<PAGE>
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 Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LUTHER MEDICAL PRODUCTS, 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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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Notes:
<PAGE>
LUTHER MEDICAL PRODUCTS, INC.
Notice of Annual Meeting of Shareholders
Friday, December 8, 1995
TO THE SHAREHOLDERS OF LUTHER MEDICAL PRODUCTS, INC.:
NOTICE IS HEREBY GIVEN and you are cordially invited to attend the Annual
Meeting of Shareholders of Luther Medical Products, Inc., a California
corporation (the "Company"), which will be held at the Company's offices, 14332
Chambers Road, Tustin, California 92680, at 9:00 A.M., local time, on Friday,
December 8, 1995. The Annual Meeting will be held for the following purposes, as
more fully described in the attached Proxy Statement:
(1) Election of Directors. To elect a Board of five (5) Directors.
---------------------
The persons nominated, Messrs. Rollo, Isaacs, Payne, Hamilton, and Dahlman,
are described in the attached Proxy Statement; and
(2) Other Business. To consider and act upon any other business
--------------
matters as may properly come before the meeting or any postponements or
adjournments thereof.
In accordance with the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on October 13, 1995, as the record
date for the determination of the holders of Common Stock entitled to notice of
and to vote at the Annual Meeting.
YOUR ATTENTION IS DIRECTED TO THE ACCOMPANYING PROXY STATEMENT.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
SIGN, DATE, AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS,
------------------------------------
Petra Darling, Secretary
November 1, 1995
YOU ARE URGED TO VOTE UPON THE MATTERS PRESENTED AND TO SIGN, DATE, AND
RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IT IS IMPORTANT
FOR YOU TO BE REPRESENTED AT THE MEETING. THE EXECUTION OF YOUR PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ARE PRESENT AT THE MEETING.
Requests for additional copies of proxy materials should be addressed to
Petra Darling, Corporate Secretary, at the offices of the Company, 14332
Chambers Road, Tustin, California 92680.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Proxies................................................................... 1
Voting Securities......................................................... 1
Security Ownership of Certain Beneficial Owners and Management............ 2
Election of Directors..................................................... 4
Directors and Executive Officers.......................................... 5
Executive Compensation.................................................... 6
Summary of Transactions In All Company Benefit Plans...................... 10
Certain Transactions...................................................... 10
Proxy Expenses............................................................ 10
1995 Annual Report to Shareholders........................................ 11
Shareholder Proposals..................................................... 11
Independent Public Accountants............................................ 11
Other Business............................................................ 11
</TABLE>
- i -
<PAGE>
LUTHER MEDICAL PRODUCTS, INC.
14332 CHAMBERS ROAD
TUSTIN, CALIFORNIA 92680
(714) 544-3002
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF SHAREHOLDERS
Friday, December 8, 1995
------------------------
PROXIES
The enclosed Proxy is solicited by and on behalf of the management and
Board of Directors of LUTHER MEDICAL PRODUCTS, INC., a California corporation
(the "Company"), for use at the Company's Annual Meeting of Shareholders and at
any and all adjournments thereof (the "Annual Meeting") to be held at the
Company's offices, 14332 Chambers Road, Tustin, California 92680, at 9:00 a.m.,
local time. Any shareholder has the power to revoke his or her proxy at any
time before it is voted. A proxy may be revoked by delivering written notice of
revocation to the Secretary of the Company at its principal office address
listed above, by a subsequent proxy executed by the person executing the prior
proxy and presented to the meeting, or by attendance at the meeting and voting
in person by the person executing the proxy. The solicitation is being made
only by use of the mails and the cost thereof will be borne by the Company.
A complete copy of the Company's 1995 Annual Report on Form 10-KSB to the
Securities and Exchange Commission, including the financial statements and
schedules thereto, may be obtained without charge by shareholders (including
beneficial owners of the Company's common stock) by sending a written request to
the Secretary of the Company, Luther Medical Products, Inc., 14332 Chambers
Road, Tustin, California 92680.
The Annual Report to Shareholders of the Company, which report includes
financial statements of the Company for the fiscal years ended June 30, 1994,
and 1995, were mailed with this Proxy Statement and the accompanying Proxy,
commencing November 1, 1995, to each person who was a shareholder as of the
record date.
VOTING SECURITIES
October 13, 1995, has been fixed as the record date for the determination
of shareholders entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. As of that date, the Company had outstanding 2,985,636
shares of common stock, no par value per share (the "Common Stock"), the only
outstanding voting securities of the Company. Shareholders of record of Common
Stock at the close of business on October 13, 1995, will be entitled to one vote
for each share held upon all matters to be considered at the Annual Meeting,
except that in the election of directors, all shareholders shall be entitled to
cumulate votes for a candidate or candidates whose names have been placed in
nomination, if one or more shareholders have given notice at the meeting, prior
to the voting, of an intention to cumulate votes. If the shareholders are
entitled to cumulate their votes, they may give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of votes
to which his or her shares are entitled or may distribute his or her votes on
the same principle among as many candidates as the shareholder sees fit.
Discretionary authority by the Board of Directors to cumulate their votes is
solicited by the Board of Directors because, in the event nominations are made
in opposition to the nominees of the Board of Directors, it is the intention of
the Board of Directors' proxies to cumulate their votes for individual nominees
in accordance with their best judgment in order to assure the election of as
many of the nominees of the Board of Directors as possible.
- 1 -
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock at October 13, 1995, (except as otherwise indicated by
footnote) by (i) each person (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) known by management to
own beneficially more than 5% of the Company's outstanding Common Stock, (ii)
each of the Company's directors and nominees, and (iii) all executive officers,
directors, and nominess as directors of the Company as a group:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned (2)
Name of Individual Amount (1) %
------------------ ---------- ----
<S> <C> <C>
David Rollo 103,175(3) 3.3
Mark S. Isaacs 85,211(4) 2.8
Jack W. Payne 46,500(5) 1.5
D. Ross Hamilton 84,856(6) 2.8
William R. Dahlman - 0 -(7) 0.0
Ronald B. Luther 343,133(8) 10.8
All executive officers, directors,
and nominees as directors
as a group (7 persons) 680,232(9) 19.6
13D Reporting Group 446,947(10) 14.0
</TABLE>
- ----------------
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Company Common Stock shown to be beneficially
owned by them, subject to community property laws where applicable and the
information contained in the footnotes to this table.
(2) Assumes the exercise of options and warrants to purchase 490,073 shares
held by executive officers and directors of the Company, which options and
warrants are, or become, exercisable within the 60 days of the record date.
(3) Includes 3,175 shares beneficially owned by Mr. Rollo, plus warrants to
purchase 150,000 shares at an exercise price of $2.94 per share, expiring
at various dates from December 5, 1999, to December 5, 2001, of which
100,000 warrants are exercisable as of, or within 60 days of, the record
date. Mr. Rollo's address is 14332 Chambers Road, Tustin, California
92680.
(4) Includes 12,568 shares beneficially owned by Mr. Isaacs, plus warrants to
purchase 7,143 shares at an exercise price of $3.50 per share, expiring on
September 12, 1996; warrants to purchase 5,000 shares at an exercise price
of $5.57 per share, expiring on January 28, 1997; warrants to purchase
5,000 shares at an exercise price of $3.50 per share, expiring on January
15, 1998; warrants to purchase 25,000 shares at an exercise price of $2.75
per share, expiring on July 23, 1998; warrants to purchase 5,000 shares at
an exercise price of $2.50 per share, expiring on January 21, 1999;
warrants to purchase 13,500 shares at an exercise price of $2.55 per share,
expiring on January 27, 2000; and warrants to purchase 12,000 shares at an
exercise price of $2.56 per share, expiring at various times during the
period of April 30 through September 30, 2000. Mr. Isaacs' address is
14332 Chambers Road, Tustin, California 92680.
(5) Includes warrants to purchase 2,500 shares at an exercise price of $6.20
per share, expiring on March 20, 1997; warrants to purchase 5,000 shares at
an exercise price of $3.50 per share, expiring on January
- 2 -
<PAGE>
15, 1998; warrants to purchase 25,000 shares at an exercise price of $2.75
per share, expiring on July 23, 1998; warrants to purchase 5,000 shares at
an exercise price of $2.50 per share, expiring on January 21, 1999; and
warrants to purchase 9,000 shares at an exercise price of $2.55 per share,
expiring on January 27, 2000. Mr. Payne's address is 4515 S. Meadow Drive,
Boulder, Colorado 80301.
(6) Includes 5,000 shares beneficially owned by Mr. Hamilton and 30,856 shares
owned by a partnership, of which Mr. Hamilton and an unaffiliated third
party each owns 50%; warrants to purchase 35,000 shares at an exercise
price of $2.75 per share, expiring on July 23, 1998; warrants to purchase
5,000 shares at an exercise price of $2.50 per share, expiring on January
21, 1999; and warrants to purchase 9,000 shares at an exercise price of
$2.55 per share, expiring on January 27, 2000. Mr. Hamilton's address is
9440 Gregory Road, Easton, Maryland 21601.
(7) Mr. Dahlman's address is 215 N. Marengo Avenue, Pasadena, California 91101.
(8) Includes 134,367 shares beneficially owned by Mr. Luther, 3,479 shares
owned by Mr. Luther's spouse, as to which shares Mr. Luther disclaims
beneficial ownership, warrants to purchase 21,429 shares at an exercise
price of $3.50 per share, expiring on January 26, 1996; warrants to
purchase 14,286 shares at an exercise price of $3.50 per share, expiring on
January 18, 1996; warrants to purchase 70,000 shares at an exercise price
of $3.75 per share, expiring on March 24, 1997; warrants to purchase 15,000
shares at an exercise price of $3.50 per share, expiring April 23, 1998;
warrants to purchase 7,143 shares at an exercise price of $3.50 per share,
expiring on June 24, 1998; warrants to purchase 4,286 shares at an exercise
price of $3.25 per share, expiring on April 22, 1999; warrants to purchase
100,000 shares at an exercise price of $2.63 per share, expiring at various
dates from November 19, 1998, to November 19, 2002, of which 40,000
warrants are exercisable as of, or within 60 days of, the record date; and
warrants to purchase 100,000 shares at an exercise price of $3.63 per
share, expiring September 18, 2000, of which 20,000 warrants are
exercisable as of, or within 60 days of, the record date. Also includes
options, issued to Mr. Luther's spouse, to purchase 2,143 shares at an
exercise price of $2.63 per share, expiring on January 18, 1996; options to
purchase 1,500 shares at an exercise price of $4.25 per share, expiring on
November 15, 1996; options to purchase 1,000 shares at an exercise price of
$4.25 per share, expiring on November 13, 1997; and options to purchase
8,500 shares at an exercise price of $3.07 per share, expiring on April 23,
1998, as to all of which options and the underlying shares Mr. Luther
disclaims beneficial ownership. Mr. Luther's address is 14332 Chambers
Road, Tustin, California 92680.
(9) Includes all shares, options, and warrants described in notes (3) through
(6), inclusive, and (8), above; 714 shares beneficially owned by an
executive officer who is not a director, plus options to purchase 1,429
shares at an exercise price of $3.71 per share, expiring on June 19, 1997;
options to purchase 4,571 shares at an exercise price of $2.63 per share,
expiring on January 18, 1996; options to purchase 1,500 shares at an
exercise price of $4.25 per share, expiring on November 15, 1996; options
to purchase 1,000 shares at an exercise price of $4.25 per share, expiring
on November 13, 1997; options to purchase 6,000 shares at an exercise price
of $3.07 per share, expiring on April 23, 1998; and options to purchase
2,143 shares at an exercise price of $3.25 per share, expiring on April 22,
1999.
(10) Includes all shares, options, and warrants described in note (8), above.
In July of 1995, a "reporting group" consisting of Ronald B. Luther,
Barbara C. Luther, Ray R. Thurston, and Amy Thurston filed a Schedule 13D
with the Securities and Exchange Commission and, in September of 1995,
filed Amendment No. 1 thereto. The information regarding the beneficial
ownership of Common Stock attributed to the group in the table was derived
from the information provided in Item 5 of Amendment No. 1 to Schedule 13D,
subject to adjustment by the Company for completeness or accuracy.
- 3 -
<PAGE>
ELECTION OF DIRECTORS
The five (5) persons named below have been nominated by management for
election as directors to serve until the Annual Meeting to be held in 1996 and
until their respective successors are elected and shall qualify. Each of the
nominees, with the exception of Mr. Dahlman, has previously served as a director
of the Company.
Unless otherwise instructed, the enclosed Proxy will be voted for
election of the nominees listed below, except that the persons designated as
proxies reserve full discretion to cast their votes for another person
recommended by management in the unanticipated event that any nominee is unable
or declines to serve.
<TABLE>
<CAPTION>
Name of Nominee Age Director Since
--------------- --- --------------
<S> <C> <C>
David Rollo 54 1993
Mark S. Isaacs 31 1991
Jack W. Payne 65 1992
D. Ross Hamilton 57 1993
William R. Dahlman 53 nominee
</TABLE>
Each of the Company's directors, with the exception of Mr. Dahlman, has
been elected or appointed to serve until the next meeting of shareholders.
Except as described below, there are no arrangements or understandings between
any director and any other person pursuant to which any person was elected or
nominated as a director. Pursuant to an understanding between the Company and a
shareholder group, of which Mr. Luther is a member, Mr. Dahlman has been
nominated to serve as a director of the Company until his successor is elected
and shall qualify, subject to Mr. Dahlman's election at the Annual Meeting. Such
understanding also provides that the Company's directors shall increase the
number of directors of the Company from five to six during the Company's current
fiscal year to facilitate the appointment of a director to be designated by such
group to serve until the following annual meeting of the Company's shareholders.
Mr. Rollo has served as President, Chief Executive Officer, and as a
director of the Company since December of 1993, as its Chief Financial Officer
since January of 1994, and as its Chairman of the Board since June of 1995.
From 1976 to 1993, Mr. Rollo was employed by Telectronics Inc. (or by certain of
its affiliates), a Denver, Colorado, based heart pacemaker manufacturer, in
various positions, including President and Chief Executive Officer.
Mr. Isaacs has served as a director of the Company since September of 1991.
From April of 1995 to the present, he has also served as a consultant to the
Company, which engagement is currently set to terminate in December of 1995.
From March of 1991 to October of 1994, Mr. Isaacs was engaged in the acquisition
of silver mining properties under the name SilTex Resources. In August of 1992,
SilTex Resources was incorporated in Nevada as "SilTex Resources, Inc." Mr.
Isaacs served as its Chairman of the Board and Chief Executive Officer until
October of 1994, as a director until December of 1994, and as a consultant
through April of 1995. From February of 1993 until October of 1994, Mr. Isaacs
served as President, Chief Executive Officer, and Chairman of the Board of
Belcor Inc. ("Belcor"), whose business consists of natural resource related
activities.
Mr. Payne has served as a director of the Company since March of 1992.
From January of 1993 to the present, he has served as the Executive Vice
President and a director of Sequin Hospital Bed Corporation, a Denver, Colorado,
durable medical equipment company of which he is a co-founder. From June of
1992 to the present, Mr. Payne has also served as President and Chief Executive
Officer of FerroMagnetic Therapeutics Corp., a Denver, Colorado, biotechnology
company. From December of 1993 to the present, he has served as a director of
First Fidelity Acceptance Corp., a public Dallas, Texas, financial services
company. Between 1990 and 1993, Mr. Payne served as the President of Executive
Marketing International, Inc., a Denver, Colorado, human resource consulting
company. From January of 1990 to June of 1992, he was the President and served
as the Chief Operating Officer of Bio Barrier Corporation. Mr. Payne commenced
his career in the medical products and devices field at Baxter Travenol
Laboratories, Inc., in 1958, where, until 1977, he was employed in various
- 4 -
<PAGE>
sales and executive positions. Thereafter, he continued his career in that
industry with executive positions at R.P. Scherer Corporation and Terumo Medical
Products, Inc.
Mr. Hamilton has served as a director of the Company since March of 1993.
For not less than the previous five years, he has served as President of
Hamilton Research, Inc., a Maryland-based financial consulting firm. Since
December of 1989, Mr. Hamilton has served as a director of Incstar Corporation,
52% of which enterprise is owned by Fiat S.p.A.; since January of 1993, as a
director of Belcor; and since June of 1994, as a director of Alpharel, Inc., a
computer software company. Between 1968 and 1981, he served as a Vice President
of Dean Witter Reynolds and, for the six previous years as an officer at
Chemical Bank.
Mr. Dahlman is a nominee to serve as a director of the Company. From
January of 1991 to the present, he has served as a principal of WRD &
Associates, a Los Angeles, California, contract management and consulting group.
From 1987 until forming WRD & Associates, Mr. Dahlman was the President and
Chief Executive Officer of Suntory Water Group in Atlanta, Georgia.
Committees; Meetings
The Company has standing audit, compensation, and nominating committees.
The Company's Board of Directors met a total of seven times during the
fiscal year ended June 30, 1995.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
David Rollo 54 Chairman of the Board, President,
Chief Executive Officer,
Chief Financial Officer, Director
Ronald B. Luther 63 Vice President, Director of
Research and Development
Petra Darling 51 Secretary
Mark S. Isaacs 31 Director
Jack W. Payne 65 Director
D. Ross Hamilton 57 Director
</TABLE>
Each of the Company's directors has been elected or appointed to serve
until the next annual meeting of shareholders. Except as set forth under
"Election of Directors," above, there are no arrangements or understandings
between any director and any other person pursuant to which any person was
elected or nominated as a director. The Company's executive officers serve at
the discretion of the Board of Directors.
Set forth below are brief descriptions of the business experience of Mr.
Luther and Ms. Darling, who are not nominees to serve as directors of the
Company. For information concerning the business experience of Messrs. Rollo,
Isaacs, Payne, Hamilton, and Dahlman, see "Election of Directors," above.
Mr. Luther is the founder of the Company and, since September of 1995 has
served as its Vice President, Director of Research and Development. From the
Company's organization in 1980, until the election of directors at the Annual
Meeting, he served as a director; until June of 1995, as the Company's Chairman
of the
- 5 -
<PAGE>
Board; until December of 1993, as its Chief Executive Officer; and, between 1980
and 1990 and during 1992 and 1993, as its President. From 1978 to 1980, Mr.
Luther was the President and sole shareholder of Luther Medical Systems, Inc., a
research and consulting company. From 1975 to 1978, he was the President of
William Harvey Research Corporation, a manufacturer of blood oxygenators for
open heart surgery.
Ms. Darling has served as secretary of the Company since November of 1992.
Since 1981, she has been employed by the Company in various administrative, non-
policy making capacities, including the Company's assistant secretary (between
1988 and 1992) and its controller (from 1981 to the present), reporting to the
Company's principal accounting officer.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------------------------------------
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Rollo 1995 $141,437 --- --- --- - 0 - --- ---
(President, 1994 $ 74,417/1/ --- --- --- 150,000 --- ---
CEO, and CFO)
Ronald Luther 1995 $107,690 --- --- --- - 0 - --- ---
(Vice President, 1994 $100,000 --- --- --- 104,286 --- ---
Director - R&D) 1993 $100,000 --- --- --- 15,000 --- ---
All executive
officers as a group
(3 persons) 1995 $308,383 --- --- --- 9,286 --- ---
(3 persons) 1994 $230,334 --- --- --- 258,429 --- ---
(2 persons) 1993 $275,910/2/ --- --- --- 32,000 --- ---
</TABLE>
- -----------------
/1/ Represents the period from the commencement of Mr. Rollo's employment in
December of 1994 through the end of the Company's fiscal year at June 30,
1995.
/2/ Includes $96,110 in cash compensation accrued or paid by the Company for
services rendered by an executive officer of the Company who left its
employ subsequent to June 30, 1992.
- -----------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- ----------------------------------------------------------------------------------------------------------------------------------
Percent of Total
Options/SARs
Options/ Granted to Market Price
SARs Employees in Exercise or Base on Date Expiration
Name Granted(#) Fiscal Year Price($/Sh) of Grant($/Sh) Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David Rollo - 0 - N/A N/A N/A N/A
Ronald Luther - 0 - N/A N/A N/A N/A
</TABLE>
- 6 -
<PAGE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise(#) Value Realized($) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David Rollo - 0 - --- 50,000/ - 0 -/
100,000 - 0 -
Ronald Luther - 0 - --- 192,144/ - 0 -/
140,000 - 0 -
</TABLE>
The Company employs Mr. Rollo as its Chief Executive Officer and President
pursuant to a series of employment agreements, the most current of which is
effective as of December of 1995. Mr. Rollo's annual base compensation
thereunder currently is $150,000, subject to cost of living increases and
periodic review and increase upon the recommendation of the Company's
compensation committee. Mr. Rollo is also entitled to receive bonus payments in
their discretion.
Upon execution of the initial employment agreement in December of 1993, the
Company granted to Mr. Rollo warrants to purchase 150,000 shares of the
Company's common stock, of which 50,000 warrants vested in December of 1994,
50,000 are to vest in December of 1995, and 50,000 are to vest in December of
1996. The exercise price of the warrants (the average of the closing bid and
asked prices as quoted on the NASDAQ System on December 6, 1993) is $2.94.
If Mr. Rollo's employment by the Company should terminate for any reason,
all of such warrants that, as of the date of termination, otherwise would have
become exercisable within the 12-month period following the date of termination
shall immediately vest and become exercisable. Vesting of all of Mr. Rollo's
unvested warrants shall be accelerated to the date on which a sale of all or
substantially all of the Company's assets closes or a change of control of the
Company occurs.
Under certain circumstances, a termination of Mr. Rollo's employment
agreement will cause the Company to pay to Mr. Rollo (i) his full base
compensation through the date of termination at the rate in effect at the time
of such termination and (ii) a lump sum equal to 50% (in the event a qualifying
termination occurs on or before December 5, 1995) or 100% (in the event a
qualifying termination occurs on or after December 6, 1995) of his annual base
compensation at the highest rate in effect during the 12 months immediately
preceding the date of termination.
Through and including December 5, 1995, under certain other circumstances
(including, but not limited to, a sale by the Company of all or substantially
all of its assets or a "change of control of the Company"), a termination of Mr.
Rollo's employment agreement will cause the Company to pay to Mr. Rollo (i) his
full base compensation through the date of termination at the rate in effect at
the time of such termination and (ii) a lump sum of $100,000.
A "change in control of the Company" means a change in control of a nature
that would be required to be reported in response to Item 5(f) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); provided, however, that such "person" (as such
term is used in Section 13(d) and 14(d) of the Exchange Act), other than the
Company or any "person" who on the date hereof is a director or officer of the
Company, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
80% or more of the combined voting power of the Company's then outstanding
securities.
- 7 -
<PAGE>
Effective in September of 1995, the Company and Mr. Luther entered into an
agreement (the "September 1995 Agreement"), pursuant to which the Company
employs Mr. Luther as its Vice President, Director of Research and Development.
Mr. Luther's annual base compensation thereunder is $115,000, subject to
periodic review. Mr. Luther may receive bonus payments in the discretion of the
Company's compensation committee. The September 1995 Agreement supersedes an
earlier employment agreement entered in November of 1993 (the "November 1993
Agreement").
Upon execution of the November 1993 Agreement, the Company granted to Mr.
Luther warrants to purchase 100,000 shares of the Company's common stock, of
which warrants, 40,000 of which are currently vested and the remainder vest
annually in November of 1996, 1997, and 1998, in three equal allotments of
20,000 each. The exercise price of the warrants, as determined by the Company's
board of directors (with Mr. Luther abstaining) is $2.63.
During each of the five years following the earlier of (i) termination of
the agreement for any reason (other than if Mr. Luther has been convicted of
committing a felony) or (ii) November 19, 1998, the Company shall pay to Mr.
Luther compensation ("Royalties") equivalent to two percent of the "net sales
price" of all products manufactured by, or on behalf of, the Company for which
the Company received a 510(k) notification from the United States Food and Drug
Administration that bears a date on or after November 19, 1993. No Royalties
shall accrue in favor of Mr. Luther during the period that the Company is
responsible to pay to him base compensation. Royalties shall be paid in cash,
quarterly, in arrears. Any successor to the Company may limit Royalties (i) to
the amount paid by the Company prior to such event of succession, if, as of the
date of such event, Mr. Luther had received Royalties in an aggregate amount of
not less than $2,000,000 or (ii) to a maximum aggregate amount of $2,000,000,
if, as of such event of succession, Mr. Luther had not received Royalties in
such amount. In lieu of the second limitation, a successor to the Company may
pay to Mr. Luther the then net present value of Royalties remaining to be paid,
to a maximum aggregate payment of $2,000,000.
"Net sales price" means all revenues from sales of relevant royalty
products received by the Company in arms-length transactions for commercial
purposes, whether a sale, lease, or other transaction, less sales, excise, and
use taxes; export or import duties; freight; credits for claims; and allowances
for returns from, and samples to, purchasers. If the Company grants licenses or
otherwise transfers to unaffiliated third parties certain patent rights to sell
relevant royalty products, sales or leases thereof by such third parties shall
be deemed to be sales or leases by the Company, although the calculation of such
"third-party generated" Royalties would be reduced from two percent to one
percent of the royalty revenues received by the Company.
During the period that Royalties are to be paid by the Company, Mr. Luther
shall not, without the Company's prior written consent, engage in business
activities that are the same or substantially similar to the businesses,
products, services, or markets of the Company. The Company's termination of Mr.
Luther's employment pursuant to the at will employment provisions of the
September 1995 Agreement shall be deemed to be such written consent.
Additionally, Mr. Luther may elect to compete by voluntarily terminating the
Company's Royalties obligation.
If Mr. Luther's employment agreement is terminated due to his death or
disability, the Company will be required to pay to Mr. Luther, his designee, or
his estate, as appropriate, (i) his full base compensation to the date of
termination, (ii) a sum equivalent to one month's salary for each year
commencing November 12, 1980, payable monthly for the relevant number of months,
and (iii) the Royalties. If Mr. Luther's employment agreement is terminated
pursuant to the at will employment provisions of the September 1995 Agreement,
the Company will be required to pay to Mr. Luther (i) his full base compensation
to the date of termination, (ii) a sum equivalent to 16 months' salary in 16
equal monthly installments, and (iii) the Royalties.
Directors who are not officers of the Company receive a fee of $600 per
meeting attended in person, or $400 per meeting attended by telephone, as
compensation for their services.
The Company granted warrants to its directors to purchase the number of
shares of the Company's Common Stock set forth in the chart below. Except as
noted, each warrant was exercisable immediately, for a
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<PAGE>
period of five years, and is currently outstanding. The chart does not reflect
warrants that expired, unexercised prior to the Company's fiscal year ended June
30, 1995.
<TABLE>
<CAPTION>
Fair
Name of Number of Date of Date of Exercise Market
Individual Shares Grant Expiration Price Value/1/
- --------------- --------- --------- -------------- -------- --------
<S> <C> <C> <C> <C> <C>
D. Rollo/2/ 150,000 Dec. 1993 Dec. 1999-2001 $2.94 $2.94
M. Isaacs 7,143 Sep. 1991 Sep. 1996 3.50 5.01
M. Isaacs 5,000 Jan. 1992 Jan. 1997 5.57 8.32
M. Isaacs 5,000 Jan. 1993 Jan. 1998 3.50 4.57
M. Isaacs 25,000 July 1993 July 1998 2.75 2.75
M. Isaacs 5,000 Jan. 1994 Jan. 1999 2.50 3.13
M. Isaacs 13,500 Jan. 1995 Jan. 2000 2.55 3.25
M. Isaacs/3/ 13,500 Sep. 1995 Sep. 2000 2.56 3.13
J. Payne 2,500 Mar. 1992 Mar. 1997 6.20 9.26
J. Payne 5,000 Jan. 1993 Jan. 1998 3.50 4.57
J. Payne 25,000 July 1993 July 1998 2.75 2.75
J. Payne 5,000 Jan. 1994 Jan. 1999 2.50 3.13
J. Payne 9,000 Jan. 1995 Jan. 2000 2.55 3.25
R. Hamilton 35,000 July 1993 July 1998 2.75 2.75
R. Hamilton 5,000 Jan. 1994 Jan. 1999 2.50 3.13
R. Hamilton 9,000 Jan. 1995 Jan. 2000 2.55 3.25
R. Luther 7,143 June 1988 June 1998 3.50 6.58
R. Luther/4/ 21,429 Jan. 1990 Jan. 1996 3.50 4.41
R. Luther 14,286 Jan. 1991 Jan. 1996 3.50 2.66
R. Luther/5/ 70,000 Nov. 1991 Nov. 1996 3.75 6.75
R. Luther 15,000 Apr. 1993 Apr. 1998 3.50 4.57
R. Luther/6/ 100,000 Nov. 1993 Nov. 1998-2002 2.63 4.57
R. Luther 4,286 Apr. 1994 Apr. 1999 3.25 3.25
R. Luther/7/ 100,000 Sep. 1995 Sep. 2000 3.63 3.13
</TABLE>
- --------------------
/1/ Fair market value represented the average of the bid and asked price for a
share of the Company's common stock on the date of grant.
/2/ 100,000 of such warrants are currently exercisable as of, or within 60 days
of, the record date; 50,000 of such warrants are to vest in December of
1996. If Mr. Rollo's employment by the Company should terminate for any
reason, all of such warrants that, as of the date of termination, otherwise
would have become exercisable within the 12-month period following the date
of termination shall immediately vest and become exercisable. Vesting of
all such unvested warrants shall be accelerated to the date on which a sale
of all or substantially all of the Company's assets closes or a change of
control of the Company occurs.
/3/ 12,000 of such warrants are currently exercisable; 1,500 of such warrants
will be exercisable in December of 1995.
/4/ The exercise period of such warrants commenced one year after date of grant
(or in January of 1991).
/5/ The exercise period of such warrants commenced on March 24, 1992, the
effective date of an agreement between the Company and Pharmacia Deltec
Inc.
/6/ 40,000 of such warrants are currently exercisable; 20,000 of such warrants
are exercisable in November of 1995, 1996, and 1997, respectively.
- 9 -
<PAGE>
/7/ 20,000 of such warrants are currently exercisable; 20,000 of such warrants
are exercisable in September of 1996, 1997, 1998, and 1999, respectively.
Vesting of all of such unvested warrants shall be accelerated (a) in the
event of Mr. Luther's death or disability or (b) to the date on which the
Company is acquired or all or substantially all of the Company's assets are
sold. Such warrants were granted in replacement of 100,000 warrants that
were granted in June of 1985, which expired, fully vested and unexercised,
in June of 1995.
SUMMARY OF TRANSACTIONS IN ALL COMPANY BENEFIT PLANS
The following table sets forth the options and warrants including options
under all Company plans granted to the persons set forth in the table for the
three years commencing July 1, 1992, and ending June 30, 1995.
<TABLE>
<CAPTION>
GRANTED EXERCISED
--------------------- -----------------------
Average
Per Share
Number of Exercise Number of Net Value
Shares Price Shares Realized/1/
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
David Rollo.......................... 150,000 $2.94 - 0 - - 0 -
Mark S. Isaacs....................... 53,000 $2.73 - 0 - - 0 -
Jack W. Payne........................ 44,000 $2.77 - 0 - - 0 -
D. Ross Hamilton..................... 49,000 $2.68 - 0 - - 0 -
Ronald B. Luther..................... 119,286 $2.65 - 0 - - 0 -
Petra Darling........................ 20,429 $3.17 - 0 - - 0 -
All current executive
officers as a group (2)............. 289,715 $2.83 - 0 - - 0 -
All directors who are not
executive officers as a group (3)... 146,000 $2.72 - 0 - - 0 -
All employees as a group (4)......... 176,436 $3.11 58,284 $26,691
</TABLE>
- ---------------------
1 Market value on the date of exercise, less exercise price.
2 3 persons were eligible in the group.
3 3 persons were eligible in the group.
4 35, 31, and 41 persons were eligible in the group for fiscal years ended
June 30, 1993, 1994, and 1995, respectively.
CERTAIN TRANSACTIONS
As of June 30, 1995, Mr. Luther was indebted to the Company in the amount
of $183,000. During the fiscal year ended June 30, 1995, Mr. Luther's
obligation did not exceed such amount. In September of 1995, such obligation
was paid in full.
PROXY EXPENSES
The entire cost of preparing, assembling, printing, and mailing this Proxy
Statement and the enclosed form of Proxy, and the cost of soliciting Proxies
with respect to the Annual Meeting, will be borne by the Com-
- 10 -
<PAGE>
PROXY
This Proxy will be voted in accordance with the instructions set forth on
the reverse side of this Proxy Card. This Proxy will be treated as a "Grant
of Authority to vote for" (1) the election of the five Directors nominated;
and (2) as said Proxy shall deem advisable on such other business as may
come before the meeting, unless otherwise directed.
Please Mark, Sign, Date, When shares are held by joint tenants, both
and Return the Proxy should sign. When signing as attorney, as
Card Promptly using the executor, administrator, trustee, or guardian,
Enclosed Envelope. please give full title as such. If a
corporation, please sign in full corporate name
by President or other authorized officer. If a
Please sign exactly as partnership, please sign in partnership name by
name appears below. authorized person.
_______________________________________
Signature
_______________________________________
Signature if held jointly
______________________________, 199____
Dated
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF LUTHER MEDICAL PRODUCTS, INC.
<PAGE>
PROXY
The undersigned hereby appoints David Rollo as Proxy, with the power to
appoint his substitute, and hereby authorizes him to represent and to vote,
as designated below, all of the shares of Common Stock, no par value per
share, of Luther Medical Products, Inc., held of record by the undersigned
on October 13, 1995 at the Annual Meeting of shareholders to be held on
December 8, 1995 or at any postponement or adjournment thereof.
1. Election of Directors:
For all nominees listed below [_]
Withheld from all nominees [_]
For, except vote withheld from the following nominee(s) _________________
William R. Dahlman Jack W. Payne David Rollo
D. Ross Hamilton Mark S. Isaacs
2. Upon such other matters as may properly come before the Meeting or at any
postponement or adjournment thereof.
