares available
for issuance under the Equity Incentive Plan. We refer to this
Proposal No. 2 as the Equity Incentive Plan Proposal in this Proxy
Statement;
3. The Voting Holders to consider and vote on a proposal to ratify the
appointment of KPMG LLP as auditors of LaserSight for the 2001 fiscal
year. We refer to this Proposal No. 3 as the Auditor Ratification
Proposal in this Proxy Statement; and
4. The Voting Holders to transact such other business that is properly
brought before the Annual Meeting.
These proposals are described in the attached Proxy Statement.
Only holders of LaserSight's common stock (together with the associated
preferred stock purchase rights) and LaserSight's Series C Convertible
Participating Preferred Stock, or Series C Preferred Stock, of record on the
books of LaserSight at the close of business on May 14, 2001, or the Record
Date, will be entitled to notice of and to vote at the Annual Meeting or any
adjournments or postponements thereof. A list of stockholders as of the Record
Date will be available at the Annual Meeting.
Your vote is important. All stockholders are invited to attend the Annual
Meeting in person. However, to assure your representation at the Annual Meeting,
please mark, date and sign your Proxy and return it promptly in the enclosed
envelope. Any stockholder attending the Annual Meeting may vote in person even
if the stockholder returned a Proxy.
By Order of the Board of Directors,
/s/Gregory L. Wilson
-------------------------------------
Gregory L. Wilson
Secretary
Winter Park, Florida
June 5, 2001
Please return the enclosed proxy, which is being solicited on behalf of
the Board of Directors of LaserSight, in the enclosed envelope, which requires
no postage if mailed in the United States.
LASERSIGHT INCORPORATED
3300 University Blvd., Suite 140
Winter Park, Florida 32792
PROXY STATEMENT
Proxies in the accompanying form are being solicited by the Board of
Directors of LaserSight for use at the Annual Meeting of Stockholders on
Thursday, July 12, 2001, or at any adjournment or postponement thereof. The
Annual Meeting will be held at the Hyatt Regency Orlando International Airport,
Orlando, Florida, at 10:00 a.m. local time. This Proxy Statement is first being
mailed to stockholders on or about June 5, 2001.
Proxies are being solicited from the holders of LaserSight's common
stock and Series C Preferred Stock with respect to each of the matters to be
presented at the Annual Meeting. Because LaserSight's common stock and Series C
Preferred Stock provide for different voting rights, separate forms of proxy are
being distributed to the holders of common stock and Series C Preferred Stock.
To the extent that any Voting Holder owns common stock and Series C Preferred
Stock, such stockholder will receive separate proxy cards, and must complete and
return each such proxy in order to ensure that the voting power represented by
the common stock and Series C Preferred Stock held by such person are voted by
proxies.
INFORMATION CONCERNING SOLICITATION OF PROXIES AND VOTING
Record Date. The Board of Directors has fixed the close of business on
May 14, 2001 as the record date for the determination of stockholders entitled
to notice of, and to vote at, the Annual Meeting. On the Record Date, LaserSight
had outstanding 23,563,111 shares of common stock and 2,000,000 shares of Series
C Preferred Stock. The common stock and the Series C Preferred Stock are
sometimes collectively referred to in this Proxy Statement as the "Voting
Shares." A list of stockholders of record entitled to vote at the Annual Meeting
will be available for inspection by any stockholder, for any purpose germane to
the meeting, during normal business hours, for a period of 10 days prior to the
Annual Meeting at the office of LaserSight located at 3300 University Blvd.,
Suite 140, Winter Park, Florida 32792. Such list will also be available at the
Annual Meeting.
Voting Rights. Each share of common stock outstanding as of the Record
Date is entitled to one vote upon each of the matters to be presented at the
Annual Meeting. Each share of Series C Preferred Stock outstanding as of the
Record Date is entitled to one vote for each share of common stock into which
such Preferred Stock is then convertible upon each of the matters to be
presented at the Annual Meeting. The Series C Preferred Stock is convertible
into common stock on a share-for-share basis.
Voting at the Annual Meeting. The presence of holders of a majority of
the outstanding Voting Shares, whether in person or by proxy, will constitute a
quorum at the Annual Meeting. LaserSight's Certificate of Incorporation does not
provide for cumulative voting. A plurality of the votes of the Voting Shares
present, either in person or by proxy, and entitled to vote on the election of
directors at the Annual Meeting is required to elect the six directors to be
elected by the Voting Holders. The affirmative vote of the holders of a majority
of the Voting Shares present, either in person or by proxy, and entitled to vote
at the Annual Meeting is required to approve the Equity Incentive Plan Proposal
and the Auditor Ratification Proposal.
Abstentions will be considered present for purposes of determining
whether a quorum exists. Shares represented at the Annual Meeting which are held
by a broker or nominee and as to which (1) instructions have not been received
from the beneficial owner or the person entitled to vote and (2) the broker or
nominee does not have discretionary voting power with respect to one or more
matters are considered not entitled to vote on such matters. We use the term
"broker non-votes" to refer collectively to these shares in this Proxy
Statement. Generally, shares represented by a proxy card containing broker
non-votes with respect to all matters voted upon will not count towards a
quorum, however, because brokers will have discretionary voting power with
respect to at least one matter to come before this meeting, shares represented
by a proxy card containing a broker non-vote will count toward the quorum.
Additionally, shares represented by a proxy card containing a broker non-vote
and also containing an indication of how to vote with respect to any item, will
count towards a quorum. In accordance with Delaware law and LaserSight's
Certificate of Incorporation and Bylaws (1) because the election of directors
requires a plurality of the votes present, abstentions, the withholding of
voting authority and broker non-votes will have no affect on the outcome of the
election of directors, and (2) for the adoption of all other proposals, which
require a majority of the Voting Shares present in person or by proxy and
entitled to vote, broker non-votes will not be considered present and will not
affect the outcome of the vote with respect to those matters, but abstentions
will have the effect of a vote against such proposals.
Proxies; Revocation. Whether or not you plan to attend the Annual
Meeting, please sign, date and mail your proxy card in the enclosed postage
prepaid envelope. The persons named in the proxy card, the proxy holders, will
vote your shares according to your instructions. In the absence of contrary
instructions, shares represented by any proxy card will be voted for the
election of the applicable nominees listed in Proposal No. 1 and for all of the
other proposals recommended by the board of directors in this Proxy Statement.
The proxy card gives authority to the proxy holders to vote your shares in their
discretion on any other matter presented at the Annual Meeting.
Any stockholder who executes and returns a proxy card may revoke it at
any time before it is exercised by (1) filing with the Secretary of LaserSight
written notice of such revocation or a duly executed proxy card bearing a later
date, or (2) by attending the Annual Meeting and voting in person. Attendance at
the Annual Meeting will not in and of itself constitute revocation of a proxy.
Solicitation. The cost of soliciting proxies will be borne by
LaserSight. In addition, LaserSight may reimburse brokerage firms and other
persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Proxies may also be
solicited by certain of LaserSight's directors, officers and employees, without
additional compensation, personally or by telephone, telegraph or facsimile.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The nominees for the Board of Directors are set forth below. The terms
of all incumbent directors expire at the Annual Meeting or at such later time as
their successors have been duly elected and qualified. Nominees elected at the
Annual Meeting will serve until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. Each of the
nominees are currently directors of LaserSight and are standing for reelection.
The nominees have agreed to serve if elected. However, if any nominee
becomes unable or unwilling to serve if elected, the shares represented by proxy
cards will, absent contrary instruction, be voted for the election of the
person, if any, recommended by the Board of Directors or, in the alternative,
for holding a vacancy to be filled by the Board of Directors. The Board of
Directors has no reason to believe that any nominee will be unable or unwilling
to serve.
Listed below are the names and ages of the nominees, the year each
individual began continuous service as director of LaserSight, and the business
experience of each, including principal occupations, at present and for at least
the past five years.
Nominees for Election by the Voting Holders at the Annual Meeting:
Michael R. Farris (41).......................................Director since 1995
Mr. Farris has served as President and Chief Executive Officer of
LaserSight since November 1995. He had previously been President and Chief
Executive Officer of The Farris Group (a consulting firm that LaserSight
acquired from Mr. Farris in February 1994) and predecessor consulting and search
firms for more than 10 years.
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Francis E. O'Donnell, Jr., M.D. (51).........................Director since 1992
Dr. O'Donnell has served as the Chairman of the Board of LaserSight since
April 1993. Dr. O'Donnell also was Chief Executive Officer of LaserSight from
April 1993 to July 1993. He founded O'Donnell Eye Institute, St. Louis,
Missouri, which has performed laser vision correction procedures since 1989.
Dr. O'Donnell is a former Professor and Chairman, Department of Ophthalmology at
the St. Louis University School of Medicine. In his role as managing partner of
the Hopkins Capital Group, L.L.C., a biotech business development company, Dr.
O'Donnell is actively involved with PhotoVision, Inc., RetinaPharma, Inc. and
BioKeys, Inc., biopharmaceutical companies, APP Pharmaceutical Network, Inc., a
retailer of biotech pharmaceuticals, Sublase, L.L.C., a medical laser company
and BioDelivery Sciences International, Inc., a drug delivery technology
company. All are privately held except BioKeys, Inc. Dr. O'Donnell is the
founder and managing partner of Hopkins Biotech Development Corporation, which
invests in biotech companies.
Terry A. Fuller, Ph.D. (52)..................................Director since 1997
Dr. Fuller has been President and Chief Executive Officer of Fuller
Research Corporation, a privately-held producer of high-technology surgical
devices and services, since March 1984. Since July 1998, he has also been the
President and Chief Executive Officer of PhotoVision Pharmaceuticals, Inc., an
ophthalmic drug and medical device development company. From March 1997 through
November 1998, he was President and Chief Executive Officer of Laser Skin Toner,
Inc. From 1990 to November 1996, he was Chief Operating Officer and Executive
Vice-President of Surgical Laser Technologies, Inc., a producer of laser systems
for surgical use.
David T. Pieroni (55)........................................Director since 1996
Mr. Pieroni has been President of Independent Management Advisors, Inc.,
a management consulting company, and its predecessor, Pieroni Management
Counselors, Inc., since September 1996 and during a portion of 1995. He was
President of LaserSight's TFG subsidiary from November 1995 to September 1996.
From 1991 to 1995, he was President of Spencer & Spencer Systems,
Inc., an information systems consulting company. From 1977 to 1990, he was a
partner in the health care and management consulting practice of a predecessor
of Ernst & Young LLP.
D. Michael Litscher (54).....................................Director since 2000
Mr. Litscher has served as LaserSight Technologies' Chief Operating
Officer since April 2000. From 1995 until he joined LaserSight, Mr. Litscher
served as General Manager for Frantz Tool and Design, the injection molding and
plastics device division of Frantz Medical Group, since 1995. From 1993 to 1995
Mr. Litscher served as Vice President-Manufacturing Operations for Frantz
Medical Group. From 1988 to 1992 Mr. Litscher served as Manager of New Products
Manufacturing for Coulter Corporation's Hemotology Division.
Guy W. Numann (69) ..........................................Director since 2000
Mr. Numann retired from Harris Corporation where he served as president
of the company's Communication Sector from 1989 until his retirement in 1997.
From 1984 to 1989 Mr. Numann served as senior vice president and group executive
for the Communications Sector. Mr. Numann currently serves as a member of
Rensselaer Polytechnic Institute's School of Engineering Advisory Board.
The Board of Directors recommends that stockholders vote "FOR"
the forgoing nominees
Directors Not Standing For Reelection
Information regarding the member of the Board of Directors who is not
standing for reelection at the Annual Meeting is set forth below:
3
Gary F. Jonas (56)...........................................Director since 1998
Mr. Jonas has served as the Managing Partner of Venture Philanthropy
Partners, a philanthropy fund focused on programs serving low income children in
education and learning, since 2000. From 1997 to 2000, Mr. Jonas was Executive
Vice President, Strategic Growth for TLC Laser Eye Centers Inc. Prior to joining
TLC in 1997, Mr. Jonas was a founder and Chief Executive Officer of 20/20 Laser
Centers Inc. from 1993 to 1997. From 1988 to 1993, Mr. Jonas served as the
President and Chief Operating Officer of Earle Palmer Brown, an advertising
agency in the U.S. From 1975 to 1988, Mr. Jonas was the Chief Executive Officer
of University Research Corporation, a health service consulting company.
Other Executive Officers
The following executive officers of LaserSight are not directors:
Jack T. Holladay, M.D. (54)
Dr. Holladay has served as Medical Director of LaserSight since October
1999. Dr. Holladay has been a practicing ophthalmologist since 1978. Since 1978
Dr. Holladay has also served as a professor at the University of Texas Medical
School, and has been a visiting professor at several major ophthalmology
programs around the world. Dr. Holladay is an active member of the American
Academy of Ophthalmology, has served as chairman of its committee on low vision
and of its committee on optics, refraction and contact lenses, and is also a
member of its committee for ophthalmic technology development. He has also has
lectured extensively, authored numerous scientific articles and book chapters,
and has invented instruments and methods related to vision testing.
Gregory L. Wilson (43)
Mr. Wilson has served as Chief Financial Officer of LaserSight since
July 1994. Mr. Wilson has also served as Chief Financial Officer of our TFG
subsidiary since 1993. From 1986 to 1993, he was a management consultant with
Deloitte & Touche LLP, an international accounting and consulting firm.
L. Stephen Dalton (48)
Mr. Dalton has served as LaserSight's Senior Vice President and Chief
Scientific Officer since April 2000. From 1994 until he joined LaserSight, Mr.
Dalton served as Vice President of Expertech Associates, Inc., a regulatory and
quality systems consulting firm. Mr. Dalton's prior experience includes the
senior regulatory affairs/quality systems position in the following companies:
Xanar Surgical Lasers (Johnson & Johnson), Sharplan Lasers, Storz Instruments,
Inc., and Intermedics Orthopedics.
Christine A. Oliver (49)
Ms. Oliver has served as LaserSight's Senior Vice President, Sales and
Marketing since October 2000. Prior to joining LaserSight, Ms. Oliver held
positions with Summit Autonomous, a laser manufacturer, from 1996 until 2000,
including the last two years as their Vice President, Marketing and Sales. Ms.
Oliver's prior experience includes various marketing and sales responsibilities
with Alcon Laboratories.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 2000, the Board of Directors met in person or by telephone
conference call 15 times. No member of the Board attended fewer than 75% of the
aggregate of the total number of meetings of the Board of Directors and of the
meetings of committees on which such director serves.
The Board of Directors has an Executive Committee, an Audit and Finance
Committee, an Executive Compensation and Stock Option Committee and a Nominating
Committee. Each such committee consists of one or more directors appointed by
the Board of Directors.
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The Executive Committee is responsible for facilitating certain executive
actions, thereby eliminating the need for full Board approval for such actions.
Specific duties, responsibilities and authority are established by the full
Board of Directors from time to time. In 2000, the Executive Committee did not
meet. The Executive Committee consisted of Messrs. O'Donnell, Jonas and Farris
until December 2000, when Mr. Jonas left the board.
The Nominating Committee is responsible for reviewing the qualifications
of, and recommending to the Board of Directors, candidates for election to the
Board of Directors. The Nominating Committee considers suggestions from many
sources regarding possible candidates for director. LaserSight's Bylaws
establish an advance notice procedure with respect to stockholder nominations of
candidates for election as directors. See "Stockholder Proposals--Stockholder
Proposals, In General." Until December 2000, when Mr. Jonas left the board, the
Nominating Committee consisted of Messrs. Fuller, Jonas and Pieroni. In 2000,
the Nominating Committee did not meet, but did take action by written consent to
nominate a slate of directors to stand for election at the 2000 Annual Meeting
of Stockholders of LaserSight. Subsequent to Mr. Jonas' departure from the board
of directors in December 2000, the Nominating Committee has consisted of Messrs.
Fullers and Pieroni.
The Executive Compensation and Stock Option Committee, or Compensation
Committee, is responsible for reviewing LaserSight's general compensation
strategy; establishing salaries and reviewing benefit programs for certain
executive officers; reviewing, approving, recommending and administering
LaserSight's stock option plans and certain other compensation plans; and
approving certain employment contracts. Until March 2000, when Ms. Bakker left
the board, the Compensation Committee consisted of Mr. Jonas and Ms. Bakker.
During 2000 and prior to Ms. Bakker's departure from the board, the Compensation
Committee met two times. Subsequent to Ms. Bakker's departure from the board,
the Compensation Committee's duties were handled by the board as a whole.
The Audit and Finance Committee, or Audit Committee, is responsible for
recommending the appointment of independent accountants; reviewing the
arrangements for and scope of the audit by independent accountants; reviewing
the independence of the independent accountants; considering the adequacy of the
system of internal accounting controls and reviewing any proposed corrective
actions; discussing with management and the independent accountants LaserSight's
draft annual financial statements and key accounting and/or reporting matters;
and reviewing the terms of potential acquisitions. In 2000, the Audit and
Finance Committee met five times. The Audit and Finance Committee consisted of
Messrs. Pieroni, Fuller and Ms. Bakker until March 2000, when Ms. Bakker left
the board. Mr. Numann joined the committee upon his election to the board on
June 9, 2000.
LaserSight adopted a formal written Audit Committee charter on June 9,
2000 and we believe that we are in compliance with the new Nasdaq audit
committee structure and membership requirements. In making this determination,
we had particular concerns about whether Mr. Numann would satisfy the new Nasdaq
audit committee membership requirements because of his ownership of a warrant
that was granted to Mr. Numann in 1999 as consideration for his performance of
consulting services on behalf of LaserSight. We requested that Nasdaq provide us
interpretive advice on this matter and we have received preliminary advice from
Nasdaq's staff members that Mr. Numann would satisfy such audit committee
membership requirements; however, the final determination as to whether Mr.
Numann satisfies such audit committee membership requirements will not be made
until Nasdaq's general counsel has had an opportunity to review the Nasdaq staff
member's preliminary advice. As of the date of the filing of this Proxy
Statement such review and determination has not yet been made. In the event that
Nasdaq finally determines that Mr. Numann does not satisfy the audit committee
membership requirements, the Board will have to either (i) find a replacement
for Mr. Numann to serve on the Audit Committee, or (ii) make the determination
that, as a result the exceptional and limited circumstances surrounding Mr.
Numann's service on the Audit Committee, Mr. Numann's continued service on the
Audit Committee is required in order to serve the best interests of LaserSight
and its shareholders.
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COMPENSATION OF DIRECTORS
Each non-employee director receives a fee of $500 for each board or
committee meeting attended. In addition, during 2000, each non-employee director
was granted an option under LaserSight's Non-Employee Directors Stock Option
Plan to purchase 15,000 shares of common stock and each committee chairman and
the Chairman of Board was granted an additional option to purchase 5,000 shares.
The exercise price of each such option on June 9, 2000, was $5.00 per share
(100% of the market price of common stock on the date of grant). Directors who
are also full-time employees of LaserSight received no additional cash
compensation for services as directors.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding ownership
of LaserSight common stock, as of April 30, 2001, by:
o each person known to LaserSight to own beneficially more than 5%
of LaserSight outstanding common stock;
o each of LaserSight's directors;
o each of LaserSight's executive officers named in the summary
compensation table; and
o all of LaserSight's directors and executive officers as a group.
The beneficial ownership of LaserSight's common stock set forth in this
table is determined in accordance with the rules of the Securities and Exchange
Commission. Unless otherwise indicated in the footnotes below, the persons and
entities named in the table have sole voting and investment power as to all
shares beneficially owned, subject to community property laws where applicable.
Class of Voting Securities
--------------------------
Common Stock Voting Authority
Name and Address of Beneficial Owner Ownership (1) Series C Preferred Ownership (6)
------------------------------------ ------------- ------------------ -------------
Directors, Nominees and Executive Officers:
Francis E. O'Donnell, Jr., M.D. 319,745 (2)(3) 0 319,745
1.4% 1.2%
Michael R. Farris 811,834 (3) 0 811,834
3.4% 3.1%
David T. Pieroni 72,500 (3) 0 72,500
* *
Terry A. Fuller, Ph.D. 56,562 (3) 0 56,562
* *
D. Michael Litscher 66,667 (3) 0 66,667
* *
Guy W. Numann 60,000 (3) 0 60,000
* *
Jack T. Holladay, M.D. 135,750 (3) 0 135,750
* *
Gregory L. Wilson 81,667 (3) 0 81,667
* *
L. Stephen Dalton 66,667 (3) 0 66,667
* *
Christine A. Oliver 38,000 (3) 0 38,000
* *
J. Richard Crowley 151,336 (3) 0 151,336
* *
All directors, nominees and executive 1,860,728 (3) 0 1,860,728
officers as a group (11 persons) 7.5% 7.0%
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Class of Voting Securities
--------------------------
Common Stock Voting Authority
Name and Address of Beneficial Owner Ownership (1) Series C Preferred Ownership (6)
------------------------------------ ------------- ------------------ -------------
Other 5% Stockholders:
TLC Laser Eye Centers Inc. 1,830,673 (4) 2,000,000 (5) 3,830,673
5600 Explorer Drive, Suite 101 7.8% 15.0%
Mississaugua, Ontario
Canada L4W 4Y2
BayStar Capital, L.P. and 2,618,254 (4) 0 2,618,254
BayStar International, Ltd. (7) 10.8% 10.0%
1500 West Market Street
Mequon, Wisconsin 53092
James W. Vaughan 1,186,025 (4) 0 1,186,025
2470 Schuetz Road 5.0% 4.6%
Maryland Heights, Missouri 63043
--------------------------
* Less than 1%.
(1) Each number of shares of common stock shown as owned in this column
assumes the exercise of all currently-exercisable options and warrants
held by the applicable person or group. Each percentage shown in this
column assumes the exercise of all such options and warrants by the
applicable person or group, but assumes that no options, warrants held by
any other persons are exercised or converted.
(2) Includes 181,245 shares held by the Irrevocable Trust No. 7 for the
benefit of the Francis E. O'Donnell, Jr., M.D. Trust or shares held by
the Francis E. O'Donnell, Jr. Descendants Trust. Ms. Kathleen M.
O'Donnell, the sister of Dr. O'Donnell, is trustee of both Trusts. Dr.
O'Donnell disclaims beneficial ownership of such shares.
(3) Includes options (and 45,000 warrants in the case of Mr. Numann) to
acquire shares of common stock which are now exercisable or will first
become exercisable on or before June 30, 2001, as follows: Dr. O'Donnell
(90,000); Mr. Farris (395,834); Mr. Pieroni (70,000); Mr. Fuller
(56,562); Mr. Litscher (66,667); Mr. Numann (60,000); Dr. Holladay
(133,750); Mr. Wilson (66,667); Mr. Dalton (66,667); Ms. Oliver (0); Mr.
Crowley (132,500) and all directors and executive officers as a group
(1,138,647).
(4) Represents (a) the number of actual shares of common stock presently
owned by such persons (based on information supplied to LaserSight as of
May 14, 2001) and (b) such additional shares of common stock that would
have been issuable if TLC had exercised all of its 50,000 warrants at a
price of $5.125.
(5) Each share of Series C Preferred Stock is convertible into one share of
common stock.
(6) On the basis of voting authority, as of May 14, 2001, a total of
25,563,111 shares of common stock would be outstanding. This amount is
composed of (a) 23,563,111 shares of common stock outstanding as of May
14, 2001 and 2,000,000 shares of common stock issuable upon the exercise
of the Series C Preferred Stock. Added to this total are the exercisable
options and warrants held by the applicable person or group.
(7) Includes 650,000 warrants to acquire shares of common stock that are now
exercisable. Of these warrants, 600,000 contain a provision limiting the
shareholders' ability to exercise their warrants to the extent that such
exercise would result in their owning more than 4.99% of our common
stock. This limitation may be waived by them by providing us at least 61
days prior written notice.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than 10% of the outstanding Common Stock, to file reports of ownership and
changes in ownership of such securities with the SEC. Officers, directors and
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over-10% beneficial owners are required to furnish the Company with copies of
all Section 16(a) forms they file. Based solely upon a review of the copies of
the forms furnished to the Company, and/or written representations from certain
reporting persons that no other reports were required, the Company believes that
all Section 16(a) filing requirements applicable to its officers, directors and
over-10% beneficial owners during or with respect to the year ended December 31,
2000 were met except as follows: the Form 3 for Mr. Numann was filed more than
10 days after he became a director (reporting only previously disclosed warrants
and stock options received during the year) and Dr. Holladay's Form 5 was filed
more than 45 days after December 31, 2000 (reporting only stock options received
during the year).
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning the
compensation paid or earned for services rendered to LaserSight in all
capacities during 1998, 1999 and 2000 for LaserSight's Chief Executive Officer
and each of LaserSight's other executive officers serving at December 31, 2000
whose total annual salary and bonus for 2000 exceeded $100,000. No restricted
stock or stock appreciation rights were granted and no payouts under any
long-term incentive plan were made to any of the named executive officers in
1998, 1999 or 2000. We use the term "named executive officers" to refer
collectively to these individuals later in this Proxy Statement.
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
------------------- ------
Other
Annual Securities
Compen- Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) sation Options/SARs (#) Compensation
--------------------------- ---- ---------- --------- ------ ---------------- ------------
Michael R. Farris 2000 $275,625 -- -- 207,549 --
President and CEO 1999 262,601 $100,406 -- 190,000 --
1998 250,000 50,000 -- 250,000 --
Jack T. Holladay, M.D. (1) 2000 200,000 -- -- 75,000 --
Medical Director 1999 35,641 -- -- 235,000 --
Gregory L. Wilson 2000 185,000 -- -- 50,000 --
Chief Financial Officer 1999 164,808 -- -- 100,000 --
1998 155,400 -- -- 25,000 $13,192 (4)
L. Stephen Dalton (2) 2000 161,000 -- -- 200,000 23,750 (4)
Chief Scientific Officer
D. Michael Litscher (3) 2000 156,859 -- -- 200,000 30,750 (4)
Chief Operating Officer
J. Richard Crowley (5) 2000 175,000 -- $26,885 (6) 30,000 --
Former Chief Operating 1999 162,401 -- -- 50,000 --
Officer 1998 154,800 -- -- -- --
(1) Dr. Holladay joined LaserSight in October 1999 as the Medical Director.
(2) Mr. Dalton joined LaserSight in March 2000 and was named Senior Vice
President and Chief Scientific Officer in April 2000.
(3) Mr. Litscher joined LaserSight in February 2000 as the Vice President of
Operations and was named Chief Operating Officer in April 2000.
(4) Consists of relocation allowance paid.
8
(5) Mr. Crowley was not an executive officer effective in June 2000, but is
included as a named executive officer because he would otherwise be among
the four highest paid executive officers.
(6) Consists of commissions based on international laser revenues.
The following table sets forth certain information concerning stock
options granted to the named executive officers during 2000. No SARs were
granted during 2000.
Option/SAR Grants In Last Fiscal Year
Individual Grants
-----------------
Number of % of Total
Securities Options/ Potential Realizable
Underlying SARs Value at Assumed
Options/ Granted to Exercise or Annual Rates of Stock
SARs Employees in Base Price Expiration Price Appreciation for
Name Granted (#) Fiscal Year ($/Share) Date Option Term
---- ----------- ----------- --------- ---- -----------
5% ($) 10% ($)
------ -------
Michael R. Farris 100,000 6.8% $5.00 6/9/2005 $226,767 $540,615
107,549 7.4% 5.00 12/31/2006 243,886 581,426
Jack T. Holladay, M.D. 75,000 5.1% 5.00 6/9/2005 103,606 228,941
Gregory L. Wilson 50,000 3.4% 5.00 6/9/2005 69,070 152,628
L. Stephen Dalton 100,000 6.8% 8.13 3/6/2005 224,479 496,039
100,000 6.8% 5.00 6/9/2005 138,141 305,255
D. Michael Litscher 100,000 6.8% 9.72 2/23/2005 268,518 593,355
100,000 6.8% 5.00 6/9/2005 138,141 305,255
J. Richard Crowley 30,000 2.1% 5.00 6/9/2005 41,442 91,577
The following table sets forth certain information relating to options
held by the named executive officers at December 31, 2000:
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/
Year-End(#)(1) SARs at Year-End ($)(1)(2)
-------------- --------------------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($)(1) Unexercisable Unexercisable
---- ------------ --------------- ------------- -------------
Michael R. Farris -- -- 251,250/396,299 $0/0
Jack T. Holladay, M.D. -- -- 108,750/201,250 0/0
Gregory L. Wilson -- -- 50,000/125,000 0/0
L. Stephen Dalton -- -- 0/200,000 0/0
D. Michael Litscher -- -- 0/200,000 0/0
J. Richard Crowley -- -- 122,500/190,000 0/0
(1) No SARs have been issued by LaserSight.
(2) Based on the $1.25 closing price of the common stock on The Nasdaq Stock
Market on December 31, 2000 when such price exceeds the exercise price
for an option.
9
Employment Agreements
In October 1998, LaserSight entered into a revised employment agreement
with Mr. Farris, which LaserSight and Mr. Farris further amended in April 1999
(as amended, the "Farris Employment Agreement"). The Farris Employment Agreement
provides for a three-year term, an annual base salary beginning at $250,000,
increased by 5% each year, a total of 210,000 stock options granted in 1998 and
190,000 stock options granted in 1999. The Farris Employment Agreement also
provides an opportunity for an annual cash performance bonus of up to 25% of
base salary based upon specific objectives established by the Compensation
Committee, and an opportunity for an additional annual cash bonus in an
aggregate amount of 20% of base salary if all or a portion of certain events or
goals identified from time to time by the Compensation Committee occur or are
achieved. If the employment of Mr. Farris is terminated by LaserSight without
"cause" or by him with "good reason" (as such terms are defined in the Farris
Employment Agreement), Mr. Farris would be entitled to all salary and other
benefits under the Farris Employment Agreement through the later of (1) the
remaining term of the Agreement or (2) one year after the date of his
termination. The Farris Employment Agreement includes non-compete and
confidentiality covenants. The Compensation Committee reviews Mr. Farris'
employment arrangements from time to time and may grant Mr. Farris additional
stock options or otherwise modify his employment arrangements in the future
based on those reviews.
In October 1999, LaserSight entered into an employment agreement with
Dr. Holladay (the "Holladay Employment Agreement"). The Holladay Employment
Agreement provides for a three-year term with automatic renewals of one-year
each unless either party provides the other with at least 60 days notice prior
to the end of the then current term that such party intends not to renew the
agreement, an annual base salary of $200,000 and a grant of 200,000 stock
options. The Holladay Employment Agreement includes non-compete and
confidentiality covenants. The Compensation Committee reviews Dr. Holladay's
employment arrangements from time to time and may grant Dr. Holladay additional
stock options or otherwise modify his employment arrangements in the future
based on those reviews.
In February 2000, LaserSight entered into an employment agreement with
Mr. Litscher (the "Litscher Employment Agreement"). The Litscher Employment
Agreement provides for a three-year term with automatic renewals of one-year
each unless either party provides the other with at least 60 days notice prior
to the end of the then current term that such party intends not to renew the
agreement, an annual base salary of $140,000 and a grant of 100,000 stock
options. The Litscher Employment Agreement includes non-compete and
confidentiality covenants. Mr. Litscher was named Chief Operating Officer and
his annual base salary was subsequently adjusted to $190,000 effective on April
1, 2000. The Compensation Committee reviews Mr. Litscher's employment
arrangements from time to time and may grant Mr. Litscher additional stock
options or otherwise modify his employment arrangements in the future based on
those reviews.
In March 2000, LaserSight entered into an employment agreement with Mr.
Dalton (the "Dalton Employment Agreement"). The Dalton Employment Agreement
provides for a three-year term with automatic renewals of one-year each unless
either party provides the other with at least 60 days notice prior to the end of
the then current term that such party intends not to renew the agreement, an
annual base salary of $200,000 and a grant of 100,000 stock options. The Dalton
Employment Agreement includes non-compete and confidentiality covenants. The
Compensation Committee reviews Mr. Dalton's employment arrangements from time to
time and may grant Mr. Dalton additional stock options or otherwise modify his
employment arrangements in the future based on those reviews.
Relocation Agreement
In October 1999, LaserSight entered into a relocation agreement with
Mr. Wilson (the "Wilson Relocation Agreement"). The Wilson Relocation Agreement
provides for a severance payment of one year's compensation if his employment is
terminated without cause, as defined in the Wilson Relocation Agreement,
subsequent to his relocation to Orlando, Florida.
10
Transition Agreement
In November 2000, LaserSight entered into a transition agreement with
Mr. Crowley (the "Crowley Transition Agreement"). Pursuant to the terms of the
Crowley Transition Agreement, Mr. Crowley and LaserSight mutually agreed that
Mr. Crowley's employment with LaserSight will terminate as of June 30, 2001.
During the period commencing on July 1, 2001 and continuing until December 31,
2001, Mr. Crowley will continue to receive his base salary at the annual rate of
$175,000.
Compensation Committee Interlocks and Insider Participation
During 2000, the Compensation Committee consisted of Mr. Jonas and Ms.
Bakker until her resignation from the board in March 2000. After that time, the
role of the Compensation Committee was performed by the board of directors as a
whole. None of the members of this committee were employees of LaserSight while
serving on this committee; however, Mr. Jonas and Ms. Bakker had certain
relationships and related transactions which require disclosure in this Proxy
Statement under applicable federal securities laws. See "Certain Relationships
and Related Transactions --TLC Laser Sales," "--TLC License Agreement," "--1999
Private Placement," and "--TLC Private Placement.
After March 2000, the role of the Compensation Committee was performed by
the board of directors as a whole. As a result, Mr. Farris and Mr. Litscher,
who were officers of LaserSight during 2000, and Mr. Pieroni, who from November
1995 to September 1996 served as President of LaserSight's TFG subsidiary,
participated in certain deliberations regarding the compensation of LaserSight's
executive officers. Neither Mr. Farris nor Mr. Litscher participated in the
board of director's deliberations regarding their respective compensation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, composed of
independent outside directors, is responsible for setting the policies that
govern LaserSight's compensation programs, administering LaserSight's equity
compensation plans, and establishing the cash compensation of executive
officers. Beginning March 2000, the Compensation Committee's duties were
performed by the board of directors as a whole. The Compensation Committee's
objectives are to establish compensation programs designed to attract, motivate,
retain, and reward executives who can lead LaserSight in achieving its long-term
business goals in a highly competitive and rapidly changing industry, whose
services LaserSight needs to maximize its return to stockholders, and to ensure
that management compensation is reasonable in light of LaserSight's objectives,
compensation for similar personnel in other companies, and other relevant
criteria. The compensation mix for executive officers consists of base salaries,
a cash bonus system, and stock option awards. As a result, much of an executive
officer's compensation is based upon the financial performance of LaserSight.
The Compensation Committee periodically establishes each executive
officer's base salary based on the committee's evaluation of the officer's
performance and contribution in the previous year and on competitive pay
practices.
Mr. Farris' employment agreement was revised in October 1998 after
several months of discussion and planning. See "Employment Agreements" above.
The Compensation Committee provides for an annual 5% increase in the base salary
of Mr. Farris beginning in 1999 and provided for bonus opportunities to be based
on specific goals to be defined, including budgeted operations, starting in
1999. The Compensation Committee recommended and the board concurred that Mr.
Farris be awarded a $100,406 cash bonus for 1999 resulting from goals achieved
during 1999. The Compensation Committee provided written feedback to Mr.
Farris on his performance based on agreed upon goals and a comprehensive rating
system for performance. The stock options granted to Mr. Farris during 1998 were
the first option grants provided to Mr. Farris since 1995, and were part of a
comprehensive, multi-year employment agreement intended to provide Mr. Farris
with incentives to lead LaserSight to improved performance.
11
The Compensation Committee and the Board of Directors believe that
management's ownership of a significant equity interest in LaserSight is a major
incentive in building stockholder wealth and aligning the long-term interests of
management and stockholders. Stock options, therefore, are granted by the
Compensation Committee at option prices not less than the fair market value of
common stock on the grant date. Thus stock options have no value unless the
share price increases over the fair market value on the date of grant. Option
awards contribute to the retention of key executives since executives realize
the benefits of options only as they vest based on tenure after the grant. The
Compensation Committee determines which employees receive stock option grants by
evaluating the responsibilities and relative positions of key employees in
comparison to like or similar positions at competitor companies.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation in excess of $1
million paid to a corporation's Chief Executive Officer or four other
most-highly compensated executive officers named in the proxy statement. The
Compensation Committee has reviewed the possible effect on LaserSight of Section
162(m), and it does not believe that such section will be applicable to
LaserSight in the foreseeable future, but will review compensation practices as
circumstances warrant. In that connection, the Equity Incentive Plan made it
possible for LaserSight to satisfy the conditions for an exemption from Section
162(m)'s deduction limit. However, other characteristics of a grant affect
whether or not compensation received from a stock option is counted in
determining whether an executive officer has received compensation in excess of
$1 million.
THE COMPENSATION COMMITTEE
Francis E. O'Donnell, Jr., M.D.
Terry A. Fuller, Ph.D.
David T. Pieroni
Guy W. Numann
Michael R. Farris
D. Michael Litscher
REPORT OF AUDIT COMMITTEE
LaserSight's Audit Committee serves, on behalf of the board of directors,
as an independent and objective party, responsible for:
o recommending the appointment of independent accountants;
o reviewing the arrangements for and scope of the audit by independent
accountants;
o reviewing the independence of the independent accountants;
o considering the adequacy of the system of internal accounting controls
and reviewing any proposed corrective actions;
o discussing with management and the independent accountants LaserSight's
draft annual financial statements and key accounting and/or reporting
matters; and
o reviewing the terms of potential acquisitions.
LaserSight adopted a formal written audit committee charter on June 9,
2000, a copy of which is attached to this Proxy Statement as Appendix A. The
Audit and Finance Committee consisted of Messrs. Pieroni, Fuller and Ms. Bakker
until March 2000, when Ms. Bakker left the board. Mr. Numann joined the
committee upon his election to the board on June 9, 2000. In 2000, the Audit
Committee met five times.
The board of directors reasonably believes that each of the members of
the Audit Committee are financially literate, and one or more of the members of
the Audit Committee has accounting or related financial management expertise.
12
Nevertheless, members of the Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not experts in the fields of
auditing or accounting, including with respect to auditor independence.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls, and for the
preparation of LaserSight's financial statements in conformity with generally
accepted accounting principles. Likewise, LaserSight's independent auditors are
responsible for auditing LaserSight's financial statements and expressing an
opinion as to their conformity with generally accepted accounting principles.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that:
o management has maintained appropriate accounting and financial reporting
principles or appropriate internal control procedures designed to assure
compliance with accounting standards and applicable laws and regulations;
or
o the audit of LaserSight's financial statements has been carried out in
accordance with generally accepted auditing standards or applicable laws
and regulations.
In fulfilling its oversight responsibilities, the committee reviewed
the audited financial statements in the Annual Report on Form 10-K with
management. The committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the committee under generally accepted auditing standards, including
Statement on Auditing Standards No. 61. In addition, the committee has discussed
with the independent auditors the auditors' independence from management and
LaserSight including the matters in the written disclosures and the letter from
the independent auditors required by the Independence Standards Board, Standard
No. 1. When considering LaserSight's independent auditor's independence, the
Audit Committee considered management's confirmations with respect to certain
services performed for LaserSight by the independent auditors, including
non-auditing services. The Audit Committee also considered the amount of fees
paid to the independent auditors for audit and non-audit services.
The committee discussed with Lasersight's independent auditors the
overall scope and plans for their audit. The committee met with the independent
auditors, with and without management present, to discuss the results of their
examination, their evaluation of the LaserSight's internal controls, and the
overall quality of the LaserSight's financial reporting.
In reliance on the reviews and meetings, discussions and reports
referred to above, and subject to the limitations on the Audit Committee's role
and responsibilities referred to above and in the Audit Committee's charter, the
committee recommended to the board of directors (and the board has approved)
that the audited financial statements be included in LaserSight's Annual Report
on Form 10-K for the year ended December 31, 2000 for filing with the Securities
and Exchange Commission. The committee and the board have also recommended,
subject to shareholder approval, the selection of the Company's independent
auditors.
THE AUDIT COMMITTEE
David T. Pieroni, Chairman
Terry A. Fuller, Ph.D.
Guy W. Numann
13
Principal Accounting Firm Fees
The following table sets forth the aggregate fees billed to LaserSight for the
year ended December 31, 2000 by LaserSight's principal accounting firm, KPMG
LLP:
Audit and 10-Q Fees $ 185,155
Financial Information Systems Design
and Implementation Fees None
All Other Fees $ 64,956 (a)(b)
---------
$ 250,111
(a) Includes fees for tax consulting and other non-audit services.
(b) The audit committee has considered whether the provision of these services
is compatible with maintaining the principal accountant's independence.
Performance Information
The following graph compares the performance of LaserSight's cumulative
stockholder return at December 31 of each year between 1995 and 2000 with
stockholder returns on (1) the Nasdaq National Market Composite Index and (2)
the Nasdaq Medical Devices, Instruments and Supplies, Manufacturers and
Distributors Index. The graph assumes that the value of the investment in the
common stock and each index was $100 at December 31, 1995 and that all
dividends, if any, were reinvested.
EDGAR REPRESENTATION OF DATA POINTS IN PRINTED GRAPHIC.
Base Point Return Return Return Return Return
Company/Index Name 1995 1996 1997 1998 1999 2000
------------------ ---- ---- ---- ---- ---- ----
LaserSight Incorporated 100 50 21 37 76 10
Nasdaq Medical Devices, Instruments
and Supplies, Manufacturers and
Distributors 100 94 107 120 146 151
Nasdaq National Market 100 123 151 213 395 238
14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LaserSight Centers. In March 1997, pursuant to an amendment to a
previously-reported 1993 acquisition agreement (as so amended, the "Amended
Centers Agreement"), LaserSight issued 625,000 unregistered shares of common
stock to a group of former stockholders and former optionholders (the "Former
Centers Holders") of LaserSight Centers Incorporated ("LaserSight Centers"), a
developmental stage company that LaserSight acquired in April 1993 and through
which LaserSight intends to begin to provide services for ophthalmic laser
surgical centers using excimer and other lasers. The Amended Centers Agreement
also provides for issuance of up to 600,000 additional shares of common stock
(the "Earnout Shares") to the Former Centers Holders to the extent that a
revised earnout, as described below, is satisfied through March 31, 2002. Trusts
for the benefit of Dr. O'Donnell, the Chairman of the Board of LaserSight, or
his descendants (collectively, the "O'Donnell Trusts") received 226,644
(approximately 36%) of the 625,000 shares issued and would be entitled to
receive the same percentage of any additional shares issued.
Under the Amended Centers Agreement, Earnout Shares are issuable at the
rate of one share of common stock per $4.00 of PRK Earnings (as defined)
received by LaserSight through March 31, 2002. No Earnout Shares have become
issuable as of the date of this Proxy Statement. For this purpose, the following
items are considered revenue: (1) per procedure revenues received by LaserSight
in connection with the utilization of a fixed or mobile excimer laser owned or
operated by LaserSight to perform photorefractive keratectomy, or PRK, and treat
myopia, astigmatism and hyperopia; (2) certain revenues received by LaserSight
from managed care companies or employers for arranging the delivery of PRK, and
(3) any royalties received by LaserSight on account of patents assigned to
LaserSight Centers. The Amended Centers Agreement excludes the following from
the computation of PRK Earnings: (1) revenues derived from the manufacture and
servicing of excimer lasers, (2) fees from patents not assigned to LaserSight
Centers, (3) managed care fees for non-PRK services, and (4) revenues from
non-excimer procedures. Management of LaserSight believes that these exclusions
will benefit LaserSight by eliminating uncertainty as to how the LaserSight
Centers earnout is to be computed. In addition, LaserSight is no longer required
to use LaserSight Centers as its exclusive representative in the U.S. and Canada
for the sale and distribution of ophthalmic refractive lasers or related
refractive procedures. However, it may be in the interest of Dr. O'Donnell for
LaserSight to pursue business strategies that maximize the issuance of Earnout
Shares.
In March 1997, LaserSight also amended its previously-reported royalty
agreement (as so amended, the "Amended Royalty Agreement") with Laser Partners,
a Florida general partnership, that it had entered into shortly before the
LaserSight Centers acquisition. The Amended Royalty Agreement reduces the
maximum per eye royalty to be paid by LaserSight from $86 to $43, and delays the
commencement of such royalty payments until after March 2002 or, if sooner, the
delivery of all of the 600,000 shares contingently issuable under the earnout
provisions of the Amended Centers Agreement. LaserSight's obligations under the
Amended Royalty Agreement are perpetual. LaserSight understands that one of the
O'Donnell Trusts is a partner of Laser Partners with a 36% partnership interest.
The Amended Royalty Agreement provides that LaserSight is not required
to pay a royalty in connection with any of the following: (1) procedures which
do not involve both an excimer laser and PRK, (2) laser procedures performed by
a third party in connection with any license granted by LaserSight, and (3)
laser procedures performed pursuant to a contract with a managed care company or
an employer, pursuant to which LaserSight agrees to arrange for the delivery of
eye care services other than PRK or for eye care services which include PRK
without any identifiable fee attributable thereto. The management of LaserSight
believes that these exclusions reduce the scope of LaserSight's obligation to
make royalty payments. It may be in the interest of Dr. O'Donnell for LaserSight
to pursue business strategies that maximize such royalty payments, however, in
late 2000, management abandoned the LaserSight Centers mobile laser strategy due
to industry conditions and our increased focus on development and
commercialization of our refractive products.
15
Consulting Arrangement. In May 1997, LaserSight's LaserSight
Technologies subsidiary entered into an agreement, effective as of January 1,
1997, with Dr. Byron A. Santos, an ophthalmologist employed by the O'Donnell Eye
Institute, a corporation of which Dr. O'Donnell, the Chairman of the Board of
LaserSight, is the Medical Director and owner. The amount that became payable to
Dr. Santos under this agreement during 2000 was $96,000. Under the agreement,
Dr. Santos is required to be available to provide a minimum of 40 hours of
services each month. Such services have related to the development of the
LaserScan 2000 excimer laser system, the development of clinical protocols, and
training and other consulting services. The agreement provides for a term ending
December 31, 2002, subject to LaserSight Technologies' right to terminate the
agreement in the event that Dr. Santos fails to perform in accordance with the
terms of the agreement.
TLC License Agreement. In October 1998, LaserSight entered into an
agreement with a subsidiary of TLC that grants LaserSight an exclusive license
under U.S. Patent No. 5,630,810 relating to a treatment method for preventing
formation of central islands during laser surgery. Central islands are a problem
generally associated with laser refractive surgery performed with broad beam
laser systems used to ablate corneal tissue. LaserSight has agreed during the
term of the patent license agreement to pay TLC 20% of the aggregate net
royalties it receives in the future from licensing of the TLC patent and certain
other patents owned by LaserSight.
TLC Laser System Sales. During 2000, 1999 and 1998, LaserSight sold
one, nine and three laser systems, respectively, for $375,000, $2,700,000 and
$900,000, respectively, to TLC. In addition, $1,396,000 and $306,000 of keratome
related products were sold to TLC during 2000 and 1999, respectively. LaserSight
has received full payment for the products sold through 1999 and the majority of
keratome related products sold in 2000; the balance of the 2000 sales is in
accounts receivable.
Sale of Laser System. As previously reported, in 2000, LaserSight sold
one of its laser systems to a company affiliated with Dr. O'Donnell at a price
of $240,000. This amount is included in accounts receivable.
1999 Private Placement. In connection with LaserSight's March 1999
private placement transaction, TLC purchased 500,000 shares of common stock and
received warrants to purchase 50,000 shares of common stock with an exercise
price of $5.125 per share. Gary F. Jonas, formerly Executive Vice President,
Strategic Growth of TLC, was a member of LaserSight's Board of Directors until
December 2000.
TLC Private Placement. In connection with a private placement
transaction, which was completed on January 31, 2000, TLC purchased 1,015,873
shares of common stock for an aggregate purchase price of $10,000,000. Gary F.
Jonas, formerly Executive Vice President, Strategic Growth of TLC, was a member
of LaserSight's Board of Directors until December 2000.
PROPOSAL NO. 2:
AMENDMENT TO EQUITY INCENTIVE PLAN
The Equity Incentive Plan was approved by LaserSight's stockholders in
June 1996 and amended in June 1998, June 1999 and June 2000. The Board of
Directors has unanimously approved an amendment and restatement of the Equity
Incentive Plan (as so amended and restated, the "Amended and Restated Equity
Incentive Plan"), subject to the approval of LaserSight's stockholders. The only
change reflected in the Amended and Restated Equity Incentive Plan is an
increase in the aggregate number of shares of common stock available for
delivery under the Amended and Restated Equity Incentive Plan from 3,750,000 to
5,250,000. As of April 30, 2001, only 108,000 shares remained available for
future grants and awards under the Equity Incentive Plan. The number of options
granted under the Equity Incentive Plan during 1999 and 2000 was 1,121,000 and
1,460,049, respectively, and 459,000 options have been granted under the Equity
Incentive Plan this year through April 30, 2001. During 2000 and during 2001 to
date, no shares were granted to outside consultants who were eligible to receive
shares under the Equity Incentive Plan. As of April 30, 2001, the aggregate
number of outstanding options and shares granted under the Equity Incentive Plan
was 3,354,604 and the aggregate market value of the underlying shares of common
16
stock was $8,587,786 (based on a closing price of $2.56 as of such date).
If the Amended and Restated Equity Incentive Plan is not approved by
LaserSight's stockholders, awards will be limited to those available in
accordance with the terms of the current Equity Incentive Plan.
The summary of the Amended and Restated Equity Incentive Plan that
appears below is qualified in its entirety by reference to the full text of the
plan document, a copy of which is available upon request from LaserSight's
secretary.
Purpose of Plan. The Amended and Restated Equity Incentive Plan is
intended to allow employees and consultants to acquire or increase equity
ownership in LaserSight, thereby strengthening their commitment to the success
of LaserSight and stimulating their efforts on behalf of LaserSight, and to
assist LaserSight in attracting new employees and consultants and retaining
existing employees and consultants.
Types of Awards. Under the Amended and Restated Equity Incentive Plan,
the Compensation Committee would be authorized to grant nonqualified stock
options, incentive stock options, stock appreciation rights, limited stock
appreciation rights, or LSARs, shares of restricted common stock, or "restricted
shares", performance shares, and shares of common stock awarded as a bonus (all
of the foregoing collectively, "Awards").
Eligibility. All employees (including officers) and consultants of
LaserSight are eligible to receive Awards. The Amended and Restated Equity
Incentive Plan provides that no employee may receive Awards covering an
aggregate of more than 750,000 shares of common stock during any year. The
Compensation Committee is authorized, subject to certain limits specified in the
Amended and Restated Equity Incentive Plan, to determine to whom and on what
terms and conditions Awards shall be made.
Number of Shares Issuable. The Amended and Restated Equity Incentive
Plan would provide for the issuance of up to 5,250,000 shares of common stock,
as compared to the current limit of 3,750,000 shares, subject to anti-dilution
adjustments.
Stock Options. Options must be granted at an exercise price of no less
than 100% of the fair market value of a share of common stock on the date of
grant. Unless otherwise specified by the Compensation Committee, options will
become exercisable in four annual installments of 25% beginning on the first
anniversary of the grant date. The option exercise price may be paid by any one
or more of the following methods: (1) cash or, if approved in advance by the
Compensation Committee, (2) a "cashless" exercise pursuant to a sale through a
broker of a portion of the shares covered by the option. Options may be granted
as either (1) nonstatutory options upon exercise of which grantees would
recognize ordinary taxable income, and LaserSight would be entitled to a
compensation expense deduction or (2) as incentive stock options (ISOs) which,
subject to certain conditions, would not result in the recognition of taxable
income by the grantee upon exercise, nor a compensation deduction to LaserSight
until the shares are disposed of by the grantee.
SARs. An award of a stock appreciation right entitles the grantee to
receive a payment equal to the appreciation in value of the common stock over
the strike price. The strike price will equal either (i) at least 100% of the
fair market value of the common stock on the grant date of the SAR, or (ii) if
the SAR is linked to an option, the exercise price of such option. The amount of
appreciation will be payable in cash or common stock.
Restricted Shares. Restricted shares will be forfeited if the
conditions set by the Compensation Committee have not been satisfied or waived.
The Compensation Committee will determine whether or not a grantee shall be
required to pay for such restricted shares and, if so, what the price shall be.
17
Performance Shares. To the extent that the performance goals specified
by the Compensation Committee, such as stock price, market share, sales,
earnings per share, and return on equity, in a grant of performance shares have
been achieved, then a benefit shall be paid after the end of the
performance-measuring period specified by the Compensation Committee. The amount
of the benefit is based upon the percentage attainment of the performance goals
multiplied by the value of a share of common stock at the end of the performance
period. No benefit will be payable if the minimum performance goals have not
been met.
LSARs. LSARs may in the discretion of the Compensation Committee be
granted with any option or stock appreciation right, either in connection with
the original grant or at any later date.
Termination of Employment. Unless otherwise approved by the
Compensation Committee, if a grantee's employment is terminated for cause, all
unexercised options (and any associated LSARs) and SARs will immediately
terminate and unvested restricted shares and performance shares will be
forfeited. In the event of death or permanent disability, any restricted shares
will be vested, any unexercised options (and any associated LSARs) or SARs,
whether or not previously exercisable, may be exercised by a beneficiary for six
months after the date of death or disability, and any unexercised performance
shares may be exercised for one year thereafter, provided that if a
performance-measuring period has not ended, the benefit will be pro-rated. If a
grantee terminates for any other reason, restricted shares will be forfeited,
any unexercised option (and any associated LSARs) or SARs may be exercised for
30 days following the date of termination, and any unexercised performance
shares may be exercised only as determined by the Compensation Committee.
Other. Options and SARs will have a maximum term of 10 years. In the
event of a "Change in Control" of LaserSight, restricted shares will become
nonforfeitable, all other Awards will become exercisable. The Amended and
Restated Equity Incentive Plan may be amended by the Board without stockholder
approval unless stockholder approval is required by federal securities law or
the listing requirements of a securities exchange on which any of LaserSight's
equity securities are listed. The Amended and Restated Equity Incentive Plan
will terminate on January 19, 2006. For purposes of this paragraph "Change of
Control" means, generally (1) certain acquisitions of the beneficial ownership
of 25% or more of the then-outstanding common stock, (2) certain changes in the
composition of the Board, and (3) certain transactions whereby stockholders who
immediately before such transaction do not, immediately, thereafter,
beneficially own, directly or indirectly, more than 60% of the then-outstanding
common stock, and the sale or other disposition of all or substantially all of
the assets of LaserSight or the dissolution or liquidation of LaserSight.
Tax Implications. Under present law, the following are the federal tax
consequences generally arising with respect to awards granted under the Amended
and Restated Equity Incentive Plan. The grant of an option or an SAR will create
no tax consequences for the grantee or LaserSight. The grantee will have no
taxable income upon exercising an ISO (except that the alternative minimum tax
may apply) and LaserSight will recognize no deduction when the ISO is exercised.
Upon exercising a non-qualified option or SAR, the grantee must recognize
ordinary income equal to the difference between (1) the exercise price of the
option or the strike price for an SAR, as applicable, and (2) and the fair
market value of the common stock on the date of exercise; LaserSight will be
entitled to a deduction for the same amount. With respect to other Awards under
the Amended and Restated Equity Incentive Plan that are either transferable or
not subject to a substantial risk of forfeiture, the grantee must recognize
ordinary income equal to the fair market value of the shares or other property
received. With respect to awards that are settled in stock or other property
that is restricted as to transferability and subject to a substantial risk of
forfeiture, the grantee recognizes ordinary income when the shares or other
property become transferable or not subject to a substantial risk of forfeiture,
whichever occurs first.
Plan Benefits
Except as described below, LaserSight has not yet determined which
persons will receive any of the awards which will be based on the additional
1,500,000 shares proposed to be made available under the Amended and Restated
Equity Incentive Plan. As of April 30, 2001, the only awards that have been made
18
under the Equity Incentive Plan are stock options except for stock grants made
to outside consultants in the aggregate amount of 40,000 shares. The table below
sets forth the number of stock options outstanding as of April 30, 2001, that
have been granted under the Equity Incentive Plan to the persons and groups
listed in the table. As of April 30, 2001, 257,690 options have been exercised.
Name and Position No. of Options
----------------- --------------
Michael R. Farris (President and CEO) 647,549
Jack T. Holladay, M.D. (Medical Director of LaserSight Technologies) 310,000
Gregory L. Wilson (Chief Financial Officer) 225,000
D. Michael Litscher (Chief Operating Officer) 205,000
L. Stephen Dalton (Chief Scientific Officer) 205,000
Christine A. Oliver (Sr. Vice President, Sales & Marketing) 105,000
J. Richard Crowley (Former Chief Operating Officer) 160,000
All current executive officers as a group 1,857,549
All directors as a group (in consulting capacity) 8,750
All employees (excluding executive officers) as a group 1,866,299
No associate (as defined in the SEC's rules) of any of the persons
named or described in the table above has received any stock options under the
Equity Incentive Plan. The persons who have received 5% or more of the 3,750,000
options currently available for awards under the Equity Incentive Plan and the
number of options received by them are as follows: Michael Farris (647,549);
Jack T. Holladay (310,000); Gregory L. Wilson (225,000); D. Michael Litscher
(205,000) and L. Stephen Dalton (205,000).
The Board of Directors recommends that stockholders vote "FOR"
the Equity Incentive Plan Proposal.
PROPOSAL NO. 3:
INDEPENDENT AUDITORS
The Board of Directors recommends that stockholders ratify the
appointment of KPMG LLP by voting "FOR" ratification of KPMG LLP as LaserSight's
auditors for the 2001 fiscal year. In the event such selection is not ratified,
the Board of Directors will reconsider its selection.
KPMG LLP has audited LaserSight's financial statements for fiscal years
1995 through 2000. Representatives of KPMG LLP are expected to be present at the
meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
The Board of Directors recommends that
stockholders vote "FOR" the Auditor Ratification Proposal.
19
STOCKHOLDER PROPOSALS
Stockholder Proposals, In General
LaserSight's bylaws provide that stockholder nominations for persons
for election to LaserSight's board of directors and proposals for business to be
considered at an annual stockholders meeting must satisfy certain conditions
including submitting notice to LaserSight not more than 120 days or less than 90
days prior to the anniversary of the preceding year's annual meeting of
stockholders; provided, however, that if the date of the 2002 Annual Meeting of
Stockholders is changed by more than 30 calendar days from the date of the 2001
Annual Meeting of Stockholders, notice of any such stockholder proposals must be
received by LaserSight not earlier than the close of business on the 120th day
prior to such annual meeting and not later than the close of business on the
later of the 90th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made.
Based upon a 2001 Annual Meeting date of July 12, 2001, if a stockholder intends
to present such a nomination or proposal at the 2002 Annual Meeting of
Stockholders but does not seek inclusion of the nomination or proposal in
LaserSight's proxy statement for such meeting, LaserSight must receive the
nomination or proposal after March 14, 2002 and before April 13, 2002 for it to
be considered timely received. If notice of a stockholder nomination or proposal
is timely received, as described above, the holders of proxies solicited in
connection with LaserSight's proxy statement for such meeting can exercise
discretionary authority with respect to such proposal only to the extent
permitted by the regulations of the Securities and Exchange Commission. If
notice of a stockholder nomination or proposal is not timely received, such
holders of proxies can exercise discretionary authority with respect to the
proposal.
All stockholder proposals must contain all of the information required
under LaserSight's Bylaws, a copy of which is available, at no charge, from the
Secretary, and should be sent to LaserSight Incorporated, 3300 University
Boulevard, Suite 140, Winter Park, Florida 32792, addressed to the attention of
Gregory L. Wilson, Secretary.
Stockholder Proposals For Inclusion In The Proxy Statement For The 2002
Annual Meeting
In order to be considered for inclusion in LaserSight's proxy materials
for the 2002 Annual Meeting of Stockholders, any stockholder proposals must be
received by LaserSight no later than February 5, 2002. Proposals should be sent
to LaserSight Incorporated 3300 University Boulevard, Suite 140, Winter Park,
Florida 32792, addressed to the attention of Gregory L. Wilson, Secretary.
OTHER MATTERS
The Board of Directors of LaserSight is not aware that any matter other
than those listed in the Notice of Meeting is to be presented for action at the
Annual Meeting. If any of the Board's nominees is unavailable for election as a
director or any other matter should properly come before the meeting, it is
intended that votes will be cast pursuant to the Proxy in respect thereto in
accordance with the best judgment of the person or persons acting as proxies.
By Order of the Board of Directors,
Gregory L. Wilson
Secretary
Winter Park, Florida
June 5, 2001
20
APPENDIX A
LASERSIGHT INCORPORATED
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee is appointed by the Board of Directors of LaserSight
Incorporated (the "Board") to assist the Board in monitoring (1) the integrity
of the financial statements of LaserSight Incorporated and Subsidiaries, (2) the
compliance by LaserSight with legal and regulatory requirements and LaserSight
policies, and (3) the independence and performance of LaserSight's outside
auditors.
ORGANIZATION
The Audit Committee shall be comprised of three members of the Board. The
members of the Audit Committee shall meet the independence and experience
requirements of the Nasdaq National Market or other exchange where LaserSight's
shares are traded. The members and the Chairman of the Audit Committee shall be
appointed by the Board. The Audit Committee shall meet when called by the
Chairman, but at least four times a year.
DUTIES AND RESPONSIBILITIES
While the Audit Committee has the responsibilities and powers set forth
in this Audit Committee Charter, it is not the duty of the Audit Committee to
plan or conduct audits or to determine that LaserSight's financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and the
independent auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent auditor or to assure compliance with laws and regulations and
LaserSight's policies.
The Board and Audit Committee have the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the independent auditor (or to
nominate the independent auditor for stockholder approval in any proxy
statement). The independent auditor is ultimately accountable to the Board and
the Audit Committee, as representatives of LaserSight's stockholders.
To fulfill its duties and responsibilities, the Audit Committee shall:
General Responsibilities
------------------------
o Make regular reports to the Board with such recommendations as the
Committee may deem appropriate.
o Review and reassess the adequacy of this Charter annually and recommend
changes to the Board for approval.
o Meet at least annually with the chief financial officer, the senior
accounting executive and the independent auditor in separate executive
sessions.
A-1
o Assist the Board in satisfying its responsibilities to the stockholders
with respect to matters relating to LaserSight's accounting, financial
reporting, audit, legal compliance, and internal control practices.
Internal Control
----------------
o Review with management and independent accountants the quality and
adequacy of internal controls.
Financial Reporting Process
---------------------------
o Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices
as well as the adequacy of internal controls that could significantly
affect LaserSight's financial statements.
o Review with management and the independent auditor significant financial
reporting issues and judgments made in connection with the preparation of
LaserSight's financial statements.
o Review with management and the independent auditor LaserSight's quarterly
financial statements and press release prior to release of quarterly
earnings.
o Review LaserSight's major financial risk exposures and the steps
management has taken to monitor and control such exposures.
o Review major changes to LaserSight's accounting principles and practices
as suggested by the independent auditor or management.
Review of Process for Company Compliance with Laws, Regulations and Policies
----------------------------------------------------------------------------
o Review with LaserSight's counsel annually, legal matters that may have a
material impact on the financial statements, LaserSight's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
Independent Accountants.
-----------------------
o Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
o Receive from the independent auditors a formal written statement
delineating all relationships between the independent auditor and
LaserSight (consistent with Independence Standards Board Standard 1).
o Receive periodic reports, at least annually, from the independent auditor
regarding the auditor's independence, discuss such reports with the
auditor, including discussion of any disclosed relationships or services
that may impact the objectivity and independence of the auditor, and if
so determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the auditor.
A-2
o Review with management and the independent auditor prior to the audit
planning, staffing and budget for the audit.
o Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of the
audit.
o Review with the independent auditor any problems or difficulties
encountered in the course of the audit work, including any restrictions
on the scope of activities or access to required information and any
management letter provided by the auditor and LaserSight's response to
that letter.
o Obtain from the independent auditor assurance that Section 10A of the
Private Securities Litigation Reform Act of 1995 has not been implicated.
ADDITIONAL AUTHORITIES
o The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Audit Committee. The Audit
Committee may request any officer or employee of LaserSight or
LaserSight's outside counsel or independent auditor to attend a meeting of
the Committee or to meet with any members of, or consultants to, the Audit
Committee.
REPORTING RESPONSIBILITIES
o Prepare the report required by the rules of the Securities and Exchange
Commission to be included in LaserSight's annual proxy statement.
A-3
LASERSIGHT INCORPORATED
PROXY
ANNUAL MEETING OF STOCKHOLDERS, JULY 12, 2001
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby (i) appoints Michael R. Farris and Gregory L.
Wilson and each of them as proxy holders and attorneys, with full power of
substitution to appear and vote all of the shares of common stock of LaserSight
Incorporated which the undersigned shall be entitled to vote at the Annual
Meeting of Stockholders of LaserSight, to be held on Thursday, July 12, 2001 at
10:00 a.m. EDT, and at any adjournments thereof, hereby revoking any and all
proxies previously given and (ii) authorizes and directs said proxy holders to
vote all of the shares of common stock of LaserSight represented by this proxy
as indicated on this proxy and in the discretion of the proxy holder with regard
to any other matter that properly comes before the meeting. If no directions are
given below, said shares will be voted "FOR" Items 1, 2 and 3.
(1) ELECTION OF DIRECTORS. Michael R. Farris; Terry A. Fuller, Ph.D.; D.
Michael Litscher; Guy W. Numann; Francis E. O'Donnell, Jr., M.D.; and
David T. Pieroni.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for the nominees listed
contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line.)
------------------------------------------------------------------------------
(2) Approve Amendment to
Equity Incentive Plan [ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Ratify appointment of
independent auditors [ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion to act
on any other matters which
may properly come before the
Annual meeting.
Please date, sign and return promptly in the
accompanying envelope.
Dated: ____________________________, 2001
----------------------------
----------------------------
(If held jointly)
Your signature should be exactly the same
as the name imprinted herein. Persons
signing as executors, administrators,
trustees or in similar capacities should
so indicate. For joint accounts, each
joint owner must sign.
The Board of Directors Recommends You Vote FOR the Above Proposals.
LASERSIGHT INCORPORATED
PROXY
ANNUAL MEETING OF STOCKHOLDERS, JULY 12, 2001
This Proxy is solicited on behalf of the Board of Directors
from the holders of Series C Preferred Stock
The undersigned hereby (i) appoints Michael R. Farris and Gregory L.
Wilson and each of them as proxy holders and attorneys, with full power of
substitution to appear and vote all of the shares of common stock of LaserSight
Incorporated which the undersigned shall be entitled to vote at the Annual
Meeting of Stockholders of LaserSight, to be held on Thursday, July 12, 2001 at
10:00 a.m. EDT, and at any adjournments thereof, hereby revoking any and all
proxies previously given and (ii) authorizes and directs said proxy holders to
vote all of the shares of Series C Preferred Stock of LaserSight represented by
this proxy as indicated on this proxy and in the discretion of the proxy holder
with regard to any other matter that properly comes before the meeting. If no
directions are given below, said shares will be voted "FOR" Items 1, 2 and 3.
(1) ELECTION OF DIRECTORS. Michael R. Farris; Terry A. Fuller, Ph.D.; D.
Michael Litscher; Guy W. Numann; Francis E. O'Donnell, Jr., M.D.; and
David T. Pieroni.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for the nominees listed
contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line.)
------------------------------------------------------------------------------
(2) Approve Amendment to
Equity Incentive Plan [ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Ratify appointment of
independent auditors [ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion to act
on any other matters which
may properly come before the
Annual meeting.
Please date, sign and return promptly in the
accompanying envelope.
Dated: ____________________________, 2001
----------------------------
----------------------------
(If held jointly)
Your signature should be exactly the same
as the name imprinted herein. Persons
signing as executors, administrators,
trustees or in similar capacities should
so indicate. For joint accounts, each
joint owner must sign.
The Board of Directors Recommends You Vote FOR the Above Proposals.