<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the 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
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BIOPSYS MEDICAL, INC.
_______________________________________________________________________________
(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: _____________________________________________________________
<PAGE>
BIOPSYS MEDICAL, INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 9, 1996
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BIOPSYS
MEDICAL, INC. a Delaware corporation (the "Company") will be held on Monday,
December 9, 1996, at 10:00 a.m., local time, at the Company's principal
executive offices, 3 Morgan, Irvine, California 92718 for the following purposes
(as more fully described in the Proxy Statement accompanying this Notice):
1. To elect two Class I directors of the Company to serve for terms
of three years expiring upon the 1999 Annual Meeting of
Stockholders or until their successors are elected, and to elect
two Class III directors of the Company to serve for terms of two
years expiring upon the 1998 Annual Meeting of Stockholders or
until their successors are elected.
2. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the fiscal year ending
June 30, 1997.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on October 25, 1996
are entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting. However, to
ensure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. If you attend the meeting, you may vote in
person even if you return a proxy.
FOR THE BOARD OF DIRECTORS
David W. Chonette
CHAIRMAN OF THE BOARD OF DIRECTORS
Irvine, California
October 25, 1996
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU
ATTEND THE MEETING, YOU MAY VOTE IN PERSON, EVEN IF YOU RETURN A
PROXY.
<PAGE>
BIOPSYS MEDICAL, INC.
------------------
PROXY STATEMENT FOR
1996 ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 9, 1996
------------------
INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Biopsys Medical, Inc. ("Biopsys" or the "Company") for use at the Annual Meeting
of Stockholders to be held on December 9, 1996 at 10:00 a.m., local time, or at
any adjournment thereof. The Annual Meeting will be held at the Company's
principal executive offices, 3 Morgan, Irvine, California 92718. The telephone
number at the meeting location is (714) 460-7800.
These proxy solicitation materials and the Annual Report to stockholders
for the fiscal year ended June 30, 1996 (the "Last Fiscal Year"), including
financial statements, were first mailed on or about November 1, 1996, to all
stockholders entitled to vote at the Annual Meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on October 25, 1996 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the Record Date, 9,716,880 shares of the Company's Common Stock, $.001 par value
(the "Common Stock"), were issued and outstanding and held of record by
approximately 178 stockholders.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person. Attending the Annual
Meeting in and of itself may not constitute a revocation of a proxy.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held as of the
record date. Stockholders will not be entitled to cumulate their votes in the
election of directors.
The cost of soliciting proxies will be borne by the Company. The Company
expects to reimburse brokerage firms and other persons representing beneficial
owners of shares for their expense in forwarding solicitation material to such
beneficial owners. Proxies may be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation, in
person or by telephone or facsimile.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections (the "Inspector") with the assistance of the
Company's Transfer Agent. The Inspector will also determine whether or not a
quorum is present. Except in certain specific circumstances, the affirmative
vote of a majority of shares present in person or represented by proxy at a duly
held meeting at which a quorum is present is required under Delaware law for
approval of proposals presented to stockholders. In general, Delaware law also
provides that a quorum consists of a majority of shares entitled to vote and
present or represented by proxy at the meeting.
<PAGE>
The Inspector will treat shares that are voted "WITHHELD" or "ABSTAIN" as
being present and entitled to vote for purposes of determining the presence of a
quorum but will not be treated as votes in favor of approving any matter
submitted to the stockholders for a vote. Any proxy which is returned using the
form of proxy enclosed and which is not marked as to a particular item will be
voted for the election of the two Class I directors and the two Class III
directors, for the confirmation of the appointment of the designated independent
auditors and, as the proxy holders deem advisable, on other matters that may
come before the meeting, as the case may be with respect to the items not
marked.
If a broker indicates on the enclosed proxy or its substitute that it does
not have discretionary authority as to certain shares to vote on a particular
matter ("Broker Non-Votes"), those shares will not be considered as present with
respect to that matter. The Company believes that the tabulation procedures to
be followed by the Inspector are consistent with the general statutory
requirements in Delaware concerning voting of shares and determination of a
quorum.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS TO BE PRESENTED AT 1997 ANNUAL
MEETING
Proposals that are intended to be presented by stockholders of the Company
at the 1997 Annual Meeting must be received by the Company no later than
June 30, 1997 in order to be considered for inclusion in the proxy statement and
form of proxy relating to that meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percent of a registered class of the Company's
equity securities to file an initial report of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the Securities and Exchange Commission (the
"SEC") and the National Associates of Securities Dealers, Inc. Executive
officers, directors and greater than ten percent stockholders are also required
by SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, with respect to fiscal year 1996, all filing requirements applicable to
its officers, directors and ten percent stockholders were complied with.
SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Common Stock of the Company as
of October 25, 1996, by (i) each person who is known to the Company to
beneficially own more than five percent of the outstanding shares of its Common
Stock, (ii) each director and nominee for election, (iii) each officer named in
the Summary Compensation Table below and (iv) all directors, nominees for
election and executive officers as a group. Unless otherwise indicated,
officers and directors can be reached at the Company's principal executive
offices. A total of 9,716,880 shares of the Company's Common Stock were issued
and outstanding as of October 25, 1996.
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED (1) OWNED (2)
- ------------------------------------------------------ ------------ -----------
Brentwood Associates VI, L.P. (3)..................... 1,334,596 13.7%
David W. Chonette
1920 Main Street, Suite 820
Irvine, CA 92714
St. Paul Venture Capital, Inc.(4)..................... 1,072,961 11.0
Nancy S. Olson
8500 Normandale Lake Blvd, #1940
Bloomington, MN 55437-3831
Entities affiliated with Institutional Venture
Partners (5)........................................ 1,072,961 11.0
3000 Sand Hill Road
Bldg. 2, Suite 290
Menlo Park, CA 94025
-2-
<PAGE>
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED (1) OWNED (2)
- ------------------------------------------------------ ------------ -----------
Entities affiliated with Three Arch Partners (6)...... 889,729 9.2
Thomas J. Fogarty, M.D.
2800 Sand Hill Road
Suite 270
Menlo Park, CA 94025
Entities affiliated with Thomas J. Fogarty, M.D. (7).. 1,458,659 15.0
3270 Alpine Road
Portola Valley, CA 94028
Entities affiliated with Fred Burbank, M.D. (8)..... 650,000 6.7
30982 Steeplechase Drive
San Juan Capistrano, CA 92675
David W. Chonette(3)(9)............................. 1,335,325 13.7
Steven L. Gex(10)................................... 314,749 3.2
Nancy S. Olson(4)(11)............................... 1,073,690 11.0
Steve H. Parker, M.D.(12)........................... 357,187 3.7
Mark A. Cole, Ph.D.(13)............................. 118,479 1.2
Kenneth M. Galt(14)................................. 58,698 *
Steven J. Naber(15)................................. 38,958 *
All directors and executive officers
as a group (9 persons) (16)....................... 3,593,882
- -------------------
* Represents beneficial ownership of less than one percent of the Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power
with respect to securities. Except as indicated by footnote, and subject
to community property laws where applicable, the persons named in the table
above have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
(2) Percentage of beneficial ownership is based on 9,716,880 shares of Common
Stock outstanding as of October 25, 1996.
(3) Mr. Chonette, a director of the Company, is a general partner of Brentwood
Associates VI, L.P. Mr. Chonette disclaims beneficial ownership of the
shares held by Brentwood Associates VI, L.P. except to the extent of his
proportionate partnership interest therein.
(4) Ms. Olson, a director of the Company, is an executive vice president of
St. Paul Venture Capital, Inc. St. Paul Venture Capital, Inc., is a
wholly-owned subsidiary of the St. Paul Fire and Marine Insurance Company.
Ms. Olson disclaims beneficial ownership of the shares held by St. Paul
Venture Capital, Inc. except to the extent of her pecuniary interest
therein arising from her equity position within St. Paul Venture
Capital, Inc.
(5) Consists of 1,051,502 shares held by Institutional Venture Partners VI and
21,459 shares held by Institutional Venture Management VI.
(6) Consists of 717,353 shares held by Three Arch Partners, L.P. and 172,376
shares held by Three Arch Associates, L.P.
(7) Includes 340,000 shares held by the Fogarty Family Revocable Trust dated
9/14/71 as Amended and Restated on 2/14/91, of which Dr. Fogarty is the
trustee, and 228,201 shares held by Fogarty Engineering. Dr. Fogarty, a
director of the Company, is the sole proprietor of Fogarty Engineering.
Dr. Fogarty disclaims beneficial ownership of the shares held by Three Arch
Partners, L.P. and Three Arch Associates, L.P., except to the extent of his
pecuniary interest therein arising from his partnership interest within
Three Arch Partners, L.P. and Three Arch Associates, L.P. Includes 729
shares issuable upon exercise of stock options exercisable within 60 days
of October 25, 1996.
(8) Consists of 270,000 shares held by Fred H. Burbank, M.D. and Melody
Burbank, Husband and Wife, as Joint Tenants, 270,000 shares held by Harbor
Bank as Custodian FBO: Fred H. Burbank, M.D. IRA BPS #505560846A31, 110,000
shares held by Fred H. Burbank, M.D. On April 5, 1996, Dr. Burbank
exercised an option for 40,000 shares. Within 60 days of October 25, 1996,
17,842 shares are subject to repurchase by the Company in the event of the
termination of Dr. Burbank's services to the Company.
(9) Includes 729 shares issuable upon exercise of stock options exercisable
within 60 days of October 25, 1996. Mr. Chonette disclaims beneficial
ownership of the shares held by Brentwood Associates VI, L.P. except to the
extent of his proportionate partnership interest therein.
(10) Consists of 210,166 shares held by Steven L. Gex and Elizabeth P. Gex,
Trustees of the Gex Family Trust U/D/T dated June 26, 1992, an aggregate of
40,000 shares held by Steven L. Gex, custodian for Ryan L. Gex, Robert L.
Gex, Aimee E. Gex and Anna C. Gex and 64,583 shares issuable to Mr. Gex
upon exercise of stock options exercisable within 60 days of October 25,
1996.
(11) Includes 729 shares issuable upon exercise of stock options exercisable
within 60 days of October 25, 1996. Ms. Olson disclaims beneficial
ownership of the shares held by St. Paul Venture Capital, Inc. except to
the extent of her pecuniary interest therein arising from her equity
position within St. Paul Venture Capital, Inc.
(12) Includes 46,637 shares held by Steve and Margaret Parker, 36,086 shares
held by First Trust Corp. TTEE Steve H. Parker IRA #617748-0001 dated
1/26/94, 21,277 shares held by First Trust Corp. TTEE Margaret A. Parker
IRA #617749-0001 dated 1/26/94, an
-3-
<PAGE>
aggregate of 60,000 shares held by Steve H. Parker as custodian for Lauren
E. Parker, Molly K. Parker and Brooke M. Parker and 22,887 shares issuable
to Dr. Parker upon exercise of stock options exercisable within 60 days of
October 25, 1996.
(13) Includes 11,500 shares held by Mark A. Cole, Smith Barney Shearson SEP
Custodian Account No. 635-67163-1-3-132 and 106,979 shares issuable to
Dr. Cole upon exercise of stock options exercisable within 60 days of
October 25, 1996.
(14) Consists of 58,698 shares issuable to Mr. Galt upon exercise of stock
options exercisable within 60 days of October 25, 1996.
(15) Consists of 38,958 shares issuable to Mr. Naber upon exercise of stock
options exercisable within 60 days of October 25, 1996.
(16) Includes 270,676 shares issuable upon exercise of stock options exercisable
within 60 days of October 25, 1996.
-4-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTOR
Pursuant to the Company's Certificate of Incorporation, the Company's Board
of Directors currently consists of seven persons, divided into three classes
serving staggered terms of three years. Currently there are two directors in
Class I, two directors in Class II and one director in Class III. Two Class I
directors and two Class III directors are to be elected at the Annual Meeting.
The Class II directors and remaining Class III director will be elected at the
Company's 1997 and 1998 Annual Meetings of Stockholders, respectively. Each of
the two Class I directors elected at the Annual Meeting will hold office until
the 1999 Annual Meeting of Stockholders or until his successor has been duly
elected and qualified. Each of the two Class III directors elected at the
Annual Meeting will hold office until the 1998 Annual Meeting of Stockholders or
until his successor has been duly elected and qualified.
In the event that any of such persons becomes unavailable or declines to
serve as a director at the time of the Annual Meeting, the proxy holders will
vote the proxies in their discretion for any nominee who is designated by the
current Board of Directors to fill the vacancy. It is not expected that any of
the nominees will be unavailable to serve.
The names of the two Class I nominees and two Class III nominees for
election to the Board of Directors at the Annual Meeting, their ages as of the
Record Date and certain information about them are set forth below. The names
of the current Class II and Class III directors with unexpired terms, their ages
as of the Record Date and certain information about them are also set forth
below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------------------- --- -------------------------------------------------- --------
NOMINEES FOR CLASS I DIRECTORS
<S> <C> <C> <C>
David W. Chonette................................ 61 General Partner, Brentwood Associates 1994
Thomas J. Fogarty, M.D........................... 62 Professor of Surgery, Stanford University 1993
NOMINEES FOR CLASS III DIRECTORS
Norwick B.H. Goodspeed........................... 47 President and Chief Executive Officer, McGaw, Inc. 1996
Edgar J. Cummins................................. 53 Senior Vice President and Chief Financial 1996
Officer, Chiron Vision
CONTINUING CLASS II DIRECTORS
Steve H. Parker, M.D............................. 42 Interventional Radiologist, Director of the Breast 1995
Diagnostic and Counseling Center
Nancy S. Olson................................... 41 Executive Vice President, St. Paul Venture 1995
Capital, Inc.
CONTINUING CLASS III DIRECTOR
Steven L. Gex.................................... 41 President and Chief Executive Officer, Biopsys 1993
Medical, Inc.
</TABLE>
There are no family relationships among directors or executive officers of
the Company.
DAVID W. CHONETTE has served as a director of the Company since April 1994.
Mr. Chonette has been a general partner of Brentwood Associates, a venture
capital firm, since 1986. Prior to 1986, Mr. Chonette served as President of
American Edwards Laboratories, a division of American Hospital Supply
Corporation. Mr. Chonette serves as a director of KeraVision, Inc., General
Surgical Innovations, Inc. and Imagyn Medical, Inc., all publicly-held medical
device
-5-
<PAGE>
companies, and several privately-held companies. Mr. Chonette holds a B.S. in
Engineering from the Massachusetts Institute of Technology.
THOMAS J. FOGARTY, M.D., co-founded the Company and has served as a
director since its inception in 1993. Dr. Fogarty is a practicing
cardiovascular surgeon and has held an appointment as Professor of Surgery at
Stanford University since July 1993. Dr. Fogarty is also a general partner of
Three Arch Partners, a venture capital firm that invests primarily in medical
device companies. Dr. Fogarty serves as a director of Raytel Medical
Corporation, Cardiac Pathways Corporation, General Surgical Innovations, Inc.
and CardioThoracic Systems, Inc., all publicly-held healthcare or medical device
companies and several privately-held companies. Dr. Fogarty holds an M.D. from
the University of Cincinnati College of Medicine.
NORWICK B.H. GOODSPEED has served as a director of the Company since
September 1996. He was appointed President and Chief Executive Officer of
McGaw, Inc. in January 1994 following the announcement of the merger between
McGaw and IVAX Corporation. From May 1991 until his appointment as President,
Mr. Goodspeed was McGaw's Senior Vice President of Sales & Marketing.
Mr. Goodspeed was previously President and CEO of Vical, Inc., a biotechnology
company in San Diego. Before Vical, he held executive marketing and management
positions at Ohmeda, and Baxter International. Mr. Goodspeed is a graduate of
Yale University and holds an M.B.A. from Stanford University.
EDGAR J. CUMMINS has served as a director of the Company since September
1996. He was appointed Senior Vice President and Chief Financial Officer of
Chiron Vision in May 1995. Prior to this appointment, Mr. Cummins was the
Corporate Vice President and Chief Financial Officer for Allergan, Inc., a
position he held from July 1986 to March 1995. Prior to Allergan, Mr. Cummins
was a senior executive at American Hospital Supply Corporation. Mr. Cummins
holds an M.B.A. from the University of Southern California and currently is a
director at OSI Corporation, a privately held ophthalmology company.
STEVE H. PARKER, M.D., co-founded the Company and has served as a director
since October 1995. Dr. Parker is a practicing interventional radiologist and
Director of the Breast Diagnostic and Counseling Center in Denver, Colorado.
Dr. Parker is a pioneer in the development of the percutaneous stereotactic
breast biopsy technique. Dr. Parker holds an M.D. from St. Louis University.
NANCY S. OLSON has served as a director of the Company since July 1995.
Ms. Olson has been an Executive Vice President of St. Paul Venture
Capital, Inc., the venture capital subsidiary of the St. Paul Fire and Marine
Insurance Company, specializing in health care and medical technology
investments since June 1993. From June 1990 to June 1993, she served as
principal of RxCapital, a financial advisory and business consulting firm she
founded to help organize and fund startup to mid-sized medical companies. Prior
to 1990, Ms. Olson was a general partner at Sequoia Capital, a venture capital
firm. Ms. Olson serves as a director of Conceptus, Inc., a medical device
company, and several privately-held companies. Ms. Olson holds an M.B.A. from
the University of Pennsylvania, Wharton School of Business.
STEVEN L. GEX has served as President of the Company since August 1993, a
director of the Company since April 1994 and Chief Executive Officer of the
Company since December 1994. From November 1991 until April 1993, Mr. Gex
served as Vice President of Marketing of Laurus Medical Corporation, a surgical
device company that he co-founded. From August 1988 to June 1991, Mr. Gex
served as Vice President of Marketing of Applied Vascular Devices, Inc., a
medical device company. From September 1989 to March 1991, he also served as a
director of Applied Urology, Inc., an affiliated company. Prior to 1988,
Mr. Gex held senior management positions in marketing, business development and
manufacturing operations at Edwards Laboratories, a division of American
Hospital Supply Corporation. Mr. Gex holds a B.S. in Marketing from San Diego
State University.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
The Board of Directors of the Company held seven meetings during the fiscal
year ended June 30, 1996.
The Board of Directors has an Audit Committee and a Compensation Committee.
It does not have a nominating committee or a committee performing the functions
of a nominating committee. From time to time, the Board has created various ad
hoc committees for special purposes. No such committee is currently
functioning.
-6-
<PAGE>
The Audit Committee previously consisted of directors David W. Chonette and
Nancy S. Olson. As of September 1996, the Audit Committee consists of directors
David W. Chonette and Edgar J. Cummins. The Audit Committee is responsible for
reviewing the results and scope of the audit and other services provided by the
Company's independent auditors. The Audit Committee held no meetings in the
last fiscal year.
The Compensation Committee previously consisted of directors Thomas J.
Fogarty, M.D. and Steve H. Parker, M.D. As of September 1996, the Compensation
Committee consists of directors Nancy S. Olson and Norwick B.H. Goodspeed. The
Compensation Committee reviews and makes recommendations to the Board concerning
salaries and incentive compensation for executive officers and certain employees
of the Company. The Compensation Committee held no meetings during the last
fiscal year. Steven L. Gex, President and Chief Executive Officer of the
Company, participates fully with all other committee members in recommending
salaries and incentive compensation to the Board of Directors, except that he
does not participate in committee proceedings relating to his salary and
compensation.
COMPENSATION OF DIRECTORS
Directors of the Company do not receive cash for services they provide as
directors. From time to time, certain directors who are not employees of the
Company have received grants of options to purchase shares of the Company's
Common Stock. Under the 1996 Director Option Plan, each nonemployee director
upon the Company's initial public offering was automatically granted a
nonstatutory option to purchase 5,000 shares of the Company's Common Stock at
the initial offering price on the date of the offering. Each nonemployee
director who becomes a director of the Company after January 31, 1996 will be
automatically granted an option to purchase 15,000 shares of the Company's
Common Stock on the date on which such person first becomes a director. On the
first business day of each fiscal year starting with the fiscal year beginning
July 1, 1997, each nonemployee director will automatically be granted an option
to purchase 5,000 shares of the Company's Common Stock. The Company does not
provide additional compensation for committee participation or special
assignments of the Board of Directors.
VOTE REQUIRED
The four nominees receiving the highest number of affirmative votes of the
shares entitled to vote on this matter shall be elected as the Class I directors
and remaining Class III directors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending June 30, 1997 and recommends that the stockholders vote FOR confirmation
of such selection. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection. Representatives of Deloitte &
Touche LLP are expected to be present at the Annual Meeting with the opportunity
to make a statement if they desire to do so, and are expected to be available to
respond to appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1997.
-7-
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION TABLES
SUMMARY COMPENSATION TABLE. The following table sets forth certain
compensation paid by the Company to the Chief Executive Officer and the four
other most highly compensated executive officers of the Company for services
rendered during each of the fiscal years ended June 30, 1995 and 1996
(collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
-------------
AWARDS OF
FISCAL ANNUAL COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (# OF SHARES)
- ---------------------------- ------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
Steven L. Gex............... 1996 $150,167 $23,966 30,000
President and Chief 1995 125,250 -- --
Executive Officer
Steven J. Naber (1)......... 1996 113,000 20,874 130,000
Vice President Finance 1995 -- -- --
and Chief Financial
Officer
Mark A. Cole, Ph.D. ........ 1996 116,179 19,791 15,000
Vice President of 1995 106,500 -- --
Medical Affairs
Kenneth M. Galt............. 1996 106,060 17,047 7,500
Vice President of 1995 101,042 -- --
Research and Development
Ellen M. Preston (2)........ 1996 27,769 -- 80,000
Vice President of 1995 -- -- --
Marketing
</TABLE>
- --------------------------
(1) Mr. Naber joined the Company in July 1995.
(2) Ms. Preston joined the Company in April 1996.
OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth
information with respect to each grant of stock options made during the fiscal
year ended June 30, 1996 to each Named Executive Officer:
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM(2)
OPTIONS IN FISCAL PRICE(1) EXPIRATION ---------------------
NAME GRANTED(1)(#) YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------- ------------- ----------- -------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Steven L. Gex........ 30,000 4.2% $ 12.00 04/11/2006 $ 220,282 $ 555,142
Steven J. Naber...... 110,000 15.5% 0.23 07/27/2005 14,094 34,797
20,000 2.8% 12.00 4/11/2006 146,855 370,095
Mark A. Cole,Ph.D. .. 15,000 2.1% 0.23 11/06/2005 1,997 4,972
Kenneth M. Galt...... 7,500 1.1% 0.23 11/06/2005 998 2,486
Ellen M. Preston..... 80,000 11.3% 12.00 04/11/2006 587,418 1,480,379
</TABLE>
- ---------------------
(1) The exercise price and tax withholding obligations related to exercise may
in some cases, be paid by delivery of other shares or by offset of the
shares subject to the options.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the Company's stock
price. The Company did not use an alternative formula for a grant date
valuation, as the Company does not believe that any formula will determine
with reasonable accuracy a present value based on future unknown or
volatile factors.
-8-
<PAGE>
No options were exercised in the fiscal year ended June 30, 1996 by the
Named Executive Officers.
FISCAL YEAR-END OPTION VALUES. The following table sets forth the number
and value of securities underlying unexercised options held by the Named
Executive Officers at June 30, 1996:
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY OPTIONS AT
UNEXERCISED OPTIONS AT JUNE 30,1996 JUNE 30, 1996 (1)
----------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Steven L. Gex............ 52,083 77,917 $ 1,033,848 $ 1,191,152
Steven J. Naber.......... -- 130,000 -- 2,334,700
Mark A. Cole, Ph.D....... 84,167 80,833 1,674,857 1,606,193
Kenneth M. Galt.......... 46,042 46,458 913,934 921,591
Ellen M. Preston......... -- 80,000 -- 640,000
</TABLE>
______________________________
(1) Based on a fair market value of $20.00, which was the last reported sale
price of the Company's stock on June 28, 1996.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Compensation Committee of the Board of Directors, as Plan Administrator
of the 1993 Stock Plan, has the authority to provide for accelerated vesting of
the shares of Common Stock subject to outstanding options held by the Named
Officers and any other officer in connection with certain changes in control of
the Company or the subsequent termination of the officer's employment following
a change in control event.
None of the Named Executive Officers have employment agreements with the
Company, and their employment may be terminated at any time. However, certain
provisions of stock option agreements and amendments thereto between the Company
and Mr. Gex, the Company's President and Chief Executive Officer, Mr. Naber, the
Company's Vice President of Finance and Chief Financial Officer, Mr. Cole, the
Company's Vice President of Medical Affairs, Mr. Galt, the Company's Vice
President of Research and Development, and Ms. Preston, the Company's Vice
President of Marketing, provide for the acceleration of vesting of certain
option shares so that such options shall immediately become fully exercisable in
the event the officer's employment is terminated or constructively terminated
without cause following certain acquisitions or changes in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the year ended June 30, 1996, Drs. Fogarty and Parker served as the
Compensation Committee of the Company's Board of Directors. During the year
ended June 30, 1996, persons and an entity affiliated with Dr. Fogarty,
purchased 343,347 shares and Dr. Steve Parker purchased 4,300 shares of the
Company's Series C Preferred Stock. In addition, Dr. Fogarty holds options to
purchase 5,000 shares of Common Stock of the Company, and Dr. Parker holds
options to purchase 45,000 shares of Common Stock of the Company. During the
year ended June 30, 1996, entities affiliated with David W. Chonette, a Director
of the Company, purchased 515,021 shares of the Company's Series C Preferred
Stock. In addition, Mr. Chonette holds an option to purchase 5,000 shares of
Common Stock of the Company. During the year ended June 30, 1996, entitles
affiliated with Nancy S. Olson, a Director of the Company, purchased 1,072,961
shares of the Company's Series C Preferred Stock. In addition, Ms. Olson holds
an option to purchase 5,000 shares of Common Stock of the Company. Upon the
completion of the Company's initial public offering, each outstanding share of
Series C Preferred Stock was converted into one share of Common Stock. No
member of the Compensation Committee has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.
-9-
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
THE FOLLOWING IS PROVIDED TO STOCKHOLDERS BY THE MEMBERS OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
The Compensation Committee of the Board of Directors (the "Committee"),
comprising two outside directors, is responsible for the administration of the
Company's compensation programs. These programs include base salary for
executive officers and both annual and long-term incentive compensation
programs. The Company's compensation programs are designed to provide a
competitive level of total compensation and include incentive and equity
ownership opportunities linked to the Company's performance and stockholder
return.
COMPENSATION PHILOSOPHY
The design and implementation of the Company's executive compensation
programs are based on a series of guiding principles derived from the Company's
values, business strategy and management requirements. These principles may be
summarized as follows:
- Align the financial interests of the management team with the Company
and its stockholders;
- Attract, motivate and retain high-caliber individuals necessary to
increase total return to stockholders;
- Provide a total compensation program where a significant portion of
pay is linked to individual achievement and short- and long-term
Company performance; and
- Emphasize reward for performance at the individual, team and Company
levels.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code adopted under the Federal Revenue Reconciliation Act of
1993. Section 162(m) disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1 million in any taxable year
for any of the named executive officers, unless compensation is performance
based. Since the targeted cash compensation of each of the named executive
officers is well below the $1 million threshold and the Committee believes that
any options granted under the Company's stock option plan will meet the
requirement of being performance based under the transition provisions provided
in the regulations under Section 162(m), the Committee believes that Section
162(m) will not reduce the tax deduction available to the Company. The
Company's policy is to qualify to the extent reasonable its executive officers'
compensation for deductibility under applicable tax laws.
COMPENSATION PROGRAM
The Company's executive compensation program has three major components,
all of which are intended to attract, retain and motivate executive officers
consistent with the principles set forth above. The Committee considers these
components of compensation individually as well as collectively in determining
total compensation for executive officers.
1. BASE SALARY. Each fiscal year the Committee reviews base salaries for
individual executive officers based upon (i) industry and peer group data,
(ii) responsibilities, scope and complexity of each position and
(iii) performance judgments as to each individual's past and expected future
contributions. The Committee reviews with the Chief Executive Officer and
approves, with appropriate modifications, an annual base salary for the
Company's executive officers other than the Chief Executive Officer. The
Committee reviews and fixes the base salary of the Chief Executive Officer based
on similar competitive compensation data and the Committee's assessment of his
past performance and its expectations as to his future contributions in leading
the Company.
-10-
<PAGE>
2. ANNUAL CASH (SHORT-TERM) INCENTIVES. Annual cash incentives are
established to provide a direct linkage between individual pay and annual
corporate performance. Target annual bonus awards are established for executive
officer and other key management positions based upon certain industry data.
Each officer's annual performance bonus is based on attainment of specific
corporate goals and objectives, which are determined at the beginning of the
Company's fiscal year. The Last Fiscal Year bonus plan was based on the
establishment of a variable bonus pool based upon achievement of specific
financial objectives. Each executive officer's allocation of the bonus pool was
based on the percentage of their salary to the aggregate salaries of all
participants. Each officer who served in an executive capacity during the
majority of the Last Fiscal Year, including the Chief Executive Officer,
received a cash bonus for such service amounting to approximately 15.5% of base
salary.
3. EQUITY BASED INCENTIVE COMPENSATION. Long-term incentives for the
Company's employees are provided under the Company's stock option plans. Each
fiscal year, the Committee considers the desirability of granting to executive
officers long-term incentives in the form of stock options. These option grants
are intended to motivate the executive officers to manage the business to
improve long-term Company performance and align the financial interests of the
management team with the Company and its stockholders. The Committee
established the grants of stock options to executive officers (other than the
Chief Executive Officer) in the Last Fiscal Year, based upon a review with the
Chief Executive Officer of proposed individual awards, taking into account each
officer's scope of responsibility and specific assignments, strategic and
operational goals applicable to the officer, anticipated performance
requirements and contributions of the officer and competitive data for similar
positions. The Committee independently reviewed these same factors in
determining the option grant to the Chief Executive Officer. During the Last
Fiscal Year, an option award of 30,000 shares of Common Stock was granted to
the Chief Executive Officer. All stock options granted to executive officers in
the Last Fiscal Year provide for vesting over a four-year period.
Respectfully submitted,
Thomas J. Fogarty, M.D.
Steve H. Parker, M.D.
THE FOREGOING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR TO BE "FILED" WITH THE SEC, NOR SHALL SUCH INFORMATION
BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE EXCHANGE ACT, EXCEPT TO THE
EXTENT THE COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.
-11-
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders of
the Company's Common Stock at June 30, 1996 since May 1, 1996 (the date the
Company first became subject to the reporting requirements of the Exchange Act)
to the cumulative total return over such period of (i) "Nasdaq Stock Market --
U.S." index, and (ii) the S&P Healthcare (Medical Products & Supplies) index.
The graph assumes the investment of $100 on May 1, 1996 in the Company's Common
Stock and each of such indices (from May 1, 1996) and reflect the change in the
market price of the Company's Common Stock relative to the noted indices at
June 30, 1996 and not for any interim period. The performance shown is not
necessarily indicative of future price performance.
Data Sheet
RESEARCH HOLDINGS LTD. TOTAL RETURN - DATA SUMMARY
BIOP CUMULATIVE TOTAL RETURN
----------------------------
5/01/96 6/30/96
BIOPSYS MEDICAL, INC. 100 133
NASDAQ STOCK MARKET-U.S. 100 100
S & P HEALTHCARE (MEDICAL PRODUCTS & SUPPLIES) 100 103
THE INFORMATION CONTAINED IN THE STOCK PERFORMANCE GRAPH SHALL NOT BE
DEEMED TO BE "SOLICITING MATERIAL" OR TO BE FILED WITH THE SEC, NOR SHALL SUCH
INFORMATION BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY
SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.
-12-
<PAGE>
CERTAIN TRANSACTIONS
During the fiscal year ended June 30, 1996, the Company issued and sold
shares of Series C Preferred Stock at a price of $2.33 per share, respectively,
to the following entities affiliated with directors and 5% stockholders.
NUMBER OF
SHARES
OF SERIES C
PREFERRED
STOCK
-----------
DIRECTORS AND ENTITIES AFFILIATED WITH DIRECTORS
Brentwood Associates VI, L.P. (David W. Chonette)............. 515,021
St. Paul Venture Capital, Inc. (1) (Nancy S. Olson)........... 1,072,961
Three Arch Partners (2) (Thomas J. Fogarty, M.D.)............. 343,347
Steve H. Parker, M.D.......................................... 4,300
OTHER 5% STOCKHOLDERS
Entities affiliated with Institutional Venture Partners (3)... 1,072,961
Fred H. Burbank, M.D.......................................... 21,500
- --------------------
(1) St. Paul Venture Capital, Inc. is a wholly-owned subsidiary of St. Paul
Fire and Marine Insurance Company, the owner of record.
(2) Dr. Fogarty is a general partner of Three Arch Partners, which entities are
Three Arch Partners, L.P. and Three Arch Associates, L.P.
(3) Institutional Venture Partners entities are Institutional Venture Partners
VI and Institutional Venture Management VI.
Upon the completion of the Company's initial public offering, each
outstanding share of Series C Preferred Stock was converted into one share of
Common Stock.
In April 1995, the Company issued convertible subordinated promissory notes
to certain institutional investors affiliated with Brentwood Associates VI, L.P.
and Three Arch Partners in the aggregate amount of $300,000. In June 1995, the
Company issued additional convertible subordinated promissory notes to the same
institutional investors in the aggregate amount of $300,000. In June 1995, the
Company issued stock purchase warrants to purchase 38,626 shares of its Series C
Preferred Stock and issued and sold Series C Preferred Stock to the same
institutional investors for cash and cancellation of all outstanding convertible
subordinated promissory notes. Representatives of Brentwood Associates VI, L.P.
and Three Arch Partners serve on the Company's Board of Directors. All such
warrants were exercised on a net basis for 32,624 shares of Common Stock upon
the closing of the Company's initial public offering.
-13-
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the shares they
represent as the Board of Directors may recommend.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT
TO INVESTOR RELATIONS, BIOPSYS MEDICAL, INC., 3 MORGAN, IRVINE, CALIFORNIA
92718.
THE BOARD OF DIRECTORS
Dated: October 25, 1996
-14-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF BIOPSYS MEDICAL, INC.
1996 ANNUAL MEETING OF SHAREHOLDERS
The undersigned stockholder of Biopsys Medical, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement each dated October 25, 1996 and hereby appoints
Steven L. Gex and Christopher D. Mitchell or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned to represent the undersigned at the 1996 Annual Meeting
of Stockholders of Biopsys Medical, Inc. to be held on December 9, 1996 at 10:00
a.m., local time, at the Company's principal executive offices located at 3
Morgan, Irvine, California 92718 and at any postponement or adjournment thereof,
and to vote all shares of Common Stock which the undersigned would be entitled
to vote if then and there personally present, on the matters set forth below:
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Election of Class I Directors / / FOR / / W/H
Nominees: David W. Chonette Thomas J. Fogarty, M.D.
2. Election of Class III Directors / / FOR / / W/H
Nominees: Norwick B. H. Goodspeed Edgar J. Cummins
3. Proposal to ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the year ending June 30, 1997.
/ / FOR / / AGAINST / / ABSTAIN
SEE REVERSE SIDE
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF THE TWO NOMINATED CLASS I
DIRECTORS; (2) FOR THE ELECTION OF THE TWO NOMINATED CLASS III DIRECTORS; (3)
FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS, AND AS THE PROXY HOLDERS DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
COME BEFORE THE MEETING.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS REGISTERED IN
THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS
A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
- --------------------------------------------------------------------------------
DATE _________________________
______________________________
SIGNATURE(S)
______________________________
SIGNATURE(S)
PLEASE SIGN, DATE AND PROMPTLY
RETURN THIS PROXY IN THE
ENCLOSED RETURN ENVELOPE WHICH
IS POSTAGE PREPAID IF MAILED IN
THE UNITED STATES.
NOTE: (This Proxy should be marked, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
