def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Escalon Medical Corp.
(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):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit or other underlying value of transaction computed pursuant to Exchange Act
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Fee paid previously with preliminary materials. |
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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
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Date Filed: |
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Escalon Medical Corp.
435 Devon Park Drive, Building 100
Wayne, PA 19087
Tel.610-688-6830 Fax. 610-688-3641
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Notice of
2008 Annual Meeting of Shareholders
To Be Held June 30, 2009
To the Shareholders of Escalon Medical Corp.:
The annual meeting of shareholders of Escalon Medical Corp. will
be held at 9:00 a.m., local time, on June 30, 2009, at
the offices of the Company, 435 Devon Park Drive, Building 100,
Wayne, PA 19087. At our annual meeting, our shareholders will
act on the following matters:
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1.
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Election of two Class III directors, each for a term of
three years and until their respective successors have been
elected to serve; and
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2.
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Any other matters that properly come before our annual meeting.
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All shareholders of record as of the close of business on
June 5, 2009 are entitled to vote at our annual meeting.
Our 2008 Annual Report is being mailed to shareholders together
with this Notice.
It is important that your shares be voted at our annual meeting.
Please complete, sign and return the enclosed proxy card in the
envelope provided whether or not you expect to attend our annual
meeting in person.
By Order of the Board of Directors,
Richard J. DePiano
Chairman and Chief Executive Officer
June 2, 2009
Wayne, Pennsylvania
ESCALON
MEDICAL CORP.
PROXY
STATEMENT
This proxy statement contains information relating to the annual
meeting of shareholders of Escalon Medical Corp. to be held on
June 30, 2009, at the offices of the Company, 435 Devon
Park Drive, Building 100, Wayne, PA 19087 at
9:00 a.m., local time, and at any adjournment, postponement
or continuation of the annual meeting. This proxy statement and
the accompanying proxy are first being mailed to shareholders on
or about June 8, 2009. Unless the context indicates
otherwise, all references in this proxy statement to
we, us, our
Escalon or the Company mean Escalon
Medical Corp. and its subsidiaries.
CONTENTS
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14
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15
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15
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Director Compensation Table
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ii
ABOUT OUR
ANNUAL MEETING
What
is the purpose of our annual meeting?
At our annual meeting, shareholders will act upon the matters
outlined in the notice of meeting on the cover page of this
proxy statement, including the election of two Class III
directors and any other matters that properly come before our
annual meeting. In addition, our management will report on our
performance during fiscal 2008 and respond to appropriate
questions from shareholders.
VOTING
Who is
entitled to vote at our meeting?
Holders of common stock of record at the close of business on
the record date, June 5, 2009, are entitled to receive
notice of and to vote at our annual meeting, and any
adjournment, postponement or continuation of our annual meeting.
What
are the voting rights of our shareholders?
As of the record date, 7,413,930 shares of common stock
were outstanding, each of which is entitled to one vote with
respect to each matter to be voted on at our annual meeting.
Who
can attend our annual meeting?
All shareholders as of the record date, or their duly appointed
proxies, may attend our annual meeting. Even if you currently
plan to attend our annual meeting, we recommend that you also
submit your proxy as described below so that your vote will be
counted if you later decide not to attend our annual meeting.
If you hold your shares in street name (that is,
through a broker or other nominee), you will need to bring a
copy of a brokerage statement reflecting your stock ownership as
of the record date and check in at the registration desk at our
annual meeting.
What
constitutes a quorum?
The presence at our annual meeting, in person or by proxy, of
the holders of a majority of the shares of our common stock
outstanding on the record date will constitute a quorum,
permitting the conduct of business at our annual meeting.
Proxies received but marked as abstentions and broker non-votes
will be included in the calculation of the number of shares
present at our annual meeting.
How do
I vote?
If you or your duly authorized attorney-in-fact complete,
properly sign and return the accompanying proxy card to us, it
will be voted as you direct. If you are a registered shareholder
and attend our annual meeting, you may deliver your completed
proxy card in person. Street name shareholders who
wish to vote at our annual meeting will need to obtain a signed
proxy from the institution that holds their shares.
May I
change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change
your vote at any time before the proxy is exercised by filing
with our Secretary either a notice of revocation or a duly
executed proxy bearing a later date. The powers of the proxy
holders will be revoked if you attend our annual meeting in
person and request that your proxy be revoked, although
attendance at our annual meeting will not by itself revoke a
previously granted proxy.
1
What
are our Boards recommendations?
Unless you give other instructions on your proxy card, the
persons named as proxy holders on the proxy card will vote in
accordance with the recommendations of our Board of Directors.
Our Board of Directors recommends a vote:
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FOR election of our nominees for Class III directors (see
pages 4 through 7).
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What
vote is required to approve each matter?
Election of Class III Directors. The two
persons receiving the highest number of FOR votes
cast by the holders of our common stock for election as
Class III directors will be elected. A properly executed
proxy marked WITHHOLD AUTHORITY with respect to the
election of one or more directors will not be voted with respect
to the director or directors indicated, although the proxy will
be counted for purposes of determining whether a quorum is
present. Abstentions and shares held by brokers or nominees as
to which voting instructions have not been received from the
beneficial owner of or persons otherwise entitled to vote the
shares and as to which the broker or nominee does not have
discretionary voting power, i.e., broker non-votes, will
not be taken into account in determining the outcome of the
election. We do not permit cumulative voting in the election of
directors.
Other Matters. The affirmative vote of a
majority of the votes cast by the holders of our common stock on
the proposal will be required to approve any other matter that
properly comes before our annual meeting. Abstentions and broker
non-votes do not constitute votes cast and therefore will not
affect the outcome of the vote.
If you sign your proxy card or broker voting instruction card
with no further instructions, your shares will be voted in
accordance with the recommendations of our Board, i.e.,
FOR the election of our nominees for Class III directors.
Who
will pay the costs of soliciting proxies on behalf of our Board
of Directors?
We are making this solicitation and will pay the cost of
soliciting proxies on behalf of our Board of Directors,
including expenses of preparing and mailing this proxy
statement. In addition to mailing these proxy materials, the
solicitation of proxies or votes may be made in person or by
telephone or telegram by our regular officers and employees,
none of whom will receive special compensation for such
services. Upon request, we will also reimburse brokers,
nominees, fiduciaries and custodians and persons holding shares
in their names or in the names of nominees for their reasonable
expenses in sending proxies and proxy material to beneficial
owners.
2
STOCK
OWNERSHIP
The following table indicates, as of September 29, 2008,
information about the beneficial ownership of our common stock
by (1) each director as of September 29, 2008,
(2) each Named Executive Officer, (3) all directors
and executive officers as of September 29, 2008 as a group
and (4) each person who we know beneficially owns more than
5% of our common stock. All such shares were owned directly with
sole voting and investment power unless otherwise indicated.
Beneficial
Ownership Table
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Amount of
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Amount of
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Beneficial
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Beneficial
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Ownership
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Ownership of
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of Shares
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Amount of
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Aggregate
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Outstanding
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Percent
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Underlying
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Aggregate Beneficial
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Percent of
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Name
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Shares(1)
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of Class
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Options
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Ownership
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Class
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Richard J. DePiano
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144,278
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2.2
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%
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286,897
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431,175
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6.7
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Richard J. DePiano, Jr.
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206
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0.0
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%
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100,367
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100,573
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1.6
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Robert OConnor
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0.0
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%
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100,000
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100,000
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1.6
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%
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Mark Wallace
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0.0
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%
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47,467
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47,467
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*
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William L.G. Kwan
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0.0
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%
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80,000
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80,000
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1.2
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%
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Jay L. Federman
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12,072
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0.2
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%
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65,000
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77,072
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1.2
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Anthony J. Coppola
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0.0
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%
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45,000
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45,000
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*
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Lisa Napolitano
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0.0
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%
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42,000
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42,000
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Fred Choate
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0.0
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30,000
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30,000
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*
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All Directors and Executive Officers as a group (9 persons)
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156,556
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2.4
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796,731
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953,287
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14.9
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Less than on percent |
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Information furnished by each individual named. This table
includes shares that are owned jointly, in whole or in part with
the persons spouse, or individually by his or her spouse.
No shares held by board members or named executive officers are
pledged as collateral. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the
Exchange Act) requires that our officers and
directors, as well as persons who own 10% or more of a class of
our equity securities, file reports of their ownership of our
securities, as well as statements of changes in such ownership,
with us and the Securities Exchange Commission (the
SEC). Based upon written representations received by
us from our officers, directors and 10% or greater shareholders,
and our review of the statements of beneficial ownership changes
filed with us by our officers, directors and 10% or greater
shareholders during fiscal 2008, we believe all such filings
required during the fiscal year 2008 were made on a timely basis.
3
ELECTION
OF DIRECTORS
ITEM 1
ELECTION OF CLASS III DIRECTORS
Introduction
The election of our directors by our shareholders is governed by
the Pennsylvania Business Corporation Law and our Bylaws. The
following discussion summarizes these provisions and describes
the process our Governance and Nominating Committee will follow
in connection with the nomination of candidates for election as
directors by the holders of our common stock.
Governance
and Nominating Procedures
Our Governance and Nominating Committee is responsible for
recommending to the Board of Directors candidates to stand for
election to the Board of Directors at the annual meeting. Our
Governance and Nominating Committee will also consider director
candidates recommended by shareholders in accordance with the
advance notice procedures in Section 2.3 of our Bylaws.
These procedures are described under Shareholder
Proposals in this proxy statement. The Governance and
Nominating Committee may also consider director candidates
proposed by our management. We have not utilized third-party
executive search firms to identify candidates for director.
With the exception of applicable rules of the SEC and the Nasdaq
Stock
MarketSM
(Nasdaq), our Governance and Nominating Committee
does not have any specific, minimum qualifications for
candidates for election to our Board of Directors, and our
Governance and Nominating Committee may take into account such
factors as it deems appropriate. Our Governance and Nominating
Committee examines the specific attributes of candidates for
election to our Board of Directors and also considers the
judgment, skill, diversity, business experience, the interplay
of the candidates experience with the experience of the
other members of our Board of Directors and the extent to which
the candidate would contribute to the overall effectiveness of
our Board of Directors.
Our Governance and Nominating Committee will utilize the
following process in identifying and evaluating candidates for
election as members of our Board of Directors:
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Evaluation of the performance and qualifications of the members
of our Board of Directors whose term of office will expire at
the forthcoming annual meeting of shareholders and determination
of whether they should be nominated for re-election.
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Consideration of the suitability of the candidates for election,
including incumbent directors.
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Review of the qualifications of any candidates proposed by
shareholders in accordance with our Bylaws, candidates proposed
by management and candidates proposed by individual members of
our Board of Directors.
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After such review and consideration, propose to the Board of
Directors a slate of candidates for election at the forthcoming
annual meeting of shareholders.
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Actions
Taken by Our Governance and Nominating Committee
Our Governance and Nominating Committee met once this year, but
our entire Board of Directors performed the functions of the
Governance and Nominating Committee with respect to the
nominating of candidates for election at the 2008 Annual
Meeting. The Board of Directors met on September 25, 2008
for the purpose of nominating candidates for election as
directors by our shareholders at our 2008 annual meeting of
shareholders and approved the nomination of the persons named
below.
Candidates
for Election
Our Board of Directors currently consists of six members, four
of whom are considered independent for purposes of the
applicable Nasdaq rules. The current independent directors are
Anthony J. Coppola, Lisa A. Napolitano, Fred G. Choate and
William L. G. Kwan. Each director is elected for a three-year
term and until
his/her
4
successor has been duly elected. The current three-year terms of
our directors expire in the years 2008, 2009 and 2010,
respectively.
Two Class III directors are to be elected at our annual
meeting. Unless otherwise instructed, the proxies solicited by
our Board of Directors will be voted for the election of the
nominees named below. The two Class III nominees are
currently directors of the Company.
If any of the nominees becomes unavailable for any reason, the
proxies intend to vote for a substitute nominee designated by
our Board of Directors. Our Board of Directors has no reason to
believe the nominees named will be unable to serve if elected.
Any vacancy occurring on our Board of Directors for any reason
may be filled by a majority vote of our directors then in office
until the expiration of the term of the class of directors in
which the vacancy exists.
The names of the nominees for Class III directors and the
Class I directors and Class II directors who will
continue in office after our annual meeting until the expiration
of their respective terms, together with certain information
regarding them, are as follows:
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Class III
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Director
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Year Term
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Principal Occupation During Past Five
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Name of Director
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Since
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Will Expire
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Age
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Years and Certain Directorships
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Richard J. DePiano
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1996
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2011*
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67
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Chairman and CEO of Escalon Medical Corp. since March 1997. CEO
of the Sandhurst Company, L.P. and Managing Director of the
Sandhurst Venture Fund since 1986; Chairman of the Board of
Directors of PhotoMedex, Inc.
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Jay L. Federman, M.D.
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1996
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2011*
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70
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Jay Federman, M.D. is an ophthalmologist subspecializing in
the management of vitreo-retinal diseases with Associated
Retinal Consultants. He is currently an Attending Surgeon at
Wills Eye Institute and a Professor of Ophthalmology at
Jefferson Medical College. His Directorships include the
Research Department of Wills Eye Hospital from 1987 to 1995,
Chief of the Department Ophthalmology of the Medical College of
PA from 1994 to 2004, Co-Director of the Retina Service of Wills
Eye Hospital from 1991 to 1999 and a Director of the
Vitreo-Retinal Research Foundation of Philadelphia. He is a
member of the American Academy of Ophthalmology, American
College of Surgeons, American Ophthalmological Society,
Association of Research in Vision and Ophthalmology, Club Jules
Gonin, Macula Society, and the Retina and Vitreous Societies.
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If elected at the Annual Meeting. |
5
Directors
Continuing in Office
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Name of Director
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Director
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Year Term
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Principal Occupation During Past Five
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Class I
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Since
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Will Expire
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Age
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Years and Certain Directorships
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William L.G. Kwan
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1999
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2009
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67
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Retired; Vice President of Business Development of Alcon
Laboratories, Inc. a medical products company, from October 1996
to 1999, and Vice President of International Surgical
Instruments from November 1989 to October 1999.
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Anthony J. Coppola
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2000
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2009
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71
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Principal and operator of The Historic Town of Smithville, Inc.,
a real estate and commercial property company from 1988 to
present; Retired Division President of SKF Industries, a
manufacturing company, from 1963 to 1986.
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Nominees for
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Class II
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Director
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Year Term
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Principal Occupation During Past Five
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Name of Director
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Since
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Will Expire
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Age
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Years and Certain Directorships
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Lisa A. Napolitano
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2003
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2010
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45
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Tax Manager, Global Tax Management, Inc., a provider of
compliance support services for both federal and state taxes,
since 1998. Ms. Napolitano is a Certified Public Accountant in
Pennsylvania.
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Fred G. Choate
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2005
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2010
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62
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Managing Member of Atlantic Capital Funding LLC, a venture
capital fund, from 2003 to present, Managing Member of Atlantic
Capital Management LLC, a venture capital fund, from 2004 to
present; Baltic-American Enterprise Fund, a venture capital
fund, Chief Investment Officer from 2003 to present; Managing
Member of Greater Philadelphia Venture Capital Corp, a venture
capital fund, from 1992 to present. Mr. Choate has been a
director of Parke Bank since 2003. Mr. Choate was formerly a
director of Escalon Medical from 1998 to 2003.
|
CORPORATE
GOVERNANCE
The SEC and Nasdaq have adopted regulations and listing
requirements that relate to our corporate governance. Our Board
of Directors has adopted standards and practices in order to
comply with those regulations that apply to us. We have has
adopted a Code of Ethics, which can be accessed on our web site
at www.escalonmed.com. Our independent directors meet at
regularly scheduled meetings at which only independent directors
are present.
Our Board
of Directors and Its Committees
Our Board of Directors met seven times in fiscal 2008. Our Board
of Directors has an Executive Committee, an Audit Committee, a
Governance and Nominating Committee and a Compensation Committee.
Audit
Committee
Our Audit Committee consists of Anthony J. Coppola, William L.G.
Kwan and Lisa A. Napolitano. The Committee met four times in
fiscal 2008. Each member of the Audit Committee is independent
within the meaning of the rules of Nasdaq and of the SEC.
Consistent with the Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley), the Audit Committee has
responsibility for:
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the selection of our independent public accountants;
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|
|
reviewing the scope and results of the audit;
|
6
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|
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reviewing related-party transactions; and
|
|
|
|
reviewing the adequacy of our accounting, financial, internal
and operating controls.
|
Our Audit Committee operates pursuant to a written charter, the
full text of which is available on our website.
Governance
and Nominating Committee
Our Governance and Nominating Committee consists of Anthony J.
Coppola, Fred G. Choate and Lisa A. Napolitano. Each member of
the Governance and Nominating Committee is independent within
the meaning of the rules of Nasdaq and of the SEC. Our
Governance and Nominating Committee has responsibility for:
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|
|
developing and recommending to the Board corporate governance
guidelines, establishing procedures to ensure effective
functioning of the Board;
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reviewing of director compensation;
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|
identifying individuals believed to be qualified to become
members of our Board of Directors and to recommend to our Board
of Directors nominees to stand for election as
directors; and
|
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|
|
Identifying members of our Board of Directors qualified to serve
on the various committees of our Board of Directors.
|
Our Governance and Nominating Committee operates pursuant to a
written charter, the full text of which is available on our
website.
Compensation
Committee
Our Compensation Committee consists of Anthony J. Coppola, Fred
G. Choate and Lisa A. Napolitano. The Committee met one time in
fiscal 2008. Each member of the Compensation Committee is
independent within the meaning of the rules of Nasdaq and of the
SEC. Our Compensation Committee has responsibility for:
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the annual review and determination of the compensation of our
executive officers;
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providing annual compensation recommendations to our Board of
Directors for all of our officers;
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|
determining the employees who participate in our equity
incentive plans and the provision of recommendations to our
Board of Directors as to individual stock option grants and
other awards; and
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|
the general oversight of our employee benefit plans.
|
Our Compensation Committee operates pursuant to a written
charter, the full text of which is available on our website. Our
Compensation Committees charter reflects these
responsibilities, and the Compensation Committee and our Board
of Directors reviews the charter annually.
Director
Shareholder Communications
Our shareholders may communicate with our Board of Directors
through our Secretary. Shareholders who wish to communicate with
any of our directors may do so by sending their communication in
writing addressed to a particular director, or in the
alternative, to Non-management Directors as a group,
in care of our Secretary at our headquarters, 435 Devon Park
Drive, Building 100, Wayne, PA 19087. All such communications
that are received by our Secretary will be promptly forwarded to
the addressee or addressees set forth in the communication.
We actively encourage our directors to attend our annual
meetings of shareholders because we believe director attendance
at our annual meetings provides our shareholders with an
opportunity to communicate with the members of our Board of
Directors. All of our directors attended our annual meeting of
shareholders in 2007 and intend to be in attendance at the 2008
annual meeting.
7
EXECUTIVE
OFFICERS OF THE COMPANY
Our executive officers are as follows:
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|
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Name
|
|
Age
|
|
Position
|
|
Richard J. DePiano
|
|
|
67
|
|
|
Chairman and Chief Executive Officer
|
Richard J. DePiano, Jr.
|
|
|
42
|
|
|
President and General Counsel
|
Mark G. Wallace
|
|
|
39
|
|
|
Chief Operating Officer
|
Robert M. OConnor
|
|
|
47
|
|
|
Chief Financial Officer
|
Mr. DePiano has been a director of the Company since
February 1996 and has served as Chairman and Chief Executive
Officer of the Company since March 1997. Mr. DePiano has
been the Chief Executive Officer of the Sandhurst Company, L.P.
and Managing Director of the Sandhurst Venture Fund since 1986.
Mr. DePiano also serves Chairman of the Board of Directors
of PhotoMedex, Inc.
Mr. DePiano, Jr. was appointed Chief Operating Officer
and General Counsel of the Company December 28, 2006.
Mr. DePiano, Jr. joined the Company in November of
2000 as Vice President Corporate and Legal Affairs. Prior to
joining the Company, Mr. DePiano, Jr. worked with
Forceno & Arangio, L.L.P., from September 1998 until
November 2000 as a Senior Associate representing individual and
business clients in various areas of the law including mergers
and acquisitions, automotive dealership representation, family,
small and emerging businesses, securities law, venture capital
financing, consumer finance and general corporate and commercial
matters. Prior to this Mr. DePiano, Jr. was in private
law practice since 1992. He served as President and is a member
of the Board of Directors of the Delaware Valley Corporate
Counsel Association (DELVACCA).
Mr. DePiano, Jr. also serves as the Chairman of the
Nominations Committee, Chairman of the Law School Initiative
Committee and member of the Pro-Bono Committee of DELVACCA. He
also is Vice Chairman of the Board of Directors of the
Montgomery County Industrial Development Authority.
Mr. Wallace was appointed our Chief Operating Officer on
January 1, 2008. Mr. Wallace has worked with us since
1997. Previous to being appointed Chief Operating Officer he was
Executive Vice President of our Escalon Digital Solutions and
Trek Medical subsidiaries. He has jointly held the position of
Vice President-Quality, with quality and regulatory
responsibilities for all of the our companies, and has also
previously served as Operations Manager at Sonomed, Inc. and
Quality Manager of Escalon Medical. He had previously worked
with Lunar Corp (now GE Healthcare) and Trek Medical. He holds a
BS Industrial Engineering and a MS Manufacturing Systems
Engineering, both from the University of Wisconsin-Madison, is a
senior member of the American Society of Quality, and has over
18 years experience in the medical device industry.
Mr. OConnor was appointed Chief Financial Officer of
the Company on June 30, 2006. Mr. OConnor joined
the Company from BDO Seidman, LLP where he served as a senior
manager from 2004. His prior experience includes both public and
private accounting roles as a manager at PricewaterhouseCoopers,
LLP where he served in the middle market advisory services group
from 1998 until 2000, and positions of controller and chief
financial officer of Science Dynamics, a manufacturer of high
tech telecom equipment, from 2000 until 2002 and
Ianieri & Giampapa, LLC, a certified public accounting
firm from 2002 until 2004. Mr. OConnor holds an MBA
from Rutgers University Graduate School of
Management and a B.S. from Kean University. He is a certified
public accountant and a member of the American Institute of
Certified Public Accountants (AICPA).
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Introduction
The Compensation Committee of our Board of Directors, or our
Compensation Committee, oversees our compensation and policies,
our compensation levels, including reviewing and approving
equity awards to our executive officers, and reviews and
recommends annually for approval by our Board of Directors all
compensation decisions relating to our executive officers.
8
Our Compensation Committee believes that the primary objectives
of our compensation programs for our executive officers are to:
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|
|
attract and retain talented and dedicated executive officers who
contribute to our growth, development and profitability and to
encourage them to remain with us for many years;
|
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|
|
motivate our executive officers to achieve our strategic
business objectives and to reward them when they achieve those
objectives; and
|
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|
|
provide long-term compensation to our executive officers that
rewards our executive officers for sustained financial and
operating performance and leadership excellence.
|
Our
Compensation Philosophy and Objectives
The most significant component of the compensation policy
administered by our Compensation Committee is that a substantial
portion of the aggregate annual compensation of our named
executive officers should be based on our annual financial
results, our overall sales, growth and our profitability. Our
Compensation Committee also evaluates the achievement of our
other corporate objectives and the contribution of each named
executive officer to those achievements.
We rely on our judgment in making compensation decisions after
reviewing our performance and the performance of our executives
based on financial and operational objectives. We do not retain
the services of any compensation consultants. Three of our named
executive officers, Richard DePiano, Sr., Mark Wallace and
Robert OConnor, have employment, severance and
change-of-control
agreements. (See Employment Agreements below.)
For a number of years, we have maintained a cash incentive
compensation program for our officers, including our named
executive officers. The amount of the bonus is dependent upon
several factors listed below including our financial results,
sales growth and our profitability. Our Compensation Committee
does not assign specific weights to these factors.
The
Compensation of Our Officers
Our officers receive the following types of compensation:
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|
|
|
|
Base Salary. The base salaries of our
officers, including our named executive officers, are
established based on the scope of their responsibilities and the
recommendation of our Chief Executive Officer to our
Compensation Committee for other than his own compensation. Our
Compensation Committee reviews the base salaries of our named
executive officers annually, including our Chief Executive
Officer, and adjusts those salaries annually after taking into
account individual responsibilities, performance, length of
service with us, current salary, experience and compensation
history as well as our results of operations.
|
|
|
|
Annual Cash Bonus. Our officers, including our
named executive officers, receive annual cash bonuses based on
our financial results, overall sales growth and profitability.
The maximum aggregate amount available annually for our officers
is determined by our Compensation Committee. Our Compensation
Committee then recommends to our Board of Directors the
percentage of the maximum amount to be allocated among our
officers, including our named executive officers, on a
discretionary basis. Our Chief Executive Officer submits
recommended bonus allocations for our officers, including our
named executive officers other than himself, to our Compensation
Committee, which reviews his recommendations and then
establishes the annual bonus allocations for our officers and
reports its decisions to our Board of Directors. The annual cash
bonuses approved by our Compensation Committee are paid in a
single installment following the completion of a particular
fiscal year.
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|
Long-Term Equity Incentives. We believe that
we can maximize our long-term performance best when the
performance of our officers is motivated by equity-based awards
that provide value based on our long-term performance. We have
designed our long-term equity compensation plans to provide all
of the members of our management, including our named executive
officers, with equity incentives to foster the alignment of the
interests of our officers with the interests of our
stockholders. Our equity-based compensation plans
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9
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provide the principal method by which our officers can acquire
ownership of our common stock. The primary form of equity
compensation that we have historically awarded to our officers,
including our named executive officers, is stock options. Our
Compensation Committee receives preliminary recommendations for
periodic stock option grants from our Chief Executive Officer
for our officers other than himself. Our Compensation Committee
then recommends stock option grants for all of our officers,
including our Chief Executive Officer, for approval by our Board
of Directors. We have stock option plans that authorize us to
grant options to purchase shares of our common stock to our
employees, officers and directors. We have consistently followed
the practice of granting stock options at an exercise price of
the closing price of our common stock on Nasdaq on the date of
grant.
|
The
Operation of Our Compensation Process
Our Compensation Committee recommends all compensation and
equity awards to our executive officers for final discretionary
action by our Board of Directors. Our Compensation Committee, in
recommending the annual compensation of our officers, including
our named executive officers, to be established by our Board of
Directors, reviews the performance and compensation of our
officers. In assessing the performance of our named executive
officers in relation to the objectives established by our Board
of Directors, our Compensation Committee reviews specific
achievements associated with attainment of the objectives, the
degree of difficulty of the objectives and the extent to which
significant unforeseen obstacles or favorable circumstances
affected their performance.
Our Compensation Committee recommends to our Board of Directors
the base salaries, annual aggregate bonus amount and stock
option grants to the members of our management. As part of its
oversight of the compensation of our named executive officers,
our Compensation Committee reviewed recommended the following
compensation adjustments for 2008 for our named executive
officers:
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|
|
increases in base salaries of our named executive officers in
2008 that averaged 3.5% which our Compensation Committee
considered an adjustment consistent with published information
about CPI increases in the United States in 2008;
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|
increase in an individual bonus represented a contractual
obligation for one of the named executives.
|
|
|
|
the remaining named executives took no bonus for the year and
initiated cost cutting measurements in all business units. To
that end, executive management took a reduction in salary of ten
percent (10%).
|
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|
continued grants of stock options at exercise prices at which we
would be prepared to sell our common stock in the event we were
to determine to raise additional capital because our
Compensation Committee believes that our history of stock option
grants has in fact been successful in motivating our named
executive officers to achieve superior performance.
|
Tax
Matters
Section 162(m) of the Code generally does not allow us a
deduction for federal income tax purposes to the extent that we
pay annual compensation to any of our executive officers named
in the Summary Compensation Table in this proxy statement that
is in excess of $1 million. However, compensation paid to
such an executive officer that is paid pursuant to a
performance-based plan is generally not subject to the
Section 162(m) limitation. Although our Compensation
Committee is aware of the Section 162(m) limitation, our
Compensation Committee believes that it is equally important to
maintain flexibility and the competitive effectiveness of the
compensation of our named executive officers. Our Compensation
Committee may, therefore, from time to time, authorize
compensation that is not deductible for federal income tax
purposes if our Compensation Committee believes it is in our
best interests and the best interests of our stockholders to do
so.
10
Executive
Compensation Tables
The following table sets forth certain summary information
concerning compensation which we paid or accrued to or on behalf
of each of our executive officers during the fiscal years ended
June 30, 2008 and 2007 (the Named Executive
Officers) for each of such fiscal years.
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|
Pension
|
|
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Value and
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|
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Nonqualified
|
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Non-Equity
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Deferred
|
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|
Stock
|
|
|
Option
|
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|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
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Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards(1)
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation(2)
|
|
|
Total
|
|
|
Richard J. DePiano
|
|
|
2008
|
|
|
$
|
336,343
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
57,653
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
19,816
|
|
|
$
|
413,812
|
|
Chairman and Chief
|
|
|
2007
|
|
|
$
|
317,700
|
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
23,207
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,600
|
|
|
$
|
600,507
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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Richard J. DePiano, Jr.
|
|
|
2008
|
|
|
$
|
180,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
18,448
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,600
|
|
|
$
|
208,048
|
|
President and
|
|
|
2007
|
|
|
$
|
127,200
|
|
|
$
|
80,000
|
|
|
$
|
|
|
|
$
|
7,425
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
214,625
|
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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Robert M. OConnor
|
|
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2008
|
|
|
$
|
205,400
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,547
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,600
|
|
|
$
|
223,547
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
$
|
200,000
|
|
|
$
|
25,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
225,000
|
|
Mark Wallace
|
|
|
2008
|
|
|
$
|
93,246
|
|
|
$
|
60,000
|
|
|
$
|
|
|
|
$
|
2,849
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
156,095
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1) |
|
Represents the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended June 30, 2008,
in accordance with FAS 123(R). Assumptions used in the
calculation of these amounts are included in Note 2 to the
Consolidated Financial Statements. There were no forfeitures
during 2008. The options granted to Mr. DePiano, Sr. vest
over a two-year period; options granted to Mr. DePiano,
Jr., Mr. OConnor and Mr. Wallace vest over a
five-year period years (see Long-Term Incentives
under Compensation Discussion and Analysis). There were no
options exercised by the named executives during the year ended
June 30, 2008. |
|
(2) |
|
Includes payment of, (a) an automobile allowance and
(b) insurance premiums paid for life and health insurance. |
Plan-Based
Awards
The following table sets forth certain information regarding
plan-based awards granted during the fiscal year ended
June 30, 2008.
Grants of
Plan-Based Awards
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All
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Other
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|
Grant
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|
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|
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|
Stock
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|
All Other
|
|
|
|
|
|
Date
|
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|
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|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
Awards
|
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|
Option
|
|
|
|
|
|
Fair
|
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|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
Number
|
|
|
Awards
|
|
|
Exercise
|
|
|
Value
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
Number of
|
|
|
or Base
|
|
|
of Stock
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Estimated Future Payouts Under Equity Incentive
|
|
|
Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
and
|
|
|
|
Grant
|
|
|
Plan Awards
|
|
|
Plan Awards
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
Name
|
|
Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Award(1)
|
|
|
Richard J. DePiano
|
|
|
11/13/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
$
|
3.05
|
|
|
$
|
71,227
|
|
Richard J. DePiano, Jr.
|
|
|
11/13/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
$
|
3.05
|
|
|
$
|
56,981
|
|
Robert M. OConnor
|
|
|
11/13/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
$
|
3.05
|
|
|
$
|
56,981
|
|
Mark Wallace
|
|
|
11/13/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
$
|
3.05
|
|
|
$
|
14,245
|
|
|
|
|
(1) |
|
Represents the fair value on date of grant in accordance with
FAS 123(R). Assumptions used in the calculation of these
amounts are included in Note 2 to the Consolidated
Financial Statements. There were no forfeitures during 2008. The
options granted to Mr. DePiano, Sr. vest over a two-year
period; options granted to Mr. DePiano, Jr.,
Mr. OConnor and Mr. Wallace vest over a
five-year period years (see Long-Term Incentives
under Compensation Discussion and Analysis). There were no
options exercised by the named executives during the year ended
June 30, 2008. |
11
Outstanding
Equity Awards at Fiscal Year-End 2008
The following table sets forth certain information regarding
grants of equity awards held by the named executive officers as
of June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Number of Securities Underlying
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
|
Unexercised Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options
|
|
|
Price
|
|
|
Date
|
|
|
Richard J. DePiano
|
|
|
41,480
|
|
|
|
|
|
|
|
|
|
|
$
|
2.13
|
|
|
|
4/19/2009
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
$
|
2.38
|
|
|
|
11/1/2010
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
$
|
2.77
|
|
|
|
11/1/2011
|
|
|
|
|
10,417
|
|
|
|
|
|
|
|
|
|
|
$
|
1.45
|
|
|
|
8/13/2112
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
6.94
|
|
|
|
11/10/2013
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
6.19
|
|
|
|
8/17/2014
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
$
|
8.06
|
|
|
|
8/16/2015
|
|
|
|
|
15,200
|
|
|
|
4,800
|
|
|
|
4,800
|
|
|
$
|
2.65
|
|
|
|
11/9/2016
|
|
|
|
|
7,293
|
|
|
|
17,707
|
|
|
|
17,707
|
|
|
$
|
3.05
|
|
|
|
11/13/2017
|
|
Richard J. DePiano, Jr.
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
$
|
2.38
|
|
|
|
11/1/2010
|
|
|
|
|
1,100
|
|
|
|
|
|
|
|
|
|
|
$
|
2.77
|
|
|
|
11/1/2011
|
|
|
|
|
3,567
|
|
|
|
|
|
|
|
|
|
|
$
|
1.45
|
|
|
|
8/13/2112
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
6.94
|
|
|
|
11/10/2013
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
6.19
|
|
|
|
8/17/2014
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
$
|
8.06
|
|
|
|
8/16/2015
|
|
|
|
|
6,334
|
|
|
|
13,666
|
|
|
|
13,666
|
|
|
$
|
2.65
|
|
|
|
11/9/2016
|
|
|
|
|
2,334
|
|
|
|
17,666
|
|
|
|
17,666
|
|
|
$
|
3.05
|
|
|
|
11/13/2017
|
|
Robert M. OConnor
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5.05
|
|
|
|
6/29/2016
|
|
|
|
|
6,334
|
|
|
|
13,666
|
|
|
|
13,666
|
|
|
$
|
3.05
|
|
|
|
11/13/2017
|
|
Mark Wallace
|
|
|
584
|
|
|
|
4,416
|
|
|
|
4,416
|
|
|
$
|
3.05
|
|
|
|
11/13/2017
|
|
|
|
|
(1) |
|
These options were granted under our 1999 Equity Incentive Plan
and have a term of ten years, subject to earlier termination in
certain events. The options granted to Mr. DePiano, Sr.
vest over a two-year period. Options granted to
Mr. DePiano, Jr., Mr. OConnor and
Mr. Wallace vest over a five-year period. There were no
options exercised by the named executives during the year ended
June 30, 2008. |
Potential
Payments upon Termination or
Change-in-Control
If Mr. DePianos employment with us is terminated by
the Company, prior to him attaining age 65 or if he
terminates his employment with us for good reason, as defined in
the agreement, we would be obligated to pay him $8,000 per month
for life. If Mr. DePiano were to die within a period of
three years after such termination, we would be obligated to
continue making such payments until a minimum of 36 monthly
payments have been made to him and his beneficiaries in the
aggregate.
Mr. OConnor, pursuant to his offer letter, will be
entitled to a severance payment equal to 100% of his annual base
salary and an increase of his annual base salary to $250,000 in
connection with a change of control.
Discussion
of Elements of Compensation
Salary. Salaries for named executive officers
are determined based on a variety of factors, including the
executives scope of responsibilities. Salaries are
reviewed for our named executive officers once each year, and
may be adjusted after considering the factors listed below and
the named executive officers performance.
12
Annual Cash Bonus. In fiscal year 2008, named
executive officers had the opportunity to earn a cash bonus.
Bonuses are provided to reward achieving business results
against individual annual performance commitments and to deliver
cash as part of an overall compensation package that is
competitive in the marketplace.
The Compensation Committee determines bonuses in its discretion
based on performance across a combination of qualitative and
quantitative objectives during the performance period. Working
with our Chief Executive Officer, each named executive officer
establishes these objectives annually. The Chief Executive
Officer establishes his goals in consultation with the Board.
The goals used to determine bonuses vary for each executive
based on his responsibilities and may include financial or
strategic measures, including:
|
|
|
|
|
revenue,
|
|
|
|
profitability,
|
|
|
|
innovation,
|
|
|
|
product development and implementation,
|
|
|
|
quality,
|
|
|
|
customer satisfaction,
|
|
|
|
customer acceptance,
|
|
|
|
organizational and leadership,
|
|
|
|
strategic planning and development,
|
|
|
|
operations excellence, and
|
|
|
|
efficiency and productivity.
|
For named executive officers other than the Chief Executive
Officer, the Chief Executive Officer recommends individual bonus
payments based on the executives performance against his
goals for the year. The Compensation Committee considers the
recommendations and makes a final decision on the bonus payments.
For Mr. DePiano, the Compensation Committee recommends a
bonus payment to the independent members of the Board. In making
this recommendation, the Compensation Committee considers the
performance evaluation of Mr. DePiano. The Board considers
the Committees recommendation and Mr. DePianos
performance evaluation in determining the bonus for
Mr. DePiano.
Employment
Agreements
On May 12, 1998, the Company entered into an employment
agreement with Richard J. DePiano as the Chairman and Chief
Executive Officer of the Company. The initial term of the
employment agreement commenced on May 12, 1998 and
continued through June 30, 2001. The employment agreement
renews on July 1 of each year for successive terms of three
years unless either party notifies the other party at least
30 days prior to such date of the notifying partys
determination not to renew the agreement. The current base
salary provided under the agreement, as adjusted for yearly cost
of living adjustments, is $317,700 per year, and the agreement
provides for additional incentive compensation in the form of a
cash bonus to be paid by the Company to Mr. DePiano at the
discretion of the Board of Directors. The agreement also
provides for health and long-term disability insurance and other
fringe benefits as well as an automobile allowance of $800 per
month.
On June 23, 2005, the Company entered into a Supplemental
Executive Retirement Benefit Agreement with Mr. DePiano.
The agreement provides for the payment of supplemental
retirement benefits to Mr. DePiano in the event of his
termination of service Mr. DePiano with the Company under
the following circumstances:
|
|
|
|
|
If Mr. DePiano retires at age 65 or older, the Company
is obligated to pay the executive $8,000 per month for life,
with payments commencing the month after retirement. If
Mr. DePiano were to die within a period of three years
after such retirement, the Company would be obligated to
continue making such payments until a
|
13
|
|
|
|
|
minimum of 36 monthly payments have been made to the
covered executive and his beneficiaries in the aggregate.
|
|
|
|
|
|
If Mr. DePiano dies before his retirement, while employed
by the Company, the Company would be obligated to make
36 monthly payments to his beneficiaries of $8,000 per
month commencing in the month after his death.
|
|
|
|
If Mr. DePiano were to become permanently disabled while
employed by the Company, the Company would be obligated to pay
the executive $8,000 per month for life, with payments
commencing the month after he suffers such disability. If
Mr. DePiano were to die within three years after suffering
such disability, the Company would be obligated to continue
making such payments until a minimum of 36 monthly payments
have been made to the covered executive and his beneficiaries in
the aggregate.
|
|
|
|
If Mr. DePianos employment with the Company is
terminated by the Company, prior to him attaining age 65 or
if he terminates his employment with the Company for good
reason, as defined in the agreement, the Company would be
obligated to pay him $8,000 per month for life. If
Mr. DePiano were to die within a period of three years
after such termination, the Company would be obligated to
continue making such payments until a minimum of 36 monthly
payments have been made to him and his beneficiaries in the
aggregate.
|
During the fourth quarter of fiscal 2005, we recorded as an
expense in our Consolidated Statement of Income, $1,087,000,
which represents the present value of the supplemental
retirement benefits awarded.
As President and General Counsel, Mr. DePiano, Jr.
received an annual salary of $180,000.
As Chief Financial Officer, Mr. OConnors annual
base salary is $205,400. Mr. OConnor has been granted
stock options to purchase 60,000 shares of the
Companys common stock, which are exercisable in full as of
the June 30, 2006 grant date. The exercise price of these
options is $5.05 per share. Mr. OConnor, pursuant to
his offer letter, will be entitled to a severance payment equal
to his annual base salary and an increase of his annual base
salary to $250,000 in connection with a change of control.
As Chief Operating Officer, Mr. Wallace received an annual
salary of $93,246.
No named executive officer exercised options during the year
ended June 30, 2008. No awards were made to any named
executive officer during such fiscal year under any long-term
incentive plan. We do not currently sponsor any defined benefit
or actuarial plans.
The following table shows securities authorized for issuance
under equity compensation plans.
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
Available
|
|
|
|
Number of
|
|
|
|
|
|
for Future
|
|
|
|
Securities to be
|
|
|
|
|
|
Issuance
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Plans (Excluding
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Securities
|
|
|
|
and Rights
|
|
|
and Rights
|
|
|
Reflected in Column
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(a))(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
920,685
|
|
|
$
|
5.728
|
|
|
|
360,667
|
|
Equity compensation plans not approved by security holders
|
|
|
120,000
|
|
|
$
|
15.60
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,040,685
|
|
|
|
|
|
|
|
360,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
Report of
Our Compensation Committee
The following report of our Compensation Committee does not
constitute proxy solicitation material and shall not be deemed
filed or incorporated by reference into any of our filings under
the Securities Act or the Exchange Act, except to the extent
that we specifically incorporate this Compensation Committee
report by reference therein.
Our Compensation Committee held a telephonic joint meeting with
the Board of Directors of the company. The committee reviewed
and discussed the compensation discussion and analysis that
appears under the caption Executive Compensation
with management.
Based on the review and discussion by our Compensation Committee
with management, the members of our Compensation Committee then
held a meeting at which they recommended to our Board of
Directors that our Board of Directors approve the inclusion of
the compensation disclosure and analysis in our
Form 10-K/A
annual report for the year ended June 30, 2008 under the
caption Executive Compensation for filing with the
SEC.
Compensation Committee:
Anthony J. Coppola
Lisa A. Napolitano
Fred G. Choate
June 4, 2009
COMPENSATION
OF DIRECTORS
None of our directors were paid any directors fees by us during
the fiscal year ended June 30, 2008. In fiscal 2008, each
of our non-employee directors was awarded a grant of options to
purchase 10,000 shares of our common stock under our 1999
Equity Incentive Plan with an exercise price of $3.05 per share,
which was the closing price of our common stock on the NASDAQ
Capital Market on November 29, 2007 which fully vested
immediately upon grant. Directors are reimbursed for expenses
incurred in connection with attending meetings of the Board and
Board Committees.
The following table sets forth certain information regarding the
compensation paid to our directors for their service during the
fiscal year ended June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Unearned
|
|
|
All Other
|
|
|
|
|
Name
|
|
in Cash
|
|
|
Awards
|
|
|
Awards(1)
|
|
|
Compensation
|
|
|
Options
|
|
|
Compensation
|
|
|
Total
|
|
|
Anthony Coppola
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
Jay L. Federman
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
William L.G. Kwan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
Lisa Napolitano
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
Fred Choate
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,754
|
|
|
|
|
(1) |
|
Represents the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended June 30, 2008,
in accordance with FAS 123(R). Assumptions used in the
calculation of these amounts are included in Note 2 to the
Consolidated Financial Statements. There were no forfeitures
during 2008. The table below sets forth the aggregate number of
stock options held by each of our non-employee directors who own |
15
|
|
|
|
|
options to purchase shares of the Companys common stock as
of June 30, 2008. Options granted to non-employee directors
vest on the date of grant and expire after ten years. |
|
|
|
|
|
Name
|
|
Stock Options
|
|
Anthony Coppola
|
|
|
45,000
|
|
Jay L. Federman
|
|
|
65,000
|
|
William L.G. Kwan
|
|
|
80,000
|
|
Lisa Napolitano
|
|
|
42,000
|
|
Fred Choate
|
|
|
30,000
|
|
Related
Person Transactions
We recognize that related person transactions present a
heightened risk of conflicts of interest and can create the
appearance of a conflict of interest. Therefore, all proposed
related person transactions are disclosed to the Board of
Directors before we enter into the transaction, and, if the
transaction continues for more than one year, the continuation
is reviewed annually by the Board of Directors.
The Company and a member of the Companys Board of
Directors, Jay Federman, M.D., are founding and equal
members of Ocular Telehealth Management, LLC (OTM).
OTM is a diagnostic telemedicine company providing remote
examination, diagnosis and management of disorders affecting the
human eye. OTMs initial solution focuses on the diagnosis
of diabetic retinopathy by creating access and providing annual
dilated retinal examinations for the diabetic population. OTM
was founded to harness the latest advances in
telecommunications, software and digital imaging in order to
create greater access and a more successful disease management
for populations that are susceptible to ocular disease. Through
June 30, 2008, Escalon had invested $357,000 in OTM and
owned 45% of OTM. We will provide administrative support
functions to OTM. For the years ended 2008, 2007 and 2006 the
Company recorded losses of $88,206, $87,852 and $173,844,
respectively.
A senior executive officer have provided legal services as
either an employee or a consultant to the Company. Richard
DePiano, Jr. (son of the Chief Executive Officer
(CEO)) is President and General Counsel to the
Company, Mr. DePianos salary for the fiscal year 2008
was approximately $180,000.
AUDIT AND
NON-AUDIT FEES
Our Audit Committee approves the fees and other significant
compensation to be paid to our independent public accountants
for the purpose of preparing or issuing an audit report or
related work. We provide appropriate funding, as determined by
our Audit Committee, for payment of fees and other significant
compensation to our independent public accountants. Our Audit
Committee also preapproves all auditing services and permitted
non-audit services, including the fees and terms thereof, to be
performed for us by our independent public accountants. The
Audit Committee does not delegate its responsibilities to
pre-approve services performed by the independent public
auditors to management, but may delegate pre-approval authority
to one or more of its members. The member or members to whom
such authority is delegated is required to report any
pre-approval decisions to the Audit Committee at its next
scheduled meeting.
Our Audit Committee reviewed and discussed with its current
independent public accountants, Mayer Hoffman McCann, the
following fees for services rendered for the 2007 fiscal year
and considered the compatibility of non-audit services with
Mayer Hoffman McCanns independence. A representative of
the Companys independent public accountants, Mayer Hoffman
McCann, is expected to attend the 2008 Annual Meeting. A
representative of the Companys independent public
accountants, Mayer Hoffman McCann, will have an opportunity to
make a statement and respond to questions at the 2008 Annual
Meeting.
Audit Fees. Mayer Hoffman McCann, our
independent public accountants, billed us $175,000 and $147,500
in total for the fiscal years ended June 30, 2008 and 2007,
respectively in connection with the audit of our annual
consolidated financial statements.
Audit Related Fees. We did not pay any audit
related fees to Mayer Hoffman McCann during fiscal years ended
June 30, 2008 and 2007.
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Tax Fees. We did not pay any fees to Mayer
Hoffman McCann for tax services during the fiscal years ended
June 30, 2008 and 2007.
All Other Fees. We did not pay any fees to
Mayer Hoffman McCann for all other services during the fiscal
years ended June 30, 2008 and 2007.
Report of
the Audit Committee
The following report of our Audit Committee shall not be
deemed proxy solicitation material, and shall not be deemed
filed with the SEC or incorporated by reference into any of our
filings under the Exchange Act or the Securities Act of 1933.
The Audit Committee of our Board of Directors was established in
accordance with the Exchange Act and reviews the financial
reporting process, including the overview of our financial
reports and other financial information we provide to
governmental or regulatory bodies, the public and others who
rely thereon; our systems of internal accounting and financial
controls; the selection, evaluation and retention of our
independent public accountants; and the annual independent audit
of our financial statements.
Each of our Audit Committee members satisfies the independence
requirements of the Exchange Act and Nasdaq rules and complies
with the financial literacy requirements thereof. Our Board of
Directors has determined that all members of Audit Committee,
Anthony J. Coppola, Lisa A. Napolitano and William L.G. Kwan,
satisfy the financial expertise requirements and have the
requisite experience as defined by the SECs rules. Our
Board of Directors adopted a written charter for our Audit
Committee on May 9, 2000 and amended such charter on
July 8, 2004 to comply with new Nasdaq rules. The full text
of the Audit Committee Charter as currently in effect is
available on our website. Our Audit Committee reviews and
reassesses the adequacy of the charter on an annual basis.
Our Audit Committee has reviewed our audited consolidated
financial statements and discussed those statements with
management. Our Audit Committee has also discussed with Mayer
Hoffman McCann our independent public accountants during fiscal
2008, the matters required to be discussed by Statement of
Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1. section 380), as adopted by the Public
Company Accounting Oversight Board in Rule 3200T.
Our Audit Committee received from Mayer Hoffman McCann and
reviewed the written disclosures required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees) as adopted by the Public Company
Accounting Oversight Board in Rule 3200T and discussed with
Mayer Hoffman McCann matters relating to its independence. Our
Audit Committee also considered the compatibility of the
provision of non-audit services by Mayer Hoffman McCann with the
maintenance of Mayer Hoffman McCann s independence.
On the basis of these reviews and discussions, our Audit
Committee recommended to the Board of Directors that our audited
consolidated financial statements be included in our Annual
Report on
Form 10-K/A
for the fiscal year ended June 30, 2008 and be filed with
the SEC.
Submitted by:
Audit Committee
Anthony J. Coppola
William L.G. Kwan
Lisa A. Napolitano
May 2, 2009
17
SHAREHOLDER
PROPOSALS
Any shareholder who, in accordance with and subject to the
provisions of
Rule 14a-8
of the proxy rules of the SEC, wishes to submit a proposal for
inclusion in our proxy statement for our 2009 annual meeting of
shareholders must deliver such proposal in writing to our
Secretary at our principal executive offices at 435 Devon Park
Drive, Building 100, Wayne, PA 19087 no later than
August 1, 2009.
Pursuant to Section 2.3 of our Bylaws, if a shareholder
wishes to present at our 2009 annual meeting of shareholders
(i) a proposal relating to nominations for and election of
directors for consideration by the Governance and Nominating
Committee of our Board of Directors or (ii) a proposal
relating to a matter other than nominations for and election of
directors, otherwise than pursuant to
Rule 14a-8
of the proxy rules of the SEC, the shareholder must comply with
the provisions relating to shareholder proposals set forth in
our Bylaws, which are summarized below. Written notice of any
such proposal containing the information required under our
Bylaws, as described herein, must be delivered in person, by
first class United States mail postage prepaid or by
reputable overnight delivery service to the Governance and
Nominating Committee in care of our Secretary, for nomination
proposals only, or to the attention of our Secretary for all
other matters, at our principal executive offices at 435 Devon
Park Drive, Building 100, Wayne, PA 19087 during the period
commencing on August 1, 2009 and ending on August 31,
2010.
A written proposal of nomination for a director must set forth:
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the name and address of the shareholder who intends to make the
nomination (the Nominating Shareholder);
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the name, age, business address and, if known, residence address
of each person so proposed;
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the principal occupation or employment of each person so
proposed for the past five years;
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the number of shares of our capital stock beneficially owned
within the meaning of SEC
Rule 13d-3
by each person so proposed and the earliest date of acquisition
of any such capital stock;
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a description of any arrangement or understanding between each
person so proposed and the Nominating Shareholder with respect
to such persons proposal for nomination and election as a
director and actions to be proposed or taken by such person as a
director;
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the written consent of each person so proposed to serve as a
director if nominated and elected as a director; and
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such other information regarding each such person as would be
required under the proxy rules of the SEC if proxies were to be
solicited for the election as a director of each person so
proposed.
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Only candidates nominated by shareholders for election as a
member of our Board of Directors in accordance with our Bylaw
provisions as summarized herein will be eligible for
consideration by the Governance and Nominating Committee to be
nominated for election as a member of our Board of Directors at
our 2009 annual meeting of shareholders, and any candidate not
nominated in accordance with such provisions will not be
considered or acted upon for election as a director at our 2009
annual meeting of shareholders.
A written proposal relating to a matter other than a nomination
for election as a director must set forth information regarding
the matter equivalent to the information that would be required
under the proxy rules of the SEC if proxies were solicited for
shareholder consideration of the matter at a meeting of
shareholders. Only shareholder proposals submitted in accordance
with the Bylaw provisions summarized above will be eligible for
presentation at our 2008 annual meeting of shareholders, and any
matter not submitted to our Board of Directors in accordance
with such provisions will not be considered or acted upon at our
2009 annual meeting of shareholders.
18
OTHER
MATTERS
Our Board of Directors does not know of any matters to be
presented for consideration at our annual meeting other than the
matters described in the notice of annual meeting, but if any
matters are properly presented, proxies in the enclosed form
returned to us will be voted in accordance with the
recommendation of our Board of Directors or, in the absence of
such a recommendation, in accordance with the judgment of the
proxy holder.
By Order of the Board of Directors,
Chairman and Chief Executive Officer
June 7, 2009
Wayne, Pennsylvania
19
ESCALON MEDICAL CORP.
Annual Meeting of Shareholders To Be Held June 30, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This Proxy is solicited on behalf of the Board of Directors. The undersigned hereby
appoints Richard J. DePiano and Mark Wallace, or either of them acting alone in the absence
of the other, the attorneys, agents and proxies of the undersigned, with full powers of
substitution (the Proxies), to attend and act as proxy or proxies of the undersigned at the
Annual Meeting of shareholders (the Annual Meeting) of Escalon Medical Corp. (the
Company) to be held at the offices of the Company 435 Devon Park Drive, Building 100,
Wayne, Pennsylvania, on June 30, 2009 at 9:00 a.m. or any adjournment or continuation
thereof, and to vote as specified herein the number of shares which the undersigned, if
personally present, would be entitled to vote.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
ESCALON MEDICAL CORP.
June 30, 2009
PROXY VOTING INSTRUCTIONS
INTERNET - Access www.voteproxy.com and follow the on-screen
instructions. Have your proxy card available when you access
the web page, and use the Company Number and Account Number
shown on your proxy card.
TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in
the United States or 1-718-921-8500 from foreign countries
from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call and use the
Company Number and Account Number shown on your proxy card.
Vote online/phone until 11:59 PM EST the day before the meeting.
MAIL - Sign, date and mail your proxy card in the envelope
provided as soon as possible.
IN PERSON - You may vote your shares in person by attending
the Annual Meeting.
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COMPANY NUMBER
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ACCOUNT NUMBER |
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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of meeting, proxy statement and proxy
card are available at http://www.amstock.com/proxyservices/viewmaterial.asp?CoNumber=02022
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![()](w74364w7436402.gif) |
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Please detach along perforated line and mail in the envelope provided
IF you are not voting via telephone or the Internet. |
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g 20200000000000001000 5
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063009 |
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THE BOARD OF DIRECTORS RECOMMENDS VOTING
FOR EACH OF THE NOMINEES IN PROPOSAL 1.
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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1. Election of Class III Directors
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2. Other Business. In their discretion, the Proxies are authorized to
vote upon such other business as may come before the Annual Meeting
and any and all adjournments thereof. The Board of Directors at
present knows of no other business to be presented by or on behalf of
the Company or the Board of Directors at the Annual Meeting.
IMPORTANT - PLEASE SIGN AND DATE BELOW AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
This Proxy when properly executed will be voted as specified. If no
instruction is specified with respect to a matter to be acted upon,
the shares represented by the Proxy will be voted FOR each nominee
for Class III Director. If any other business is presented at the
meeting, this Proxy confers authority to and shall be voted in
accordance with the recommendations of the Board of Directors. This
Proxy is solicited on behalf of the Board of Directors and may be
revoked prior to its exercise by filing with the Secretary of the
Company a duly executed proxy bearing a later date or an instrument
revoking this Proxy, or by attending the meeting and electing to vote
in person.
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FOR ALL NOMINEES
c
WITHHOLD AUTHORITY FOR ALL NOMINEES
c
FOR ALL EXCEPT
(See
instructions below)
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NOMINEES: O Richard J.
DePiano
O Jay
Federman, M.D.
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INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in the
circle next to each nominee you wish to withhold, as shown
here:
n
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Please mark here if you plan to attend the Annual Meeting c |
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To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method. |
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date: |
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
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ANNUAL MEETING OF SHAREHOLDERS OF
ESCALON MEDICAL CORP.
June 30, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement, Proxy Card
are available at
http://www.amstock.com/proxyservices/viewmaterial.asp?CoNumber=02022
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
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![()](w74364w7436402.gif) |
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Please detach along perforated line and mail in the envelope provided. |
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g 20200000000000001000 5
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063009 |
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THE BOARD OF DIRECTORS RECOMMENDS VOTING
FOR EACH OF THE NOMINEES IN PROPOSAL 1.
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
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1. Election of Class III Directors
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2. Other Business. In their discretion, the Proxies are authorized to
vote upon such other business as may come before the Annual Meeting
and any and all adjournments thereof. The Board of Directors at
present knows of no other business to be presented by or on behalf of
the Company or the Board of Directors at the Annual Meeting.
IMPORTANT - PLEASE SIGN AND DATE BELOW AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
This Proxy when properly executed will be voted as specified. If no
instruction is specified with respect to a matter to be acted upon,
the shares represented by the Proxy will be voted FOR each nominee
for Class III Director. If any other business is presented at the
meeting, this Proxy confers authority to and shall be voted in
accordance with the recommendations of the Board of Directors. This
Proxy is solicited on behalf of the Board of Directors and may be
revoked prior to its exercise by filing with the Secretary of the
Company a duly executed proxy bearing a later date or an instrument
revoking this Proxy, or by attending the meeting and electing to vote
in person.
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c
FOR ALL NOMINEES
c
WITHHOLD AUTHORITY FOR ALL NOMINEES
c
FOR ALL EXCEPT
(See
instructions below)
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NOMINEES: O Richard J.
DePiano
O Jay
Federman, M.D.
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INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in the
circle next to each nominee you wish to withhold, as shown
here:
n
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Please mark here if you plan to attend the Annual Meeting c |
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To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method. |
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date: |
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
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