SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S 240.14a-11(c) or S 240.14a-12
Luxtec Corporation
(Name of Registrant as Specified in its Charter)
Luxtec Corporation
(Name of Person(s) Filing Proxy Statements)
Payment of Filing Fee (Check the appropriate box)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction computed
persuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total fee paid:
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[ ] 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:
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4) Date Filed:
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<PAGE>
LUXTEC CORPORATION
March 16, 1998
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of LUXTEC CORPORATION, to be held on Thursday, April 23, 1998, at 11:00 A.M. at
the Company's Board Room, 326 Clark Street, Worcester, Massachusetts.
The Notice of Meeting and the Proxy Statement that follow describe the
business to be considered and acted upon by the stockholders at the Meeting,
after which management will also report on the affairs of the Company.
The Board of Directors of the Company encourages your participation in
the Company's electoral process and, to that end, solicits your proxy. You may
give your proxy by completing, dating and signing the Proxy Card and returning
it promptly in the enclosed envelope. You are urged to do so even if you plan to
attend the meeting.
A copy of the Company's 1997 Annual Report to Stockholders is
simultaneously being mailed to all stockholders entitled to vote, but is not to
be considered a part of the proxy solicitation material. This Proxy Statement
and the Proxy Card were first mailed to stockholders on or about March 16, 1998.
Sincerely,
JAMES W. HOBBS
President
<PAGE>
LUXTEC CORPORATION
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 23, 1998
Notice is hereby given that the Annual Meeting (the "Meeting") of
Stockholders of Luxtec Corporation (the "Company") will be held at the Corporate
Offices of the Company located at 326 Clark Street, Worcester, Massachusetts,
01606-1214, at 11:00 a.m., local time, to consider and act upon the following
matters:
1. A proposal to elect two (2) Class II directors of the Company, each
to hold a three-year term.
2. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
Stockholders of record at the close of business on February 26, 1998, are
entitled to notice of and to vote at the Meeting and any adjourned sessions
thereof. All stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors
JAMES W. HOBBS
Director
Worcester, Massachusetts
March 16, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, COMPLETE, DATE,
SIGN AND MAIL THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY, AND PROMPTLY RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED
FOR THAT PURPOSE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN BY
YOU AND VOTE YOUR SHARES IN PERSON.
<PAGE>
LUXTEC CORPORATION
326 Clark Street
Worcester, MA 01606
-----------------------------------
PROXY STATEMENT
March 16, 1998
-----------------------------------
This Proxy Statement (the "Proxy Statement") is being furnished to
stockholders of Luxtec Corporation, a Massachusetts corporation ("Luxtec" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of Luxtec Corporation (the "Luxtec Board"), for use at the 1998 Annual
Meeting of Stockholders of the Company, including any adjournments or
postponements thereof (the "Meeting"), scheduled to be held on Thursday, April
23, 1998, at 11:00 A.M. in the Company's Board Room, 326 Clark Street,
Worcester, Massachusetts, 01606-1214. This Proxy Statement relates to the
election of Class II Directors of Luxtec. This Proxy Statement was first mailed
to Luxtec Stockholders on or about March 16, 1998. All solicitation expenses,
including costs of preparing, assembling and mailing proxy material, will be
borne by the Company.
With respect to the Meeting, the close of business on February 26,
1998, has been established as the record date for determining the stockholders
entitled to notice of and to vote at the Meeting and at any adjournments or
postponements thereof. As of the record date, there were issued and outstanding
and entitled to vote 2,858,998 shares of Luxtec common stock, par value $0.01
per share ("Common Stock"). Holders of shares of Luxtec Common Stock are
entitled to one vote for each share owned at the record date on all matters to
come before the Meeting and any adjournments or postponements thereof. The
presence in person or by proxy of holders of a majority of the shares of Luxtec
Common Stock entitled to vote at the Meeting constitutes a quorum for the
transaction of business.
In connection with the Meeting, any proxy may be revoked at any time
before it is voted by written notice received by the Clerk of Luxtec or by
attending the Meeting and voting in person; but if not so revoked, the shares
represented by such proxy will be voted. Attendance at the Meeting will not by
itself constitute revocation of a proxy unless the stockholder so attending so
notifies the Clerk of Luxtec in writing at any time prior to the voting of the
proxy. All proxies will be voted in accordance with the instructions contained
therein. If no choice is specified for one or more proposals in a proxy
submitted by or on behalf of a stockholder, the shares represented by such proxy
will be voted in favor of such proposals and in the discretion of the named
proxies with respect to any other proposals which may properly come before the
Meeting. Broker non-votes (i.e., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or the
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) and proxies that withhold
authority to vote for election as a director or that reflect abstentions will be
deemed present for the purpose of determining the presence of a quorum for the
transaction of business. With respect to Proposal 1 (election of Directors),
broker non-votes and abstentions will have no effect on the outcome of voting on
such proposals.
The Luxtec Board does not know of any matters which will be brought
before the Meeting other than those matters specifically set forth in the Notice
of Meeting. However, if any other matter properly comes before the Meeting, it
is intended that the persons named in the enclosed form of Proxy, or their
substitute acting thereunder, will vote on such matter in accordance with their
best judgment.
The Board of Directors has reappointed Arthur Andersen LLP as
Independent Public Accountants for the Company. The Company does not anticipate
that a representative of Arthur Andersen LLP will be present at the Meeting.
<PAGE>
AVAILABLE INFORMATION
Luxtec is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information concerning Luxtec may be inspected and copies
may be obtained (at prescribed rates) at the Commission's Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
following regional offices: 7 World Trade Center, 13th Floor, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60604. Such reports and other information can also be reviewed
through the Commission's Web Site (http://www.sec.gov).
This Proxy Statement incorporates by reference certain documents which are
not presented herein or delivered herewith. Upon written or oral request, Luxtec
will provide without charge to each person to whom a copy of this Proxy
Statement is delivered a copy of the documents incorporated by reference herein
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference therein). Requests should be submitted in writing or
by telephone at (508) 856-9454 to Samuel M. Stein, Luxtec Corporation, 326 Clark
Street, Worcester, Massachusetts 01606-1214. In order to ensure timely delivery
of the documents, any request should be made by March 26, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated by reference into this Proxy Statement:
1. Luxtec's Annual Report on Form 10-K, for the year ended
October 31, 1997.
2. The description of the Luxtec Common Stock contained in its
Registration Statement on Form 8-A (File No. 33-83510) filed on April
4, 1994.
3. Luxtec's Quarterly Report on Form 10-Q for the period ended
January 31, 1998.
4. All other reports filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act since October 31, 1997.
All documents subsequently filed by Luxtec pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the date of Meeting shall be
deemed to be incorporated by reference into this Proxy Statement and to be part
of this Proxy Statement from the date of filing thereof. Any statement contained
in a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated herein modifies or replaces such statement. Any statement so
modified or superseded shall not be deemed, in its unmodified form, to
constitute a part of this Proxy Statement.
The Company will provide free of charge to any stockholder from whom a
proxy is solicited pursuant to this Proxy Statement, upon written request from
such stockholder, a copy of the Company's annual report filed with the
Securities and Exchange Commission on Form 10-K for the Company's fiscal year
ended October 31, 1997 and a copy of the Company's Quarterly Report for the
period ended January 31, 1998 on Form 10-Q. Requests for such reports should be
directed to Luxtec Corporation, 326 Clark Street, Worcester, Massachusetts
01606-1214, Attention: Chief Financial Officer.
This Proxy Statement is accompanied by a copy of Luxtec's 1997 Annual
Report to Stockholders.
<PAGE>
PROPOSAL 1
ELECTION OF LUXTEC DIRECTORS
Section 50A of Chapter 156B of the Massachusetts General Laws provides for
a Board of Directors of such number as is fixed by the directors, and which is
divided into three classes serving staggered three-year terms. The Luxtec Board
has fixed the number of Directors at seven (7). At the Meeting, the terms of the
members of Class II, Paul Epstein and James W. Hobbs, expire. Mr. Epstein and
Mr. Hobbs are currently members of the Board and are the only nominees for
election as Class II Directors for a term to expire at the 2001 Annual Meeting
of Stockholders.
The Luxtec Board recommends that the shareholders vote "FOR" the election
of Mr. Epstein and Mr. Hobbs to be directors of the Company until the 2001
Annual Meeting of Stockholders and until their successors are duly elected and
qualified. Unless authority is withheld, it is the intention of the persons
voting under the enclosed proxy to vote such proxy in favor of the election of
Mr. Epstein and Mr. Hobbs to be directors of the Company until the 2001 Annual
Meeting of Stockholders and until their successors are duly elected and
qualified. The affirmative vote of a plurality of the shares of Luxtec Common
Stock present or represented by proxy, and voting, at the Meeting is required
for the election of Mr.
Epstein and Mr. Hobbs.
The following table and narrative sets forth information regarding the
principal occupation, other affiliations, committee memberships and age, for the
two nominees and each director continuing in office.
<TABLE>
<CAPTION>
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
Director Position Term
Name Age Since With Company Ends
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
<S> <C>
Nominees for Election:
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
James W. Hobbs (1) 49 1993 President, Chief Executive Officer, Director 1998
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
Paul Epstein (2) 67 1995 Vice President of Business Development and 1998
Strategic Planning, Director
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
Directors Continuing in Office
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
James Berardo (2)(3) 38 1995 Director 1999
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
James J. Goodman (3) 39 1996 Director 1999
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
Patrick G. Phillipps (1) 52 1995 Vice President of Engineering, Director 2000
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
Thomas J. Vander Salm (1)(2) 57 1984 Director 1999
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
Louis C. Wallace (1)(3) 57 1989 Director 2000
----------------------------------- ---------- ----------- ----------------------------------------------- --------------
(1) Member of the Nominating Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
</TABLE>
James Berardo has been a Director of the Company since 1995. Mr. Berardo
currently serves as President of Darlco, Inc., a real estate development and
investment management company. Mr. Berardo joined Darlco in 1986, serving in
various financial capacities prior to assuming his current position in March,
1995.
Paul Epstein joined the Company in 1995 as Vice President of Business
Development and Strategic Planning and as a Director. Mr. Epstein, a co-founder
of CardioDyne, Inc., served as Chairman, Vice President and Chief Financial
Officer from the time of CardioDyne's founding in February, 1989 until the
merger with Luxtec in October, 1995. Previously, Mr. Epstein co-founded
Electronic Image Systems Corporation, Brattle Instrument Corporation and, most
recently, Omni-Flow, Inc., which introduced the first multiple medication,
programmable infusion pump and was acquired by Abbott Laboratories in 1989. Mr.
Epstein holds B.S. and M.S. degrees in Chemical Engineering and a B.S. degree in
Business Management from MIT. Mr. Epstein has been jointly awarded eleven
patents in the medical instrumentation and communication fields.
<PAGE>
James J. Goodman has been a Director of the Company since 1996. Since its
founding in 1993, Mr. Goodman has been President of Geneva Middle Market
Investors, L.P., a private firm that invests in emerging growth companies across
a wide range of industries with revenues of $10 - $50 million, based in
Wellesley, MA. Mr. Goodman was a Vice President at Berkshire Partners, a middle
market buyout firm, from 1989 to 1993. Mr. Goodman was educated at Harvard
University where he received his undergraduate degree in Economics in 1979 and
M.B.A. and J.D. degrees in 1984.
James W. Hobbs was elected to the positions of President, Chief Executive
Officer and Director in 1993. Mr. Hobbs was Chief Executive Officer of Graylyn
Associates from 1992 to 1993. Graylyn was an investment firm founded by Mr.
Hobbs to invest in early stage medical technology. Prior to Graylyn, Mr. Hobbs
served as the President and Chief Executive Officer of Genica Pharmaceuticals
from 1990 to 1992. Genica Pharmaceuticals was a corporation engaged in providing
new diagnostic assays and conducting therapeutic research for neurological
disorders. Mr. Hobbs was with Johnson and Johnson Professional Diagnostics as
Vice President and General Manager from 1985 to 1989.
Patrick Phillipps joined the Company in 1995 as Vice President of
Engineering and a Director. Mr. Phillipps, a co-founder of CardioDyne, Inc.,
served as President and Chief Executive Officer from the time of CardioDyne's
founding in February, 1989 until the merger with Luxtec in October, 1995.
Previously, Mr. Phillipps founded the Engineering Department of Lifeline
Systems, Inc., where he served as Vice President of Engineering and oversaw the
development and introduction of a new generation of Lifeline's hospital based
emergency call system for home use by the elderly. Mr. Phillipps holds an S.B.
degree in Electrical Engineering from MIT and has been jointly awarded over a
dozen patents in the medical monitoring and related fields.
Dr. Thomas Vander Salm has been a Director of the Company since 1984. Dr.
Vander Salm is Chief of Cardio Thoracic Surgery and has been a Professor of
Surgery at the University of Massachusetts Medical School in Worcester, MA since
1970.
Louis C. Wallace has been a Director of the Company since 1989. Mr. Wallace
is the founder and President of Specialty Surgical Instrumentation, Inc.
(S.S.I.), a manufacturer and distributor of surgical instruments. S.S.I. was
established in Nashville, TN in 1976.
Board and Committee Meetings
During the fiscal year ended October 31, 1997 (the "1997 Fiscal Year"),
the Luxtec Board held five (5) meetings. During the 1997 Fiscal Year, each
incumbent director attended at least 75% of the aggregate of the number of
meetings of the Luxtec Board and the total number of meetings held by all
committees on which the individual served.
The Audit Committee presently is composed of three directors: James
Berardo, Paul Epstein and Thomas J. Vander Salm. Responsibilities of this
committee include engagement of independent auditors, review of audit fees,
supervision of matters relating to audit functions, review and setting of
internal policies and procedures regarding audits, accounting and other
financial controls, and reviewing related party transactions. During the 1997
Fiscal Year, the Audit Committee met one time.
The Compensation Committee presently is composed of three directors: James
Berardo, James J. Goodman and Louis C. Wallace. Responsibilities of this
committee include approval of remuneration arrangements for executive officers
of the Company, review and approval of compensation plans relating to executive
officers and directors, including grants of stock options and other benefits
under the Company's stock option plan, and general review of the Company's
employee compensation policies. None of the members of the Compensation
Committee has been an employee of the Company at any time and none has any
relationship with either the Company or the Company's officers requiring
disclosure under applicable regulations of the Securities and Exchange
Commission. During the 1997 Fiscal Year, the Compensation Committee met two (2)
times.
<PAGE>
The Nominating committee presently is composed of four directors: James Hobbs,
Patrick Phillipps, Thomas VanderSalm and Louis Wallace. The responsibility of
this committee is to recommend new members of the Board of Directors when a
vacancy exists. During the 1997 Fiscal Year, the Nominating Committee did not
meet. The Nominating Committee will consider all nominees recommended to it by
holders of Luxtec Common Stock. Such recommendations should be presented to the
Nominating Committee at least 120 days prior to the projected date of the next
Annual Meeting of Stockholders. Such recommendations should include all material
information known to the recommending stockholder with respect to such nominee.
Director Compensation
The Company pays non-employee directors $500 for attendance at each
meeting of the Luxtec Board, $250 per each meeting of a committee thereof ($150
per meeting of a committee if such meeting is concurrent with a regular meeting
of the Luxtec Board), and $100 per meeting held by telephone conference. The
Company also pays expenses for attendance at meetings of the Luxtec Board and
committees thereof. Additionally, non-employee Directors are compensated with
options to purchase shares of Common Stock of the Company, in accordance with
the 1995 Stock Option Plan For Non-Employee Directors.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers of the Company who are not also directors. The executive
officers are elected annually by the Board of Directors following the Annual
Meeting of Stockholders and serve at the discretion of the Board.
<TABLE>
<CAPTION>
- ----------------------------- ----------- ------------------------------------------------------------------------------------
<S> <C>
Name Age Position With Company
- ----------------------------- ----------- ------------------------------------------------------------------------------------
- ----------------------------- ----------- ------------------------------------------------------------------------------------
David C. Mutch 54 Vice President of Sales and Marketing
- ----------------------------- ----------- ------------------------------------------------------------------------------------
- ----------------------------- ----------- ------------------------------------------------------------------------------------
Samuel M. Stein 58 Vice President of Finance, Chief Financial Officer, Treasurer and Assistant Clerk
- ----------------------------- ----------- ------------------------------------------------------------------------------------
</TABLE>
David Mutch is Vice President of Sales and Marketing of the Company. Mr.
Mutch joined the Company in September, 1992 as Director of Sales and Marketing
and assumed his present position in December, 1994. Previously, Mr. Mutch held
various management positions with Hewlett Packard Company over a twenty-one year
career. During his last five years at Hewlett Packard, Mr. Mutch was the
Marketing Manager for the Health Care Information Systems Division.
Samuel Stein is Vice President, Chief Financial Officer, Treasurer and
Assistant Clerk of the Company. Mr. Stein joined the Company in October, 1993 as
Vice President of Finance and Chief Financial Officer and was elected to the
further offices of Treasurer and Assistant Clerk during 1994. From 1990 to 1993,
Mr. Stein was employed as the Corporate Controller of Great American Software,
Inc., an accounting software manufacturer.
<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth certain compensation information for the fiscal
years ended October 31, 1997, 1996 and 1995 of those persons who were at October
31, 1997: (i) the Chief Executive Officer, and (ii) the most highly compensated
executive officers whose total annual salary and bonus exceeded $100,000
(collectively, the "Named Officers").
<TABLE>
Summary Compensation Table
Long-Term
<CAPTION>
Annual Compensation
Compensation Awards
----------------------------------------------------- -------------------
Securities
Name and Fiscal Other Annual Underlying
Principal Position Year Salary($) Bonus($) Compensation ($) Options (#)
------------------ ----- --------- -------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
James Hobbs 1997 $176,069 $10,000 $7,800 24,000
President, CEO and Director 1996 $170,474 $21,400 $7,800 0
1995 $154,827 $0 $7,800 50,000
Samuel M. Stein 1997 $97,677 $15,000 $7,800 12,000
CFO and Treasurer 1996 $95,760 $15,438 $7,800 0
1995 $86,716 $0 $7,800 40,000
David C. Mutch 1997 $97,677 $14,000 $7,800 12,000
VP Marketing and Sales 1996 $95,760 $15,438 $7,800 0
1995 $86,827 $0 $7,800 40,000
Patrick G. Phillipps 1997 $97,677 $14,000 $7,800 12,000
VP Engineering 1996 $95,760 $15,438 $7,800 0
1995 -- -- -- --
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options that were granted
pursuant to the Company's 1992 Stock Plan, as amended, during the fiscal year
ended October 31, 1997 to the Named Officers listed in the Summary Compensation
Table above.
----------------------- -----------------------------------------------------------------------------
Individual Grants
----------------------- -----------------------------------------------------------------------------
----------------------- ------------------- ------------------- ---------------- --------------------
Number of Percent of Total
Securities Options Granted
Underlying to Employees in Exercise Price
Options Granted Fiscal Year ($/Share) Expiration Date
Name (#)
----------------------- ------------------- ------------------- ---------------- --------------------
----------------------- ------------------- ------------------- ---------------- --------------------
James W. Hobbs 24,000 13.47% $6.00 2/20/2007
----------------------- ------------------- ------------------- ---------------- --------------------
----------------------- ------------------- ------------------- ---------------- --------------------
Samuel M. Stein 12,000 6.73% $6.00 2/20/2007
----------------------- ------------------- ------------------- ---------------- --------------------
----------------------- ------------------- ------------------- ---------------- --------------------
David C. Mutch 12,000 6.73% $6.00 2/20/2007
----------------------- ------------------- ------------------- ---------------- --------------------
----------------------- ------------------- ------------------- ---------------- --------------------
Patrick G. Phillipps 12,000 6.73% $6.00 2/20/2007
----------------------- ------------------- ------------------- ---------------- --------------------
</TABLE>
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Company's Common Stock granted under the 1992 Stock Option Plan, as
amended, including (i) the number of shares purchased upon exercise of options
in the most recent fiscal year, (ii) the net value realized upon such exercise,
(iii) the number of unexercised options outstanding at October 31, 1997, and
(iv) the value of such unexercised options at October 31, 1997:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OCTOBER 31, 1997 OPTION VALUES
Number of Securities Underlying Value of Unexercised
Shares Value Unexercised Options at October In-The-Money Options at October
Acquired on Realized 31, 1997 (#) 31, 1997 ($)
Name Exercise (#) ($) Exercisable Unexercisable Exercisable/Unexercisable (1)
- --------------------- ---------------- ------------ ----------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
James Hobbs - - 56,050 67,950 $44,000 $0
Samuel Stein - - 14,750 47,250 $5,000 $0
David Mutch - - 14,750 47,250 $5,000 $0
Patrick Phillipps 150 11,850 $0 $0
- --------------------- ----------------
</TABLE>
(1) Value is based on the closing sale price of the Common Stock as of October
31, 1997 ($2.13) minus the exercise price.
Executive Employment Agreements
The Company has entered into an employment agreement with James W. Hobbs,
pursuant to which the Company has agreed to employ Mr. Hobbs as President and
Chief Executive Officer. The agreement with Mr. Hobbs was entered into on June
10, 1993 with an initial term of one year with automatic renewals for successive
terms of one year each unless either party gives notice of intention not to
renew. The Compensation Committee of the Luxtec Board set Mr. Hobbs' base salary
for 1997 at $173,740 and for 1998 at $178,950. Mr. Hobbs is entitled to receive
an annual bonus in cash and/or equity of the Company from an annual bonus pool
for all employees based, in Fiscal Year 1997, on 1.9% of the net sales of the
Company, with such bonus to be determined by the Compensation Committee. Factors
taken into account by the Compensation Committee in determining bonuses include
return on investment, net sales, and net income compared to the business plan.
Although there is no maximum percentage bonus, 30% of base salary is the
expected guideline. Mr. Hobbs is entitled to severance pay in an amount equal to
six months of his then current annual salary if his employment is terminated by
(i) the Company without cause or (ii) Mr. Hobbs for Good Reason (as defined in
the agreement).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of reports furnished to the Company or written
representations from the Company's directors and executive officers, the Company
believes that all reports required to be filed pursuant to Section 16 of the
Exchange Act were satisfied by the Company's directors, executive officers and
ten percent (10%) holders during the 1997 fiscal year.
<PAGE>
SECURITIES OWNERSHIP
The following table sets forth certain information as of February 26,
1998, with respect to the Common Stock owned by (a) each director of the
Company, (b) the Named Officers, (c) all directors and executive officers of the
Company as a group, and (d) each person who is known by the Company to own
beneficially more than 5% of the Common Stock. Unless otherwise indicated in the
footnotes to the table, all stock is owned of record and beneficially by the
persons listed in the table.
<TABLE>
<CAPTION>
Percentage of
Number of Shares Common Stock
Name and Addresses (1) Beneficially Owned (2) Outstanding
- --------------------------------------------------------------------------------- --------------------------- ------------------
Directors and Officers
<S> <C> <C> <C>
James Berardo 156,520 (3) 5.47%
Director
Paul Epstein 168,988 (4) 5.91%
Vice President of Business Development and Strategic Planning and Director
James J. Goodman 450,000 (5) 13.60%
Director
James W. Hobbs 131,639 4.46%
President, Chief Executive Officer and Director
David C. Mutch 33,773 1.18%
Vice President of Sales and Marketing
Patrick G. Phillipps 241,882 (6) 8.44%
Vice President of Engineering and Director
Samuel M. Stein 14,548 *
Vice President of Finance, Chief Financial Officer, Treasurer, and Assistant
Clerk
Thomas J. Vander Salm 48,700 (7) 1.70%
Director
Louis C. Wallace 37,250 1.30%
Director
All directors and executive officers as a group (9 persons) 1,283,300 37.67%
Principal Stockholders
Denton A. Cooley, MD 419,046 14.49%
6624 Fannin, Suite 2700
Houston, TX 77030
G&G Diagnostics Fund, L.P. I & L.P. III 209,484 7.24%
30 Ossipee Road
Newton, MA 02164
Rita Kloots 155,100 5.42%
Box 1077
Sturbridge, MA 01566
</TABLE>
(1) The mailing address of each of the Company's directors and executive
officers is c/o Luxtec Corporation, 326 Clark Street,
Worcester, Massachusetts, 01606-1214
(2) Shares of Common Stock subject to options or warrants exercisable as of
February 26, 1998 (or exercisable within 60 days after such date), are
deemed outstanding for purposes of computing the percentage ownership of the
person holding such option or warrant but are not outstanding for purposes
of computing the percentage of any other person.
<PAGE>
(3) Mr. Berardo owns, as trustee of various trusts, 154,520 shares of the
Company's Common Stock.
(4) Mr. Epstein owns 86,676 shares in his name and is the beneficial owner of
82,218 shares in the name of his wife, Mary Epstein.
(5) Consists of shares issuable to GMMI upon exercise of a warrant.
(6) Mr. Phillipps owns 126,493 shares in his name and is the beneficial
owner of 106,905 shares in the name of his wife, Janice B. Phillipps.
(7) The 48,700 shares of the Company's Common Stock owned of record and
beneficially by Thomas J. Vander Salm includes 32,000 shares of the
Company's Common Stock owned of record by the trustees of the Vander Salm
Family Trust, of which he may be deemed to be a beneficial owner.
CERTAIN TRANSACTIONS
Mr. Louis C. Wallace is currently, and has been since 1989, a member of
the Board of Directors of the Company. Mr. Wallace is the founder and President
of Specialty Surgical Instrumentation, Inc. ("SSI), a surgical distributor in
ten (10) southeastern states. SSI is the largest single customer of the Company,
representing approximately fourteen percent (14%) of net sales during fiscal
1997. SSI and the Company operate at arms length with a contract substantially
the same as the other domestic distributors of the Company's products. The
Company expects that SSI will represent approximately the same percentage of net
sales during fiscal 1998 as occurred during fiscal 1997.
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STOCKHOLDER PROPOSALS
The Luxtec Board will make provision for presentation of proposals by
shareholders at the 1999 Annual Meeting of Stockholders (or special meeting in
lieu thereof) provided such proposals are submitted by eligible shareholders who
have complied with the relevant regulations of the Securities and Exchange
Commission. Such proposals must be received by the Company no later than October
23, 1998, to be considered for inclusion to the Company's proxy materials
relating to that meeting.
GENERAL
The management of the Company knows of no matter other than the foregoing
to be brought before the Luxtec Meeting. However, the enclosed proxy gives
discretionary authority in the event any additional matters should be presented.
The Company will provide free of charge to any stockholder from whom a
proxy is solicited pursuant to this Proxy Statement, upon written request from
such stockholder, a copy of the Company's annual report filed with the
Securities and Exchange Commission on Form 10-K for the Company's fiscal year
ended October 31, 1997. Requests for such report should be directed to Luxtec
Corporation, 326 Clark Street, Worcester, Massachusetts 01606-1214, Attention:
Chief Financial Officer.
The Company expects to hold its next stockholder meeting on or about April
15, 1999 and proxy materials in connection with that meeting are expected to be
mailed approximately 30 days prior to the meeting.
JAMES W. HOBBS
President
