<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[_] Definitive Proxy Statement by Rule 14a-6(e)(2))
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
LTX CORPORATION
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(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] 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:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LTX Logo]
University Avenue
Westwood, Massachusetts 02090
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 5, 2000
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 5, 2000, beginning at 4:30 p.m. local
time, for the following purposes:
1. To elect three members of the Board of Directors to serve for three-year
terms as Class II Directors.
2. To consider and act upon a proposed amendment to the LTX Corporation
1999 Stock Plan to increase the number of shares of common stock reserved
for issuance thereunder by 2,325,000 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 31, 2000 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 8, 2000
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 8, 2000
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 5, 2000, and
any adjournments thereof (the "2000 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 2000
Annual Meeting.
Solicitation of proxies by mail is expected to commence on November 8, 2000,
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 $7,500 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
31, 2000 is entitled to one vote for each share registered in such
stockholder's name. As of that date, there were 47,726,249 shares of common
stock issued and outstanding.
CERTAIN STOCKHOLDERS
The following table sets forth, as of October 13, 2000, 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.
<TABLE>
<CAPTION>
Number of Shares of Common
Stock Percent of
Name Beneficially Owned(1) Common Stock
---- -------------------------- ------------
<S> <C> <C>
Roger W. Blethen...................... 608,723 1.3%
David G. Tacelli...................... 115,500 *
Samuel Rubinovitz..................... 94,750 *
Roger J. Maggs........................ 79,700 *
Robert J. Boehlke..................... 56,625 *
Stephen M. Jennings................... 21,963 *
Robert E. Moore....................... 19,200 *
Jacques Bouyer........................ 15,700 *
All directors and executive officers
as a group (9 persons)............... 1,012,161 2.1%
</TABLE>
--------
* Less than 1%.
(1) Shares owned by Messrs. Blethen, Tacelli, Rubinovitz, Maggs, Boehlke,
Jennings, Moore, Bouyer and by all executive officers and directors as a
group include 516,605 shares, 85,525 shares, 72,750 shares, 79,700 shares,
46,625 shares, 20,963 shares, 11,700 shares, 15,700 shares, and 851,568
shares respectively, under options which are presently exercisable or
become so within sixty days of October 13, 2000.
1
<PAGE>
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 2000 Annual Meeting. The nominees for election as
Class II Directors are Messrs. Blethen, Boehlke and Maggs. Messrs. Blethen,
Boehlke and Maggs were elected Directors at the Annual Meeting of Stockholders
held in December 1997. If re-elected, the Class II nominees will hold office
until the Annual Meeting of Stockholders to be held in the year 2003.
Unless a proxy is marked 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 Class II 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 II Directors
to be elected at the 2000 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 2001 and 2002, respectively.
Nominees to Serve a Three-Year Term Expiring at the 2003 Annual Meeting (Class
II Directors)
<TABLE>
<CAPTION>
Name Business Affiliations
---- ---------------------
<S> <C>
Roger W. Blethen........ Mr. Blethen, age 49, has been a Director since 1980. Mr. Blethen
was appointed Chief Executive Officer of the Company in
September 1996. Mr. Blethen was a President of the Company from
1994 to 1996 and 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 59, was elected a Director of the Company in
June 1997. Mr. Boehlke was Executive Vice President and Chief
Financial Officer of KLA-Tencor Corporation, a position he held
from 1990 until his retirement in 2000. Between 1983 and 1990,
he held a variety of management positions with KLA Instruments.
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. He is also a director of Entegris
Inc. and Quicklogic Corporation.
Roger J. Maggs.......... Mr. Maggs, age 54, 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.
</TABLE>
2
<PAGE>
Directors Serving a Three-Year Term Expiring at the Year 2001 Annual Meeting
(Class III Directors)
<TABLE>
<CAPTION>
Name Business Affiliations
---- ---------------------
<S> <C>
Jacques Bouyer.......... Mr. Bouyer, age 72, 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 70, 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. and Kronos Inc.
</TABLE>
Directors Serving a Three-Year Term Expiring at the Year 2002 Annual Meeting
(Class I Directors)
<TABLE>
<CAPTION>
Name Business Affiliations
---- ---------------------
<S> <C>
Stephen M. Jennings..... Mr. Jennings, age 39, 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. Mr. Jennings is a
director of Aspen Technology, Inc.
Robert E. Moore......... Mr. Moore, age 62, 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.
</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 2000
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 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. Employee directors receive no separate,
additional compensation or options for their services as directors.
3
<PAGE>
Board of Directors' Meetings and Committees
The Board of Directors of the Company held eight meetings during the fiscal
year ended July 31, 2000, 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, 2000. 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, Jennings and Maggs.
The Board has a standing Audit Committee which meets periodically and met four
times during the fiscal year ended July 31, 2000. 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 Rubinovitz. The Board has a standing Strategic
Planning Committee which meets periodically and met four times during the
fiscal year ended July 31, 2000. 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, 2000. 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 13, 2000, are as follows:
<TABLE>
<CAPTION>
Executive Officer Age Position
----------------- --- --------
<S> <C> <C>
Roger W. Blethen..... 49 President, Chief Executive Officer and Director
David G. Tacelli..... 41 Executive Vice President
Mark J.
Gallenberger........ 36 Vice President, Chief Financial Officer and Treasurer
</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 and has been a Director since 1980. Mr. Blethen was a President
of the Company from 1994 to 1996 and a Senior Vice President of the Company
from 1985 until 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.
David G. Tacelli was appointed Executive Vice President in December 1999. He
was Chief Financial Officer and Treasurer of LTX from December 1998 to October
2000. Prior to that, Mr. Tacelli was Vice President, Operations from 1996 to
1998. 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.
Mark J. Gallenberger was appointed Vice President, Chief Financial Officer and
Treasurer in October 2000. Prior to joining LTX, Mr. Gallenberger was a Vice
President with Ernst & Young's consulting practice. During his six years with
Ernst & Young, Mr. Gallenberger established the Deals & Acquisitions Group,
where he was involved in numerous domestic and international strategic
acquisitions, joint ventures, alliances and equity investments. Mr.
Gallenberger holds an MBA from Northwestern University's Kellogg Graduate
School of Management and a Bachelor of Science degree in electrical
engineering from Rochester Institute of Technology. Prior to joining Ernst &
Young, Mr. Gallenberger served in several technical and management positions
within Digital Equipment Corporation's semiconductor products group.
4
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
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, and the other executive officer of the Company who was serving as an
executive officer at the end of fiscal 2000 (such executive officers are
sometimes collectively referred to herein as the "named executive officers"):
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
--------------------------------- ------------
Name and Principal Other Annual Options All Other
Position Year Salary Bonus(2) Compensation(3) Granted(#) Compensation(4)
------------------ ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Blethen........ 2000 $450,000 $567,000 0 0 $13,365
President and Chief 1999 450,000 0 0 625,000 1,400
Executive Officer 1998 450,000 0 0 40,000 6,600
David G. Tacelli(1)..... 2000 210,050 251,250 0 0 10,883
Vice President, Chief 1999 205,000 0 0 120,000 1,065
Financial Officer and
Treasurer
1998 195,833 0 0 50,000 4,690
</TABLE>
--------
(1) Mr. Tacelli became an executive officer of the Company in June 1998 as a
result of a restructuring of the Company.
(2) Amounts shown under "Bonus" for fiscal year 2000 includes a bonus of
$150,000 for Mr. Blethen and a bonus of $51,250 for Mr. Tacelli paid in
fiscal year 2000 based on the Company's performance in the second half of
fiscal 1999 and the first quarter of fiscal 2000.
(3) 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.
(4) Amounts shown under "All Other Compensation" column represent, 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, 2000 by the Company to each of the named
executive officers:
<TABLE>
<CAPTION>
Individual Grants
--------------------------------
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
% of Total Appreciation for Option
Options Term
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......... 0 -- -- -- -- --
David G.
Tacelli......... 0 -- -- -- -- --
</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, 2000 and the total number of
unexercised options held on July 31, 2000, by each of the named executive
officers:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money Options at
Shares End Fiscal Year End(A)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Blethen........ 108,000 $2,989,238 498,605 543,000 $7,841,157 $7,784,625
David G. Tacelli........ 78,325 2,683,083 85,525 118,500 1,405,173 1,672,406
</TABLE>
--------
(A) The closing price for the Company's common stock as reported by the Nasdaq
National Market on July 31, 2000, the last business day of fiscal 2000,
was $22.00. Value is calculated on the basis of the difference between the
option exercise price and $22.00 multiplied by the number of shares of
common stock underlying the option.
5
<PAGE>
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 become fully vested and immediately
exercisable upon a "change of control event" as defined in such options.
6
<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, 2000. 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 2000
after reviewing the Company's business and financial position entering the
year and the business plan for the year. The Executive Bonus Plan provides for
an annual cash bonus based upon a percentage of net income, as well as upon
the achievement of individual goals. Specific participation percentages for
each executive officer were established with reference to the officer's area
and scope of responsibility within the Company.
Chief Executive Officer's Compensation
The Compensation Committee determined that it was appropriate to maintain Mr.
Blethen's base salary at the level set by the Committee during fiscal 1999,
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 2000 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
2000. The Company exceeded its performance targets in fiscal 2000 and bonuses
were commensurate with the Company's performance for fiscal 2000. 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 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
7
<PAGE>
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
2001 will exceed the $1 million limit per officer.
Stephen M. Jennings
Roger J. Maggs
Robert J. Boehlke
8
<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, 2000 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, 1995 in the Company's common
stock and in each of the foregoing indices and assumes reinvestment of
dividends.
[GRAPH]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG LTX CORPORATION. THE S & P 500 INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
LTX Corporation S&P 500 S&P /TECHNOLOGY SECTOR
---------------- ------- ----------------------
Jul-95 $100.00 $100.00 $100.00
Jul-96 40.45 116.57 107.40
Jul-97 64.04 177.35 200.78
Jul-98 34.83 211.55 239.09
Jul-99 123.6 254.29 376.38
Jul-00 197.75 277.12 522.17
* $100.00 INVESTED ON 7/31/95 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, 2000 except for a report involving the exercise of
a stock option for 3,975 shares by David G. Tacelli, which has been reported.
9
<PAGE>
ITEM 2. PROPOSAL TO AMEND THE LTX CORPORATION
1999 STOCK PLAN
The Board of Directors has adopted an amendment to the LTX Corporation 1999
Stock Plan (as amended, the "1999 Plan"), subject to approval by the
stockholders, to increase the number of shares of common stock reserved for
issuance thereunder by 2,325,000 shares. The following is a summary of the
material provisions of the 1999 Plan.
The 1999 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 incentive for
such individuals to contribute to the Company's future success. The Plan
replaced the LTX Corporation 1990 Stock Option Plan, as amended (the "1990
Plan"), which expired on October 23, 2000. Under the terms of the 1990 Plan,
there was no provision for extending its life beyond that date. The 1999 Plan
was established with substantially the same terms as the 1990 Plan to continue
the benefits that were achieved by the 1990 Plan.
The 1999 Plan provides that the Company may grant options and awards of
Restricted Shares (as defined below) for not more than 2,100,000 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 1999 Stock Plan is
approved, the maximum number of shares available for options grants and awards
of Restricted Shares will be increased to 4,425,000 shares. 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 1999 Plan. Options and Restricted Share awards under the 1999 plan
may be granted on or after June 4, 1999 but not later than June 4, 2009. As of
October 13, 2000, 403,000 shares of common stock remain subject to further
grant under the 1999 Plan.
The 1999 Plan is 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"). The Committee has
complete authority, subject to the limitation described in the 1999 Plan, to
determine which eligible employees will be granted options or Restricted Share
awards, the time at which options will be granted, the number of shares
covered by each option and the option period.
An option or Restricted Share award under the 1999 plan may be granted only to
an employee, director or consultant of the Company or its subsidiaries. Each
option and Restricted Shared award under the 1999 Plan will be evidenced by a
written agreement in such form as may be approved by the Committee. The
Company may award shares of common stock to an employee, director or
consultant of the Company or its subsidiaries, subject to provisions affecting
retention and transferability (the "Restricted Shares"). The Restricted Shares
may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until satisfaction of the conditions specified by the Committee.
All rights with respect to Restricted Shares are available only to the
recipient during his or her lifetime. Recipients holding Restricted Shares may
exercise full voting rights with respect to such shares and will receive such
cash dividends paid with respect to the Restricted Shares as may be declared
while they are so held.
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. No optionee may receive incentive stock options covering more than
500,000 shares in any fiscal year. The exercise price under each incentive
option granted pursuant to the 1999 Plan shall not be less than 100% of the
fair market value of the common stock on the date of grant. The exercise price
of each nonstatutory option in not so limited.
The 1999 Plan provides 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, and, at each Annual Meeting,
6,000 additional shares in each year served as a member of the Board, 3,000
additional shares
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in each year served as a 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.
Each such option will have a fair market value exercise price and will be
exercisable, cumulatively, to the extent of twenty percent of the option
shares on the first anniversary date of the grant of the option, thirty-five
percent of the option shares on the second anniversary date of the option
grant and forty-five percent of the option shares on the third anniversary
date of the option grant. 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 provisions of the 1999 Plan
relating to directors who are not employees of the Company 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.
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 incentive
option will provide that the option will become immediately exercisable in
full in the event of a change of control. Options granted under the 1999 Plan
are not transferable other than by the optionee. All rights to purchase shares
will cease to accrue upon the death, disability or other termination of
employment of an optionee, and any accrued rights not then exercised are
exercisable within certain time periods depending on the nature of the
termination.
The 1999 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 1999 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 1999 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 any incentive option. Generally, if an optionee disposes of the
incentive option shares more than two years after the date of 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 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 in an 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 holders of options may be subject to a minimum tax upon
exercise of those options. No taxable income will be recognized by an
individual upon the grant of a nonstatutory option under the 1999 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 present in
person or by proxy and voting at the 2000 Annual Meeting is necessary to
approve the amendment to the LTX Corporation 1999 Stock Plan. The Board of
Directors recommends that you vote "FOR" this proposal.
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<PAGE>
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 2001 fiscal year, have served as auditors for the Company
since 1980. Representatives of Arthur Andersen LLP are expected to be at the
2000 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.
STOCKHOLDER PROPOSALS
Stockholder proposals to be submitted for vote at the 2001 Annual Meeting
pursuant to Rule 14a-8 promulgated under the Exchange Act must be delivered to
the Company on or before July 11, 2000. 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 24, 2001 of a non-Rule
14a-8 shareholder proposal which such proponent intends to submit at the
Company's 2001 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 2000 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, 2000 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
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<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 Mark J. Gallenberger 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 31, 2000, at the annual meeting of stockholders to be held on December
5, 2000, 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
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shares.
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SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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<PAGE>
[ 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 and 2.
1. To elect three members to the Board of Directors to serve for three-year
terms as Class II Directors.
Nominees: (01) Roger W. Blethen, (02) Robert J. Boehlke and
(03) Roger J. Maggs
[ ] FOR ALL NOMINEES
[ ] WITHHELD FROM ALL NOMINEES
[ ]
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For all nominees except as noted above
2. To approve the amendment to the LTX Corporation 1999 Stock Plan to increase
the number of shares of common stock reserved for issuance thereunder by
2,325,000 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:
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