<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 (S)240.14a-11(c) or (S)240.14a-12
LTX CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] 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:
________________________________________________________________________
<PAGE>
UNIVERSITY AVENUE
WESTWOOD, MASSACHUSETTS 02090
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 8, 1998
The Annual Meeting of Stockholders of LTX Corporation will be held at the
Hilton at Dedham Place, 95 Dedham Place, Exit 14, Allied Drive off I-95 (Rte.
128), Dedham, Massachusetts, on December 8, 1998, beginning at 10:00 a.m.
local time, for the following purposes:
1. To elect two members of the Board of Directors to serve for three-year
terms as Class III Directors.
2. To consider and act upon a proposed amendment to the LTX Corporation
1993 Employees' Stock Purchase Plan to increase the number of shares of
common stock available for issuance thereunder by 1,500,000 shares.
3. 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 30, 1998
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.
By Order of the Board
Joseph A. Hedal, Clerk
November 10, 1998
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.
<PAGE>
LTX CORPORATION
PROXY STATEMENT
November 10, 1998
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 8, 1998, and
any adjournments thereof (the "1998 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, by
executing a proxy with a later date or by attending and voting at the 1998
Annual Meeting.
Solicitation of proxies by mail is expected to commence on November 10,
1998, and the cost thereof will be borne by the Company. The Company has
retained the services of Corporate Investor Communications, Inc., a proxy
solicitation firm, to whom the Company will pay a fee of $4,500 plus
reimbursement for mailing and out-of-pocket expenses. 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
30, 1998, is entitled to one vote for each share registered in such
stockholder's name. As of that date, there were 35,508,736 shares of common
stock issued and outstanding.
1
<PAGE>
CERTAIN STOCKHOLDERS
The following table sets forth, as of October 16, 1998, 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 six,
(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.
<TABLE>
<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.......................... 3,630,000 10.2%
Princeton Services, Inc. ....... 2,435,000 6.9%
Greenway Partners L.P. ......... 1,984,800 5.6%
Thomson Horstman & Bryant,
Inc. .......................... 1,984,500 5.6%
Roger W. Blethen................ 339,393 *
Kenneth E. Daub................. 89,356 *
Robert E. Moore................. 77,500 *
Samuel Rubinovitz............... 65,867 *
Jacques Bouyer.................. 56,667 *
Roger J. Maggs.................. 53,000 *
Edward J. Terrenzi.............. 48,471 *
David G. Tacelli................ 31,350 *
Robert J. Boehlke............... 10,300 *
Stephen M. Jennings............. 7,250 *
Gregory M. Perkins.............. 7,000 *
Carol B. Langer................. -- *
All directors and executive
officers as a group (12
persons)....................... 786,154 2.2%
</TABLE>
- --------
* Less than 1%.
(1) The address of State of Wisconsin Investment Board is P.O. Box 7842,
Madison, Wisconsin 53707. The address of Princeton Services, Inc. is 800
Scudders Mill Road, Plainsboro, New Jersey 08536. The address of Greenway
Partners L.P. is 277 Park Avenue, New York, New York 10172. The address of
Thomson Horstman & Bryant, Inc. is Park 80 West Plaza I, Saddlebrook, New
Jersey 07663.
(2) Shares owned by Messrs. Blethen, Daub, Moore, Rubinovitz, Bouyer, Maggs,
Terrenzi, Tacelli, Boehlke, Jennings, Perkins and by all executive
officers and directors as a group include 247,475 shares, 86,100 shares,
70,000 shares, 43,867 shares, 50,667 shares, 53,000 shares, 25,750 shares,
23,850 shares, 7,300 shares, 6,250 shares, 7,000 shares and 621,259
shares, respectively, under stock options which are presently exercisable
or become so within sixty days.
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 III
Directors expires at the 1998 Annual Meeting. The nominees for election as
Class III Directors are Messrs. Bouyer and Rubinovitz. Mr. Bouyer was elected
a Director at the Annual Meeting of Stockholders held in December 1991. Mr.
Rubinovitz was elected a Director at the Annual Meeting of Stockholders held
in December 1994. If re-elected, the Class III nominees will hold office until
the Annual Meeting of Stockholders to be held in the year 2001.
Unless a proxy is marked to withhold authority for the election of either or
both of the nominees for Class III Directors, then the persons named in the
proxy will vote the shares represented by the proxy for the election of both
of the nominees for Class III Directors. If the proxy indicates that the
stockholder wishes to withhold a
2
<PAGE>
vote from either Class III Director nominee, 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. The By-
laws of the Company provide that a stockholder wishing to nominate a person to
serve as a director of the Company must provide the Company with at least
sixty days' written notice in advance of an annual meeting, together with such
information concerning the identity, background and experience of the nominee
as the Board of Directors may require.
Set forth below is information for each of the nominees for Class III
Directors to be elected at the 1998 Annual Meeting, and for each of the Class
I Directors and Class II Directors who will continue to serve until the Annual
Meetings of the Stockholders to be held in 1999 and 2000, respectively.
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING AT THE YEAR 2001 ANNUAL
MEETING (CLASS III DIRECTORS)
NAME BUSINESS AFFILIATIONS
---- ---------------------
Jacques Bouyer................... Mr. Bouyer, age 70, 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
currently an Honorary Chairman of that
company. He is also a director of
Richardson Electronics, Ltd.
Samuel Rubinovitz................ Mr. Rubinovitz, age 68, has been Chairman
of the Board of the Company since December
1997. He was elected a Director of the
Company in 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
Richardson Electronics, Ltd., KLA-Tencor
Corporation and Kronos Inc.
DIRECTORS SERVING A THREE-YEAR TERM EXPIRING AT THE 1999 ANNUAL MEETING (CLASS
I DIRECTORS)
NAME BUSINESS AFFILIATIONS
---- ---------------------
Stephen M. Jennings.............. Mr. Jennings, age 37, was elected a
Director of the Company in September 1997.
Mr. Jennings has been a Director of Monitor
Company, a strategy consulting firm, since
1996. From 1992 to 1996, he was a
consultant to that company.
Robert E. Moore.................. Mr. Moore, age 60, 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. He 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.
3
<PAGE>
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT THE YEAR 2000
ANNUAL MEETING (CLASS II DIRECTORS)
NAME BUSINESS AFFILIATIONS
---- ---------------------
Roger W. Blethen................. Mr. Blethen, age 47, has been a Director
since 1980. Mr. Blethen was appointed Chief
Executive Officer of the Company in
September 1996. Mr. Blethen has been a
President of the Company since he was
elected to that office in 1994 and was a
Senior Vice President of the Company from
1985 until 1994. Mr. Blethen was a founder
of the Company and served in a number of
senior management positions with the
Company since its formation in 1976.
Robert J. Boehlke................ Mr. Boehlke, age 57, was elected a Director
of the Company in June 1997. Mr. Boehlke is
currently Chief Financial Officer of KLA-
Tencor Corporation, a position he has held
since 1990. Between 1983 and 1990, he held
a variety of management positions with that
company. Prior to his employment by KLA-
Tencor, Mr. Boehlke was a partner at the
investment banking firm of Kidder, Peabody
& Company, Inc. from 1971 until 1983.
Roger J. Maggs................... Mr. Maggs, age 52, was elected a Director
of the Company in 1994. Mr. Maggs is
currently Chairman of Celtic House
Investment Partners, a private investment
firm. Mr. Maggs was a Vice President of
Alcan Aluminium Limited from 1986 until
1994.
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 1998
Annual Meeting is required to elect the Class III Directors. The Board of
Directors recommends you vote "FOR" the election of its nominees for Class III
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 on the
date first elected to the Board, 6,000 additional shares in each year served
as a member of the Board, 3,000 additional shares in each year served as
chairman of a committee of the Board and 1,500 additional shares in each year
served as a member of a committee of the Board. All of such options have a
fair market value exercise price. Directors who are not employees of the
Company may also elect to pay premiums and receive benefits under the
Company's group health insurance plans. For as long as Mr. Rubinovitz
continues to serve as Chairman of the Board, he will receive an annual
retainer and fees equal to twice that received by the other directors who are
not employees of the Company. In fiscal 1998, Mr. Bouyer received, in
addition, $8,500 for services as a consultant to the Company's French
subsidiary and LTX has agreed to pay any uninsured medical expenses he may
have while in the United States attending to business of the Company. Employee
directors receive no separate, additional compensation or options for their
services as directors.
4
<PAGE>
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors of the Company held six meetings during the fiscal
year ended July 31, 1998, and took other actions by unanimous consent of the
Board of Directors. All directors 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, 1998. The Compensation
Committee determines the compensation of all executive officers of the Company
and recommends the compensation policies for other officers and employees. The
members of the Compensation Committee are Messrs. Boehlke, Bouyer and Maggs.
The Board has a standing Audit Committee which meets periodically and met four
times during the fiscal year ended July 31, 1998. 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. Boehlke, Jennings and Moore. The Board has a standing Strategic
Planning Committee which meets periodically and met four times during the
fiscal year ended July 31, 1998. 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,
Boehlke, Bouyer, Jennings, Maggs, Moore and Rubinovitz. The Board has a
standing Directors' Affairs Committee which meets periodically and met four
times during the fiscal year ended July 31, 1998. 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.
Boehlke, Bouyer, Jennings, Maggs, Moore and Rubinovitz.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, as of October 16, 1998, are as
follows:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER AGE POSITION
- ----------------- --- --------
<S> <C> <C>
Roger W. Blethen..... 47 President, Chief Executive Officer and Director
Carol B. Langer...... 48 Vice President, Chief Financial Officer and Treasurer
Kenneth E. Daub...... 62 Senior Vice President
Gregory M. Perkins... 45 Vice President, Worldwide Sales and Support
Edward J. Terrenzi... 49 Vice President, Fusion Products Division
David G. Tacelli..... 39 Vice President, Operations
</TABLE>
Executive officers are appointed by and serve at the discretion of the Board
of Directors of the Company.
Roger W. Blethen was appointed Chief Executive Officer of the Company in
September 1996. Mr. Blethen has been a President since 1994 and has been a
Director since 1980. He has been a Senior Vice President of the Company from
1985 until February 1994. Mr. Blethen was a founder of LTX and has served in a
number of senior management positions with the Company since its formation in
1976.
Carol B. Langer was appointed Vice President, Chief Financial Officer and
Treasurer of the Company in January 1998. Prior to joining LTX, Ms. Langer had
been Senior Vice President, Finance and Chief Financial Officer of Boston
Technology, Inc. from 1993 to 1998. Prior to Boston Technology, Inc., Ms.
Langer was a Senior Manager at KPMG Peat Marwick.
Kenneth E. Daub was appointed a Senior Vice President of the Company in 1991
and is responsible for business development. From 1991 until March 1997, Mr.
Daub was responsible for North American and Pacific Rim sales. From the time
he joined the Company in 1987 until 1991, Mr. Daub served as Vice President
responsible for North American sales. Prior to joining the Company in 1987,
Mr. Daub held various senior positions with Schlumberger Limited.
Gregory M. Perkins was appointed Vice President, Worldwide Sales and Support
in June 1998. Mr. Perkins joined LTX as Vice President, North America Sales in
March 1997. Mr. Perkins joined LTX from General Electric Corporation where he
held a variety of senior level sales and marketing positions for 19 years.
5
<PAGE>
Edward J. Terrenzi was appointed Vice President, Fusion Products Division in
June 1998. Mr. Terrenzi joined LTX in 1984, and has held a variety of
management positions in Marketing, Engineering and Applications. In 1994, he
was promoted to General Manager of the Mixed Signal Division and became Vice
President of that Division in 1996. From 1991 to 1994, he was Director of
Marketing and Applications and from 1987 to 1991, he was Director of Worldwide
Applications. Before joining LTX, he spent five years at Digital Equipment
Corporation as a Senior Engineering Manager in the LSI Group, and eight years
at Raytheon Company Equipment Division in various engineering positions.
David G. Tacelli was appointed Vice President, Operations in October 1996.
Mr. Tacelli's previous responsibilities at LTX included Director of
Manufacturing of the Mixed Signal Division, a position he held from 1994 to
1996. From 1992 to 1994, he was Director of Customer Service. He served as
Controller and Business Manager for Operations from 1990 to 1992 and was
Controller for Sales and Support from 1989 to 1990. Prior to joining LTX, Mr.
Tacelli was employed by Texas Instruments for seven years in various
management positions.
COMPENSATION OF EXECUTIVES
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
annual and long term compensation of the Company's President and Chief
Executive Officer, the five other most highly compensated executive officers
of the Company who were serving as executive officers at the end of fiscal
1998, (such executive officers are sometimes collectively referred to herein
as the "named executive officers"):
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
NAME OTHER ANNUAL OPTIONS ALL OTHER
AND PRINCIPAL POSITION YEAR SALARY BONUS(3) COMPENSATION(4) GRANTED (#) COMPENSATION(5)
---------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Blethen....... 1998 $450,000 0 0 40,000 6,600
President and Chief 1997 389,166 100,000 0 290,000 5,520
Executive Officer 1996 300,000 316,650 0 50,000 6,210
Carol B. Langer(1)..... 1998 93,370 25,000 0 150,000 475
Vice President, Chief
Financial Officer and
Treasurer
Kenneth E. Daub........ 1998 240,000 0 0 20,000 6,528
Senior Vice President 1997 226,270 50,000 0 58,000 5,895
1996 226,270 99,303 0 0 5,762
Gregory M. Perkins(2).. 1998 167,500 77,487 0 50,000 6,424
Vice President
Worldwide Sales and
Support
Edward J. Terrenzi(2).. 1998 195,833 0 0 50,000 4,764
Vice President
Fusion Products
Division
David G. Tacelli(2).... 1998 195,833 0 0 50,000 4,690
Vice President
Operations
</TABLE>
- --------
(1) Ms. Langer joined the Company in March 1998, replacing John J. Arcari.
(2) Each of Messrs. Perkins, Terrenzi and Tacelli became executive officers of
the Company in June 1998 as a result of a restructuring of the Company.
6
<PAGE>
(3) Amounts shown under "Bonus" column represent, for Ms. Langer, a signing
bonus; for Mr. Daub, bonuses paid under the Executive Bonus Plan for
fiscal 1997 and commission payments for fiscal year 1996; and, for Mr.
Perkins, commission payments for 1998.
(4) 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.
(5) Amounts shown under "All Other Compensation" column represent, for Messrs.
Blethen, Langer, Daub, Perkins, Terrenzi and Tacelli taxable amounts in
respect of term life insurance and 401(k) plan matching contributions made
by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options granted
during the fiscal year ended July 31, 1998 by the Company to each of the named
executive officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
----------------------------------- RATES OF STOCK PRICE
% OF TOTAL APPRECIATION FOR OPTION
OPTIONS TERM(C)
GRANTED EXERCISE -------------------------
OPTIONS TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED IN FISCAL YEAR PER SHARE DATE 5% 10%
- ---- ------- -------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Blethen........ 40,000(A) 3.4% $8.0625 09/03/07 $202,819 $513,982
Carol B. Langer......... 75,000(A) 6.7% $5.2500 03/02/08 $247,627 $627,536
75,000(B) 6.7% $5.2500 03/02/08 $247,627 $627,536
Kenneth E. Daub......... 20,000(A) 1.7% $3.9375 06/26/08 $ 49,525 $125,507
Gregory M. Perkins...... 50,000(A) 4.2% $3.9375 06/26/08 $123,814 $313,768
Edward J. Terrenzi...... 50,000(A) 4.2% $3.9375 06/26/08 $123,814 $313,768
David G. Tacelli........ 50,000(A) 4.2% $3.9375 06/26/08 $123,814 $313,768
</TABLE>
- --------
(A) 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.
(B) These options will be fully exercisable on March 29, 2004, but are subject
to earlier vesting if the Company attains certain earnings per share
("EPS") targets for any period of four consecutive quarters as follows:
10% when EPS is $0.25; 10% when EPS is $0.50; 15% when EPS is $0.75; 15%
when EPS is $1.00; 25% when EPS is $1.25; and 25% when EPS is $1.50.
(C) 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.
7
<PAGE>
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, 1998 and the total number of
unexercised options held on July 31, 1998, by each of the named executive
officers:
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
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........ 0 -- 178,475 330,500 $85,877 $ 0
Carol B. Langer......... 0 -- 0 150,000 $ 0 $ 0
Kenneth E. Daub......... 0 -- 83,300 76,400 $86,886 $ 0
Gregory M. Perkins...... 0 -- 7,000 118,000 $ 0 $ 0
Edward J. Terrenzi...... 0 -- 22,250 122,000 $ 5,250 $ 0
David G. Tacelli........ 0 -- 20,350 142,000 $ 8,919 $ 0
</TABLE>
- --------
(A) The closing price for the Company's common stock as reported by the Nasdaq
National Market on July 31, 1998, the last business day of fiscal 1998,
was $3.875. Value is calculated on the basis of the difference between the
option exercise price and $3.875 multiplied by the number of shares of
common stock underlying the option.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into change of control employment agreements with
each of the named executive officers and with five other officers. The change
of control employment agreements have three year terms, which terms extend for
one year upon each anniversary unless a notice not to extend is given by the
Company. If a Change of Control (as defined in the agreements) occurs during
the term of an agreement, then the agreements become operative for a fixed
three year period. The agreements provide generally that the executive's terms
and conditions of employment (including position, location, compensation and
benefits) will not be adversely changed during the three year period after a
Change of Control of the Company. If the Company terminates the executive's
employment (other than for cause, death or disability) or if the executive
terminates for good reason during such three year period or for any reason
during the 30 day period following the first anniversary of the Change of
Control (or upon certain terminations prior to a Change of Control or in
connection with or in anticipation of a Change of Control), the executive is
generally entitled to receive (i) three times in the case of the Chief
Executive Officer, and two times in the case of the other officers (a) the
executive's annual base salary plus (b) the executive's annual bonus amount
(as defined in the agreement), (ii) accrued but unpaid compensation for the
period before the date of termination, (iii) continued welfare benefits for
three years in the case of the Chief Executive Officer and for two years in
the case of the other officers, and (iv) outplacement services. In addition,
the executive is entitled to receive an additional payment, if any, in an
amount sufficient to make the executive whole for any excise tax on excess
parachute payments imposed under Section 4999 of the Internal Revenue Code of
1986, as amended.
Options granted to the named executive officers contain provisions pursuant
to which, under certain circumstances, they shall become fully vested and
immediately exercisable upon a "change of control event" as defined in such
options.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of three
directors who are not employees of the Company. The Committee met five times
during the fiscal year ended July 31, 1998. 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 various salary
surveys conducted by consultants as well as proxy statements from other
companies in the semiconductor industry.
EXECUTIVE BONUS PLAN
The Compensation Committee adopted an Executive Bonus Plan for fiscal 1998
after reviewing the operation of the Executive Bonus Plan in effect during
fiscal 1997 in order to determine whether adjustments to the arrangements were
warranted. Based on the review, the Plan was adjusted in several respects for
fiscal 1998. The Executive Bonus Plan provides for an annual cash bonus based
upon a percentage of pretax income. Specific participation percentages for
each executive officer were established with reference to the officer's area
and scope of responsibility within the Company. No bonuses were paid under the
Executive Bonus Plan during fiscal 1998.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The Compensation Committee determined that it was appropriate to increase
Mr. Blethen's base salary from the level set by the Committee during fiscal
1997, and that any additional increase in total compensation should be derived
from Mr. Blethen's participation in the Executive Bonus Plan and from stock
options. The decisions made with respect to the fiscal 1998 compensation of
the Chief Executive Officer were intended to continue the Company's philosophy
of aligning the interests of the Chief Executive Officer with the interests of
the Company and its stockholders.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The Committee determined the appropriate portion of each other executive
officer's total potential cash compensation to be contingent upon performance
and payable under the Executive Bonus Plan which was in effect for fiscal
1998. The Company did not achieve its performance targets in fiscal 1998 due
to weak industry conditions. Consequently, no bonuses were paid in fiscal 1998
under this 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 comparable companies.
EQUITY ARRANGEMENTS
The Company maintains two 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
9
<PAGE>
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 benefit generally. There is no fixed ratio between Company
performance and size of grants or between base salary and size of grants.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation
exceeding $1 million paid to certain of the corporation's executive officers.
The Committee believes that any compensation deemed paid to an executive
officer when he or she exercises an outstanding option granted under that Plan
with an exercise price equal to the fair market value of the option share on
the grant date will qualify as performance-based compensation which will not
be subject to the $1 million limitation. Otherwise, it is not expected that
the compensation to be paid to the Company's executive officers for fiscal
1999 will exceed the $1 million limit per officer.
Roger J. Maggs
Jacques Bouyer
Robert J. Boehlke
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<PAGE>
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, 1998 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, 1993 in the Company's common
stock and in each of the foregoing indices and assumes reinvestment of
dividends.
[STOCK PERFORMANCE CHART APPEARS HERE]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG LTX CORPORATION, THE S & P 500 INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-------------------------------------------------------------------
7/93 7/94 7/95 7/96 7/97 7/98
<S> <C> <C> <C> <C> <C> <C>
LTX CORPORATION $ 100.00 $ 55.10 $ 181.63 $ 73.47 $ 116.33 $ 63.27
S & P 500 $ 100.00 $ 105.16 $ 132.62 $ 154.60 $ 235.20 $ 280.55
S & P TECHNOLOGY SECTOR $ 100.00 $ 115.95 $ 194.12 $ 208.49 $ 389.77 $ 464.13
</TABLE>
* $100 INVESTED ON 7/31/93 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JULY 31.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Company's directors and certain of its officers and persons holding more than
ten percent of the Company's common stock are required to report their
ownership of the common stock and any changes in such ownership to the
Securities and Exchange Commission and the Company. Based on the Company's
review of copies of such reports, no untimely reports were made during the
fiscal year ended July 31, 1998.
11
<PAGE>
ITEM 2. PROPOSAL TO AMEND THE LTX CORPORATION 1993 EMPLOYEES' STOCK PURCHASE
PLAN
The Board of Directors has adopted an amendment to the LTX Corporation 1993
Employees' Stock Purchase Plan (the "Purchase Plan"), subject to approval by
the stockholders, to increase the number of shares available for issuance
under the Purchase Plan by 1,500,000 shares. The Board of Directors believes
that the attraction and retention of high quality personnel are essential to
the Company's continued growth and success and that an incentive plan such as
the Purchase Plan is necessary for the Company to remain competitive in its
compensation practices. In the absence of an increase in the available shares,
no additional shares will be available for purchase under the Purchase Plan,
except to the extent that shares are not purchased during the current offering
period due to the withdrawal of a plan participant. The following is a summary
of the material provisions of the Purchase Plan.
The purpose of the Purchase Plan is to encourage ownership of stock by
employees of the Company and its subsidiaries and to provide additional
incentive for the employees to promote the success of the Company.
The Purchase Plan provides that the Company may grant options for not more
than 1,500,000 shares of its common stock, subject to increase or decrease in
the event of subsequent stock splits or other capital changes. If the
amendment to the Purchase Plan is approved, the maximum number of shares
available for option grants will be increased to 3,000,000. Options are
granted to eligible employees on each February 1 and August 1 which is
designated by the Board of Directors as an Offering Commencement Date.
All employees who are customarily employed by the Company or a participating
subsidiary for more than twenty hours per week and more than five months per
year will be eligible to receive options. No option will be granted, however,
if after the exercise of the option and all other options held by the
employee, the employee would own stock possessing five percent or more of the
total voting power or value of the Company's stock. In addition, no option
will be granted which will cause the optionee's right to purchase shares of
the Company's common stock under the Purchase Plan to accrue at a rate which
exceeds $25,000 of fair market value of the stock in any calendar year.
Eligible employees may elect to participate in the Purchase Plan by
executing a membership agreement which provides for a percentage, which shall
be a whole percentage between one and fifteen percent, or such range as may be
determined by the Board of Directors, of his or her gross compensation to be
withheld each pay period. Options granted under the Purchase Plan will be
automatically exercised, on the date six months after the grant date (the
"Offering Termination Date"), to the extent of the employee's accumulated
payroll deductions not withdrawn on or prior to that date. The Purchase Plan
limits the number of shares which can be issued for any six-month offering
period under the Purchase Plan to 150,000 shares. Options will expire if not
exercised on the Offering Termination Date relating to the shares or if the
employee ceases, for any reason other than retirement or death, to be employed
by the Company. Accumulated payroll deductions not applied to the exercise of
options will be returned to the employee. Options granted under the Purchase
Plan are not transferable otherwise than by will and under the laws of descent
and distribution and, during the lifetime of the optionee, may not be
exercised by anyone other than the optionee. In the event of the death or
retirement of the optionee, the employee or his or her beneficiary shall be
entitled to withdraw the employee's accumulated payroll deductions or to
exercise the employee's options to the extent of the employee's accumulated
payroll deductions as of the date of his or her death. Exercise of the options
by the beneficiary of an employee will be permitted only on receipt by the
Company of a request therefor in writing.
The exercise price is 85% of the lower of the market value of the stock on
the Offering Commencement Date or the Offering Termination Date.
The Purchase Plan is administered by the Board of Directors. The Purchase
Plan may be amended or terminated at any time by the Board of Directors but no
amendments may, without approval by the stockholders, increase the maximum
number of shares purchasable under the Purchase Plan, change the description
of
12
<PAGE>
employees or classes of employees eligible to receive options, change the
manner of determining the exercise price of the options or extend the period
during which the options may be granted or exercised under the Purchase Plan.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" as defined by Section 423 of the Internal Revenue Code. Under the
applicable Code provision, an employee will incur no federal income tax on
either the grant or the exercise of an option granted under the Purchase Plan.
If the employee sells or otherwise disposes of the shares within two years
after the date the option was granted or within one year after the date the
option was exercised, the employee will be taxed at ordinary income rates on
an amount equal to the difference between the exercise price and the fair
market value of the shares at the time the option was exercised, and the
Company will be entitled to a deduction of an equivalent amount. The
difference between the amount received on the disposition of the shares and
the employee's tax basis in the shares, which is equal to the exercise price
plus the amount taxed as ordinary income, will be recognized as a capital gain
or loss.
If the employee sells or disposes of the shares more than two years after
the option was granted and more than one year after the option was exercised,
the employee will be taxed at ordinary income rates on the amount equal to the
excess of the fair market value of the shares at the time the option was
granted, whichever is less, and the Company will not be entitled to a
corresponding deduction. The difference between the amount realized on the
disposition of the shares and the optionee's tax basis in the shares will be
recognized as a long-term capital gain or loss.
The Board of Directors believes that it is in the best interest of the
Company and its stockholders to have the flexibility to be able to continue to
offer its present and prospective employees options under an employee stock
purchase plan to provide them with additional incentive to promote the success
of the Company.
RECOMMENDED VOTE
An affirmative vote of a majority of the Company's common stock issued and
outstanding is necessary to approve the amendment to the LTX Corporation 1993
Employees' Stock Purchase Plan to increase the number of shares of common
stock for issuance available thereunder by 1,500,000 shares. The Board of
Directors recommends that you vote "FOR" this proposal.
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 1999 fiscal year, have served as auditors for the Company
since 1980. Representatives of Arthur Andersen LLP are expected to be at the
1998 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
On December 9, 1997, the Board of Directors adopted amendments to the By-
laws of the Company (i) to promulgate procedures with respect to calling a
special meeting pursuant to written application of one or more stockholders
who hold at least forty percent in interest of the capital stock entitled to
vote at the special meeting and (ii) to update the location of the principal
office of the Company to Westwood, Massachusetts.
The first amendment to the By-laws was adopted to establish procedures for
consent solicitations by stockholders who wish to apply for the calling of a
special meeting of stockholders. The amendment provides that a stockholder
seeking to require the Company to call a special stockholder meeting must
request the Board of Directors to fix a record date (the "Application Record
Date") for determining stockholders entitled to call a
13
<PAGE>
special meeting. The request must provide (i) a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business and any material interest such stockholders have in proposing
such business and (ii) certain additional information with respect to
stockholders making the application and the beneficial owners on whose behalf
such application is being made. Within five business days after receipt of a
request to set a record date, the Board of Directors must meet to set the
Application Record Date. The Application Record Date selected by the Board of
Directors must be within 10 days after the Board of Directors' meeting. If,
within 60 days after the Application Record Date, executed requests are
received from holders of record as of the Application Record Date of shares
representing at least forty percent in interest of the capital stock entitled
to vote at the special meeting, the Company must call a special meeting. The
Board of Directors must meet within five business days after receipt of such
executed requests, and certification by independent inspectors, to set a
record date (the "Special Meeting Record Date") for the special meeting (which
record date must be within fifteen business days after such meeting of the
Board of Directors) and a date for the meeting itself (which must be at least
10 days and no more than 50 days after the Special Meeting Record Date). If
the Board of Directors does not meet to set the Special Meeting Record Date,
then such meeting shall be held on the 60th day after valid applications are
duly delivered to the Company and certified by independent inspectors, and the
Special Meeting Record Date shall be the 30th day before such meeting date.
Requests for a special meeting are not deemed to have been delivered to the
Company until an independent inspector of election has certified to the
Company that such consents have been validly executed and delivered within the
appropriate time periods by holders of record as the Application Record Date
of shares representing at least forty percent of the capital stock entitled to
vote on any matter proposed to be considered at the special meeting.
STOCKHOLDER PROPOSALS
Stockholder proposals to be submitted for vote at the 1999 Annual Meeting
pursuant to Rule 14a-8 promulgated under the Exchange Act must be delivered to
the Company on or before July 13, 1999. 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.
If a proponent fails to notify the Company by September 27, 1999 of a non-Rule
14a-8 shareholder proposal which such proponent intends to submit at the
Company's 1999 Annual Meeting, the proxy solicited by the Board of Directors
with respect to such meeting may grant discretionary authority to the proxies
named therein to vote on such matter.
OTHER MATTERS
As of this date, management knows of no business which may properly come
before the 1998 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.
ANNUAL REPORT ON FORM 10-K
Copies of the Company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1998 as filed with the Securities and Exchange Commission are
available to stockholders without charge upon written request addressed to
Investor Relations, Direct Report Corporation, 132 Great Road, Stowe,
Massachusetts 01775.
JOSEPH A. HEDAL, Clerk
14
<PAGE>
PROXY
LTX CORPORATION
UNIVERSITY AVENUE
WESTWOOD, MASSACHUSETTS 02090
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Roger W. Blethen and Joseph A. Hedal or either
of them as Proxies, each with the power to appoint his substitute, and 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
30, 1998, at the annual meeting of stockholders to be held on December 8, 1998,
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 AND 2.
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 | | SEE REVERSE |
| SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SIDE |
|_____________| |_____________|
<PAGE>
Please mark _____
[X] 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 and 2.
1. To elect two members to the Board of Directors to serve for
three-year terms as Class III Directors.
Nominees: Jacques Bouyer and Samuel Rubinovitz
FOR WITHHELD
[_] BOTH [_] FROM
NOMINEES BOTH
NOMINEES
[_]
--------------------------------------------------
For both nominees except as noted above
2. To approve the amendment to the LTX Corporation 1993 Employees' Stock
Purchase Plan to increase the number of shares of common stock available for
issuance thereunder by 1,500,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To transact such other business as may properly come before 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 held by joint
tenants, both should sign. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
PROMPTLY, USING THE ENCLOSED ENVELOPE.
Signature: Date: Signature: Date:
-------------- ----------- --------------- ----------
