<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
Micro Therapeutics, 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:
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<PAGE> 2
MICRO THERAPEUTICS, INC.
2 GOODYEAR
IRVINE, CALIFORNIA 92618
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 25, 2000
TO THE STOCKHOLDERS OF MICRO THERAPEUTICS, INC.,
A Special Meeting of Stockholders of Micro Therapeutics, Inc. (the
"Company"), will be held at 2 Goodyear, Irvine, California 92618 on September
25, 2000, at 10:00 a.m., for the following purposes as more fully described in
the accompanying Proxy Statement:
(1) To consider and vote upon a proposal to amend the Company's 1996 Stock
Incentive Plan (the "1996 Plan") to increase the number of shares
issuable thereunder by 500,000 shares, bringing the total number of
shares issuable thereunder to 2,500,000.
(2) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on August 22, 2000
will be entitled to vote at the meeting or any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ George Wallace
----------------------------------
George Wallace
Chief Executive Officer,
President and Director
Irvine, California
August 29, 2000
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
YOU SHOULD COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. Any stockholder
present at the meeting may withdraw his or her proxy and vote personally on each
matter brought before the meeting. Stockholders attending the meeting whose
shares are held in the name of a broker or other nominee who desire to vote
their shares at the meeting should bring with them a proxy or letter from that
firm confirming their ownership of shares.
<PAGE> 3
MICRO THERAPEUTICS, INC.
2 GOODYEAR
IRVINE, CALIFORNIA 92618
---------------
PROXY STATEMENT
---------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Micro Therapeutics, Inc., a Delaware
corporation (the "Company"), for use at a Special Meeting of Stockholders
("Special Meeting") to be held on September 25, 2000, at 10:00 a.m., at 2
Goodyear, Irvine, California 92618. This Proxy Statement and the accompanying
proxy are being mailed to stockholders on or about August 29, 2000. It is
contemplated that this solicitation of proxies will be made primarily by mail;
however, if it should appear desirable to do so in order to ensure adequate
representation at the meeting, directors, officers and employees of the Company
may communicate with stockholders, brokerage houses and others by telephone,
telegraph or in person to request that proxies be furnished and may reimburse
banks, brokerage houses, custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy materials to the beneficial owners of
the shares held by them. All expenses incurred in connection with this
solicitation shall be borne by the Company.
Holders of shares of common stock of the Company ("stockholders") who
execute proxies retain the right to revoke them at any time before they are
voted. Any proxy given by a stockholder may be revoked or superseded by
executing a later dated proxy, by giving notice of revocation to the Secretary,
Micro Therapeutics, Inc., 2 Goodyear, Irvine, California 92618, in writing prior
to or at the meeting or by attending the meeting and voting in person. A proxy,
when executed and not so revoked, will be voted in accordance with the
instructions given in the proxy. If a choice is not specified in the proxy, the
proxy will be voted "FOR" the amendment of the 1996 Stock Incentive Plan.
VOTING SECURITIES
The shares of Common Stock, $.001 par value, constitute the only
outstanding class of voting securities of the Company. Only the stockholders of
the Company of record as of the close of business on August 22, 2000 (the
"Record Date"), will be entitled to vote at the meeting or any adjournment or
postponement thereof. As of the Record Date, there were 9,952,758 shares of
Common Stock outstanding and entitled to vote. No shares of the Company's
preferred stock, $.001 par value, were outstanding. A majority of shares
entitled to vote represented in person or by proxy will constitute a quorum at
the meeting. Each stockholder is entitled to one vote for each share of Common
Stock held as of the Record Date. Abstentions and broker non-votes are each
included in the determination of the number of shares present and voting for the
purpose of determining whether a quorum is present. Abstentions will be treated
as shares present and entitled to vote for purposes of any matter requiring the
affirmative vote of a majority or other proportion of the shares present and
entitled to vote. With respect to shares relating to any proxy as to which a
broker non-vote is indicated on a proposal, those shares will not be considered
present and entitled to vote with respect to any such proposal. With respect to
any matter brought before the Special Meeting requiring the affirmative vote of
a majority or other proportion of the outstanding shares, an abstention or
broker non-vote will have the same effect as a vote against the matter being
voted upon.
<PAGE> 4
PROPOSAL ONE
AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN TO INCREASE THE TOTAL NUMBER OF
SHARES PURCHASABLE THEREUNDER FROM 2,000,000 TO 2,500,000 SHARES
INTRODUCTION
Approval of the amendments to the 1996 Plan will require the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
present or represented at the Special Meeting of stockholders and entitled to
vote threat. Proxies solicited by management for which no specific direction is
included will be voted FOR the amendment of the 1996 Plan to add 500,000 shares
of Common Stock to the pool of shares reserved for issuance thereunder. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE 1996 PLAN.
DESCRIPTION OF THE 1996 PLAN
The principal features of the 1996 Plan are summarized below, but the
summary is qualified in its entirety by reference to the 1996 Plan itself.
Copies of the 1996 Plan can be obtained by writing to the Secretary, Micro
Therapeutics Inc., 2 Goodyear, Irvine, California 92618.
1996 PLAN TERMS
The Board of Directors adopted and the stockholders of the Company
originally approved the 1996 Stock Incentive Plan (the "1996 Plan") in July
1996. The purpose of the 1996 Plan is to provide participants with incentives
which will encourage them to acquire a proprietary interest in, and continue to
provide services to, the Company. The 1996 Plan is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and
is not a qualified deferred compensation plan under Section 401(a) of the Code.
At the time of its adoption, the 1996 Plan authorized the sale of up to
600,000 shares of Common Stock. On May 29, 1998 the Board of Directors and
stockholders amended the 1996 Plan to increase the authorized number of shares
of Common Stock issuable thereunder by 500,000 shares and to reserve the
additional shares for issuance under the 1996 Plan, bringing the total number of
shares of Common Stock subject to the 1996 Plan to 1,100,000. On May 27, 1999,
the Board of Directors and the stockholders amended the 1996 Plan to increase
the authorized number of shares of Common Stock issuable thereunder by 900,000
shares and to reserve the additional shares for issuance under the 1996 Plan,
bringing the total number of shares of Common Stock subject to the 1996 Plan to
2,000,000.
Incentive Options. Officers and other key employees of the Company or of
any parent or subsidiary corporation of the Company, whether now existing or
hereafter created or acquired (an "Affiliated Company") (including directors if
they also are employees of the Company or an Affiliated Company), as may be
determined by the Administrator, who qualify for incentive stock options under
the applicable provisions of the Code, will be eligible for selection to receive
incentive options under the 1996 Plan. An employee who has been granted an
incentive option may, if otherwise eligible, be granted an additional incentive
option or options and receive nonqualified options or restricted shares if the
Administrator so determines. No incentive stock options may be granted to an
optionee under the 1996 Plan if the aggregate fair market value (determined on
the date of grant) of the stock with respect to which incentive stock options
are exercisable by such optionee in any calendar year under the 1996 Plan of the
Company and its affiliates exceeds $100,000.
Nonqualified Options or Restricted Shares. Officers and other key employees
of the Company or of an Affiliated Company, any member of the Board, whether or
not he or she is employed by the Company, or consultants, business associates or
others with important business relationships with the Company will be eligible
to receive nonqualified options or restricted shares under the 1996 Plan. An
2
<PAGE> 5
individual who has been granted a nonqualified option or restricted shares may,
if otherwise eligible, be granted an incentive option or an additional
nonqualified option or options or restricted shares if the Administrator so
determines.
In no event may any individual be granted options under the 1996 Plan
pursuant to which the aggregate number of shares that may be acquired thereunder
during any calendar year exceeds 100,000 shares. As of August 22, 2000,
approximately 84 persons were participating in the 1996 Plan.
The 1996 Plan may be administered by either the Board of Directors or a
committee appointed by the Board (the "Committee"). The Board has delegated
administration of the 1996 Plan to the Compensation Committee, which is
comprised of three non-employee directors, all of whom are eligible to
participate in the 1996 Plan. Subject to the provisions of the 1996 Plan, the
Committee has full authority to implement, administer and make all
determinations necessary under the 1996 Plan. See "Directors' Fees" regarding
the annual grant of options to non-employee directors.
The exercise price of incentive stock options must at least be equal to the
fair market value of a share of Common Stock on the date the option is granted
(110% with respect to optionees who own at least 10% of the outstanding Common
Stock). Nonqualified options shall have an exercise price of not less than 85%
of the fair market value of a share of Common Stock on the date such option is
granted (110% with respect to optionees who own at least 10% of the outstanding
Common Stock). The exercise price of all options granted under the Plan to
non-employee directors shall be 100% of the fair market value of the Common
Stock on the date of grant, and all such options shall have a term of 10 years.
Payment of the exercise price may be made in cash, by delivery of shares of the
Company's Common Stock or, potentially, through the delivery of a promissory
note. The Compensation Committee has the authority to determine the time or
times at which options granted under the Plan become exercisable, provided that
options must expire no later than ten years from the date of grant (five years
with respect to optionees who own at least 10% of the outstanding Common Stock).
Options are nontransferable, other than upon death by will and the laws of
descent and distribution, and generally may be exercised only by an employee
while employed by the Company or within three months after termination of
employment (one year for termination resulting from death or disability).
The Board may from time to time alter, amend, suspend or terminate the 1996
Plan in such respects as the Board may deem advisable; provided, however, that
no such alteration, amendment, suspension or termination shall be made that
would substantially affect or impair the rights of any person under any
incentive option, nonqualified option or restricted share theretofore granted to
such person without his or her consent. Unless previously terminated by the
Board, the 1996 Plan will terminate on August 1, 2006.
NEW PLAN BENEFITS
The Company believes that the benefits or amounts that have been received
or will be received by any participant under the 1996 Plan cannot be determined.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF 1996 PLAN
The following is a summary of certain federal income tax consequences of
participation in the 1996 Plan. The summary should not be relied upon as being a
complete statement of all possible federal income tax consequences. Federal tax
laws are complex and subject to change. Participation in the 1996 Plan may also
have consequences under state and local tax laws which vary from the federal tax
consequences described below. For such reasons, the Company recommends that each
participant consult his or her personal tax advisor to determine the specific
tax consequences applicable to him or her.
Incentive Options. No taxable income will be recognized by an optionee
under the 1996 Plan upon either the grant or the exercise of an incentive
option. Instead, a taxable event will occur upon the sale or other disposition
of the shares acquired upon exercise of an incentive option, and the tax
treatment
3
<PAGE> 6
of the gain or loss realized will depend upon how long the shares were held
before their sale or disposition. If a sale or other disposition of the shares
received upon the exercise of an incentive option occurs more than (i) one year
after the date of exercise of the option and (ii) two years after the date of
grant of the option, the holder will recognize long-term capital gain or loss at
the time of sale equal to the full amount of the difference between the proceeds
realized and the exercise price paid. However, a sale, exchange, gift or other
transfer of legal title of such stock (other than certain transfers upon the
optionee's death) before the expiration of either of the one-year or two-year
periods described above will constitute a "disqualifying disposition." A
disqualifying disposition involving a sale or exchange will result in ordinary
income to the optionee in an amount equal to the lesser of (i) the fair market
value of the stock on the date of exercise minus the exercise price or (ii) the
amount realized on disposition minus the exercise price. If the amount realized
in a disqualifying disposition exceeds the fair market value of the stock on the
date of exercise, the gain realized in excess of the amount taxed as ordinary
income as indicated above will be taxed as capital gain. A disqualifying
disposition as a result of a gift will result in ordinary income to the optionee
in an amount equal to the difference between the exercise price and the fair
market value of the stock on the date of exercise. Any loss realized upon a
disqualifying disposition will be treated as a capital loss. Capital gains and
losses resulting from disqualifying dispositions will be treated as long-term or
short-term depending upon whether the shares were held for more or less than the
applicable statutory holding period (which currently is more than one year for
long-term capital gains). The Company will be entitled to a tax deduction in an
amount equal to the ordinary income recognized by the optionee as a result of a
disposition of the shares received upon exercise of an incentive option.
The exercise of an incentive option may result in items of "tax preference"
for purposes of the "alternative minimum tax." Alternative minimum tax is
imposed on an individual's income only if the amount of the alternative minimum
tax exceeds the individual's regular tax for the year. For purposes of computing
alternative minimum tax, the excess of the fair market value on the date of
exercise of the shares received on exercise of an incentive option over the
exercise price paid is included in alternative minimum taxable income in the
year the option is exercised. An optionee who is subject to alternative minimum
tax in the year of exercise of an incentive option may claim as a credit against
the optionee's regular tax liability in future years the amount of alternative
minimum tax paid which is attributable to the exercise of the incentive option.
This credit is available in the first year following the year of exercise in
which the optionee has regular tax liability.
Nonqualified Options. No taxable income is recognized by an optionee upon
the grant of a nonqualified option. Upon exercise, however, the optionee will
recognize ordinary income in the amount by which the fair market value of the
shares purchased, on the date of exercise, exceeds the exercise price paid for
such shares. The income recognized by the optionee who is an employee will be
subject to income tax withholding by the Company out of the optionee's current
compensation. If such compensation is insufficient to pay the taxes due, the
optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company will be entitled to a tax
deduction equal to the amount of ordinary income recognized by the optionee,
provided that certain reporting requirements are satisfied. If the exercise
price of a nonqualified option is paid by the optionee in cash, the tax basis of
the shares acquired will be equal to the cash paid plus the amount of income
recognized by the optionee as a result of such exercise. If the exercise price
is paid by delivering shares of Common Stock of the Company already owned by the
optionee or by a combination of cash and already-owned shares, there will be no
current taxable gain or loss recognized by the optionee on the already-owned
shares exchanged (however, the optionee will nevertheless recognize ordinary
income to the extent that the fair market value of the shares purchased on the
date of exercise exceeds the price paid, as described above). The new shares
received by the optionee, up to the number of the old shares exchanged, will
have the same tax basis and holding period as the optionee's basis and holding
period in the old shares. The balance of the new shares received will have a tax
basis equal to any cash paid by the optionee plus the amount of income
recognized by the optionee as a result of such exercise, and will have a holding
period commencing with the date of exercise. Upon the sale or disposition of
shares acquired pursuant to the exercise of a nonqualified option, the
difference between the proceeds realized and the optionee's basis in the shares
will be a capital gain or loss and will be treated as long-term capital gain or
loss if the shares have been held for more than the applicable statutory holding
period (which is currently more than one year for long-term capital gains).
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<PAGE> 7
Restricted Stock. If no Section 83(b) election is made and repurchase
rights are retained by the Company, a taxable event will occur on each date the
participant's ownership rights vest (e.g., when the Company's repurchase rights
expire) as to the number of shares that vest on that date, and the holding
period for capital gain purposes will not commence until the date the shares
vest. The participant will recognize ordinary income on each date shares vest in
an amount equal to the excess of the fair market value of such shares on that
date over the amount paid for such shares. Any income recognized by a
participant who is an employee will be subject to income tax withholding by the
Company out of the optionee's current compensation. If such compensation is
insufficient to cover the amount to be withheld, the participant will be
required to make a direct payment to the Company for the balance of the tax
withholding obligation. The Company is entitled to a tax deduction in an amount
equal to the ordinary income recognized by the participant. The participant's
basis in the shares will be equal to the purchase price, if any, increased by
the amount of ordinary income recognized.
If a Section 83(b) election is made within 30 days after the date of
transfer, or if no repurchase rights are retained by the Company, then the
participant will recognize ordinary income on the date of purchase in an amount
equal to the excess of the fair market value of such shares on the date of
purchase over the purchase price paid for such shares.
TAX WITHHOLDING
Under the 1996 Plan, the Company has the power to withhold, or require a
participant to remit to the Company, an amount sufficient to satisfy Federal,
state and local withholding tax requirements with respect to any options
exercised or restricted stock granted under the 1996 Plan. To the extent
permissible under applicable tax, securities, and other laws, the Committee may,
in its sole discretion, permit a participant to satisfy an obligation to pay any
tax to any governmental entity in respect of any option or restricted stock up
to an amount determined on the basis of the highest marginal tax rate applicable
to such participant, in whole or in part, by (i) directing the Company to apply
shares of Common Stock to which the participant is entitled as a result of the
exercise of an option or as a result of the lapse of restrictions on restricted
stock, or (ii) delivering to the Company shares of Common Stock owned by the
participant.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation earned during the three fiscal
years ended December 31, 1997, 1998 and 1999 by the Company's Chief Executive
Officer and the four other most highly compensated executive officers whose
total salary and bonus during 1999 exceeded $100,000 (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- ------------
AWARDS
------------
SECURITIES
BONUS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($) OPTIONS(#) COMP.(1)
--------------------------- ---- --------- ----- ------------ ---------
<S> <C> <C> <C> <C> <C>
George Wallace 1999 211,000 40,000 18,813
Chief Executive Officer and President 1998 196,200 30,000
1997 173,333 25,000 25,000
Harold Hurwitz 1999 145,800 20,000 13,125
Chief Financial Officer 1998 135,000 15,000
1997 11,250 50,000
William McLain 1999 139,150 22,000 13,125
Vice President - Operations 1998 125,125 15,000
1997 107,917 21,000
Earl Slee (2) 1999 151,525 8,000
1998 176,533(3)
Kevin Daly (4) 1999 107,154 15,000 73,125
Vice President - Regulatory & 1998 -- -- --
Clinical Affairs 1997 -- -- --
</TABLE>
----------------
(1) Does not reflect certain personal benefits, which in the aggregate are less
than 10% of each Named Executive Officer's salary and bonus.
(2) Mr. Slee was hired on April 6, 1998.
(3) Includes $69,430 in additional compensation in connection reimbursement for
relocation expenses.
(4) Mr. Daly was hired on March 29, 1999.
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<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
OPTION MATTERS
Option Grants. The following table sets forth certain information
concerning grants of options to each of the Company's Named Executive Officers
during the fiscal year ended December 31, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(1) ($/SHARE) DATE
--------------- ----------- -------------- --------- ----------
<S> <C> <C> <C> <C>
George Wallace 18,813 4.30% $7.750 2/23/09
Harold Hurwitz 13,125 3.00% $7.750 2/23/09
William McLain 13,125 3.00% $7.750 2/23/09
Earl Slee 13,125 3.00% $7.750 2/23/09
Kevin Daly 73,125 16.71% $6.500 4/29/09
</TABLE>
(1) Options to purchase an aggregate of 437,624 shares of Common Stock were
granted to employees, including the Named Executive Officers during the
fiscal year ended December 31, 1999.
OPTION EXERCISES IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING EXERCISE
OPTIONS PRICE EXERCISE
NAME EXERCISED(#) REALIZED VALUE($) ($/SHARE) DATE
-------------------- ------------ ---------------- --------- ---------
<S> <C> <C> <C> <C>
George Wallace 24,375 $177,645 $0.462 3/17/99
15,080 67,860 $5.250 10/25/99
1,625 15,093 $0.462 10/25/99
William McLain 29,250 127,676 $5.385 10/25/99
10,675 48,038 $5.250 10/25/99
</TABLE>
7
<PAGE> 10
The following table includes the number of shares covered by both
exercisable and unexercisable stock options as of December 31, 1999. Also
reported are the values for "in the money" options which represent the positive
spread between the exercise prices of any such existing stock options and the
fiscal year end price of the Company's Common Stock ($7.6875 per share).
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
-------------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
George Wallace 21,060 37,673 $ 3,803 $20,378
Harold Hurwitz 24,984 25,016 48,407 48,469
William McLain 3,742 16,333 8,792 38,814
Earl Slee 39,289 58,836 -- --
Kevin Daly 10,000 63,125 11,875 74,961
</TABLE>
EMPLOYMENT AGREEMENTS
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company entered into an employment agreement with Mr. Slee, effective
April 6, 1998, for a term expiring September 6, 2000, pursuant to which he will
serve as Vice President Research and Development. The employment agreement
provides for a base salary of One Hundred Forty-Five Thousand Dollars ($145,000)
per year with annual raises to be determined by the Company. Mr. Slee is also
eligible to participate in incentive compensation and other employee benefit
plans established by the Company from time to time. Mr. Slee's employment
agreement provides for a severance benefit of One Hundred Fifty Thousand Dollars
($150,000) if he is terminated without cause within the first twelve months of
his employment and such termination occurs within six months of a change in
control. The severance benefit is in addition to his current base salary accrued
through date of termination.
DIRECTORS' FEES
The Company's directors have not been previously paid cash compensation for
their services on the Company's Board of Directors. However, in the future, all
non-employee directors will be compensated in the amount of $2,000 for each
meeting of the Board of Directors attended and $500 for each committee meeting
attended. Additionally, all directors will continue to be reimbursed for certain
expenses incurred for meetings of the Board of Directors which they attended. At
the discretion of the Board of Directors, each non-employee director will be
granted options under the Company's 1996 Stock Incentive Plan. Currently, each
non-employee director shall receive an initial grant of 16,000 shares, vesting
25% immediately and the remaining 75% over the following three years, plus an
annual grant of 4,000 shares upon each reelection, vesting 25% immediately and
the remaining 75% over the following three years. In fiscal year 1999, Mr.
Montgomery, Mr. Allen, Ms. Hutton and Mr. Blickenstaff were each granted options
to purchase 2,000 shares. Mr. Fitzsimmons was granted 8,000 shares in January of
2000, and Mr. Montgomery, Mr. Allen, Ms. Hutton, Mr. Blickenstaff and Mr.
Fitzsimmons were each granted options to purchase 2,000 shares in May 2000.
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1999, the Company's Board of Directors,
based upon the recommendations of the Compensation Committee, established the
levels of compensation for the Company's executive officers, provided, however,
Mr. Slee has an employment agreement with the Company and his compensation is
determined in accordance with the terms and conditions of such agreement.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of August 22, 2000 by (i) each stockholder who is
known by the Company to own beneficially more than five percent of the Company's
outstanding Common Stock, (ii) each director and nominee for director of the
Company, (iii) each of the Company's executive officers named in the Summary
Compensation Table (see "Executive Compensation") and (iv) by all executive
officers and directors of the Company as a group. The information as to each
person or entity has been furnished by such person or group.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Set forth below is certain information as of August 22, 2000 regarding the
beneficial ownership of the Company's Common Stock by (i) any person who was
known by the Company to own more than five percent (5%) of the voting securities
of the Company, (ii) all directors and nominees, (iii) each of the Named
Executive Officers identified in the Summary Compensation Table, and (iv) all
current directors and executive officers as a group. Unless otherwise indicated,
the persons named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) OWNERSHIP(2) OF CLASS
---------------------------------------- -------------------- --------
<S> <C> <C>
Mayfield VII(3) 1,031,108 10.36%
Mayfield VII Management Partners
Mayfield Associates Fund II
Yogen K. Dalal
F. Gibson Myers, Jr.
Kevin A. Fong
William D. Unger
Wendell G. Van Auken
Michael J. Levinthal
A. Grant Heidrich, III
2800 Sand Hill Road
Suite 250
Menlo Park, California 94025
Abbott Laboratories 1,212,628 12.18%
100 Abbott Park Road
Abbott Park, IL 60064-3500
Guidant Corporation(4) 535,442 5.13%
111 Monument Circle, 29th Floor
Indianapolis, Indiana 46204
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) OWNERSHIP(2) OF CLASS
---------------------------------------- -------------------- --------
<S> <C> <C>
George Wallace(5) 376,126 3.76%
Dick Allen(6) 70,930 *
Wende Hutton(7) 11,000 *
Kim Blickenstaff(8) 11,000 *
William McLain(9) 81,576 *
Harold Hurwitz(10) 64,672 *
Kevin Daly(11) 43,985 *
W. James Fitzsimmons(12) 2,500 *
Pequot Capital Management, Inc.(13) 1,369,000 13.76%
Earl Slee(14) 72,029 *
All executive officers and 718,715 7.03%
directors as a group (9 persons)(15)
</TABLE>
---------------------
*Less than 1%
(1) Unless otherwise indicated, the business address of each stockholder is c/o
Micro Therapeutics, Inc., 2 Goodyear, Irvine, California 92618.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options, warrants and convertible notes currently exercisable or
convertible, or exercisable or convertible within 60 days of August 22,
2000, are deemed outstanding for computing the percentage of the person
holding such options but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them.
(3) Based on information set forth in a Schedule 13G, filed with the Securities
and Exchange Commission on February 17, 1998. Includes (i) 987,854 shares
owned by Mayfield VII of which Mayfield VII Management Partners is the sole
General Partner and (ii) 43,254 shares owned by Mayfield Associates Fund
II. The individuals listed above are General Partners of Mayfield VII
Management Partners and are General Partners of Mayfield Associates Fund
II. Such individuals may be deemed to have shared voting and dispositive
power over the shares which are or may be deemed to be beneficially owned
by Mayfield VII and Mayfield Associates Fund II but disclaim such
beneficial ownership.
(4) Based on information set forth in a Schedule 13G, filed with the Securities
and Exchange Commission on June 9, 1998. Includes 487,805 shares which may
be acquired pursuant to conversion of the Convertible Subordinated Note
Agreement, dated November 17, 1997, by and between the Company and Guidant
Corporation.
10
<PAGE> 13
(5) Includes 46,473 shares subject to options exercisable within 60 days of
August 22, 2000. Also includes 6,000 shares held by Mr. Wallace as
custodian for his three daughters who were given shares pursuant to the
Uniform Gift to Minors Act, and 2,000 shares held in trust for Mr.
Wallace's mother. Mr. Wallace disclaims beneficial ownership of the shares
held in trust for his mother.
(6) Includes 11,000 shares subject to options exercisable within 60 days of
August 22, 2000. Also includes 7,800 shares owned by the Allen Investment
Partnership, of which Mr. Allen is the managing partner; 37,130 shares
owned by DIMA Ventures, Incorporated; 1,000 shares owned by the Brett
Richard Allen Trust; and 1,000 shares owned by Jennifer Lee Allen Trust.
Mr. Allen disclaims beneficial ownership of the shares owned by The Allen
Investment Partnership, except to the extent of his pecuniary interest
therein and disclaims beneficial ownership of the 2,000 shares held in the
two trusts names above.
(7) Includes 11,000 shares subject to options exercisable within 60 days of
August 22, 2000. Ms. Hutton is a general partner in Mayfield VIII
Management Partners, the general partner of Mayfield VIII, but is not a
general partner of Mayfield VII Management Partners, Mayfield VII or
Mayfield Associates Fund II.
(8) Consists of 11,000 shares subject to options exercisable within 60 days of
August 22, 2000.
(9) Includes 41,104 shares subject to options exercisable within 60 days of
August 22, 2000.
(10) Includes 62,546 subject to options exercisable within 60 days of August 22,
2000.
(11) Includes 39,125 shares subject to options exercisable within 60 days of
August 22, 2000 and 240 shares held in a 401(k) retirement account in the
name of Mr. Daly's wife. Mr. Daly disclaims beneficial ownership of the
shares held by his wife.
(12) Includes 2,500 shares subject to options exercisable within 60 days of
August 22, 2000.
(13) Based on information set forth in a Schedule 13G/A, filed with the
Securities and Exchange Commission on April 4, 2000. Includes 800,000
shares of common stock owned by Pequot Private Equity Fund II LP, of which
Pequot Capital Management, Inc. is the beneficial owner.
(14) Includes 70,619 shares subject to options exercisable within 60 days of
August 22, 2000.
(15) Includes directors' and executive officers' shares, including shares
subject to options exercisable within 60 days of August 22, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon its review of the copies of Forms 3 and 4 and amendments
thereto furnished to the Company, or written representations that no annual Form
5 reports were required, the Company believes that all filing requirements under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") applicable to its directors, officers and any persons holding ten percent
(10%) or more of the Company's Common Stock were made with respect to the
Company's fiscal year ended December 31, 1999.
11
<PAGE> 14
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the 2001 Annual
Meeting of Stockholders and presentation in the Company's Proxy Statement with
respect to such meeting should arrange for such proposal to be delivered to the
Company at its principal place of business no later than January 1, 2001 in
order to be considered for inclusion in the Company's proxy statement relating
to that meeting. Matters pertaining to such proposals, including the number and
length thereof, eligibility of persons entitled to have such proposals included
and other aspects are regulated by the Securities Exchange Act of 1934, Rules
and Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer.
OTHER MATTERS
Management is not aware of any other matters to come before the meeting. If
any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed Proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
INTERESTS OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON
Officers and directors of the Company are eligible under the 1996 Plan, and
have a substantial direct interest in the approval of the amendment to the 1996
Plan.
By Order of the Board of Directors
/s/ George Wallace
-----------------------------------
George Wallace
Chief Executive Officer,
President and Director
Irvine, California
August 29, 2000
12
<PAGE> 15
PROXY MICRO THERAPEUTICS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
SPECIAL MEETING OF THE STOCKHOLDERS -- SEPTEMBER 25, 2000
The undersigned hereby nominates, constitutes and appoints George Wallace
and Harold Hurwitz, and each of them individually, the attorney, agent and proxy
of the undersigned, with full power of substitution, to vote all stock of MICRO
THERAPEUTICS, INC. which the undersigned is entitled to represent and vote at
Special Meeting of Stockholders of the Company to be held at 2 Goodyear, Irvine,
California 92618 on September 25, 2000, at 10:00 a.m., and at any and all
adjournments or postponements thereof, as fully as if the undersigned were
present and voting at the meeting, as follows:
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEM 1.
1. AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES
SUBJECT THERETO BY 500,000 TO A TOTAL OF 2,500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. IN THEIR DISCRETION, ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
IMPORTANT -- PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
<PAGE> 16
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED "FOR" THE
AMENDMENT TO THE 1996 PLAN.
Date , 2000
-------------------------
(Signature of
stockholder)
Please sign your name
exactly as it appears
hereon. Executors,
administrators,
guardians, officers of
corporations and others
signing in a fiduciary
capacity should state
their full titles as
such.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND RETURN
THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
