<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] 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 Rule 14a-11(c) or Rule 14a-12
Summit Technology Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
SUMMIT TECHNOLOGY, INC.
21 HICKORY DRIVE
WALTHAM, MA 02154
Dear Shareholder:
It is a pleasure to invite you to your Company's 1997 Annual Meeting on
Wednesday, June 25, beginning at 9:00 a.m. local time, at The Westin Hotel, 70
Third Avenue, Waltham, Massachusetts. This will be Summit Technology's ninth
Annual Meeting of Shareholders and it marks a time of important transition for
the Company and its investors. I hope that those who find the time and place
convenient will attend the meeting.
Whether you own a few or many shares of stock and whether or not you plan
to attend in person, it is important that your shares be voted on matters that
come before the meeting. I urge you to specify your choices by marking the
enclosed proxy card and returning it promptly. If you sign and return your proxy
card without specifying your choices, it will be understood that you wish to
have your shares voted in accordance with the directors' recommendations.
Thank you for your interest.
Sincerely,
ROBERT J. PALMISANO
Chief Executive Officer
<PAGE> 3
SUMMIT TECHNOLOGY, INC.
21 HICKORY DRIVE
WALTHAM, MA 02154
------------------------
NOTICE OF SPECIAL MEETING IN LIEU OF
1997 ANNUAL MEETING OF STOCKHOLDERS
------------------------
A Special Meeting in Lieu of 1997 Annual Meeting of Stockholders
("Meeting") of Summit Technology, Inc. ("Company") will be held at The Westin
Hotel, 70 Third Avenue, Waltham, Massachusetts, on Wednesday, June 25 at 9:00
A.M. to consider and act upon the following matters:
1. To elect one director to serve for a three-year term;
2. To approve the Company's 1997 Stock Option Plan;
3. To amend the Company's Articles of Organization and By-Laws to
increase the number of directors from five to seven; and
4. To transact such other business as may properly come before the
Meeting or any adjournment or adjournments of the Meeting.
Stockholders of record at the close of business on April 28, 1997 are
entitled to receive notice of and to vote at the Meeting.
All stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors
PETER E. LITMAN, Clerk
May 1, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 4
SUMMIT TECHNOLOGY, INC.
21 HICKORY DRIVE
WALTHAM, MA 02154
------------------------
PROXY STATEMENT FOR SPECIAL MEETING IN LIEU OF
1997 ANNUAL MEETING OF STOCKHOLDERS
JUNE 25, 1997
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Summit Technology, Inc. ("Company") for use
at the Special Meeting in Lieu of 1997 Annual Meeting of Stockholders
("Meeting") to be held on June 25, 1997 and at any adjournments thereof. Each
signed and returned proxy will be voted in accordance with the instructions, if
any, of the stockholder(s) executing such proxy. If a stockholder attends the
Meeting and votes in person, his or her proxy will not be counted. A signed
proxy may be revoked at any time before it is exercised in person or by giving
written notice of revocation to the Clerk of the Company at the above address.
The Board of Directors (hereinafter sometimes referred to as the "Board")
has fixed April 28, 1997 as the record date for determining the stockholders
entitled to vote at the Meeting. On that date there were 31,026,595 shares of
common stock, $.01 par value ("Common Stock"), of the Company issued, of which
31,026,595 were outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote.
This Proxy Statement and the accompanying proxy card and Annual Report are
being mailed to stockholders on or about May 6, 1997.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The Company's Articles of Organization and By-Laws fix the number of
directors at five and provide for the election of directors to staggered,
three-year terms. One director will be elected at this Meeting for a term ending
at the annual meeting of stockholders for the year 2000 (and until his successor
is elected and qualified). The Board has nominated Richard F. Miller for
re-election as a director.
Unless otherwise instructed, the persons named in the proxy will vote to
elect such nominee as a director. Although the Board does not contemplate that
the nominee will be unavailable to serve as a director, if for some reason the
nominee is unable to serve, the enclosed proxy will be voted for such
substituted nominee(s), if any, as may be designated by the Board.
The following information summarizes the recent business experience and
qualifications of the nominee:
Mr. Miller was elected to the Board in June 1988 and was re-elected in 1994
for a three year term expiring in 1997. Since August, 1994, Mr. Miller has
served as an investment executive with First Albany Corporation, a financial
services firm. From 1991 through August, 1994 Mr. Miller was a private investor,
and prior to that was an investment banker employed by Tucker, Anthony & R.L.
Day, Inc., from 1979 to 1991, where he last held the position of first vice
president.
The re-election of Mr. Miller requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock entitled to notice of
and to vote at the Meeting. See "Voting Procedures" for a
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discussion of the method by which votes, including abstentions and broker
non-votes, will be tabulated. If no candidate is elected, Mr. Miller will
continue to serve as a director until a successor is elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF MR.
MILLER AS A DIRECTOR.
PROPOSAL NUMBER TWO
APPROVAL OF 1997 STOCK OPTION PLAN
The Company's 1987 Stock Option Plan expired by its terms on March 18, 1997
and the Board has replaced it with the 1997 Stock Option Plan (the "Plan"). The
Plan is designed to advance the Company's interests by enhancing its ability to
attract and retain employees and others in a position to make significant
contributions to the success of the Company through ownership of shares of
Common Stock. A total of 1,500,000 shares of Common Stock have been reserved for
issuance under the Plan, subject to adjustment for stock dividends and similar
events. The Plan was adopted by the Board of Directors on March 19, 1997,
subject to stockholder approval. Stockholders are being requested to approve the
Plan at the Meeting. The following summary of the Plan is qualified in its
entirety by the full text of the Plan that appears as Exhibit A attached to this
Proxy Statement.
GENERAL
The Plan is administered by the Board, which may delegate some or all of
its powers with respect to the Plan to a Board committee. Under the plan, the
Board may grant stock options (both incentive stock options and nonstatutory
options) and stock appreciation rights (SARs) to employees of the company and
its subsidiaries and other persons or entities who, in its opinion, are in a
position to make a significant contribution to the success of the Company. The
number of employees of the Company (including subsidiaries) as of March 19, 1997
was approximately 519. The closing price of the Common Stock on the NASDAQ
National Market System on such date was $7.25.
Stock Options. The exercise price of an incentive stock option (ISO)
granted under the Plan may not be less than 100% (110% in the case of ten
percent shareholders) of the fair market value of the Common Stock at the time
of grant. The exercise price of a nonstatutory option granted under the Plan is
determined by the Board. The Board sets the term of each option, which cannot
exceed ten years from grant (five years from grant in the case of an incentive
stock option granted to a ten percent shareholder), and specifies the time or
times each option will be exercisable. The exercise price may be paid in cash or
check acceptable to the Company. Subject to certain additional limitations, the
Board may also permit the exercise price to be paid by tendering shares of
Common Stock, by using a promissory note, by delivering to the Company an
undertaking by a broker to deliver promptly sufficient funds to pay the exercise
price, or a combination of the foregoing.
Stock Appreciation Rights (SARs). Stock appreciation rights ("SARS") may
be granted either alone or in tandem with stock option grants. Each SAR entitles
the participant, in general, to receive upon exercise the excess of a share's
fair market value at the date of exercise over the share's fair market value on
the date the SAR was granted. The Plan also provides for SARs entitling the
participant, upon exercise, to receive an amount based on certain other
measures, including SARs that entitle the recipient to receive, following a
change in control of the Company as determined by the Board, an amount measured
by specified values or averages of values prior to the change in control. If an
SAR is granted in tandem with an option, the SAR will be exercisable only to the
extent the option is exercisable. To the extent the option is exercised, the
accompanying SAR will cease to be exercisable, and vice versa.
Except as the Board may otherwise provide, if a participant dies, options
and SARs exercisable immediately prior to death may be exercised by the
participant's executor, administrator or transferee during a
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period of one year following such death (or for the remainder of their original
term, if less) and options and SARs not then exercisable will terminate. In the
case of termination of a participant's association with the Company for reasons
other than death, except as the Board may otherwise provide, options and SARs
remain exercisable, to the extent they were exercisable immediately prior to
termination, for three months (or for the remainder of their original term, if
less).
Options and SARs are transferable only by will or the laws of descent and
distribution, except as the Board may otherwise provide.
In the case of certain mergers, consolidations or other transactions in
which the Company is acquired or liquidated, or its assets are sold, all
outstanding awards will terminate. Prior to such termination, however, all
outstanding awards will become exercisable unless the Board arranges for
assumption of the awards by any surviving corporation.
The Board may discontinue granting awards under the Plan at any time. The
Board may also amend the Plan for any purpose permitted by law, but no amendment
may adversely affect the rights of any participant under any award previously
granted.
FEDERAL INCOME TAX CONSEQUENCES
The Corporation is advised that under the federal income tax laws as now in
effect, the income tax consequences associated with stock options awarded under
the Plan are, in summary, as follows:
Incentive Options. An optionee realizes no ordinary taxable income upon
the grant or exercise of an ISO. If the optionee does not dispose of shares
issued pursuant to the exercise of an ISO within two years from the date of
grant or within one year after the transfer of such shares to the optionee, then
(a) upon sale of such shares, any amount realized in excess of the option price
(the amount paid for the shares) will be taxed to the optionee as a long-term
capital gain and any loss allowed for tax purposes will be long-term capital
loss, and (b) no deduction will be allowed to the Company. The exercise of an
ISO will, however, increase the optionee's alternative minimum taxable income
and may result in alternative minimum tax liability for the optionee.
If the optionee disposes of shares of Common Stock acquired upon the
exercise of an ISO prior to the expiration of the two-year or one-year holding
periods described above (a "disqualifying disposition"), generally (a) the
optionee will realize ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of the shares at exercise
(or, if less, the amount realized on a sale of such shares) over the option
price thereof, and (b) the Company will be entitled to deduct such amount. Any
further gain recognized will be taxed as short-term or long-term capital gain
and will not result in any deduction by the Company. Special rules may apply
where all or a portion of the exercise price of the ISO is paid by tendering
shares of Common Stock. A disqualifying disposition will eliminate the
alternative minimum taxable income adjustment associated with the exercise of
the ISO if it occurs in the same calendar year as the year in which the
adjustment occurred.
If an ISO is exercised at a time when it no longer qualifies for the tax
treatment described above, the option is treated as a nonstatutory option.
Generally, an ISO will not be eligible for the tax treatment described above if
it is exercised more than three months following termination of employment (one
year following termination of employment, in the case of termination by reason
of permanent and total disability), except in certain cases where the ISO is
exercised after the death of the optionee. Options otherwise qualifying as ISOs
will also be treated for federal income tax purposes as nonstatutory options to
the extent they (together with other ISOs held by the optionee) first become
exercisable in any calendar year for shares having a fair market value,
determined at the time of the option grant, exceeding $100,000.
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<PAGE> 7
Nonstatutory Options. With respect to nonstatutory options under the Plan,
no income is realized by the optionee at the time the option is granted.
Generally, (a) at exercise, an optionee realizes ordinary income, subject (in
the case of options granted to an employee) to withholding, in an amount equal
to the difference between the option price and the fair market value of the
shares on the date of exercise, and a corresponding deduction will be available
to the Company, and (b) any gain or loss recognized upon a later sale is treated
as capital gain or loss, either short-term or long-term, depending on the
applicable holding period for the sale.
Certain Limitations. Section 162(m) of the Internal Revenue Code limits to
$1 million the deduction a public corporation may claim for remuneration paid to
any of its five top officers, subject to a number of exceptions and special
rules. Eligible performance-based compensation is exempt from this limit. The
Company intends that compensation associated with the exercise of stock options
(and SARs) awarded under the Plan will qualify for this performance-based
exemption.
The Internal Revenue Code also limits the amount of compensation that may
be paid without penalty in connection with a change in control. In general, if
the total of an individual's change-in-control related compensation equals or
exceeds three times his or her average annual taxable compensation (determined,
in general, over the five calendar year period preceding the calendar year in
which the change in control occurs), change-in-control related payments in
excess of that annual average are nondeductible to the Company and subject to an
additional 20% tax on the recipient. In making this determination, some portion
or all of the value of options and other awards granted or accelerated in
connection with a change in control may be required to be taken into account.
The foregoing discussion is provided for the information of stockholders
and does not purport to be a complete description of the federal tax
consequences in respect of transactions under the Plan, nor does it describe
state or local tax consequences.
The following chart summarizes, as of the date hereof, the number of Plan
options that the Board has voted to grant upon shareholder approval of the Plan:
NEW PLAN BENEFITS
1997 STOCK OPTION PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER OF SHARES
NAME AND POSITION VALUE($) OF COMMON STOCK
---------------------------------------------------------- --------- ----------------
<S> <C> <C>
Robert J. Palmisano, Director and Chief Executive
Officer................................................. * 300,000
All Executive Officers as a group......................... * 300,000
</TABLE>
- ---------------
* The dollar value of these benefits is not yet determinable.
The Board believes that the adoption of the Plan will promote the interests
of the Company and the stockholders and enable the Company to attract, retain
and reward persons important to the Company's success. Accordingly, the Board
has approved the adoption of the Plan and recommends that the stockholders vote
"FOR" the proposal to adopt the Plan. Proxies solicited by the Board will be so
voted unless stockholders specify otherwise.
To approve the Plan, the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock entitled to notice of and to vote at the
Meeting is required. See, "Voting Procedures" for a discussion of the method by
which votes, including abstentions and broker non-votes, will be tabulated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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<PAGE> 8
PROPOSAL NUMBER THREE
APPROVAL OF AMENDMENT TO ARTICLES OF ORGANIZATION AND BYLAWS
INCREASING NUMBER OF DIRECTORS FROM FIVE TO SEVEN
On March 19, 1997, the Board approved, subject to action by the
stockholders at the Meeting, an amendment to the Company's Articles of
Organization and By-Laws increasing the number of directors from five to seven
(the "Amendment").
The Company's Articles of Organization presently fix the number of
directors at five and provide for the election of directors to staggered,
three-year terms. If the proposed Amendment is adopted by the stockholders, two
additional Board members will be appointed by the existing Board to fill the
resulting vacancies and assigned initial terms of office ending with the annual
meetings of stockholders for the years 1998 and 2000, respectively (and until
their successors are elected and qualified). Thereafter, directors holding these
seats would be elected to staggered, three-year terms. The Board has not
identified and does not intend to select any candidates until this Amendment is
approved.
The Board believes that the proposed Amendment would benefit the Company by
enabling the Board to draw upon the skill and experience of additional qualified
individuals.
If approved by the stockholders, increase of the number of directors from
five to seven would be effected by the filing of an amendment to the Company's
Articles of Organization with the Secretary of State of the Commonwealth of
Massachusetts, which would take effect upon filing. If the proposed Amendment is
approved by the stockholders, the Board will adopt conforming changes to the
Company's By-Laws.
Approval of the Amendment requires the affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock entitled to notice of and
to vote at the Meeting. See "Voting Procedures" for a discussion of the method
by which votes, including abstentions and broker non-votes, will be tabulated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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<PAGE> 9
OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock on February 28, 1997, (i) by each person
who is known by the Company to own beneficially more than five percent (5%) of
the outstanding shares of the Company's Common Stock, (ii) by each of the
Company's directors, (iii) by each of the Named Executive Officers listed below
in the Summary Compensation Table and (iv) by all directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED(1) OWNED(2)
-------------------------------------------------------------- --------- ------------
<S> <C> <C>
Jeffrey A. Bernfeld........................................... 11,600(3) *
Richard F. Miller............................................. 2,000(4) *
John A. Norris................................................ 16,208(5) *
Richard M. Traskos............................................ 15,729(6) *
D. Verne Sharma............................................... 50,000(7) *
Rajiv P. Bhatt................................................ 66,264(8) *
Ronald Herskowitz............................................. 14,031(9) *
Peter E. Litman............................................... 102,130(10) *
Menderes Akdag................................................ 885(11) *
All Executive Officers and Directors as a Group (14
persons)(3)(4)(5)(6)(7)(8)(9)(11)........................... 1.14%
Ray H. Krauss................................................. 32,125(12) *
David F. Muller............................................... 1,522,396(13) 4.68%
</TABLE>
- ---------------
* Less than 1% of the outstanding Common Stock
(1) Except as otherwise noted, the Company believes that the persons named in
the table have sole voting and investment power with respect to the shares
of Common Stock set forth opposite such persons' name. Amounts shown
include the shares issuable pursuant to stock options which may be
exercised within 60 days of February 28, 1997.
(2) Determined on the basis of 31,027,282 shares outstanding, except that
shares underlying options exercisable within 60 days of February 28, 1997
are deemed outstanding for calculating the percentage owned by holders
thereof.
(3) Does not include options to purchase 25,000 shares of Common Stock at $5.38
per share, and options to purchase 3,000 shares of Common Stock at $5.50
per share, which are not exercisable within 60 days of February 28, 1997,
and includes options to purchase 10,500 shares, which are presently
exercisable.
(4) Does not include options to purchase 25,000 shares of Common Stock at $5.38
per share, and options to purchase 3,000 shares of Common Stock at $5.50
per share, which are not exercisable within 60 days of February 28, 1997
and includes options to purchase 2,000 shares, which are presently
exercisable.
(5) Does not include options to purchase 25,000 shares of Common Stock at $5.38
per share, and options to purchase 3,000 shares of Common Stock at $5.50
per share, which are not exercisable within 60 days of February 28, 1997
and includes options to purchase 10,500 shares which are currently
exercisable.
(6) Does not include options to purchase 25,000 shares of Common Stock at $5.38
per share, and options to purchase 3,000 shares of Common Stock at $5.50
per share, which are not exercisable within 60 days of February 28, 1997
and includes options to purchase 10,500 shares which are currently
exercisable. Includes 1,050 shares owned by Mr. Traskos' wife as to which
Mr. Traskos disclaims beneficial ownership.
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<PAGE> 10
(7) Does not include options to purchase 50,000 shares of Common Stock at
$5.38 per share and includes options to purchase 50,000 shares which are
presently exercisable.
(8) Does not include options to purchase 50,000 shares of Common Stock at $5.38
per share and options to purchase 36,000 shares of Common Stock at $18.00,
which are not exercisable within 60 days of February 28, 1997, and includes
options to purchase 66,050 shares, which are presently exercisable and 214
shares held in the Company's 401(k) plan.
(9) Does not include options to purchase 10,000 shares of Common Stock at $5.38
per share and options to purchase 7,500 shares of Common Stock at $14.50
per share, which are not exercisable within 60 days of February 28, 1997,
and includes options to purchase 13,750 shares, which are presently
exercisable, and 281 shares held in the Company's 401(k) plan.
(10) Does not include options to purchase 50,000 shares of Common Stock at $5.38
per share, options to purchase 12,000 shares of Common Stock at $14.50 and
options to purchase 4,500 shares at $18.83 per share, which are not
exercisable within 60 days of February 28, 1997, and includes 101,373
shares which are presently exercisable, and includes 757 shares held in the
Company's 401(k) plan.
(11) Does not include options to purchase 5,000 shares of Common Stock at $5.38
per share, which are not exercisable within 60 days of February 28, 1997.
Mr. Akdag, who is President of the Company's wholly-owned subsidiary, Lens
Express, Inc., is not an officer of Summit Technology, Inc.
(12) Includes options to purchase 31,692 shares, which are presently
exercisable, and 433 shares held in the Company's 401(k) plan. Mr. Krauss'
employment with the Company terminated effective December 31, 1996.
(13) Includes options to purchase 225,000 shares of Common Stock which are
presently exercisable and 910 shares held in the Company's 401(k) plan. Dr.
Muller was terminated from all positions with the Company on September 5,
1996.
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<PAGE> 11
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers and directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- ----------------------------------------------
<S> <C> <C>
Robert J. Palmisano........ 52 Director and Chief Executive Officer
D. Verne Sharma............ 47 President
Rajiv P. Bhatt............. 39 Executive Vice President, Treasurer and Chief
Financial Officer
Ronald Herskowitz.......... 42 Executive Vice President, Professional
Business Development
Peter E. Litman............ 45 Executive Vice President and General Counsel
David B. Applegate......... 38 Vice President, Marketing
John B. Frantzis(1)........ 41 Vice President, Sales
Peter J. Klopotek.......... 43 Vice President, Science and Technology
Alex C. Sacharoff.......... 40 Vice President, Research & Development
Menderes Akdag............. 36 President, Lens Express, Inc.
Jeffrey A. Bernfeld(3)..... 39 Director
Richard F. Miller(2)....... 45 Director
John A. Norris............. 50 Director
Richard M. Traskos(2,3).... 49 Director
</TABLE>
- ---------------
(1) Mr. Frantzis resigned from the Company effective April 25, 1997.
(2) Audit Committee
(3) Compensation Committee
Mr. Palmisano joined the Company in April 1997 as Chief Executive Officer
and a member of the Board of Directors. From 1984 to January 1996, Mr. Palmisano
was employed at Bausch and Lomb, Inc., where he served from 1988 to 1996 as
Senior Vice President and as President of its Eyewear Division. From January,
1996 to April, 1997, Mr. Palmisano was a private consultant. Mr. Palmisano holds
a B.A. degree from Providence College.
Mr. Sharma joined the Company in April 1996 as President and served as
Interim Chief Executive Officer from September, 1996 to April, 1997. Mr. Sharma
previously served as Vice President of Marketing at United States Surgical
Corporation, and prior to that was general manager of business units at General
Electric Medical Systems and Rohm and Hass Company. Mr. Sharma holds an MBA from
the Wharton School and an undergraduate degree in Chemical Engineering from the
University of the West Indies, Trinidad and Tobago.
Mr. Bhatt joined the Company in September 1994. Prior to Summit, Mr. Bhatt
was the Chief Financial Officer and a member of the Board of Directors of
Carlisle Plastics, Inc., a diversified manufacturer of consumer plastic
products. In this capacity, Mr. Bhatt was responsible for all financial and
administrative functions. Mr. Bhatt holds an M.B.A. in corporate finance from
the University of Michigan and a bachelor of commerce degree from the University
of Bombay. Mr. Bhatt is a certified public accountant.
Dr. Herskowitz joined the Company in September 1993 from Polymer Technology
Corp., a wholly owned subsidiary of Bausch & Lomb. Polymer is a world leader in
the development and sale of specialty contact lens materials and solutions. He
was employed by Polymer from March 1986 until joining the Company, most recently
as vice president, research and development and prior to that as vice president,
technical affairs.
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<PAGE> 12
Dr. Herskowitz holds a Doctor of Optometry degree from the Illinois College of
Optometry and a B.A. in Chemistry from Knox College.
Mr. Litman joined the Company in September 1990. Prior to joining the
Company, Mr. Litman was a partner for six years with the law firm of Goldstein &
Manello, P.C. Mr. Litman served as outside legal counsel to the Company from
August 1986 through August 1990. Mr. Litman received a J.D. from Columbia
University School of Law and a B.A. from the University of Pennsylvania.
Mr. Applegate joined the Company in April 1995 as Vice President of
Marketing for its Summit Vision Centers subsidiary. In September 1996, he became
Vice President of Marketing for the worldwide equipment business. Prior to
joining the Company, Mr. Applegate was Marketing Director, New Products, for
Vistakon, a Johnson and Johnson company. Vistakon is the worldwide market share
leader in disposable contact lenses. Mr. Applegate holds an MBA in marketing
from the University of California, Berkeley and a Bachelor's degree in
Psychology from California State University, Fresno.
Mr. Frantzis joined the Company in August 1990 as North American Sales
Manager. Mr. Frantzis was promoted to the position of Worldwide Sales Manager in
1991, to Director of Sales in 1994 and to his current position as Vice President
of Sales in January 1995. Prior to joining the Company, Mr. Frantzis was a
regional manager for ADC Telecommunications, a manufacturer of central office
switching and test equipment. Mr. Frantzis holds a Bachelor's degree in Business
Administration from Washington & Jefferson College.
Dr. Klopotek joined the Company in January 1987 as Manager of Laser
Development. Dr. Klopotek was promoted to the position of Chief Scientist in
1990 and to Vice President, Science and Technology in October 1991. Prior to
joining the Company, Dr. Klopotek was project manager at Lambda Physik GmbH in
Gottingen, Germany from 1984 to 1986. Dr. Klopotek holds a Ph.D. in physics from
the Max Planck Institute and an M.S. in electrical engineering.
Dr. Sacharoff joined the Company in April 1986 as Senior Staff Scientist,
and has held a variety of positions in the Company's Research and Development
Group. He was promoted to Vice President of Research and Development in July
1996. Prior to joining Summit, Dr. Sacharoff was a Senior Staff Scientist at
Raytheon Corporation. Dr. Sacharoff holds a Ph.D. in Applied Physics from
Harvard University and a Bachelor of Science degree in Physics from Stevens
Institute of Technology.
Mr. Akdag joined Lens Express in May 1991 as Chief Financial Officer. Mr.
Akdag was promoted to the position of Chief Executive Officer in 1992. He has
been in his current position as President of Lens Express since May 1995. Prior
to joining the Company, Mr. Akdag was the Finance Manager for Beksa Steel Cord
Manufacturing and Trading, Inc. Mr. Akdag holds a Bachelor of Science degree in
Business Administration with a major in finance from the University of Florida.
Mr. Akdag is not an officer of Summit Technology, Inc.
Mr. Bernfeld was elected to the Board in October, 1988 and was re-elected
in 1995 for a three year term expiring in 1998. Mr. Bernfeld is vice president
and general counsel of American Science and Engineering, a manufacturer of x-ray
based detection equipment. Mr. Bernfeld was vice president and general counsel
of Spire Corporation, a publicly held company specializing in biomaterials,
optoelectronics and energy technologies from June 1992 to February 1996. From
1991 through June, 1992, Mr. Bernfeld was a principal of the consulting firm
Global Solutions, Inc. and from 1988 to 1990 Mr. Bernfeld was vice president and
general counsel of the Mediplex Group, Inc. Prior to joining Mediplex, Mr.
Bernfeld was a partner with the law firm of Goldstein & Manello, P.C.
Mr. Miller was elected to the Board in June 1988 and was re-elected in 1994
for a three year term expiring in 1997. Since August, 1994, Mr. Miller has
served as an investment executive with First Albany Corporation, a financial
services firm. From 1991 through August, 1994 Mr. Miller was a private investor,
and
9
<PAGE> 13
prior to that was an investment banker employed by Tucker, Anthony & R.L. Day,
Inc., from 1979 to 1991, where he last held the position of first vice
president.
Mr. Norris was elected to the Board in May 1990 and was re-elected in 1993.
Since February, 1994, Mr. Norris has served as President of John A. Norris,
Esquire, P.C. a health care law, public policy and management consulting firm
founded in February, 1994. Mr. Norris was President and Chief Executive Officer
of National Pharmaceutical Council, Inc., an educational resource for
research-based pharmaceutical companies, from April 1995 to March 1996. From
June 1988 through February 1994, he was executive vice president of Hill and
Knowlton, Inc., a consulting and public relations firm, and served as the
worldwide director of its Health Sciences Consulting Group. Prior to joining
Hill and Knowlton in 1988, Mr. Norris served as deputy commissioner and chief
operating officer of the FDA from 1985 to 1988, where his main responsibility
was overseeing the operations of the FDA. Mr. Norris has taught healthcare
policy at Harvard University since 1988. Mr. Norris currently serves as a
director of Cytologies, Inc., Horus Inc. and National Applied Sciences, Inc.
Mr. Traskos was elected to the Board in March, 1987 and was re-elected in
1995 for a three year term expiring in 1998. Since March 1993, Mr. Traskos has
served as vice president of Arthur A. Watson & Company, Inc., a business
insurance brokerage firm located in Wethersfield, Connecticut. Previously, Mr.
Traskos served as a director and senior vice president of Allen, Russell &
Allen, Inc., a business insurance brokerage and consulting firm. Mr. Traskos is
a licensed insurance broker and certified insurance consultant.
Director Liability. The Company's Articles of Organization provide that
directors are not liable to the Company or its shareholders for monetary damages
for breach of fiduciary duty except for: (a) any breach of the director's duty
of loyalty to the Company or its shareholders, (b) acts or omissions not in good
faith or that involve intentional misconduct or knowing violations of law, (c)
under the Massachusetts Business Corporation Law, provisions imposing joint and
several liability for improper distributions to shareholders or loans to
officers or directors, (d) transactions from which a director derived an
improper personal benefit, or (e) for any act or omission occurring prior to the
effective date of such provision.
Shareholder Derivative Action. On December 20, 1996, a shareholder of the
Company filed in the United States District Court for the District of
Massachusetts a derivative action, purportedly on behalf of the Company, against
the Company as nominal defendant, its directors and certain of its present or
former officers. The complaint alleges that the defendant directors and officers
caused the Company to make public statements, in violation of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and of Sections 11 and 12 of the
Securities Act of 1933. It alleges that this conduct has rendered the Company
liable to the plaintiffs in, and has exposed the Company to the expense and
inconvenience of defending, other shareholder securities laws class action
lawsuits and has harmed the Company's reputation. The complaint further alleges
that the defendant directors and officers improperly traded in the Company's
Common Stock based upon material non-public information. The complaint seeks
recovery from the defendant directors and officers, in an unspecified amount,
for the damages allegedly caused by their alleged misconduct.
Indemnification of Directors and Officers. The Company's By-Laws require
the Company to indemnify all officers, directors, employees and agents of the
Company against all liabilities and expenses they may incur on account of all
actions threatened or brought against them by reason of their services to the
Company. No indemnification is provided for any person with respect to any
matter as to which such person has been adjudicated in any proceeding not to
have acted in good faith in the reasonable belief that his action was in the
best interests of the Company.
The Company maintains a director's and officer's liability insurance policy
in the aggregate amount of $3,000,000 on behalf of its directors and officers.
The insurance policy expires on October 31, 1997, unless renewed or earlier
terminated.
10
<PAGE> 14
OTHER TRANSACTIONS AND RELATIONSHIPS
During the fiscal year ended December 31, 1996, the Company loaned David
Applegate, the Company's Vice President of Marketing, $100,000. The note is
payable on August 9, 1998 and carries an interest rate of 9%.
See "Compensation Committee Interlocks and Insider Participation" for
information regarding transactions between the Company and a firm with which Mr.
Traskos is affiliated.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
Section 16 of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with, except that (i)
initial reports of beneficial ownership were filed late by each of Messrs.
Akdag, Applegate, Sacharoff and Sharma and (ii) two reports covering two
transactions were filed late by Mr. Traskos and a report covering one
transaction was filed late by Mr. Applegate.
INFORMATION CONCERNING THE
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company held 15 meetings and acted by
unanimous consent three times during 1996. Each director then serving attended
more than 75% of such Board meetings and meetings of all committees of the Board
on which he served.
The Company has a standing Audit Committee of the Board of Directors, which
provides the opportunity for direct contact between the Company's independent
public auditors and the Board. The Audit Committee met once during 1996 to
review the financial results for 1995, to review the audit plan for 1996 to
review the adequacy of financial statement disclosures, to discuss the Company's
internal control policies and procedures and to consider and recommend the
selection of the Company's independent auditors. The current Audit Committee
members are Messrs. Miller and Traskos.
The Company also has a standing Compensation Committee of the Board of
Directors, which provides recommendations to the Board regarding compensation
programs of the Company and administers the Company's 1987 Stock Option Plan and
the 1991 Employee Stock Purchase Plan, including making recommendations
regarding issuance of stock options and shares of Common Stock to employees. The
Compensation Committee held two meetings and acted by unanimous consent four
times during 1996. The current Compensation Committee members are Messrs.
Bernfeld and Traskos. Members of the Compensation Committee may not be granted
options under any of the Company's plans during the one year period prior to
serving on the Committee and during their tenure on the Committee, except that
members of the Committee who are otherwise eligible to participate in the 1992
Stock Option Plan For Outside Directors may receive grants of options under such
Plan.
The Company does not have a Nominating Committee.
11
<PAGE> 15
EXECUTIVE COMPENSATION
The following table shows for the fiscal years ended December 31, 1996,
1995 and 1994 compensation paid or accrued by the Company to (i) the Company's
Chief Executive Officer and all other persons who served as the Company's Chief
Executive Officer during 1996, (ii) the four other most highly compensated
executive officers of the Company who were serving as executive officers as of
December 31, 1996 and (iii) an individual for whom disclosure in this table
would have been required but for the fact that he was not serving as an
executive officer as of December 31, 1996 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ------------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING
PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS/
POSITION YEAR ($) ($) ($) SAR'S(#)
- -------------------------------------- ------ ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
D. Verne Sharma....................... 1996 174,308 -- 38,436(2) 100,000(3)
President 10,000(3)
1995 -- -- -- --
1994 -- -- -- --
Rajiv P. Bhatt........................ 1996 188,633 -- -- 100,000(4)
Executive Vice President, Treasurer 15,000(4)
and Chief Financial Officer 1995 165,788 21,363(1) -- --
1994 -- -- -- 61,500(4)
25,000(4)
Ronald Herskowitz..................... 1996 150,627 -- -- 20,000(5)
Executive Vice President, 20,000(5)
Professional Business 1995 134,415 17,519(1) -- --
Development 1994 130,290 -- -- 30,000(5)
Ray H. Krauss......................... 1996 162,684 -- -- --
Former Executive Vice 1995 158,568 12,290(1) -- --
President and Chief 1994 154,121 3,500 -- 3,000(6)
Operating Officer
Peter E. Litman....................... 1996 187,502 -- -- 100,000(7)
Executive Vice President 15,000(7)
and General Counsel 1995 157,737 19,814(1) -- --
1994 148,031 3,500 7,500(7)
5,000(7)
David F. Muller....................... 1996 181,424 -- -- --
Former President and Chief 1995 216,346 29,138(1) -- --
Executive Officer 1994 200,172 -- -- 450,000(8)
Menderes Akdag........................ 1996 156,940 -- -- 5,000(9)
President, Lens Express, Inc. 1995 88,804 80,000 -- --
1994 163,236 25,000 -- --
</TABLE>
- ---------------
(1) Bonus received in the form of stock options to purchase shares of Company
Stock and is deemed annual compensation and is, therefore, not included as
long-term compensation. The amounts are calculated based on the excess of
the fair market value of the Company Stock over the option price at the
date of grant.
(2) Other annual compensation represents moving and relocation expenses
reimbursed by the Company.
(3) During the year ended December 31, 1996, Mr. Sharma received options to
purchase 100,000 shares of Company Stock and 10,000 shares of common stock
of Refractive Centers International, Inc. ("RCII"), a wholly-owned
subsidiary of the Company.
12
<PAGE> 16
(4) During the year ended December 31, 1996, Mr. Bhatt received options to
purchase 100,000 shares of Company Stock and 15,000 shares of common stock
of RCII. During the year ended December 31, 1994, Mr. Bhatt received
options to purchase 61,500 shares and 25,000 shares of Company Stock and
common stock of RCII, respectively.
(5) During the year ended December 31, 1996, Dr. Herskowitz received options to
purchase 20,000 shares of Company Stock and 20,000 shares of common stock
of RCII. During the year ended December 31, 1994, Dr. Herskowitz received
options to purchase 30,000 shares of common stock of RCII.
(6) During the year ended December 31, 1994, Mr. Krauss received options to
purchase 3,000 shares of common stock of RCII.
(7) During the year ended December 31, 1996, Mr. Litman received options to
purchase 100,000 shares of Company Stock and 15,000 shares of common stock
of RCII. During the year ended December 31, 1994, Mr. Litman received
options to purchase 7,500 shares and 5,000 shares of Company Stock and
common stock of RCII, respectively.
(8) During the year ended December 31, 1994, Dr. Muller received options to
purchase 450,000 shares of common stock of RCII, all of which have been
cancelled. Dr. Muller was terminated from all positions with the Company on
September 5, 1996.
(9) During the year ended December 31, 1996, Mr. Akdag, who is President of the
Company's Lens Express subsidiary, received options to purchase 5,000
shares of Company Stock. Mr. Akdag is not an officer of Summit Technology,
Inc.
The following tables show, as to the Named Executive Officers, information
as to options granted and exercised during the fiscal year ended December 31,
1996 and fiscal year end options and option values:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SAR'S APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SAR'S EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ----------------------------- ------------- ------------- ----------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Akdag (2).................... 5,000 .8 5.38 11/4/2006 16,902 42,832
Bhatt........................ 100,000(3) 15.97 5.38 11/4/2006 338,031 856,637
15,000(4) 17.96 0.50 11/4/2006 4,717 11,953
Herskowitz................... 20,000(3) 3.19 5.38 11/4/2006 67,606 171,327
20,000(4) 23.95 0.50 11/4/2006 6,289 15,937
Litman....................... 100,000(3) 15.97 5.38 11/4/2006 338,031 856,637
15,000(4) 17.96 0.50 11/4/2006 4,717 11,953
Sharma....................... 100,000(3) 15.97 5.38 11/4/2006 338,031 856,637
10,000(4) 11.98 0.50 11/4/2006 3,144 7,969
</TABLE>
- ---------------
(1) Generally, an employee may exercise an option only while employed by the
Company or within three months of termination of employment.
(2) 2,500 options vest on June 30, 1997 and 2,500 options vest on June 30, 1998.
(3) Options to purchase Company Stock; fifty percent of options granted vested
on grant date of November 4, 1996; twenty-five percent vests on November 4,
1997; and the remaining twenty-five percent vests on November 4, 1998.
(4) Options to purchase RCII stock; one third of options granted vest on
November 4, 1997; one third vest on November 4, 1998 and the balance vest on
November 4, 1999.
13
<PAGE> 17
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S AT OPTIONS/SAR'S AT
SHARES FY-END(#) FY-END($)
ACQUIRED ON VALUE -------------------- --------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- -------- -------------------- --------------------
<S> <C> <C> <C> <C>
Akdag........................... -- -- --/5,000(2) --/625
Bhatt........................... -- -- 66,050/86,000(2) 6,250/6,250
10,000/30,000(3) --/--
Herskowitz...................... -- -- 13,750/17,500(2) 1,250/1,250
-- -- 21,000/44,000(3) --/--
Krauss.......................... -- -- 31,692/--(2) --/--
Litman.......................... 5,000 146,150 101,373/66,500(2) 29,649/6,250
8,000/22,000(3)
Muller.......................... 150,000 412,500 225,000/--(2) 1,012,500/--
Sharma.......................... -- -- 50,000/50,000(2) 6,250/6,250
-- -- --/10,000(3) --/--
</TABLE>
- ---------------
(1) Represents the excess of the fair market value of the Company Stock over the
option price at the date of exercise.
(2) Options to purchase shares of Common Stock of the Company.
(3) Options to purchase shares of Common Stock of RCII. The Company believes
that the exercise price of these options is at or above fair market value;
therefore, the options are not in-the-money.
Compensation Of Directors. The Company currently pays $10,000 per year to
its outside directors for their services as directors and $1,000 per year per
committee to each outside director for serving on Board committees. The Company
also pays each outside director $2000 for each Board meeting attended, and $500
for each committee meeting attended.
In addition, the Company's outside directors (the "Participants") are
eligible to participate in the 1992 Stock Option Plan For Outside Directors
Plan, which constitutes a "formula plan" for purposes of Section 16b-3
promulgated under the Securities Exchange Act of 1934. Pursuant to this Plan,
each Participant has been granted as of February 28, 1997, options to purchase
13,500 shares of Common Stock (at prices ranging from $5.50 to $25.31 per
share). Provided that a Participant remains a director of the Company, he will
be granted an additional option to acquire 3,000 shares of Common Stock on
January 1, 2000 at 100% of market value.
The Company's outside directors were each also granted options to purchase
25,000 shares of Company Stock on November 4, 1996 at an option price of $5.38
per share. Of these, 8,333 options vest on November 4, 1997, 8,333 options vest
on November 4, 1998 and the balance vest on November 4, 1999.
Employment Agreements. Robert J. Palmisano was elected as the Company's
Chief Executive Officer and a Director on April 15, 1997. Mr. Palmisano's
employment arrangement with the Company provides that he will receive a base
salary of $300,000 per year and will be eligible for discretionary bonuses,
based on criteria established from time to time. In addition, Mr. Palmisano will
be granted options to purchase 300,000 shares of the Company's Common Stock
pursuant to the Company's 1997 Stock Option Plan, subject to approval of the
Plan by the shareholders. Such options will be granted at the market value of
the Common
14
<PAGE> 18
Stock on the date of grant, and will vest in accordance with a schedule to be
determined by the Compensation Committee. In the event Mr. Palmisano's
employment is terminated without cause, Mr. Palmisano will be entitled to
severance payments equal to one year's base compensation. In the event Mr.
Palmisano's employment terminates within twelve months of a change in control of
the Company, Mr. Palmisano's severance payments will be equal to two years' base
compensation. All of the Company's executive officers, including Mr. Palmisano,
are employees-at-will.
Termination Agreement. On March 5, 1997, the Company entered into a
Settlement Agreement with David F. Muller, its former President and Chief
Executive Officer. The Company agreed to pay Dr. Muller $450,000 in equal
monthly installments over two years, to reimburse Dr. Muller for certain
expenses, and to forgive approximately $325,000 of indebtedness in 1999. In
addition, the parties agreed to release each other from certain claims.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors consists of Mr. Traskos and Mr.
Bernfeld. Arthur A. Watson & Company, Inc., a firm with which Mr. Traskos is
affiliated, currently serves as one of the Company's insurance brokers. The
aggregate premiums paid for insurance placed by Arthur A. Watson on behalf of
the Company in 1996 amounted to approximately $785,000, which is less than five
percent of 1996 consolidated gross revenues of the Company and Arthur A. Watson,
respectively. The Company believes that all transactions with Arthur A. Watson &
Company, Inc. are on terms no less favorable than those available from other
companies.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1993, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Report of the
Compensation Committee and the Performance Graph shall not be incorporated by
reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE
The primary goals of the 1996 executive compensation program established
and administered by the Compensation Committee were to attract, retain and
recognize the achievements of superior executives, and to compensate these
executives in a manner that both recognized their individual performance and
aligned their interests with the interests of the Company's stockholders, as
measured principally by stock performance. At the current stage of the Company's
development, the Compensation Committee also strives to administer the
compensation program to conserve cash resources of the Company to the extent
possible.
General Policies. For 1996, the executive compensation program consisted
of three principal components: base salary, bonus and stock options. The level
and mix of each of these components was determined on a case by case basis
without reference to specific criteria or formulas.
Base Salary. In setting the base salary of each executive, including the
Chief Executive Officer, the Compensation Committee takes into account the
following factors: (i) the executive's individual performance and contribution
to the management team; (ii) the performance of the Company over the evaluation
period by reference to the Company's stock value and its progress towards its
goals of obtaining regulatory approvals for sale of its products in the United
States and achieving market acceptance of procedures performed with its
products; and (iii) base salaries of executives in comparable positions in
comparable companies. The Committee considers salaries of executives in other
companies for the purpose of determining what it believes to be the minimum base
salary necessary to recruit a superior executive, and then to retain such
executive. The Committee intends to target base salary levels of the Company's
executive officers to the low end of the range of such comparable companies in
keeping with the objective of conserving cash resources to the extent
15
<PAGE> 19
possible. In setting base salary, the Committee takes into account all
components of an executive officer's compensation package, believing that the
Company's overall compensation packages places the Company's executive officers
in the middle of the range of comparable companies. The companies considered
comparable by the Compensation Committee are not necessarily those represented
in the peer group used by the Company in preparing its Performance Graph, but
rather are companies of a comparable size, stage of development and industry
located in the New England area, as well as its primary competitor in the United
States. In determining base salary, the Committee reviews the foregoing factors
as they relate to each executive individually and applies each factor
subjectively, without reference to specific criteria. The Committee does not
weigh any one factor more or less heavily than any other and considers the input
of the Chief Executive Officer and several senior executives in reaching its
determinations.
Cash and Non-Cash Bonuses. Cash and non-cash bonuses are awarded to
individual executives principally as a mechanism to recognize and reward the
executive's role in achieving short-term performance objectives of the Company.
The Committee has not established specific, quantitative measures for awarding
cash and non-cash bonuses, but rather awards such bonuses in such amounts as
individual achievements warrant, based on subjective criteria and the
recommendations of the Chief Executive Officer.
Stock Options. The Compensation Committee views grants of stock options as
a major component of an executive's compensation, believing that the grant of
options aligns the interests of the executives with the interests of the
stockholders by providing a direct correlation between an increase in the value
of the Company's stock and executive compensation and that this method of
compensation allows the Company to conserve cash resources. The Compensation
Committee's present intention is to make substantial stock option grants to
executives every three years, although options may be granted in each year to
achieve an overall compensation package deemed appropriate by the Committee.
In determining the size of a stock option award for an individual executive
officer, the Committee considers the same factors used for determining base
salary and applies each factor subjectively, without reference to specific
criteria. The Committee does not weigh any one factor more or less heavily than
any other and considers the input of the Chief Executive Officer, several senior
executives and the Company's Human Resources staff in reaching its
determinations. The size of previous option grants are not an important factor
in determining current awards. Options are typically exercisable at the market
price on the date of the grant, except in the case of recruitment packages,
which sometimes include options at below market price. The Company has not yet
adopted a policy with respect to the million dollar cap on deduction of
executive compensation.
The Compensation Committee is composed of the two individuals whose names
appear below, both of whom are independent directors of the Company. The
Compensation Committee has the power and authority to administer all components
of the Company's compensation program for executive officers of the Company.
Compensation Committee
Jeffrey A. Bernfeld
Richard M. Traskos
May 1, 1997
16
<PAGE> 20
PERFORMANCE GRAPH
The following Performance Graph assumes an investment of $100 on December
31, 1991 and compares annual percentage changes thereafter in the market price
of the Company's Common Stock with a market index of U.S. NASDAQ traded
securities (NASDAQ Market Index -- U.S.) and an industry index (Dow Jones
Medical and Biological Technology Index). The Company paid no dividends during
the periods shown; the performance of the indices is shown on an actual return
(dividend reinvestment) basis. The graph lines merely connect year-end dates and
do not reflect fluctuations between those dates.
<TABLE>
<CAPTION>
DOW JONES MEDICAL
MEASUREMENT PERIOD SUMMIT NASDAQ STOCK & BIOLOGICAL
(FISCAL YEAR COVERED) TECHNOLOGY, INC. MARKET - U.S. TECHNOLOGY INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 110.70 116.37 86.41
1993 78.14 132.77 75.32
1994 105.12 129.81 85.95
1995 188.37 188.00 147.21
1996 30.70 230.18 156.29
</TABLE>
SELECTION OF AUDITORS
The Company has selected KPMG Peat Marwick LLP ("Peat Marwick"),
independent certified public accountants, to act as its auditors and to audit
the financial statements of the Company and its subsidiaries for the year ending
December 31, 1997. Peat Marwick performed the audit of the Company's financial
statements for 1996.
Representatives of Peat Marwick have been invited to the Annual Meeting and
are expected to be present at the Meeting. They will have the opportunity to
make a statement if they so desire, and will be available to respond to
appropriate questions from stockholders.
VOTING PROCEDURES
The holders of a majority of the shares of outstanding Common Stock
entitled to notice of and to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether or not a quorum is present
at the Meeting. Shares of Common Stock which are not voted, including "broker
non-votes" (i.e., shares held by a broker or nominee for a beneficial holder as
to which the broker or
17
<PAGE> 21
nominee does not have discretionary voting power and does not receive voting
instructions from the beneficial owner) will not be counted for purposes of
determining whether or not a quorum is present.
The affirmative vote of a majority of the shares of outstanding Common
Stock entitled to notice of and to vote at the Meeting is required for the
election of the nominee for Director (Proposal 1) and for approval of the
Company's 1997 Stock Option Plan (Proposal 2). The affirmative vote of holders
of two-thirds of the outstanding Common Stock entitled to notice of and to vote
at the Meeting is required for approval of an amendment to the Company's
Articles of Organization and By-Laws increasing the number of directors from
five to seven (Proposal 3). Abstentions and broker non-votes will not be counted
as affirmative votes for purposes of obtaining the required approvals with
respect to these Proposals and will have the effect of a vote against such
Proposals.
OTHER MATTERS
The Board of Directors knows of no other matters that may come before the
Meeting. If any other matters should properly come before the Meeting, it is the
intention of the persons named in the accompanying proxy to vote in accordance
with their judgment on such matters. Such discretionary authority is conferred
by the proxy.
All costs of this solicitation, which is being made principally by mail,
will be borne by the Company. Solicitation of proxies may be supplemented by
telephone or personal contacts by the Company's directors, officers and
employees without additional compensation. Brokers will be requested to forward
proxy soliciting material to the beneficial owners of the stock held in such
brokers' names, and the Company will reimburse them for their expenses incurred
in complying with the Company's request.
STOCKHOLDER PROPOSALS
In order to be considered for presentation at the 1998 Annual Meeting of
Stockholders, and to be included in the proxy statement and form of proxy for
that meeting, stockholder proposals must be received by the Company at its
corporate offices in Waltham, Massachusetts, no later than December 14, 1997.
By Order of the Board of Directors
PETER E. LITMAN, Clerk
May 1, 1997
18
<PAGE> 22
EXHIBIT A
SUMMIT TECHNOLOGY, INC.
1997 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1997 Stock Option Plan (the "Plan") is to advance the
interests of Summit Technology, Inc. (the "Company") by enhancing the ability of
the Company and its subsidiaries to attract and retain directors, employees,
consultants or advisers who are in a position to make significant contributions
to the success of the Company, to reward them for their contributions and to
encourage them to take into account the long-term interests of the Company.
The Plan provides for the award of options to purchase shares of the
Company's common stock ("Stock") and for the award of stock appreciation rights
("SARs") based on Stock. Options granted pursuant to the Plan may be incentive
stock options as defined in section 422 of the Internal Revenue Code of 1986 (as
from time to time amended, the "Code") (any option that is intended to qualify
as an incentive stock option being referred to herein as an "incentive option"),
or options that are not incentive options, or both. Options granted pursuant to
the Plan shall be presumed to be non-incentive options unless expressly
designated as incentive options.
2. ELIGIBILITY FOR AWARDS
Persons eligible to receive awards under the Plan shall be all directors,
including directors who are not employees, of the Company and all executive
officers of the Company and its subsidiaries and other employees, consultants
and advisers who, in the opinion of the Board, are in a position to make a
significant contribution to the success of the Company and its subsidiaries.
Incentive options shall be granted only to "employees" as defined in the
provisions of the Code or regulations thereunder applicable to incentive stock
options. A subsidiary for purposes of the Plan shall be a corporation in which
the Company owns, directly or indirectly, stock possessing 50% or more of the
total combined voting power of all classes of stock. Persons selected for awards
under the Plan are referred to herein as "participants."
3. ADMINISTRATION
The Plan shall be administered by the Board of Directors (the "Board") of
the Company. The Board shall have authority, not inconsistent with the express
provisions of the Plan, (a) to grant awards consisting of options or SARs, or
both, to such participants as the Board may select; (b) to determine the time or
times when awards shall be granted and the number of shares of Stock subject to
each award; (c) to determine which options are, and which options are not,
incentive options; (d) to determine the terms and conditions of each award; (e)
to prescribe the form or forms of any instruments evidencing awards and any
other instruments required under the Plan and to change such forms from time to
time; (f) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (g) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations of the Board shall be conclusive and shall
bind all parties. Subject to Section 8 the Board shall also have the authority,
both generally and in particular instances, to waive compliance by a participant
with any obligation to be performed by the participant under an award, to waive
any condition or provision of an award, and to amend or cancel any award (and if
an award is canceled, to grant a new award on such terms as the Board shall
specify) except that the Board may not take any action with respect to an
outstanding award that would adversely affect the rights of the participant
under such award without such participant's consent.
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Nothing in the preceding sentence shall be construed as limiting the power of
the Board to make adjustments required by Section 5(c) and Section 6(j).
The Board may, in its discretion, delegate some or all of its powers with
respect to the Plan to a committee (the "Committee"), in which event all
references in this Plan (as appropriate) to the Board shall be deemed to refer
to the Committee. The Committee, if one is appointed, shall consist of at least
two directors. A majority of the members of the Committee shall constitute a
quorum, and all determinations of the Committee shall be made by a majority of
its members. Any determination of the Committee under the Plan may be made
without notice or meeting of the Committee by a writing signed by a majority of
the Committee members.
4. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date on which it is approved by the
shareholders of the Company. Grants of awards under the Plan may be made prior
to that date (but contemporaneous with or after Board adoption of the Plan),
subject to approval of the Plan by such shareholders.
No awards shall be granted under the Plan after the completion of ten years
from the date on which the Plan was adopted by the Board, but awards previously
granted may extend beyond that date.
5. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section 5(c),
the aggregate number of shares of Stock that may be delivered upon the exercise
of awards granted under the Plan shall be 1,500,000. If any award granted under
the Plan terminates without having been exercised in full, or upon exercise is
satisfied other than by delivery of Stock, the number of shares of Stock as to
which such award was not exercised shall be available for future grants within
the limits set forth in this Section 5(a).
The maximum number of shares for which options may be granted to any
individual over the life of the Plan shall be 750,000. The maximum number of
shares subject to SARs granted to any individual over the life of the Plan shall
likewise be 750,000. The per-individual limitations described in this paragraph
shall be construed and applied consistent with the rules and regulations under
Section 162(m) of the Code.
(b) Shares to be Delivered. Shares delivered under the Plan shall be
authorized but unissued Stock or, if the Board so decides in its sole
discretion, previously issued Stock acquired by the Company and held in its
treasury. No fractional shares of Stock shall be delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
stock, the number and kind of shares of Stock subject to awards then outstanding
or subsequently granted under the Plan, the exercise price of such awards, the
maximum number of shares of Stock that may be delivered under the Plan, and
other relevant provisions shall be appropriately adjusted by the Board, whose
determination shall be binding on all persons.
The Board may also adjust the number of shares subject to outstanding
awards and the exercise price and the terms of outstanding awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, consolidations or mergers (except those described in
Section 6(j)), acquisitions or dispositions of stock or property or any other
event if it is determined by the Board that such adjustment is appropriate to
avoid distortion in the operation of the Plan, provided that no such adjustment
shall be made in the case of an incentive option without the consent of the
participant, if it would constitute a modification, extension or renewal of the
option within the meaning of section 424(h) of the Code.
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<PAGE> 24
6. TERMS AND CONDITIONS OF OPTIONS AND SARS
(a) Exercise Price of Options and SARs. The exercise price of each option
or SAR shall be determined by the Board but in the case of an incentive option
shall not be less than 100% (110% in the case of an incentive option granted to
a ten-percent shareholder) of the fair market value of the Stock at the time the
option is granted; nor shall the exercise price be less, in the case of an
original issue of authorized stock, than par value. For this purpose, "fair
market value" in the case of incentive options shall have the same meaning as it
does in the provisions of the Code and the regulations thereunder applicable to
incentive options; and "ten-percent shareholder" shall mean any participant who
at the time of grant owns directly, or by reason of the attribution rules set
forth in Section 424(d) of the Code, is deemed to own stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
of any of its parent or subsidiary corporations.
(b) Duration of Options and SARs. Options and SARs shall be exercisable
during such period or periods as the Board may specify. The latest date on which
an option or SAR may be exercised (the "Final Exercise Date") shall be the date
that is ten years (five years, in the case of an incentive option granted to a
"ten-percent shareholder" as defined in (a) above) from the date the option or
SAR was granted or such earlier date as the Board may specify at the time the
option or SAR is granted.
(c) Exercise of Options and SARs.
1. Options and SARs shall become exercisable at such time or times and upon
such conditions as the Board shall specify. In the case of an option or
an SAR not immediately exercisable in full, the Board may at any time
accelerate the time at which all or any part of the option or SAR may be
exercised.
2. Options and SARs may be exercised only in writing. Written notice of
exercise must be signed by the proper person and furnished to the
Company, together with (i) such documents as the Board may require and
(ii) in the case of options, payment in full as specified below in
Section 6(d) for the number of shares for which the option is exercised.
3. The delivery of Stock upon the exercise of an option or an SAR shall be
subject to compliance with (i) applicable federal and state laws and
regulations, (ii) if the outstanding Stock is at the time listed on any
stock exchange, the listing requirements of such exchange, and (iii)
Company counsel's approval of all other legal matters in connection with
the issuance and delivery of such Stock. If the sale of Stock has not
been registered under the Securities Act of 1933, as amended, the
Company may require, as a condition to exercise of the option or SAR,
such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that
the certificates evidencing such Stock bear an appropriate legend
restricting transfer.
4. In the case of an option that is not an incentive option or an SAR, the
Board shall have the right to require that the participant exercising
the option remit to the Company an amount sufficient to satisfy any
federal, state, or local withholding tax requirements (or make other
arrangements satisfactory to the Company with regard to such taxes)
prior to the delivery of any Stock pursuant to the exercise of the
option. If permitted by the Board, either at the time of the grant of
the option or SAR or the time of exercise, the participant may elect, at
such time and in such manner as the Board may prescribe, to satisfy such
withholding obligation by (i) delivering to the Company Stock (which in
the case of Stock acquired from the Company shall have been owned by the
participant for at least six months prior to the delivery date) having a
fair market value equal to such withholding obligation, or (ii)
requesting that the Company withhold from the shares of Stock to be
delivered upon the exercise a number of shares of Stock having a fair
market value equal to such withholding obligation.
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<PAGE> 25
In the case of an incentive option, if at the time the option is
exercised the Board determines that under applicable law and regulations
the Company could be liable for the withholding of any federal or state
tax with respect to a disposition of the Stock received upon exercise,
the Board may require as a condition of exercise that the participant
exercising the option agree (i) to inform the Company promptly of any
disposition (within the meaning of Section 424(c) of the Code and the
regulations thereunder) of Stock received upon exercise, and (ii) to give
such security as the Board deems adequate to meet the potential liability
of the Company for the withholding of tax, and to augment such security
from time to time in any amount reasonably deemed necessary by the Board
to preserve the adequacy of such security.
5. If an option or an SAR is exercised by the executor or administrator of
a deceased participant, or by the person or persons to whom the option
has been transferred by the participant's will or the applicable laws of
descent and distribution, the Company shall be under no obligation to
deliver Stock pursuant to such exercise until the Company is satisfied
as to the authority of the person or persons exercising the option or
SAR.
(d) Payment for and Delivery of Stock. Stock purchased upon exercise of an
option under the Plan shall be paid for as follows:
1. in cash or by personal check, certified check, bank draft or money order
payable to the order of the Company; or
2. if so permitted by the Board (which, in the case of an incentive option,
shall specify the method of payment at the time of grant), (a) through
the delivery of shares of Stock (which, in the case of Stock acquired
from the Company, shall have been held for at least six months prior to
delivery) having a fair market value on the last business day preceding
the date of exercise equal to the purchase price or (b) by delivery of a
promissory note of the participant to the Company, such note to be
payable on such terms as are specified by the Board or (c) by delivery
of an unconditional and irrevocable undertaking by a broker to deliver
promptly to the Company sufficient funds to pay the exercise price or
(d) by any combination of the permissible forms of payment; provided,
that if the Stock delivered upon exercise of the option is an original
issue of authorized Stock, at least so much of the exercise price as
represents the par value of such Stock shall be paid other than by a
personal check or promissory note of the person exercising the option.
(e) Stock Appreciation Rights. The Board in its discretion may grant SARs
either in tandem with or independent of options awarded under the Plan. Except
as hereinafter provided, each SAR shall entitle the participant to receive upon
exercise, with respect to each share of Stock to which the SAR relates, the
excess of (i) the share's value on the date of exercise over (ii) the share's
fair market value on the date the SAR was granted. For purposes of clause (i),
"value" shall mean fair market value; provided, that the Board may adjust such
value to take into account dividends on the Stock and may also grant SARs that
provide, in such limited circumstances following a change in control of the
Company (as determined by the Board) as the Board may specify, that "value" for
purposes of clause (i) is to be determined by reference to an average value for
the Stock during a period immediately preceding the change in control, all as
determined by the Board. The amount payable to a participant upon exercise of an
SAR shall be paid either in cash or in shares of Stock, as the Board determines.
Each SAR shall be exercisable during such period or periods and on such terms as
the Board may specify. In no event, however, shall an SAR be exercisable after
the date that is ten years from the date of grant.
(f) Rights as Shareholder. A participant shall not have the rights of a
shareholder with regard to awards under the Plan except as to Stock actually
received by the participant under the Plan.
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<PAGE> 26
(g) Nontransferability of Awards. Except as the Board may otherwise
determine, no award may be transferred other than by will or by the laws of
descent and distribution, and during a participant's lifetime an award may be
exercised only by the participant.
(h) Death. If a participant dies, each option and SAR held by the
participant immediately prior to death may be exercised, to the extent it was
exercisable immediately prior to death, by the participant's executor or
administrator or by the person or persons to whom the option or SAR is
transferred by will or the applicable laws of descent and distribution, at any
time within the one-year period (or such longer or shorter period as the Board
may determine) beginning with the date of the participant's death but in no
event beyond the Final Exercise Date. All options and SARs held by a participant
immediately prior to death that are not then exercisable shall terminate on the
date of death.
(i) Termination of Service Other Than By Death. If an employee's
employment with the Company and its subsidiaries terminates for any reason other
than by death, all options and SARs held by the employee that are not then
exercisable shall terminate. Options and SARs that are exercisable on the date
employment terminates shall continue to be exercisable for a period of three
months (or such longer period as the Board may determine, but in no event beyond
the Final Exercise Date) unless the employee was discharged for cause that in
the opinion of the Board casts such discredit on the employee as to justify
termination of the employee's options and SARs. After completion of the
post-termination exercise period, such options and SARs shall terminate to the
extent not previously exercised, expired or terminated. For purposes of this
Section 6(i), employment shall not be considered terminated (i) in the case of
sick leave or other bona fide leave of absence approved for purposes of the Plan
by the Board, so long as the employee's right to reemployment is guaranteed
either by statute or by contract, or (ii) in the case of a transfer of
employment between the Company and a subsidiary or between subsidiaries, or to
the employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option or SAR in a transaction to which
Section 424(a) of the Code applies.
In the case of a participant who is not an employee, provisions relating to
the exercisability of options and SARs following termination of service shall be
specified in the award. If not so specified, all options and SARs held by such
participant that are not then exercisable shall terminate upon termination of
service. Options and SARs that are exercisable on the date the participant's
service as a director, consultant or adviser terminates shall continue to be
exercisable for a period of three months (or such longer period as the Board may
determine, but in no event beyond the Final Exercise Date) unless the director,
consultant or adviser was terminated for cause that in the opinion of the Board
casts such discredit on him or her as to justify termination of his or her
options and SARs. After completion of the post-termination exercise period, such
options and SARs shall terminate to the extent not previously exercised, expired
or terminated.
(j) Mergers, etc. In the event of a consolidation or merger in which the
Company is not the surviving corporation or which results in the acquisition of
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or in the event of
the sale or transfer of substantially all the Company's assets, all outstanding
awards shall thereupon terminate, provided that all outstanding awards shall
become exercisable immediately prior to consummation of such merger,
consolidation or sale of assets unless, if there is a surviving or acquiring
corporation, the Board has arranged, subject to consummation of the merger,
consolidation or sale of assets, for the assumption of the awards or the grant
to participants of replacement awards by that corporation or an affiliate of
that corporation, which awards in the case of incentive options shall satisfy
the requirements of Section 424(a) of the Code.
The Board may grant awards under the Plan in substitution for awards held
by directors, employees, consultants or advisers of another corporation who
concurrently become directors, employees, consultants or advisers of the Company
or a subsidiary of the Company as the result of a merger or consolidation of
that
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<PAGE> 27
corporation with the Company or a subsidiary of the Company, or as the result of
the acquisition by the Company or a subsidiary of the Company of property or
stock of that corporation. The Company may direct that substitute awards be
granted on such terms and conditions as the Board considers appropriate in the
circumstances.
7. EMPLOYMENT RIGHTS
Neither the adoption of the Plan nor the grant of awards shall confer upon
any participant any right to continue as an employee or director of, or
consultant or adviser to, the Company or any parent or subsidiary or affect in
any way the right of the Company or parent or subsidiary to terminate them at
any time. Except as specifically provided by the Board in any particular case,
the loss of existing or potential profit in awards granted under this Plan shall
not constitute an element of damages in the event of termination of the
relationship of a participant even if the termination is in violation of an
obligation of the Company to the participant by contract or otherwise.
8. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of awards to a participant shall
affect the Company's right to make awards to such participant that are not
subject to the Plan, to issue to such participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued.
The Board may at any time discontinue granting awards under the Plan. With
the consent of the participant, the Board may at any time cancel an existing
award in whole or in part and grant another award for such number of shares as
the Board specifies. The Board may at any time or times amend the Plan or any
outstanding award for the purpose of satisfying the requirements of Section 422
of the Code or of any changes in applicable laws or regulations or for any other
purpose that may at the time be permitted by law, or may at any time terminate
the Plan as to further grants of awards, but no such amendment shall adversely
affect the rights of any participant (without the participant's consent) under
any award previously granted.
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<PAGE> 28
SUMMIT TECHNOLOGY, INC.
PROXY FOR SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF STOCKHOLDERS JUNE 25, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Peter E. Litman proxy of the undersigned, with
power of substitution, to act for and to vote all shares of Summit Technology,
Inc. common stock owned by the undersigned upon the matters set forth in the
Notice of said Meeting and the related Proxy Statement, at the Special Meeting
in Lieu of the Annual Meeting of Stockholders to be held at The Westin Hotel,
70 Third Avenue, Waltham, Massachusetts, at 9:00 a.m. on June 25, 1997, and any
adjournments thereof. The proxies, and either one of them, are further
authorized to vote, in their discretion, upon such other business as may
properly come before the meeting, or any adjournments thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
SEE REVERSE
SIDE
<PAGE> 29
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
1. Election of Director:
FOR WITHHELD
NOMINEE FOR NOMINEE
/ / / /
NOMINEE: Richard F. Miller
2. Approval of 1997 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of Amendment of Articles of Organization and By-Laws Increasing
Number of Directors from Five to Seven
FOR AGAINST ABSTAIN
/ / / / / /
Your shares will be voted in accordance with your instructions. If you sign
this proxy but do not indicate how to vote on a particular proposal, your
shares will be voted FOR each of these proposals.
Check here for address change and write new
address on the reverse side of this proxy. / /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S) ________________________________________ Dated: ____________, 1997
(Note: Please sign exactly as your name appears hereon. When shares are held by
joint tenants, both should sign. Fiduciaries and corporate officers should
indicate their full titles.)
