<PAGE> 1
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
LTX Corporation
(Name of Registrant as Specified In Its Charter)
LTX Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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> 2
[LOGO]
LTX CORPORATION
LTX PARK AT UNIVERSITY AVENUE
WESTWOOD, MASSACHUSETTS 02090
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 7, 1994
The Annual Meeting of Stockholders of LTX Corporation will be held at the
offices of LTX Corporation, LTX Park at University Avenue, Westwood,
Massachusetts, on December 7, 1994, beginning at 3:30 p.m. local time, for the
following purposes:
1. To elect three members to the Board of Directors to serve for a
three-year term as Class II Directors.
2. To consider and act upon proposed amendments to the 1990 Incentive
Stock Option Plan to increase the number of shares subject to the Plan from
1,500,000 to 2,700,000 shares and to provide for the grant of nonstatutory
stock options under the Plan.
3. To consider and act upon a proposal to approve the 1995 LTX
(Europe) Ltd. Approved Stock Option Plan.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on October 24, 1994
as the record date for the Annual Meeting. All holders of common stock of record
at that time are entitled to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
PAMELA A. KEATING, Clerk
November 1, 1994
<PAGE> 3
LTX CORPORATION
PROXY STATEMENT
November 1, 1994
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of LTX Corporation ("LTX" or the "Company") of proxies
for use at the Annual Meeting of Stockholders to be held on December 7, 1994,
and any adjournments thereof (the "Annual Meeting"). Shares as to which a proxy
has been executed will be voted as specified in the proxy. A majority in
interest of the outstanding shares represented at the meeting in person or by
proxy shall constitute a quorum for the transaction of business. Votes withheld
from any nominee, abstentions and broker "non-votes" are counted as present or
represented for purposes of determining the presence or absence of a quorum for
the meeting. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner. Abstentions are included in the number
of shares present or represented and voting on each matter. Broker "non-votes"
are not so included. A proxy may be revoked at any time by notice in writing
received by the Clerk of the Company before it is voted.
Solicitation of proxies by mail is expected to commence on November 1,
1994, and the cost thereof will be borne by the Company. Copies of solicitation
material will also be furnished to brokerage firms, fiduciaries and custodians
to forward to their principals, and the Company will reimburse them for their
reasonable expenses.
VOTING SECURITIES
The Company's only issued and outstanding class of voting securities is its
common stock, par value $0.05 per share. Each stockholder of record on October
24, 1994, is entitled to one vote for each share registered in such
stockholder's name. As of that date there were 26,244,690 shares of common stock
issued and outstanding.
<TABLE>
CERTAIN STOCKHOLDERS
The following table sets forth, as of October 1, 1994, the amount and
percentage of outstanding common stock of the Company beneficially owned by (i)
each person known by the Company to beneficially own 5% of the Company's
outstanding common stock, (ii) each executive officer named in the Summary
Compensation Table under the heading "Compensation of Executives" on page 5,
(iii) each director and (iv) all directors and executive officers of the Company
as a group, on the basis of information supplied to the Company.
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) COMMON STOCK
------------------- --------------------- ------------
<S> <C> <C>
State of Wisconsin Investment Board..................... 2,575,000 9.8%
Ando Electric Co., Ltd.................................. 2,000,000 7.1%
Graham C. C. Miller..................................... 887,530 3.4%
Richard Boltrus......................................... 348,515 1.3%
Roger W. Blethen........................................ 295,290 1.1%
Martin S. Francis....................................... 101,932 *
Kenneth E. Daub......................................... 64,950 *
John J. Arcari.......................................... 49,790 *
David A. Adey........................................... 48,608 *
Jacques Bouyer.......................................... 13,230 *
Fred J. Butler.......................................... 7,667 *
Robert E. Moore......................................... 7,000 *
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) COMMON STOCK
------------------- --------------------- ------------
<S> <C> <C>
Roger J. Maggs.......................................... -0- *
Samuel Rubinovitz....................................... -0- *
All directors and executive officers
as a group (12 persons)............................... 1,817,363 6.7%
<FN>
- - ---------------
* Less than 1%.
(1) The address of each person named in the table is the same as the
Company's except for State of Wisconsin Investment Board which is P.O. Box 7842,
Madison, Wisconsin 53707 and Ando Electric Co., Ltd. which is 19-7, Kamata,
4-chome, Ota-ku, Tokyo 144, Japan.
(2) All shares owned by Ando Electric Co., Ltd. are covered by a warrant
exercisable within sixty days. Shares owned by Messrs. Miller, Boltrus, Blethen,
Francis, Daub, Arcari, Adey, Bouyer, Butler and Moore, and by all executive
officers and directors as a group include 194,600 shares, 137,740 shares,
141,600 shares, 77,400 shares, 64,950 shares, 48,750 shares, 38,421 shares,
7,230 shares, 6,667 shares, 5,000 shares and 722,358 shares, respectively,
covered by stock options exercisable within sixty days.
</TABLE>
ITEM 1. ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Each class
serves three years, with the terms of office of the respective classes expiring
in successive years. The present term of office for the Class II Directors
expires at the Annual Meeting of Stockholders to be held December 7, 1994. The
nominees for election as Class II Directors are Messrs. Blethen, Butler and
Maggs. Mr. Blethen was elected a Director at the Annual Meeting of Stockholders
held in December 1991. Mr. Butler was elected a Director by the Board of
Directors in November 1993 and Mr. Maggs was elected a Director by the Board of
Directors in June 1994. If re-elected, the Class II nominees will hold office
until the Annual Meeting of Stockholders to be held in 1997 and until their
successors shall have been elected and shall have qualified.
Unless a proxy is executed to withhold authority for the election of any or
all of the nominees for Class II Directors, then the persons named in the proxy
will vote the shares represented by the proxy for the election of all of the
nominees for Class II Directors. If the proxy indicates that the stockholder
wishes to withhold a vote from any or all nominees for Class II Directors, such
instructions will be followed by the persons named in the proxy. Management has
no reason to believe that any of the nominees will be unable to serve. In the
event that a nominee should not be available, the persons named in the proxies
will vote for the other nominees and may vote for a substitute for such nominee.
Set forth below is information for each of the nominees for Class II
Directors to be elected at the Annual Meeting, and for each of the Class III
Directors and Class I Directors who will continue to serve until the Annual
Meetings of the Stockholders to be held in 1995 and 1996, respectively.
<TABLE>
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT THE 1997 ANNUAL MEETING
(CLASS II DIRECTORS)
<CAPTION>
NAME BUSINESS AFFILIATIONS
---- ---------------------
<S> <C>
Roger W. Blethen................. Mr. Blethen, age 43, has been a Director since 1980 and
was elected a President of the Company in February 1994.
Prior to his election as President, he was a Senior Vice
President since 1985 responsible for all engineering and
marketing activities of LTX and has served in a number
of senior management positions with the Company since
its formation in 1976. Mr. Blethen was a founder of the
Company.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME BUSINESS AFFILIATIONS
- - --------------------------------- ----------------------------------------------------------
<S> <C>
Fred J. Butler................... Mr. Butler, age 65, was elected a Director of the Company
in 1993. Mr. Butler was Vice President Finance of Thinking
Machines Corporation, a manufacturer of supercomputers,
from 1988 until his retirement in 1994. From 1980 until
1988 Mr. Butler was Senior Vice President Finance and
Treasurer of Compugraphic Corporation, a supplier of
photo typesetting equipment.
Roger J. Maggs................... Mr. Maggs, age 48, was elected a Director of the Company
in June 1994. Mr. Maggs is currently President of Celtic
House Investment Partners, a private investment firm.
Mr. Maggs was a Vice President of Alcan Aluminium
Limited from 1986 until June 1994.
</TABLE>
<TABLE>
DIRECTORS SERVING A THREE-YEAR TERM EXPIRING AT THE 1995 ANNUAL MEETING (CLASS
III DIRECTORS)
<CAPTION>
NAME BUSINESS AFFILIATIONS
- - --------------------------------- ----------------------------------------------------------
<S> <C>
Jacques Bouyer................... Mr. Bouyer, age 66, was elected a Director of the Company
in 1991. Mr. Bouyer has been a management consultant since
1990. Mr. Bouyer was Chairman of the Board and Chief
Executive Officer of Philips Composants S.A., an
electronics company which is a wholly-owned subsidiary
of Philips Electronics N.V. from 1986 until his
retirement from that company in 1990. He is also a
director of Richardson Electronics, Ltd.
Martin S. Francis................ Mr. Francis, age 48, has been a Director since 1991 and
was elected a President of the Company in February 1994.
Prior to his election as President, he was a Senior Vice
President (1991 until 1994) and a Vice President (1987
until 1991) responsible for international sales and
support activities. He has held senior management
positions in the Company's European and Japanese
operations since joining LTX in 1982.
Samuel Rubinovitz................ Mr. Rubinovitz, age 64, was elected a Director of the
Company in September 1994. He was Executive Vice President
of EG&G, Inc., responsible for the aerospace,
optoelectronics and instrument product groups from 1989
until his retirement in 1994. He is a director of EG&G,
Inc., Richardson Electronics, Ltd., KLA Instruments Inc.
and Kronos Inc.
</TABLE>
<TABLE>
DIRECTORS SERVING A THREE-YEAR TERM EXPIRING AT THE 1996 ANNUAL MEETING (CLASS I
DIRECTORS)
<CAPTION>
NAME BUSINESS AFFILIATIONS
- - --------------------------------- ----------------------------------------------------------
<S> <C>
Graham C. C. Miller.............. Mr. Miller, age 63, has been the Chairman of the Board of
the Company since its formation in 1976. Mr. Miller was a
founder of the Company and was President of the Company
from 1976 until February 1994. Mr. Miller is also a
director of Newbridge Networks Corporation.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME BUSINESS AFFILIATIONS
---- ---------------------
<S> <C>
Robert E. Moore.................. Mr. Moore, age 56, has been a Director of the Company
since 1989. Mr. Moore is currently President and Chairman
of the Board of Reliable Power Meters, Inc., a company
founded by him in 1992 which manufactures and sells
power measurement instruments. He also was a founder of
Basic Measuring Instruments, Inc., which manufactures
and sells power measurement instruments, and served as a
director of that company from 1982 until 1990 and as a
Senior Vice President responsible for marketing and
sales from 1985 until 1990.
</TABLE>
RECOMMENDED VOTE
The affirmative vote of the holders of a plurality of the Company's
outstanding common stock present in person or by proxy and voting at the Annual
Meeting is required to elect the Class II Directors. The Board of Directors
recommends you vote "FOR" the election of its nominees for Class II Directors.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a retainer of
$12,000 per year, payable on a quarterly basis, a fee of $1,000 for each
directors' meeting attended and a fee of $1,000 for attendance at each meeting
of a committee approved by the Board of Directors. Directors are also reimbursed
for travel expenses for attending meetings. In addition, directors who are not
employees of the Company receive an option to purchase 20,000 shares, at an
option price of $1.00 per share, on the date first elected to the Board, 6,000
additional shares, at an option price of $1.00 per share, in each year served as
a member of the Board, 2,000 additional shares, at an option price of $1.00 per
share, in each year served as chairman of a committee of the Board and 1,000
additional shares, at an option price of $1.00 per share, in each year served as
a member of a committee of the Board. In addition, directors who are not
employees of the Company may elect to pay premiums and receive benefits under
the Company's group health insurance plans, at no cost to the Company. In fiscal
1994, Mr. Bouyer received, in addition, approximately $18,000 for services as a
consultant to the Company's French subsidiary. Employee directors receive no
separate, additional compensation or options for their services as directors.
For additional information on directors' compensation see description under the
heading "Arrangements Regarding Resignation of Executive Officers" in the
Summary Compensation Table.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors of the Company held eleven meetings during the
fiscal year ended July 31, 1994, and took other actions by unanimous consent of
the Board of Directors. All directors, except Mr. Maggs, attended at least 75%
of the meetings of the Board and of the committees of the Board on which they
respectively served. The Board has a standing Compensation Committee which meets
periodically and met five times during the fiscal year ended July 31, 1994. The
Compensation Committee determines the compensation of all executive officers of
the Company. The members of the Compensation Committee are Messrs. Bouyer and
Moore. The Board has a standing Audit Committee which meets periodically and met
twice during the fiscal year ended July 31, 1994. The Audit Committee reviews
and makes recommendations to the Board of Directors with respect to the
accounting and financial functions of the Company, including the appointment of
the Company's independent auditors. The members of the Audit Committee are
Messrs. Butler and Moore. The Board has a standing Strategic Planning Committee
which meets periodically and met three times during the fiscal year ended July
31, 1994. The Strategic Planning Committee is responsible for developing and
reviewing long-term strategic plans for the Company. The members of the
Strategic Planning Committee are Messrs. Blethen, Bouyer, Francis, Miller and
Moore. The Board established a Directors' Affairs Committee in June 1994 which
will meet periodically and did not meet during the fiscal year ended July 31,
1994. The Directors' Affairs Committee is responsible for review of the make-up
of the Board, proposals for new candidates to be members of the Board and review
of compensation of directors. The members of the Directors' Affairs Committee
are Messrs. Bouyer and Moore.
4
<PAGE> 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Graham C.C. Miller, Chairman of the Board, had loans of up to $195,000
outstanding from the Company during fiscal 1994, with interest charged at the
prime rate plus 1%. As of this date $132,346 of these loans have been repaid to
the Company and the balance of $62,654 remains outstanding. Mr. Miller purchased
242,424 shares of Common Stock, at the fair market value of $4.125 per share,
for an aggregate purchase price of $1,000,000, in a private sale of stock
completed by the Company in January 1994.
COMPENSATION OF EXECUTIVES
<TABLE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's Presidents and each of the
four other most highly compensated executive officers of the Company in 1994,
for the past three fiscal years (such executive officers are sometimes
collectively referred to herein as the "named executive officers"):
<CAPTION>
ANNUAL COMPENSATION LONG TERM
--------------------------------------- COMPENSATION
OTHER ------------
NAME AND PRINCIPAL ANNUAL OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS(6) COMPENSATION(7) GRANTED(#) COMPENSATION(9)
- - ------------------------- ----- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Blethen......... 1994 $260,000 $ -- $-- 55,000 $ 670
President(1) 1993 270,000 29,238 -- 36,000 918
1992 255,863 -- -- -- 918
Martin S. Francis........ 1994 201,500 4,702 41,000(8) 45,000 29,176
President(2) 1993 154,389 164,901 -- 28,000 41,508
1992 163,560 48,529 -- -- 27,572
John J. Arcari........... 1994 175,000 -- -- 8,000 425
Chief Financial Officer 1993 175,000 1,300 -- 15,000 387
1992 155,590 -- -- -- 353
Kenneth E. Daub.......... 1994 208,000 52,438 -- 8,000 840
Senior Vice President 1993 173,000 57,464 -- 15,000 2,534
1992 142,825 48,823 -- 2,364 3,287
Graham C. C. Miller...... 1994 207,000 -- -- 30,000 99,400
Chairman of the 1993 360,000 56,132 -- 90,000 6,318
Board(3) 1992 365,248 -- -- -- 5,792
Richard Boltrus.......... 1994 260,000 -- -- -- 1,090
Former Senior 1993 260,000 15,343 -- 40,000 2,375
Vice President(4) 1992 237,629 -- -- 3,940 1,555
David A. Adey............ 1994 170,000 5,000 -- 20,000 405
Former Senior 1993 140,000 -- -- 6,000 367
Vice President(5) 1992 128,130 -- -- 2,121 335
- - ---------------
<FN>
(1) Mr. Blethen was a Senior Vice President prior to his election as a President
of the Company in February 1994.
(2) Mr. Francis was a Senior Vice President prior to his election as a President
of the Company in February 1994.
(3) Mr. Miller resigned as President of the Company in February 1994. See
"Arrangements Regarding Resignation of Executive Officers" on page 7.
(4) Mr. Boltrus' employment with the Company terminated in September 1994.
</TABLE>
5
<PAGE> 8
[FN]
(5) Mr. Adey's employment with the Company terminated in July 1994. See
"Arrangements Regarding Resignation of Executive Officers".
(6) Amounts shown under "Bonus" column for fiscal year 1994 represent, for Mr.
Francis and Mr. Adey, bonuses paid under the Executive Bonus Plan in effect
for the first two quarters and represent, for Mr. Daub, commission payments.
See "Compensation Committee Report on Executive Compensation".
(7) Amounts shown under "Other Annual Compensation" column exclude perquisites
if the aggregate amount of the named executive officer's perquisites was
less than the lesser of $50,000 or 10% of such officer's salary plus bonus.
(8) Amount shown includes relocation costs payable to Mr. Francis of $19,000 in
connection with relocation to the United States, an estimated amount of
$15,000 payable for reimbursement of additional tax liabilities as a result
of relocation to the United States, and a $7,000 automobile allowance.
(9) Amounts shown under "All Other Compensation" column represent, for Messrs.
Blethen, Arcari, Daub, Miller, Boltrus and Adey, taxable amounts in respect
of split-dollar life insurance, and for Mr. Miller, with respect to fiscal
year 1994, $93,000 in respect of salary continuation, and represent, for Mr.
Francis, amounts contributed to benefit plans available generally to
employees who are citizens of the United Kingdom.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options
granted during the fiscal year ended July 31, 1994 by the Company to each of the
named executive officers:
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
------------------------------------------------- RATES OF STOCK PRICE
% OF TOTAL APPRECIATION FOR OPTION
OPTIONS GRANTED TERM(B)
OPTIONS TO EMPLOYEES EXERCISE PRICE EXPIRATION ------------------------
NAME GRANTED(A) IN FISCAL YEAR PER SHARE DATE 5% 10%
- - --------------------------- ---------- --------------- -------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Blethen........... 20,000 5.1% $3.25 12/16/03 $40,885 $103,610
25,000 6.4% $3.94 03/07/04 61,957 157,009
10,000 2.6% $3.00 04/08/04 18,870 47,820
Martin S. Francis.......... 20,000 5.1% $3.25 12/16/03 40,885 103,610
25,000 6.4% $3.94 03/07/04 61,957 157,009
John J. Arcari............. 8,000 2.1% $2.125 06/02/04 10,693 27,098
Kenneth E. Daub............ 8,000 2.1% $2.125 06/02/04 10,693 27,098
Graham C. C. Miller........ 30,000 7.7% $3.25 12/16/03 61,328 155,415
Richard Boltrus............ 0 0% $0 -- -- --
David A. Adey.............. 20,000 5.1% $1.00 12/16/03 85,885 148,610
- - ---------------
<FN>
(A) With the exception of Mr. Adey's option, these options become exercisable in
three installments. Twenty percent become exercisable one year from the
grant date, thirty-five percent become exercisable two years from the grant
date and forty-five percent become exercisable three years from the grant
date. On the grant date of Mr. Adey's option, fifty percent was to become
exercisable eight months from the grant date and fifty percent was to become
exercisable sixteen months from the grant date, although these terms were
modified in connection with Mr. Adey's resignation as Senior Vice President.
See "Arrangements Regarding Resignation of Executive Officers".
(B) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. Actual gains, if any, on stock appreciation exercises will
depend on the future performance of the common stock and the date on which
the options are exercised.
</TABLE>
6
<PAGE> 9
<TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth the aggregate dollar value of all options
exercised during the fiscal year ended July 31, 1994 and the total number of
unexercised options held on July 31, 1994, by each of the named executive
officers:
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(A)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Blethen............... -- -- 129,000 83,800 $ 101,550 $ 49,450
Martin S. Francis.............. -- -- 67,600 67,400 61,400 36,100
John J. Arcari................. -- -- 43,540 20,000 42,625 28,000
Kenneth E. Daub................ -- -- 59,700 20,000 36,786 28,000
Graham C. C. Miller............ -- -- 163,100 102,000 134,813 111,750
Richard Boltrus................ -- -- 123,740 32,000 108,660 48,000
David A. Adey.................. -- -- 38,421 -- 64,382 --
- - ---------------
<FN>
(A) The closing price for the Company's common stock as reported by the NASDAQ
National Market System on July 29, 1994, the last business day of fiscal
1994, was $3.375. Value is calculated on the basis of the difference between
the option exercise price and $3.375 multiplied by the number of shares of
common stock underlying the option.
</TABLE>
ARRANGEMENTS REGARDING RESIGNATION OF EXECUTIVE OFFICERS
In connection with the resignation of Mr. Miller as President of the
Company in February 1994, the Company will pay Mr. Miller $90,000 per year as an
employee of the Company and Mr. Miller will receive salary continuation of
$210,000 per year through January 6, 1996. In addition, Mr. Miller will be
eligible to participate in the Company's bonus plan for officers through January
6, 1996, will receive an automobile allowance through September 1, 1996 and will
receive health insurance through January 6, 2001. Mr. Miller will not receive
any other benefits in connection with his resignation or upon his retirement
with the exception of payments under the Company's 401(k) plan.
In connection with the resignation of Mr. Adey as Senior Vice President of
the Company in July 1994, the Company will pay Mr. Adey salary continuation of
$105,000, and he will receive health insurance and an automobile allowance
through April 1995. In addition, 22,100 shares of stock options became fully
vested as of the date of termination of Mr. Adey's employment with the Company
and all of his vested stock option shares are exercisable until April 30, 1995.
The Company is in the process of negotiating a severance arrangement with
Mr. Boltrus.
7
<PAGE> 10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of two
directors who are not employees of the Company. The Committee has met five times
since the last Annual Meeting of Stockholders of the Company. The Compensation
Committee is responsible for establishing compensation policies with respect to
all executive officers of the Company and determining on an annual basis the
compensation of these individuals.
The Compensation Committee has identified six goals for its work on behalf
of the Company:
1. Insure appropriate linkage between executive compensation and creation
of stockholder value.
2. Insure that the total compensation program can attract, motivate and
retain executives with outstanding abilities.
3. Determine the competitiveness of current cash and equity incentive
opportunities.
4. Evaluate the components of fixed salary and flexible compensation.
5. Adopt and implement a cash bonus plan.
6. Evaluate the effectiveness of the Company's equity opportunities for
executives.
In order to fulfill these goals, the Committee has reviewed salary surveys
commissioned by the American Electronics Association, and has reviewed proxy
statements from ten companies believed by the Committee to be comparable in size
and complexity.
EXECUTIVE BONUS PLAN
The Board of Directors adopted an Executive Bonus Plan for fiscal 1994 upon
recommendation of the Compensation Committee. Bonuses were paid during the first
two quarters of fiscal 1994 under this Executive Bonus Plan to only two
executive officers and these bonuses were less than five percent of these
executive officers' base salaries. In view of the change in senior management
and the financial performance of the Company, the Committee determined that no
further bonuses would be paid under the Executive Bonus Plan in the second-half
of fiscal 1994 and the Plan was deemed canceled for the fiscal year. The
Compensation Committee has established a new Executive Bonus Plan to provide for
quarterly bonuses which may be paid for the first two quarters of fiscal 1995
based upon financial performance during the last two quarters of fiscal 1994 and
the first two quarters of fiscal 1995, with uniform Company goals established by
the Committee for all executive officers except Mr. Daub, who receives incentive
compensation under a commission plan. Specific participation percentages for
each executive officer covered by the Executive Bonus Plan were established with
reference to the officer's area and scope of responsibility within the Company.
The relevant period for calculation of bonuses has not been completed and the
amount of bonuses payable for the first two quarters of fiscal 1995, if any,
cannot be determined as of this date.
CHIEF EXECUTIVE OFFICERS' COMPENSATION
At the beginning of fiscal year 1994, the Committee determined that it
would be appropriate for Graham C.C. Miller to have approximately 40% of his
total potential cash compensation contingent upon performance through the
Executive Bonus Plan. It set his base salary after reviewing the surveys and
other information concerning companies deemed by the Committee to be comparable
in size and complexity. Mr. Miller's base salary of $300,000, which was
approximately seventeen percent lower than for fiscal 1993, was comparable to
the base salaries of chief executive officers in the comparable companies. Mr.
Miller's compensation arrangements were modified by the Committee effective as
of the date of his resignation as President of the Company (See "Arrangements
Regarding Resignation of Executive Officers" on page 7). In February 1994 the
Board of Directors formed an Office of the Presidents and elected Roger W.
Blethen and Martin S. Francis as Presidents of LTX. The Compensation Committee
determined that it would be appropriate that the total compensation of Messrs.
Blethen and Francis be equal. The Committee established identical base
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<PAGE> 11
compensation for Messrs. Blethen and Francis and provided other compensation
consistent with the goal of equal total compensation for the two Presidents. The
total compensation payable to the two Presidents was deemed appropriate based
upon past performance of the Presidents and the level of compensation suitable
for two individuals charged with the responsibilities of the Office of the
Presidents.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The Committee determined the appropriate portion of each executive
officer's total potential cash compensation to be contingent upon performance
and payable under the Executive Bonus Plan which was in effect at the beginning
of fiscal year 1994. The maximum potential bonuses would have ranged from 17 to
38%, had this plan been in effect for the full fiscal year. Bonuses were paid in
fiscal 1994 to two executive officers under this Executive Bonus Plan, and, as
discussed above, additional bonuses could be paid in fiscal 1995 under the new
Executive Bonus Plan. The Committee set base salaries with reference to both the
base salary of the chief executive officer and the salaries of officers with
comparable responsibilities in the comparable companies. The average increase in
base salaries, approximately six and one-half percent over fiscal 1993, was
deemed appropriate by the Committee.
EQUITY ARRANGEMENTS
The Company maintains three stock option plans and one employee stock
purchase plan. Each executive officer is eligible for stock option grants under
one of the stock option plans. In determining the size of grants to be made to
executive officers, the Committee seeks to implement its stated goal that there
be appropriate linkage between executive compensation and the creation of
stockholder value. If executive officers are able to increase the market
capitalization of the Company, their stock options will achieve significant
value and the stockholders will have benefited generally. There is no fixed
ratio between Company performance and size of grants or between base salary and
size of grants.
Robert E. Moore
Jacques Bouyer
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither Robert E. Moore nor Jacques Bouyer, the members of the Compensation
Committee, is now or has ever been an employee of the Company or its affiliates
or has had any other relationship requiring disclosure under the rules and
regulations of the Securities and Exchange Commission.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
on Form 3 and changes in ownership on Form 4 or 5 with the Securities and
Exchange Commission (the "SEC"). Such officers, directors and ten-percent
shareholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by it, or
written representation from certain reporting persons that no Forms 5 were
required for such persons, the Company believes that, during the fiscal year
ended July 31, 1994, all Section 16(a) filing requirements applicable to its
officers, directors and ten-percent shareholders were complied with, except that
Mr. Butler failed to file a monthly report of a purchase of 1,000 shares of the
Company's Common Stock but did report the transaction in his year-end report on
Form 5, which was timely filed.
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<PAGE> 12
<TABLE>
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's common stock during the five years
ended July 31, 1994 with the total return on the Standard & Poor's 500 Composite
Index and the Standard & Poor's High Technology Composite Index. The comparison
assumes $100 was invested on July 31, 1989 in the Company's common stock and in
each of the foregoing indices and assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN
<CAPTION>
S&P HIGH
S&P 500 TECHNOLOGY
MEASUREMENT PERIOD LTX CORPO- COMPOSITE COMPOSITE
(FISCAL YEAR COVERED) RATION INDEX INDEX
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 168.00 106.00 102.00
1991 235.00 120.00 106.00
1992 76.00 135.00 111.00
1993 288.00 147.00 121.00
1994 159.00 155.00 141.00
</TABLE>
ITEM 2. PROPOSAL TO AMEND THE 1990 INCENTIVE STOCK OPTION PLAN
The Board of Directors has adopted an amendment to the 1990 Incentive Stock
Option Plan (as amended, the "1990 Plan"), subject to approval by the
stockholders, to increase the number of shares available for issuance under the
1990 Plan from 1,500,000 to 2,700,000 and to provide for the grant of
nonstatutory stock options under the 1990 Plan. The Company's 1983 Non-Qualified
Stock Option Plan expires on December 31, 1994. The proposed amendments to the
1990 Plan would consolidate the Company's nonstatutory stock option plan in the
1990 Plan. In addition, the amendments to the 1990 Plan provide, subject to
approval by the stockholders, that each director who is not an employee of the
Company will receive options to purchase 20,000 shares of the Company's common
stock on the date first elected to the Board, 6,000 additional shares in each
year served as a member of the Board, 2,000 additional shares in each year
served as a chairman of a committee of the Board and 1,000 additional shares in
each year served as a member of a committee of the Board. Each such option will
have an option exercise price of $1.00 per share and will be exercisable,
cumulatively, to the extent of one-third of the option shares on each of the
first three anniversary dates of the grant of the option. In the event any
director standing for re-election is not re-elected to the Board, all of such
director's unexercisable option shares will become exercisable immediately. The
1983 Non-Qualified Stock Option Plan, which will expire on December 31, 1994,
contains the same provisions respecting stock option grants to each director who
is not an employee of the Company as those proposed in the amendments to the
1990 Plan. The amendment also provides that these provisions of the 1990 Plan
cannot be amended more than once every six months, other than to comply with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules and regulations thereunder. As of October 1, 1994, 419,282
shares of common stock remain subject to future grant under the 1990 Plan, not
including the
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<PAGE> 13
1,200,000 shares approved by the Board of Directors, for which stockholder
approval is being requested (although the number currently subject to future
grant may increase in the event that presently outstanding options expire or are
surrendered or terminated before their exercise). The following is a summary of
the material provisions of the 1990 Plan.
The 1990 Plan is intended to advance the interests of the Company and its
stockholders by improving the Company's ability to attract and retain qualified
individuals who are in a position to contribute to the management and growth of
the Company and its subsidiaries and to provide additional incentive for such
individuals to contribute to the Company's future success.
The 1990 Plan provides that the Company may grant options for not more than
2,700,000 shares of its common stock, subject to increase or decrease in the
event of subsequent stock splits or other capital changes. In the event that any
option expires or terminates for any reason without being exercised in full, the
unpurchased shares covered thereby will be available for reoffering under the
1990 Plan. Options under the 1990 Plan may be granted on or after October 24,
1990 but not later than October 23, 2000.
An option under the 1990 Plan may be granted only to an employee, director
or consultant of the Company or its subsidiaries. The aggregate fair market
value of common stock for which incentive options held by any participant may
first become exercisable in any calendar year (determined as of the time the
incentive option is granted) shall not exceed $100,000.
The exercise price under each incentive option granted pursuant to the 1990
Plan shall not be less than 100% of the fair market value on the date of grant.
The exercise price of each nonstatutory option is not so limited.
The 1990 Plan will be administered by the Board of Directors of the Company
or by a committee composed of members of the Board (the Board of Directors or
any such committee being hereinafter referred to as the "Committee"). With
respect to directors and executive officers eligible to receive an option under
the 1990 Plan, the 1990 Plan shall be administered by a special committee (the
"Special Committee") of the Board of Directors who are "disinterested persons"
as defined under Section 16 of the Securities Exchange Act of 1934. The Special
Committee is currently the Compensation Committee. The Committee or the Special
Committee, as the case may be, will have complete authority, subject to the
limitations described herein, to determine which eligible employees will be
granted options, the time at which options will be granted, the number of shares
covered by each option, and the option period.
Each option under the 1990 Plan will be evidenced by a written option
agreement in such form as may be approved by the Committee. Each option will be
exercisable in one or more installments at the time provided in the option
agreement, except that no incentive option may be exercised later than 10 years
from the date of its grant. Each option will provide that the option will become
immediately exercisable in full in the event of a change of control. Options
granted under the 1990 Plan are not transferable other than by will or the laws
of descent and distribution, and may be exercised during the life of an optionee
only by the optionee. All rights to purchase shares will cease to accrue upon
the death or other termination of employment of an optionee, and any accrued
rights not then exercised are exercisable only within a limited period
thereafter.
The 1990 Plan is intended to qualify as an "incentive stock option plan"
within the meaning of Section 422 of the Internal Revenue Code of 1986, but not
all options granted under the 1990 Plan are required to be incentive options.
Under the applicable Code provisions, an employee will recognize no income
subject to federal income taxation upon either the grant or exercise of an
incentive option under the 1990 Plan, and the Company will not be entitled to a
deduction for federal income tax purposes as a result of the grant or exercise
of the incentive option. Generally, if an optionee disposes of the incentive
option shares more than two years after the date the option was granted and more
than one year after the exercise of the option, the gain or loss on a sale of
the incentive option shares, equal to the difference between the sales price and
the option exercise price, will be treated as long-term capital gain or loss. In
that case the Company will not be entitled to a deduction at the time the
optionee sells the option shares. If the optionee sells the incentive option
shares within two years after the date the option is granted or within one year
after the date the option is exercised, the optionee will generally be taxed on
an ordinary income basis on the sale of the shares on an
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<PAGE> 14
amount equal to the difference between the fair market value at exercise and the
incentive option exercise price. The Company will be allowed a deduction at that
time in an amount equal to the ordinary income realized by the employee. In
addition, some optionees may be subject to a minimum tax on tax preference
income. No taxable income will be recognized by an individual upon the grant of
a nonstatutory option under the 1990 Plan. Upon the exercise of the nonstatutory
option, however, the amount, if any, by which the fair market value of the
shares at exercise exceeds the option exercise price will be treated as ordinary
income to the individual in the year of exercise. In that case the Company will
be allowed an income tax deduction in an amount equal to the amount the
individual recognizes as ordinary income.
RECOMMENDED VOTE
An affirmative vote of a majority of the Company's common stock represented
in person or by proxy at the meeting is necessary to approve the amendments to
the 1990 Incentive Stock Option Plan. The Board of Directors recommends that you
vote 'FOR' this proposal.
ITEM 3. PROPOSAL TO APPROVE THE 1995 LTX (EUROPE) LTD. APPROVED
STOCK OPTION PLAN
The Board of Directors has adopted the 1995 LTX (Europe) Ltd. Approved
Stock Option Plan (the "1995 Plan") for LTX (Europe) Ltd. ("LTX Europe"),
subject to approval by the stockholders. The 1995 Plan will replace the 1984 LTX
(Europe) Ltd. Approved Stock Option Plan (the "1984 Plan"), which expires on
December 31, 1994. Under the terms of the 1984 Plan there is no provision for
extending it's life beyond that date, and it is therefore proposed that the 1995
Plan will be established with substantially the same terms as the 1984 Plan, to
continue the benefits that have been achieved by the 1984 Plan. The following is
a summary of the material provisions of the 1995 Plan.
The establishment of the 1995 Plan is subject to approval being obtained
for it from the United Kingdom Inland Revenue (the "Revenue") which is a
precondition to the granting of United Kingdom tax benefits that are not
available in connection with unapproved stock option arrangements.
The object of the 1995 Plan, as with the 1984 Plan, is to promote the
interest of LTX Europe and therefore of the Company by enabling LTX Europe to
attract and retain directors and employees of high caliber who are able to
contribute to the future success of LTX Europe which is intended will be
reflected in the value of LTX Europe to the Company and its group. The 1995 Plan
will provide that selected key directors and employees of LTX Europe will be
granted options to acquire stock in the Company. Those eligible for
participation in the 1995 Plan will be full-time directors of LTX Europe and
employees of LTX Europe who work for at least 20 hours per week for LTX Europe
(excluding meal breaks).
The 1995 Plan provides that the Company may grant options for not more than
100,000 shares of its common stock, subject to increase or decrease in the event
of subsequent stock splits or other changes in the stock of the Company. Options
under the 1995 Plan may be granted on or after January 1, 1995 (or such later
date as may be agreed with the Revenue). The period during which options may be
granted will be 10 years from the commencement date of the 1995 Plan.
The 1995 Plan will be administered by the Committee. With respect to
executive officers eligible to receive an option under the 1995 Plan, the 1995
Plan shall be administered by a special committee (the "Special Committee") of
the Board of Directors who are "disinterested persons" as defined under Section
16 of the Securities Exchange Act of 1934. Subject to the limitations on the
1995 Plan within its rules as agreed with the Revenue, the Committee or the
Special Committee, as the case may be, will have to complete discretion as to
the following matters:
(a) which of the eligible directors and employees of LTX Europe will
be granted options,
(b) the timing of the granting of options,
(c) the number of shares that will be subject to any option, and
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<PAGE> 15
(d) the period during which options may be exercised.
Among the factors the Committee will take into account will be the present
and potential contribution eligible members of staff have made or are expected
to make to the success of the business of LTX Europe.
The maximum total value of stock that may be covered by all outstanding and
unexercised options held by any one member of staff under the 1984 Plan, the
1995 Plan, and any other such Plan at any time will be L100,000 or if greater, 4
times that person's relevant emoluments (excluding non cash benefits in kind).
The exercise price under each option granted pursuant to the 1995 Plan will
be 100% of the open market value of the stock covered by the option grant on the
date of grant. This value will be agreed with the Revenue's Share Valuation
Division.
Each option under the 1995 Plan will be evidenced by a written option
agreement in a form to be approved by the Revenue. Each option will be
exercisable in one or more installments at the time or times provided in the
option agreement, except that no option may be exercised earlier than one year
after the date it was granted (unless earlier exercise is expressly permitted by
the Committee or the Special Committee), or later than ten years from date of
grant.
Options granted under the 1995 Plan will not be transferable otherwise than
by will or under the laws of intestate succession, and will generally be
exercisable only during the life of the person to whom the option is granted,
and only by that person. Upon the death or termination of employment of an
option holder any accrued rights not then exercised will only be exercisable
within a limited time thereafter.
Shares acquired under the 1995 Plan by a member of staff will only be
transferable if either the shares are registered under the provisions of the
Securities Act of 1933 (as amended), or counsel to the Company is satisfied that
the transfer would not constitute a violation of that Act.
Once the 1995 Plan has been approved by the Revenue under the relevant
United Kingdom tax legislation, it will be treated as an "Approved Share Option
Scheme" for the purposes of United Kingdom law. This status will enable option
holders to enjoy certain United Kingdom income tax advantages. The acquisition
of shares by a member of staff can give rise to a charge to United Kingdom
income tax in the hands of that person on the exercise of the option, based on
the difference between the value of the shares acquired at that date of
exercise, and the price paid for those shares. In certain situations an income
tax charge can also arise on the granting of the option. Assuming the Revenue
give their approval, shares granted under the 1995 Plan will not give rise to an
income tax charge in the hands of an option holder, either on the granting or
the exercise of the option, as long as the option is exercised not less than
three years after it is granted, and as long as the other 1995 Plan rules are
complied with.
The only tax charge a member of staff should suffer in connection with
stock acquired under the 1995 Plan is United Kingdom Capital Gains Tax on a
subsequent disposal by that person should the shares have increased in value
during this period of ownership.
RECOMMENDED VOTE
An affirmative vote of a majority of the Company's common stock represented
in person or by proxy at the meeting is necessary to approve the 1995 LTX
(Europe) Ltd. Approved Stock Option Plan. The Board of Directors recommends that
you vote "FOR" this proposal.
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<PAGE> 16
INFORMATION CONCERNING AUDITORS
Arthur Andersen LLP, who have been selected by the Board of Directors as
independent public accountants to audit the financial statements of the Company
for the 1995 fiscal year, have served as auditors for the Company since 1980.
Representatives of Arthur Andersen LLP are expected to be at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so. Such
representatives are also expected to be available to respond to appropriate
questions.
AMENDMENTS TO COMPANY'S BY-LAWS
The Board of Directors approved an amendment to the By-laws of the Company
in June 1993 to provide that Massachusetts General Law Chapter 110D, which
restricts voting rights of those who acquire more than 20% of the Company unless
certain conditions are met, shall not apply to acquisitions of stock of the
Company. The Board of Directors also approved an amendment to the By-laws of the
Company in June 1994 to provide that the Board can set the date of the Annual
Meeting of Stockholders.
STOCKHOLDER PROPOSALS
Stockholder proposals to be submitted for vote at the 1995 Annual Meeting
must be delivered to the Company on or before July 1, 1995. In order to minimize
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail -- Return
Receipt Requested.
OTHER MATTERS
As of this date, management knows of no business which may properly come
before the Annual Meeting other than that stated in the Notice of Meeting
accompanying this Proxy Statement. Should any other business arise, proxies
given in the accompanying form will be voted in accordance with the discretion
of the person or persons voting them.
PAMELA A. KEATING, Clerk
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<PAGE> 17
P LTX CORPORATION
LTX PARK AT UNIVERSITY AVENUE
R WESTWOOD, MASSACHUSETTS 02090
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
O THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X The undersigned hereby appoints Martin S. Francis and Roger W. Blethen or
either of them as Proxies, each with the power to appoint his substitute, and
Y hereby authorizes them to represent and to vote as designated below, all of
the shares of common stock of LTX Corporation held of record by the
undersigned on October 24, 1994, at the annual meeting of stockholders to be
held on December 7, 1994, and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
SEE REVERSE SIDE. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS, JUST SIGN ON THE REVERSE SIDE. YOU NEED NOT MARK
ANY BOXES. HOWEVER, YOU MUST SIGN AND RETURN THIS CARD TO ASSURE
REPRESENTATION OF YOUR SHARES.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
<TABLE>
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
PLEASE MARK, SIGN, DATE AND RETURN THIS FORM OF WRITTEN CONSENT PROMPTLY,
USING THE ENCLOSED ENVELOPE.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS CONSENT TO PROPOSALS NO. 1, 2, AND 3.
<S> <C> <C> <C> <C> <C> <C>
1. To elect Class II Directors for three-year terms FOR AGAINST ABSTAIN
ending 1997. ---------- 2. Approval of the amendments to / / / / / /
the 1990 Incentive Stock Option
NOMINEES: Roger W. Blethen, Fred J. Butler and Roger J. Plan.
Maggs
/ / FOR ALL / / WITHHELD FROM 3. Approval of the 1995 LTX (Europe) / / / / / /
NOMINEES ALL NOMINEES Ltd. Approved Stock Option Plan.
/ /_____________________________________________________ 4. To transact such other business as may properly come before
For, except vote withheld from the nominees noted above the meeting and any adjournments thereof.
MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
Please sign exactly as name appears hereon. When shares are Signature: __________________________________ Date __________
held by joint tenants, both should sign. PLEASE MARK, SIGN,
DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. Signature: __________________________________ Date __________
</TABLE>
