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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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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(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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Notes:
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SUMMIT TECHNOLOGY, INC.
21 HICKORY DRIVE
WALTHAM, MA 02451
Dear Summit Stockholder:
It is a pleasure to invite you to our 1999 annual meeting on Tuesday, June
15, beginning at 10:00 a.m. local time, at the BankBoston Conference and
Training Center, 100 Federal Street, Boston, Massachusetts 02110. I hope that
those who find the time and place convenient will attend the meeting.
Whether you own a few or many shares 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,
/s/ Robert J. Palmisano
_____________________________________
ROBERT J. PALMISANO
Chief Executive Officer
<PAGE>
SUMMIT TECHNOLOGY, INC.
21 HICKORY DRIVE
WALTHAM, MA 02451
----------------------------------------------
NOTICE OF
1999 ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------------
Summit Technology, Inc. will hold our 1999 annual meeting of stockholders on
Tuesday, June 15, 1999 at 10:00 A.M. at the BankBoston Conference and Training
Center, 100 Federal Street, Boston, Massachusetts 02110, to consider and act
upon the following matters:
1. To elect two directors to serve for three-year terms;
2. To approve Summit's 1999 Outside Directors' Compensation Plan; and
3. To transact any other business that may properly come before the meeting
or any adjournment of the meeting.
Stockholders of record at the close of business on April 26, 1999 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
/s/ James A. Lightman
_____________________________________
JAMES A. LIGHTMAN, Clerk
April 30, 1999
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>
SUMMIT TECHNOLOGY, INC.
21 HICKORY DRIVE
WALTHAM, MA 02451
----------------
PROXY STATEMENT FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
JUNE 15, 1999
----------------
Information about the Annual Meeting and Voting
The annual meeting
Our annual meeting will be held on June 15, 1999 at the BankBoston
Conference and Training Center, 100 Federal Street, Boston, Massachusetts
02110. At the meeting, stockholders will be asked to elect two directors,
approve a compensation plan for outside directors and act on any other
business that may properly come before the meeting. We do not know of any
matters other than those discussed in this proxy statement that may come
before the meeting. Our management will also report on our performance during
the past year, discuss our acquisition of Autonomous Technologies Corporation
and respond to appropriate questions from stockholders.
Who is entitled to attend and vote at the meeting?
Stockholders of record at the close of business on April 26, 1999 are
entitled to attend and vote at the meeting. Each share of common stock is
entitled to one vote.
What will constitute a quorum at the meeting?
Holders of a majority of our outstanding shares on the record date must be
present at the meeting, either in person or by proxy, to establish a quorum.
On the record date, we had 31,188,420 shares of common stock outstanding.
Proxies that we receive that are marked "withhold" or "abstain" will be
considered present at the meeting for purposes of establishing a quorum.
How do I vote by proxy?
If you hold your share in your name, you should sign and date the enclosed
proxy card and return it in the envelope provided. If you hold your shares in
"street name", the proxy card that accompanies this proxy statement represents
an instruction to your broker, who is the record holder, on how to vote the
shares. The proxy card contains instructions on how to instruct your broker
and you may do so by signing and mailing the card in the envelope or using the
telephone number or internet address provided on the card.
If you sign the card but do not indicate how you would like your shares
voted, the persons named as your proxies will vote FOR the election of both
director nominees and FOR the approval of the outside directors' compensation
plan. In addition, if any other matters are brought before the meeting, your
proxies will vote in their discretion. At present, we do not know of any other
matters that will be brought before the meeting.
What if I fail to instruct my broker how to vote?
The rules of the New York Stock Exchange allow your broker to vote your
shares on the director nominees and on the outside directors' compensation
plan even if you do not provide the broker with instructions.
1
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Can I change my vote after I return my proxy card?
If you hold your shares directly, you can change your vote at any time
before the meeting by:
. Filing with the Clerk of Summit a written notice revoking your earlier
vote;
. Submitting a later-dated proxy card to our transfer agent; or
. Voting in person at the meeting.
If you hold your shares in "street name", you must contact your broker to
revoke your proxy.
How do I vote in person?
If you plan to attend the meeting to vote in person, we will give you a
ballot when you arrive. If your shares are held in the name of your broker or
another nominee, you should bring an account statement or letter from the
nominee indicating that you were the beneficial owner of the shares on April
26, 1999, the record date.
What vote is required to approve each proposal?
. For the election of directors, the nominees who receive the most votes
will be elected no matter how many votes are cast. Therefore, if you do
not vote for a particular nominee, or if you withhold authority for one
or all of the nominees, your vote will not count either for or against
the nominee. In any event, your shares will count to establish a quorum.
. For the approval of the outside directors' compensation plan, the
required vote is a majority of the shares of common stock outstanding.
Therefore, if you abstain or otherwise do not vote on this proposal, it
will have the effect of a vote against the approval of the plan.
Is management soliciting proxies?
Yes. We will solicit proxies, principally through the mailing of this proxy
statement. However, our officers and employees may also make solicitations by
telephone or in person. We may also enlist the assistance of brokerage houses,
custodians and other third parties. We will bear all solicitation expenses,
including the cost of preparing, assembling and mailing this proxy statement.
This Proxy Statement and the accompanying proxy card and Annual Report are
being mailed to stockholders on or about May 10, 1999.
2
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PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
Our articles of organization and by-laws fix the number of directors at
seven and divide the Board into three classes. Each director serves a three-
year term. Two directors will be elected at this meeting for terms ending at
the annual meeting of stockholders for the year 2002 and until their
successors are elected and qualified. The Board has nominated John A. Norris
and Robert J. Palmisano for re-election as directors. Their business
experience and qualifications are summarized below:
John A. Norris was first elected to the Board in May 1990. 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 he founded. 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.
Robert A. Palmisano was first elected to the Board in April 1997 when he
joined Summit as Chief Executive Officer. 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 the Eyewear Division. From
January 1996 to April 1997, Mr. Palmisano was a private consultant. Mr.
Palmisano holds a BA from Providence College.
The Board knows of no reason why either of the nominees would be unable to
serve as a director. If for some reason either nominee is unable to serve, the
enclosed proxy will be voted for a substituted nominee designated by the
Board.
The Board recommends that you vote for "FOR" the re-election of Mr. Norris
and Mr. Palmisano as directors.
3
<PAGE>
PROPOSAL NUMBER TWO
APPROVAL OF 1999 OUTSIDE DIRECTORS' COMPENSATION PLAN
The Board adopted the 1999 Outside Directors' Compensation Plan in December
1998, to be effective on January 1, 1999, subject to shareholder approval. The
plan is designed to assist us in recruiting and retaining highly qualified
directors, to compensate directors for their contributions and services to
Summit and to strengthen the commonality of interest between directors and
stockholders. Because the plan provides for the issuance of our common stock
to directors, the rules of the Nasdaq National Market require that we obtain
stockholder approval. The following description summarizes the material
features of the plan. It may not contain all the information you would be
interested in knowing. We encourage you to review the entire text of the plan
which appears as Exhibit A to this proxy statement.
General. All directors who are not Summit employees, referred to as outside
directors, are eligible to participate in the plan. There are currently five
outside directors: Mr. Bernfeld, Dr. Bradley, Mr. Miller, Mr. Norris and Mr.
Traskos. The Board will administer the plan, although it may delegate this
responsibility to a committee. The plan provides a comprehensive compensation
arrangement for eligible directors in the form of cash, stock options and
restricted stock. We have reserved 200,000 shares for issuance under the plan,
although that number is subject to adjustment for recapitalizations, stock
dividends or similar events. If a director forfeits any shares of restricted
stock or fails to exercise any stock option granted under the plan, those
shares will be available for future awards or grants under the plan.
Compensation. Outside directors will receive the following compensation
under the plan:
. An annual retainer payable on the first day of each year, which will be
paid one-half in cash and one-half in restricted stock as described
below. For 1999, the annual retainer will be $10,000. An additional
retainer will be paid in cash to directors who serve on a committee of
the Board. For 1999, this amount will be $1,000 per committee
membership. These amounts may be adjusted in future years in the Board's
discretion. The restricted stock portion of the annual retainer will
vest in four equal installments at the end of each quarter. The director
will forfeit any restricted stock that has not vested if he ceases to be
a director other than because of death, disability or retirement. The
restrictions, however, do not apply to the stock portion of the annual
retainer awarded on January 1, 1999.
. Meeting fees for attending each regularly scheduled Board meeting.
Meeting fees are $2,000 for 1999, payable one-half in cash and one-half
in shares of common stock that are not restricted. Meeting fees for
special meetings of the Board are $2,000 payable wholly in cash.
. Committee fees paid for attending a Board committee meeting. Committee
fees, which are payable in cash, are $500 for 1999.
. Stock options. Outside directors will also receive an option to purchase
5,000 shares of our common stock on a date in each July to be determined
by the Board, beginning July 1999. Outside directors who join the board
after January 1, 1999 will receive an option on the date they join the
board to purchase 10,000 shares. The terms of these stock options are
discussed more fully below.
Restricted Stock. Outside directors will have the right to vote and execute
proxies on the restricted stock and to receive cash dividends at any time
after they receive a grant of stock, and any other distribution when the
applicable restrictions lapse. If an outside director dies, becomes
permanently disabled or retires, the restrictions on any restricted stock that
director holds will lapse.
Stock Options. Except as the Board may otherwise determine, stock options
will vest and become exercisable immediately on the date of grant, and will
expire ten years following the date of grant. No stock options may be repriced
without approval of the stockholders. Except as the Board may otherwise
determine, stock options will be transferable only by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order.
If an outside director dies, becomes permanently disabled or retires, each
stock option
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then held by such director will vest and become immediately exercisable. In no
event may a stock options be exercised more than one year after the date of
the director's death, permanent disability or retirement, or after the date
the stock options terminate, whichever is earlier.
Mergers; Other Events. In the event of a merger, consolidation or other
transaction in which Summit is acquired, dissolved or liquidated, or in which
we sell substantially all of our assets, the restrictions on all shares of
restricted stock will lapse, and all stock options will terminate. Before that
termination, however, all stock options that will not have vested as of the
effective date of the transaction will vest and become exercisable 20 days
before the effective date. If the transaction is a merger or consolidation
intended to qualify as a pooling of interests for accounting purposes, then
the acquiring or surviving corporation will assume or provide replacement
options for all stock options outstanding under the plan. These options will
be on terms and conditions substantially equivalent to those of the plan, will
be immediately exercisable and, except as to outside directors who become
directors of the acquiring or surviving corporation, will terminate on the
180th day following the completion of the merger or consolidation.
Amendment. The Board may at any time amend or discontinue the plan and amend
or cancel any outstanding stock option or restricted stock award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding restricted
stock award or stock option without the holder's consent.
NEW PLAN BENEFITS
1999 Outside Directors' Compensation Plan
<TABLE>
<CAPTION>
Number
Name and Position of Options Cash ($)(1)
----------------- ---------- -----------
<S> <C> <C>
Non-Executive Director Group.......................... 23,333 96,666
</TABLE>
- --------
(1) Assumes four regularly scheduled meetings of the Board and of each
committee of the Board. As described above, a portion of the cash amount
will be paid in shares of our common stock.
The Board recommends that you vote "FOR" this proposal.
5
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OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding the beneficial
ownership of Summit's common stock on April 15, 1999, (i) by each person who
is known by Summit to own beneficially more than five percent (5%) of the
outstanding shares of Summit's common stock, (ii) by each of Summit's
directors, (iii) by each of the 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>
Gilder Gagnon Howe & Co. LLC
1775 Broadway, 26th Floor
New York, NY 10019............................. 1,649,350(3) 5.29%
Jeffrey A. Bernfeld.............................. 44,534(4) *
C. Glenn Bradley................................. -- --
Randy W. Frey.................................... -- --
Richard F. Miller................................ 34,934(5) *
John A. Norris................................... 48,642(6) *
Richard M. Traskos............................... 47,113(7) *
Robert J. Palmisano.............................. 201,000(8) *
D. Verne Sharma.................................. 100,800(9) *
Robert J. Kelly.................................. 36,334(10) *
Peter E. Litman.................................. 147,924(11) *
Menderes Akdag................................... 22,885(12) *
All Executive Officers and Directors as a Group
(19 persons).................................... 888,401 2.85%
</TABLE>
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* Less than 1% of the outstanding common stock.
(1) Summit 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 pursuant to
stock options which may be exercised within 60 days of April 15, 1999.
(2) Determined on the basis of 31,188,341 shares outstanding, except that
shares underlying options exercisable within 60 days of April 15, 1999
are deemed outstanding for calculating the percentage owned by holders
thereof.
(3) As reported on a Schedule 13G dated April 11, 1999, members and/or
employees of Gilder Gagnon Howe & Co. LLC have discretionary authority to
dispose or direct the disposition of the reported shares which are held
in customer accounts.
(4) Includes options to purchase 41,834 shares of common stock.
(5) Includes options to purchase 33,334 shares of common stock.
(6) Includes options to purchase 41,834 shares of common stock.
(7) Includes options to purchase 41,834 shares of common stock.
(8) Includes options to purchase 200,000 shares of common stock.
(9) Includes options to purchase 100,000 shares of common stock and 800
shares held in Summit's 401(k) plan.
(10) Includes options to purchase 33,334 shares of common stock.
(11) Includes options to purchase 146,374 shares of common stock and 1,550
shares held in Summit's 401(k) plan.
(12) Includes options to purchase 5,000 shares of common stock.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning our executive
officers and directors.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Robert J. Palmisano....... 54 Director and Chief Executive Officer
D. Verne Sharma........... 49 President and Chief Operating Officer
Randy W. Frey............. 41 Director, Executive Vice President, and
President, Autonomous Technologies Corporation
Robert J. Kelly........... 54 Executive Vice President, Chief Financial
Officer and Treasurer
Peter E. Litman........... 48 Executive Vice President, Corporate Business
Development
Eric P. Ankerud........... 42 Vice President, Quality, Regulatory and
Clinical Affairs
John P. Coffidis.......... 49 Vice President, Global Customer Support
P. Bernard Haffey......... 36 Vice President, Sales and Marketing
Peter J. Klopotek......... 46 Vice President, Science and Technology
James A. Lightman......... 41 Vice President, General Counsel and Clerk
Bernard R. Patriacca...... 55 Vice President and Controller
James L. Richey........... 51 Vice President, Operations
Alex C. Sacharoff......... 42 Vice President, Research & Development
Menderes Akdag............ 38 President, Lens Express, Inc.
Jeffrey A. Bernfeld (2)... 41 Director
C. Glenn Bradley.......... 56 Director
Richard F. Miller (l)..... 47 Director
John A. Norris............ 52 Director
Richard M. Traskos (1,2).. 51 Director
</TABLE>
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(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
ROBERT J. PALMISANO, DIRECTOR AND CHIEF EXECUTIVE OFFICER
Mr. Palmisano, 54, joined Summit in April 1997 as Chief Executive Officer
and a member of the Board. 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 the Eyewear Division. From January 1996 to
April 1997, Mr. Palmisano was a private consultant. Mr. Palmisano holds a BA
from Providence College.
D. VERNE SHARMA, PRESIDENT AND CHIEF OPERATING OFFICER
Mr. Sharma, 49, joined Summit 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.
RANDY W. FREY, DIRECTOR, EXECUTIVE VICE PRESIDENT, AND PRESIDENT, AUTONOMOUS
TECHNOLOGIES CORPORATION
Mr. Frey, 41, was elected to the Board in April 1999 for a term expiring in
2001. Mr. Frey is an Executive Vice President of Summit and is President of
Autonomous Technologies Corporation, a wholly-owned subsidiary of Summit. From
1985 to March 1998, and again since October 1998, Mr. Frey was President of
Autonomous.
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ROBERT J. KELLY, EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
TREASURER
Mr. Kelly, 54, joined Summit in November 1997 as Executive Vice President,
Chief Financial Officer and Treasurer. From 1972 to 1997 Mr. Kelly was
employed by Bull HN Information Systems Inc., where he served from 1992 to
February 1997 as Executive Vice President and Chief Financial Officer. Mr.
Kelly holds an MBA from Harvard Business School and a BS from the University
of Massachusetts.
ERIC P. ANKERUD, VICE PRESIDENT, QUALITY, REGULATORY AND CLINICAL AFFAIRS
Mr. Ankerud, 42, joined Summit in July 1997 as Vice President of Quality,
Regulatory and Clinical Affairs. From 1994 to 1997 Mr. Ankerud served as
Director of Corporate Regulatory Affairs at Bausch and Lomb, Inc. From 1991 to
1994, Mr. Ankerud was Vice President of Regulatory Affairs for the Surgical
Products Group at C.R. Bard, Inc. Mr. Ankerud holds a JD from the Faculty of
Law and Jurisprudence, SUNY at Buffalo and a BA in economics from St. Lawrence
University.
JOHN P. COFFIDIS, VICE PRESIDENT, GLOBAL CUSTOMER SUPPORT
Mr. Coffidis, 49, joined Summit in November 1987 and was promoted to Vice
President, Global Customer Support in August 1997. Mr. Coffidis previously
served with Johnson and Johnson ("J&J") in the Medical Instrumentation
Division from 1973 to 1987. During his employment with J & J, Mr. Coffidis
served ten years in Europe as International Customer Support Manager. Mr.
Coffidis holds a Masters Degree in Management from Cambridge College and a BA
in biology from the University of Massachusetts.
P. BERNARD HAFFEY, VICE PRESIDENT, SALES AND MARKETING
Mr. Haffey, 36, joined Summit in September 1997 as Vice President, Sales and
Marketing. Prior to joining Summit, Mr. Haffey was employed since 1990 at
Mentor Opthalmics, Inc., most recently serving as the Vice President of
Marketing and Sales. Mr. Haffey holds an MBA from Cornell University and a BA
from Colgate University.
PETER J. KLOPOTEK, VICE PRESIDENT, SCIENCE AND TECHNOLOGY
Dr. Klopotek, 46, joined Summit 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 Summit, 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 MS in electrical engineering.
JAMES A. LIGHTMAN, VICE PRESIDENT, GENERAL COUNSEL AND CLERK
Mr. Lightman, 41, joined Summit in February 1996 as Assistant General
Counsel and was promoted to Vice President and General Counsel in January
1998. Prior to joining Summit, Mr. Lightman was a member of Goldstein and
Manello, P.C., a Boston law firm which he joined in 1984. Mr. Lightman holds a
JD from Boston University Law School and a BS from Boston University School of
Management.
PETER E. LITMAN, EXECUTIVE VICE PRESIDENT, CORPORATE BUSINESS DEVELOPMENT
Mr. Litman, 48, joined Summit in September 1990 as Vice President and
General Counsel and was promoted to Executive Vice President of Corporate
Business Development in January 1998. Prior to joining Summit, Mr. Litman was
a member of Goldstein and Manello, P.C., a Boston law firm. Mr. Litman holds a
JD from Columbia University School of Law and a BA from the University of
Pennsylvania.
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BERNARD R. PATRIACCA, VICE PRESIDENT AND CONTROLLER
Mr. Patriacca, 55, joined Summit in November 1997. From 1973 to 1991, Mr.
Patriacca was employed in various capacities at Dunkin Donuts, Inc., including
Chief Financial Officer and a Director. From 1991 to 1994, Mr. Patriacca held
senior financial management positions at several privately-held consumer
services companies. From 1994 until joining Summit, Mr. Patriacca served as
Vice President of Errands Etc., Inc., a privately-held homeowners' personal
service company. Mr. Patriacca also serves as a Director of Video Update
Corporation, a publicly-held chain of video stores. Mr. Patriacca received a
BS and an MBA from Northeastern University.
JAMES L. RICHEY, VICE PRESIDENT, OPERATIONS
Mr. Richey, 51, joined Summit in September 1997 as Vice President of
Operations. Prior to joining Summit, Mr. Richey served since 1994 as Vice
President and General Manager of U.S. Operations for Datapoint Corporation, a
manufacturer of computer servers, operating systems, LANs and video
communication systems. Mr. Richey holds an MBA from Clark University, an MS in
Electrical Engineering from Northeastern University and a BS degree in
Electrical Engineering from Worcester Polytechnic Institute.
ALEX C. SACHAROFF, VICE PRESIDENT, RESEARCH AND DEVELOPMENT
Dr. Sacharoff, 42, joined Summit in April 1986 as Senior Staff Scientist and
has held a variety of positions in Summit's Research and Development Group
before being promoted to Vice President, 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 physics from Harvard
University and a BS degree in physics from Stevens Institute of Technology.
MENDERES AKDAG, PRESIDENT, LENS EXPRESS, INC.
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 Summit, 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.
JEFFREY A. BERNFELD, DIRECTOR
Mr. Bernfeld was elected to the Board in October 1988 and was re-elected in
1998 for a three-year term expiring in 2001. 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 member of the law firm of Goldstein &
Manello, P.C.
C. GLENN BRADLEY, DIRECTOR
Dr. C. Glenn Bradley, 56, was elected to the Board in April 1999 for a term
expiring in 2000. Dr. Bradley has been the Chief Executive Officer of CIBA
Vision Corporation since 1990.
RICHARD F. MILLER, DIRECTOR
Mr. Miller was elected to the Board in June 1988 and was re-elected in 1997
for a three-year term expiring in 2000. 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.
9
<PAGE>
JOHN A. NORRIS, DIRECTOR
Mr. Norris was elected to the Board in May 1990 and was re-elected in 1996.
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.
RICHARD M. TRASKOS, DIRECTOR
Mr. Traskos was first elected to the Board in March 1987 and was re-elected
in 1998 for a three-year term expiring in 2001. Mr. Traskos is a vice
president of Shoreline Insurance Co., Inc., a business insurance brokerage
firm located in Clinton, Connecticut. From March 1993 to September 1997, Mr.
Traskos was a vice president of Arthur A. Watson, Inc., a business insurance
brokerage firm located in Wethersfield, Connecticut. Before joining Arthur A.
Watson, 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. Our articles of organization provide that directors will
not be liable for monetary damages for breach of fiduciary duty except in the
case of breaches of the director's duty of loyalty, acts or omissions taken in
bad faith or involving intentional misconduct or knowing violations of law,
improper distributions to shareholders or loans to officers or directors or
transactions from which a director derived an improper personal benefit.
Shareholder Actions. Between August 1996 and February 1997 various
shareholder actions were commenced against Summit and certain of its officers
in the United States District Court for the District of Massachusetts (the
"District of Massachusetts") claiming, among other things, violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 arising out of
public statements made by defendants. The actions have been consolidated as In
re Summit Technology Securities Litigation, Civil Action No. 96-11589-JCT (the
"Securities Litigation"). Plaintiffs have obtained certification of the action
as a class action on behalf of all purchasers of Summit common stock, other
than defendants and persons and entities affiliated with them, between March
31, 1995 and July 3, 1996. They seek unspecified damages, interest, costs and
expenses.
On October 1, 1996 an additional action was commenced in the District of
Massachusetts against Summit, its directors, certain of its officers and the
four underwriters of Summit's October 1995 Common Stock offering claiming
violations of Sections 11, 12(2) and 15 of the Securities Act of 1933 arising
out of alleged material misstatements of fact in the registration statement
used in connection with the offering. The action was coordinated with the
Securities Litigation by order of the Court dated December 2, 1996. It also
seeks unspecified damages, interest, costs and expenses.
On December 20, 1996, a Summit stockholder filed in the District of
Massachusetts a derivative action, purportedly on behalf Summit, against
Summit as nominal defendant, its directors and certain of its present or
former officers. This action was consolidated with the Securities Litigation
by order of the Court entered July 22, 1997. The complaint alleges that the
conduct of the individual defendants has exposed Summit to the expense and
inconvenience of defending the Securities Litigation and has harmed Summit's
reputation, thereby limiting its access to capital markets. It also alleges
that the individual defendants improperly traded in Summit's common stock
based upon material non-public information.
10
<PAGE>
Indemnification of Directors and Officers. Our by-laws require us to
indemnify our officers, directors, employees and agents against all
liabilities and expenses they may incur on account of all actions threatened
or brought against them by reason of their services to Summit. 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 our best interests.
We maintain a director's and officer's liability insurance policy in the
aggregate amount of $5,000,000 on behalf of our directors and officers. The
insurance policy expires on October 31, 1999 unless renewed or earlier
terminated.
OTHER TRANSACTIONS AND RELATIONSHIPS
During 1997, we made a bridge loan to Robert Palmisano, our Chief Executive
Officer and a member of the Board, in the amount of $500,000, which was the
amount outstanding as of April 15, 1999. The loan is non-interest bearing and
is payable on demand.
See "Compensation Committee Interlocks and Insider Participation" for
information regarding transactions between Summit and a firm with which Mr.
Traskos is affiliated.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than ten percent of our
common stock, to file with the SEC initial reports of ownership and reports of
changes in ownership of our common stock and any other of our equity
securities. Officers, directors and greater than ten-percent stockholders must
furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based on our review of the copies of the reports furnished
to us and written representations that no other reports were required, during
1998, our officers, directors and greater than ten-percent beneficial owners
complied with all Section 16(a) filing requirements, except that Mr. Traskos
filed one late Form 4, covering one transaction, required to be filed in
January 1999.
INFORMATION CONCERNING THE
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held nine meetings during 1998. Each director then
serving attended more than 75% of such Board meetings and meetings of all
committees of the Board on which he served.
Summit has a standing Audit Committee of the Board, which provides the
opportunity for direct contact between our independent public auditors and the
Board. The Audit Committee met two times during 1998 to review the financial
results for 1997, to review the audit plan for 1998, to review the adequacy of
financial statement disclosures, to discuss our internal control policies and
procedures and to consider and recommend the selection of Summit's independent
auditor. The current Audit Committee members are Messrs. Miller and Traskos.
Summit also has a standing Compensation Committee of the Board, which
provides recommendations to the Board regarding compensation programs and
administers Summit's 1997 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 during 1998. The current Compensation Committee members are
Messrs. Bernfeld and Traskos.
Summit does not have a Nominating Committee.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table shows for the fiscal years ended December 31, 1998, 1997
and 1996 compensation paid or accrued by Summit to (i) our Chief Executive
Officer, and (ii) our four other most highly compensated executive officers
who were serving as executive officers as of December 31, 1998 (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------------------- ------------
Securities
Name and Other Underlying All Other
Principal Fiscal Salary Bonus Annual Options/ Compensation
Position Year ($) ($) Compensation ($) SAR's (#) ($)(1)
--------- ------ ------- ------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert Palmisano........ 1998 324,692 112,668 32,112(2) 40,000(3) 6,400
Chief Executive Officer 18,430(4) 2,446(5)
4,813(6)
1997 206,539 165,000 100,062(2) 300,000(3) --
11,562(4)
45,039(6)
1996 -- -- -- -- --
D. Verne Sharma......... 1998 275,738 25,000 -- 10,000(7) 9,600
President & Chief 1997 250,000 74,375 62,633(2) -- 472
Operating Officer 65,978(6)
1996 174,308 35,960 38,436(2) 100,000(7) --
10,000(7)
Robert J. Kelly......... 1998 238,846 59,234 -- 120,000(8) 5,338
Executive Vice 1997 30,962 -- -- 100,000(8) --
President 1996 -- -- -- -- --
Chief Financial Officer
& Treasurer
Peter Litman............ 1998 229,517 45,903 -- 3,689(9) 9,600
Executive Vice 1997 211,313 67,620 -- 100,000(9) --
President, Corporate 1996 187,502 -- -- 15,000(9) 2,996
Business Development
Menderes Akdag.......... 1998 220,022 93,948 -- 20,000(10) --
President 1997 204,552 119,322 -- -- --
Lens Express, Inc. 1996 156,940 -- -- 5,000(10) --
</TABLE>
- --------
(1) Except where otherwise noted, the indicated amounts represent Summit's
contributions to its 401(k) plan.
(2) Moving and relocation expenses reimbursed by Summit.
(3) During the year ended December 31, 1998, Mr. Palmisano received options
to purchase 40,000 shares of common stock. During the year ended December
31, 1997, Mr. Palmisano received options to purchase 300,000 shares of
common stock.
(4) During the year ended December 31, 1998, the indicated amount represents
an automobile allowance of $12,462 and imputed interest income of $5,968
because of a loan. During the year ended December 31, 1997, the indicated
amount represents an automobile allowance of $8,262 and imputed interest
income of $3,300 because of a loan.
(5) Summit's contribution to its Supplemental Deferral Plan.
(6) Employment tax paid on behalf of the employee by Summit.
(7) During the year ended December 31, 1998, Mr. Sharma received options to
purchase 10,000 shares of common stock. During the year ended December
31, 1996, Mr. Sharma received options to purchase 100,000 shares of
common stock and 10,000 shares of common stock of Refractive Centers
International, Inc., a former wholly-owned subsidiary of Summit.
(8) During the year ended December 31, 1998, Mr. Kelly received options to
purchase 120,000 shares of common stock. During the year ended December
31, 1997, Mr. Kelly received options to purchase 100,000 shares of common
stock, which have subsequently been canceled.
(9) During the year ended December 31, 1998, Mr. Litman received options to
purchase 3,689 shares of common stock. During the year ended December 31,
1996, Mr. Litman received options to purchase 100,000 shares of common
stock and 15,000 shares of common stock of Refractive Centers
International.
(10) During the year ended December 31, 1998, Mr. Akdag, the president of
Summit's Lens Express subsidiary and not an officer of Summit, received
options to purchase 20,000 shares of common stock. During the year ended
December 31, 1996, Mr. Akdag received options to purchase 5,000 shares of
common stock.
12
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates
of Stock Price
Appreciation for
Option Term
-----------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise of
Options/SARs Employees in Base Price Expiration
Name Granted (#)(1) Fiscal Year ($/Share) Date 5% ($) 10% ($)
---- -------------- ---------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Menderes Akdag.......... 20,000 3.34 3.50 09/01/2008 44,023 111,562
Robert Kelly............ 100,000(2) 16.72 4.53 10/22/2007 450,180 950,811
20,000 3.34 3.50 09/01/2008 44,023 111,562
Peter Litman............ 3,689 0.62 3.50 09/01/2008 8,120 20,578
Robert Palmisano........ 40,000 6.69 3.50 09/01/2008 88,045 223,124
D. Verne Sharma......... 10,000 1.67 3.50 09/01/2008 22,011 55,781
</TABLE>
- --------
(1) Except as otherwise noted, option vests in three equal installments
beginning 9/1/99.
(2)Option vests in three equal annual installments beginning 10/22/98.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired on Value FY-End (#) FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- ----------- -------- -------------------- ---------------
<S> <C> <C> <C> <C>
Menderes Akdag....... -- -- 5,000/2,000(1) /17,500
Robert Kelly......... -- -- 33,334/86,666(1) /17,500
Peter Litman......... -- -- 166,373/5,189(1) 900/3,228
Robert Palmisano..... -- -- 100,000/240,000(1) /35,000
D. Verne Sharma...... -- -- 100,000/10,000(1) /8,750
</TABLE>
- --------
(1) Options to purchase shares of common stock.
Compensation Of Directors. Summit 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. Summit
also pays each outside director $2,000 for each Board meeting attended and
$500 for each committee meeting attended.
In addition, during 1998 Summit's outside directors were eligible to
participate in the 1992 Stock Option Plan For Outside Directors. Under this
Plan, each outside director was granted on February 28, 1998 an option to
purchase 13,500 shares of common stock (at prices ranging from $5.50 to $25.31
per share). This Plan will be replaced by the 1999 Outside Directors'
Compensation Plan if that plan is approved at this annual meeting.
Employment Agreements. Robert J. Palmisano was elected as Summit's Chief
Executive Officer and a Director on April 15, 1997. Mr. Palmisano's employment
arrangement with Summit 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 has been
granted options to purchase 300,000 shares of Summit's common stock pursuant
to Summit's 1997 Stock Option Plan, at an exercise price of $5.63 per share.
In the event Mr. Palmisano's employment is terminated without cause, Mr.
Palmisano will be entitled to severance
13
<PAGE>
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 Summit,
Mr. Palmisano's severance payments will be equal to two years' base
compensation.
Randy W. Frey was elected as Summit's Executive Vice President and a
Director in April 1999. Mr. Frey's employment arrangement with Summit provides
that he will receive a base salary of $212,000 per year and will be eligible
for discretionary bonuses, based on criteria established from time to time. In
addition, Mr. Frey has been granted options to purchase 200,000 shares of
Summit's common stock pursuant to Summit's 1997 Stock Option Plan. The option
will be an incentive stock option to the fullest extent possible, with the
balance being a nonqualified option. The exercise price of the incentive stock
option portion will be the fair market value on the date of the grant, and the
exercise price of the nonqualified portion will be $5.625 per share. In the
event Mr. Frey's employment is terminated without cause, he will be entitled
to severance payments equal to one year's base compensation. In the event Mr.
Frey's employment terminates within twelve months of a change in control of
Summit, his severance payments will be equal to two years' base compensation.
All of Summit's executive officers, including Mr. Palmisano and Mr. Frey,
are employees-at-will.
Severance Agreements. Summit's Board of Directors has approved severance
agreements for its officers and director-level employees. These severance
arrangements become available only in the event of a "change of control" of
Summit and entitle covered employees to continuation of salary, standard
bonuses and benefits in the event they are terminated without cause after a
change of control or terminate their employment for "good reason" after a
change of control. The severance arrangements would not apply to a termination
for "cause" after a change of control. The arrangements approved by the Board
provide for salary continuation for (i) two (2) years for each of the Chief
Executive Officer, President and Executive Vice Presidents, (ii) one (1) year
for all other Vice Presidents and (iii) six (6) months for director-level
employees.
REPORT ON REPRICING OF OPTIONS/SAR's
Mr. Kelly joined Summit as Chief Financial Officer in October 1997. At that
time, he was granted an option to purchase 100,000 shares of common stock at
an exercise price of $9.125, which was the fair market value per share on the
date he joined Summit. At the time, the Summit common stock had been trending
up in relation to the trading range during the previous 60 days. After Mr.
Kelly received his option, that price of the stock returned to its normal
trading range and thus his option was significantly out of the money. The
Compensation Committee viewed this situation as one of unfortunate timing that
had the effect of penalizing Mr. Kelly for joining Summit when he did. As a
result, it concluded that it would be appropriate to reset the exercise price
of Mr. Kelly's option to the fair market value on the last day of 1997.
10-YEAR OPTION/SARs REPRICINGS
<TABLE>
<CAPTION>
Number of Length of
Securities Original
Underlying Option Term
Options/ Market Price of Exercise Remaining at
SARs Stock at Time of Price at Time of New Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended (#) Amendment ($)* Amendment($)* Price ($)* Amendment
---- ------- ----------- ---------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Kelly......... 4/30/98 100,000 5.688 9.125 4.531 9.5 years
</TABLE>
- --------
* Amounts stated are per share.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board consists of Mr. Traskos and Mr. Bernfeld.
Shoreline Insurance Agency, Inc., a firm with which Mr. Traskos is affiliated,
currently serves as one of Summit's insurance brokers. The aggregate premiums
paid for
14
<PAGE>
insurance placed by Shoreline on behalf of Summit in 1998 amounted to
approximately $369,104, which is less than five percent of 1997 consolidated
gross revenues of Summit and Shoreline. Summit believes that all transactions
with Shoreline are on terms no less favorable than those available from other
companies.
Notwithstanding anything to the contrary set forth in any of Summit's
previous filings with the SEC 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 are not incorporated by
reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE
The primary goals of the 1998 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 Summit's stockholders.
General Policies. For 1998, 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 Summit over the evaluation
period by reference to Summit'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. In setting base salary, the Committee takes into account
all components of an executive officer's compensation package, believing that
Summit's overall compensation packages place Summit'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 Summit 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. For 1998, Summit had in place an executive
incentive compensation plan designed to provide awards in addition to base
salary based on the achievement of specific performance goals. These
performance goals are based on corporate-wide and unit financial performance
as well as individual objectives. The financial performance goals are based
principally on revenues and operating results. Executive bonuses generally
range from 30% to 40% of base salary if performance goals are met and can be
higher if performance goals are substantially exceeded.
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 Summit's stock and executive compensation and that this method of
compensation allows Summit to conserve cash resources.
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 Summit's Human Resources staff in reaching its
determinations. The size of previous option grants is not an important factor
in determining current
15
<PAGE>
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. Summit 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 Summit. The
Compensation Committee has the power and authority to administer all
components of Summit's compensation program for executive officers of Summit.
Compensation Committee
Jeffrey A. Bernfeld
Richard M. Traskos
April 30, 1999
16
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph assumes an investment of $100 on December
31, 1993 and compares annual percentage changes thereafter in the market price
of Summit'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). Summit 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.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Summit Technology, Inc. $100 $137 $241 $39 $35 $34
NASDAQ Stock Market--U.S. $100 $98 $138 $170 $209 $293
Dow Jones Medical &
Biomedical Technology Index $100 $114 $195 $207 $267 $364
</TABLE>
SELECTION OF AUDITORS
Deloitte & Touche LLP ("Deloitte & Touche"), independent certified public
accountants, performed the audit of Summit's financial statements for 1998.
Representatives of Deloitte & Touche 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.
Summit has selected Deloitte & Touche as its independent auditors for the
year ending December 31, 1999.
Effective June 18, 1998, Summit retained Deloitte & Touche as its
independent public accountants and, on that same date, Summit terminated the
engagement of KPMG Peat Marwick LLP as its independent public accountants. The
engagement of Deloitte & Touche was recommended by the audit committee of
Summit's Board of Directors and approved by the Board.
The audit reports of KPMG Peat Marwick LLP on Summit's financial statements
for each of the past two years ended December 31, 1997 did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope, or accounting principles.
17
<PAGE>
In connection with the audits of Summit's financial statements for each of
the two years ended December 31, 1997 and in the subsequent interim period
through June 18, 1998, there were no disagreements between Summit and KPMG
Peat Marwick LLP on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope and procedures which, if not
resolved to the satisfaction of KPMG Peat Marwick LLP, would have caused it to
make reference to the subject matter of the disagreement in connection with
its report on the audited financial statements.
During Summit's two most recently completed years and through present date,
there have been no reportable events (as defined in Item 304 of Regulation S-
K) with KPMG Peat Marwick LLP and during such periods Summit has not consulted
Deloitte & Touche regarding the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on Summit's financial statements.
STOCKHOLDER PROPOSALS
In order to be included on the proxy statement and form of proxy for the
2000 Annual Meeting of Stockholders, stockholder proposals must be received by
Summit at its corporate offices in Waltham, Massachusetts, no later than
December 15, 1999.
Stockholders who wish to make a proposal at the 2000 Annual Meeting--other
than one that will be included in Summit's proxy materials--should notify
Summit no later than February 15, 1999. If a stockholder who wishes to present
a proposal fails to notify Summit by this date, the proxies that management
solicits for the meeting will have discretionary authority to vote on the
stockholder's proposal if it is properly brought before the meeting. If a
stockholder makes a timely notification, the proxies may still exercise
discretionary voting authority under circumstances consistent with the SEC's
proxy rules.
By Order of the Board of Directors
James A. Lightman, Clerk
April 30, 1999
18
<PAGE>
Exhibit A
SUMMIT TECHNOLOGY, INC.
1999 Outside Directors' Compensation Plan
1. Purpose.
The purpose of this 1999 Outside Directors' Compensation Plan (the "Plan")
of Summit Technology, Inc. (the "Company") is to assist the Company in
recruiting and retaining highly qualified directors, to compensate directors
for their contributions and services to the Company, and to strengthen the
commonality of interest between directors and shareholders by providing for
the grant of Stock Options (as defined below) to directors of the Company and
for the receipt by the directors of the Company of a portion of their
directors' fees in the form of Restricted and Unrestricted Stock (as defined
below).
2. Administration.
The Plan will be administered by the Board of Directors of the Company. The
Board may delegate this responsibility to a committee. If the Board has
delegated this responsibility to a committee, references in this Plan to the
Board shall mean such committee. All questions of interpretation of the Plan
shall be determined by the Board, and such determination shall be final and
binding upon all persons having an interest in the Plan. No Board member shall
be liable for any action or determination under the Plan made in good faith.
3. Participation in the Plan.
All directors of the Company who are not employees of the Company or any of
its subsidiaries ("Eligible Directors") shall be eligible to participate in
the Plan.
4. Stock Subject to the Plan.
Except as the Board may otherwise determine, the maximum number of shares
which may be issued under the Plan shall be 200,000 shares of the Company's
common stock, $0.01 par value per share ("Common Stock"), subject to
adjustment as provided in Section 9. If any shares of Restricted Stock are
forfeited pursuant to the Plan or any Stock Option granted under the Plan
terminates without having been exercised in full, the number of shares of
Common Stock so forfeited, or for which such Stock Option was not exercised,
shall be available for future awards or grants under the Plan.
5. Effective Date and Duration of the Plan.
The Plan shall become effective upon approval by the Board (the "Effective
Date"). Amendments to the Plan shall become effective when adopted by the
Board. Unless earlier terminated pursuant to Section 9, the Plan shall
terminate upon the date on which all shares available for issuance under the
Plan shall have been issued.
6. Compensation of Eligible Directors.
Each Eligible Director shall receive the following compensation:
(a) Annual Retainer and Committee Retainer. On the 1st of January of 1999
and of each succeeding year, each Eligible Director then in office shall be
paid an annual retainer for serving on the Board (the "Annual Retainer").
The Annual Retainer shall be paid to each Eligible Director (i) one-half in
cash and (ii) one-half in the form of Restricted Stock (as defined below),
which shall be issued in accordance with Section 7. For 1999, the Annual
Retainer will be $10,000. Also on the 1st of January, each Eligible
Director who serves on a committee of the Board shall be paid a retainer
for service on the committee (the "Committee Retainer"). For 1999, the
Committee Retainer shall be $1,000 per committee membership. The Board may
adjust the Annual Retainer and the Committee Retainer from time to time.
Any Eligible Director
A-1
<PAGE>
who is first elected after January 1 shall be entitled to receive these
amounts (appropriately pro-rated) as of the date of his or her election.
The shares of Common Stock issued in January 1999 will not be restricted.
(b) Meeting Fee. Each Eligible Director shall be paid a meeting fee for
attending each regularly scheduled quarterly meeting of the Board (the
"Meeting Fee"). For 1999, the Meeting Fee will be $2,000. The Board may
adjust the Meeting Fee from time to time. The Meeting Fee shall be paid to
each Eligible Director (i) one-half in cash and (ii) one-half in the form
of Unrestricted Stock (as defined below), which shall be issued in
accordance with Section 7.
(c) Committee Meeting Fee. Each Eligible Director shall be paid a fee in
cash for attending each meeting of a committee of the Board (the "Committee
Meeting Fee"). For 1999, the Committee Meeting Fee will be $500. The Board
may adjust the Committee Meeting Fee from time to time.
(d) Special Meeting Fee. Each Eligible Director shall be paid a fee in
cash for attending each special meeting of the Board (the "Special Meeting
Fee"). For 1999, the Special Meeting Fee will be $2,000. The Board may
adjust the Special Meeting Fee from time to time.
(e) Stock Options. In each July on a date to be determined by the Board
following the Effective Date (each, a "Grant Date"), each Eligible Director
then in office shall receive an option to purchase 5,000 shares of Common
Stock (a "Stock Option") with an exercise price equal to the Fair Market
Value of the Common Stock on the Grant Date. In addition, Eligible
Directors who join the Board after January 1, 1999 will receive a one-time
grant, on the date they join the board, of an option to purchase 10,000
shares of Common Stock subject to the same terms and conditions as other
Stock Options granted under the Plan. The "Fair Market Value" will be (i)
the average of the daily high and low price of the Common Stock on the date
of determination as reported on the Nasdaq National Market or such other
securities exchange or automated quotation system on which the Common Stock
is primarily traded or (ii) if there is no such trading, as determined in
good faith by the Board. Stock Options shall have the terms and conditions
set forth in Section 8.
7. Terms and Conditions of Awards of Restricted Stock and Unrestricted Stock.
"Restricted Stock" is shares of Common Stock that, prior to the dates
described in Section 7(d), may not be sold, assigned, pledged or otherwise
transferred and must be forfeited to the Company if the director ceases to be
a director other than by reason of death, permanent disability (as defined
below) or retirement. "Unrestricted Stock" is shares of Common Stock that have
no restrictions. Subject to Section 12, awards of Restricted Stock and
Unrestricted Stock will be made on the following terms:
(a) Annual Retainer. For the portion of each Annual Retainer payable in
the form of Restricted Stock, the number of shares granted to any Eligible
Director shall be equal to the whole number (with any fractional interests
rounded up to the next highest whole number) obtained by dividing one-half
of the Annual Retainer by the Fair Market Value of the Common Stock on
December 31 of the year preceding the award. For Eligible Directors who
become entitled to receive the Annual Retainer other than on January 1, the
Fair Market Value will be determined on the day they become so entitled.
(b) Meeting Fee. For the portion of each Meeting Fee payable in the form
of Unrestricted Stock, the number of shares granted to any Eligible
Director shall be equal to the whole number (with any fractional interests
rounded up to the next highest whole number) obtained by dividing one-half
of the Meeting Fee by the Fair Market Value of the Common Stock on the date
of the meeting.
(c) Restrictions and Forfeiture. The Restricted Stock issued under the
Plan will be subject to forfeiture to the Company if an Eligible Director
ceases to serve as a director other than as a result of death, permanent
disability or retirement. In the event of a forfeiture, the Eligible
Director shall execute and deliver to the Clerk of the Company, at the
Clerk's request, a stock power or other assignment permitting transfer of
his or her forfeited shares to the Company.
(d) Lapse of Restrictions. The restrictions on Restricted Stock will
lapse as to one-quarter of the shares covered by any award on the last day
of each quarter following the date on which the director receives the
Restricted Stock.
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<PAGE>
(e) Registration and Certificates. Restricted Stock awarded under the
Plan will be registered in the name of each Eligible Director and a stock
certificate representing the shares awarded will be issued and retained by
the Clerk of the Company for the benefit of the Eligible Director until the
restrictions on the shares lapse or the Restricted Stock is forfeited. Such
certificates, and any issued as a result of a stock dividend, stock split
or recapitalization, will bear an appropriate legend evidencing the
restrictions and forfeiture provisions of the Plan.
(f) Dividends. Whenever a cash dividend or any other distribution is paid
with respect to Common Stock, each Eligible Director shall be entitled to
receive (i) the appropriate cash dividend, when paid, on his or her shares
of Restricted Stock and (ii) any other distribution on such shares at such
time or times as the applicable restrictions on the shares lapse.
(g) Voting Rights; Proxies. Eligible Directors shall have the right to
vote and execute proxies with respect to shares of Restricted Stock, unless
and until the shares are forfeited under the terms of the Plan.
(h) Death, Permanent Disability or Retirement. If an Eligible Director
dies, becomes permanently disabled or retires, the restrictions on any
shares of Restricted Stock that such director holds shall lapse. The terms
"permanently disabled" and "permanent disability" as used in the Plan shall
mean a physical or mental illness or disability which severely impairs an
Eligible Director's ability to discharge his or her responsibilities as a
director for a period of at least six months.
(i) Insufficient Shares. If at any time there are insufficient shares
available in the Plan to allow each Eligible Director to receive either (i)
the entire Restricted Stock portion of the Annual Retainer or (ii) the
entire Unrestricted Stock portion of the Meeting Fee, those amounts shall
be paid in cash.
8. Terms and Conditions of Stock Options.
Subject to Section 12, grants of Stock Options will be made on the following
terms:
(a) Vesting and Expiration. Except as the Board may otherwise determine,
the Stock Options granted on each Grant Date shall vest and become
exercisable immediately on the date of grant. Each such Stock Option shall
expire 10 years following the relevant Grant Date (each, a "Stock Option
Expiration Date"). In the case of a Stock Option not immediately
exercisable in full, the Board may at any time accelerate the time at which
all or any part of the Stock Option may be exercised.
(b) Method of Exercise. Any exercise of a Stock Option shall be in
writing, signed by the proper person and delivered or mailed to the Company
accompanied by (i) any documentation which may be required by the Board and
(ii) payment in full. If a Stock Option is exercised by the executor or
administrator of a deceased director, or by the person or persons to whom
the Stock Option has been transferred by the director's will or the
applicable laws of descent and distribution, the Company shall be under no
obligation to deliver Common Stock until the Company is satisfied that the
person or persons exercising the Stock Option have authority to do so.
(c) Method of Payment. Common Stock purchased upon the exercise of a
Stock Option shall be paid for as follows: (i) in cash or by check
(acceptable to the Company), bank draft or money order payable to the order
of the Company, or (ii) if permitted by the Board, (A) through the delivery
of shares of Common Stock (which, in the case of shares of Common Stock
acquired from the Company, have been outstanding for at least six months)
having a Fair Market Value on the last business day preceding the date of
exercise equal to the purchase price or (B) by the delivery of a promissory
note of the director (acceptable to the Company) to the Company, (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 these permissible forms of payment; provided,
that if the Common Stock delivered upon exercise of the option is an
original issue of authorized Common Stock, at least so much of the exercise
price as represents the par value of such Common Stock shall be paid other
than by a personal check or promissory note of the person exercising the
option.
(d) Transferability. Except as the Board may otherwise determine, Stock
Options granted under the Plan shall not be transferable by the grantee
prior to his or her death otherwise than by will or by the laws
A-3
<PAGE>
of descent and distribution, or pursuant to a qualified domestic relations
order (as defined in Section 414(p) of the Internal Revenue Code of 1986,
as amended or replaced from time to time) and Stock Options shall be
exercised during the lifetime of the grantee only by such grantee or the
transferee pursuant to a qualified domestic relations order.
(e) Death, Permanent Disability or Retirement. If an Eligible Director
becomes permanently disabled or retires, each Stock Option then held by
such director shall vest and become immediately exercisable. If an Eligible
Director dies, each Stock Option then held by such director shall vest and
become immediately exercisable by (i) the director's executor or
administrator or (ii) the person or persons to whom the Stock Option is
transferred by will or the applicable laws of descent and distribution.
Notwithstanding the foregoing, no such Stock Option may be exercised
following the first to occur of (i) the date that is one year (or such
longer or shorter period as the Board may determine) after the date of the
director's death, permanent disability or retirement, or (ii) the relevant
Stock Option Expiration Date.
(f) Repricing of Options. The Board may not adjust the exercise price of
any Stock Option granted under the Plan without the approval of the
stockholders of the Company, except for adjustments required by Section 9.
(g) Rights as Shareholder. An Eligible Director shall not have the rights
of a stockholder with regard to awards of Stock Options under the Plan
except as to Common Stock actually received by the director under the Plan.
9. Adjustment Provisions.
(a) Recapitalizations. If, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other securities of the
Company or other non-cash assets of the Company are distributed with
respect to such shares of Common Stock or other securities, an appropriate
and proportionate adjustment may be made in (A) the maximum number and kind
of shares reserved for issuance under the Plan, (B) the number and kind of
shares or other securities subject to any then outstanding Stock Option
under the Plan and (C) the price for each share subject to any then
outstanding Stock Option under the Plan. In the event of (i) any other
extraordinary dividend or distribution, whether in stock, cash or other
property, (ii) a spinoff, split up or other extraordinary transaction or
(iii) any material changes in accounting practices or principles, the
number of shares issuable under this Plan shall be subject to such
adjustment as the Board may deem appropriate, and the number of shares
issuable pursuant to any Stock Option theretofore granted and the price of
such Stock Option shall be subject to such adjustment as the Board may deem
appropriate with a view toward preserving the value of such Stock Option.
(b) Mergers, etc. In the event of a consolidation or merger in which the
Company is not the surviving entity or which results in the acquisition of
more than 50% of the Company's outstanding Common Stock by a single person
or entity or by a group of persons and/or entities acting in concert, or in
the event of a sale or transfer of substantially all of the Company's
assets or a dissolution or liquidation of the Company, (i) the restrictions
on all shares of Restricted Stock will lapse, and (ii) all Stock Options
which will not have vested as of the effective date of such merger,
consolidation, sale, dissolution or liquidation shall vest and become
exercisable 20 days prior to such effective date. All Stock Options not
exercised as of the effective date shall terminate.
Notwithstanding the foregoing, in the event that a transaction covered by
Section 9(b) is a merger or consolidation intended to qualify as a pooling of
interests for accounting purposes, then the acquiring or surviving corporation
shall assume or provide replacement options for all Stock Options outstanding
under the Plan, with such adjustments to the number of shares covered by and
the exercise price of such Stock Options as may be necessary to reflect the
exchange ratio provided for in the merger or consolidation. Such substitute
options shall (i) otherwise be on terms and conditions substantially
equivalent to those set forth in the Plan, (ii) be immediately exercisable,
and (iii) except as to Eligible Directors who become directors of the
acquiring or surviving corporation, terminate on the 180th day following the
consummation of the merger or consolidation.
A-4
<PAGE>
The termination of Stock Options held by Eligible Directors who become
directors of the acquiring or surviving corporation shall be governed by the
agreement that assumes or replaces such Stock Options.
10. Amendment of the Plan.
The Board may at any time amend or discontinue the Plan and amend or cancel
any outstanding Stock Option or Restricted Stock award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Restricted Stock award or
Stock Option without the holder's consent.
11. Notice.
Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Chief Financial Officer of the Company and
shall become effective when it is received.
12. General Restrictions.
(a) Investment Representations. The Company may require any person to whom
Restricted Stock is awarded or a Stock Option is granted, as a condition of
receiving such Restricted Stock or Stock Option, to give written assurances in
substance and form satisfactory to the Company to the effect that such person
is acquiring the Common Stock subject to such Restricted Stock or Stock Option
for his or her own account for investment and not with any present intention
of selling or otherwise distributing the same, and to such other effects as
the Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws.
(b) Compliance with Certain Laws. Each award of Restricted Stock or grant of
a Stock Option shall be subject to the requirements that if, at any time,
counsel to the Company shall determine that the listing, registration,
authorization or qualification of the shares subject to such Restricted Stock
or Stock Option upon any securities exchange or under any state or federal law
is necessary as a condition of, or in connection with, the issuance or
purchase of shares thereunder, such shares may not be issued unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable
to the Board. Nothing herein shall be deemed to require the Company to apply
for or to obtain listing, registration, authorization or qualification, or to
satisfy such condition.
13. Governing Law.
The Plan shall be construed in accordance with the laws of the Commonwealth
of Massachusetts without giving effect to the conflict of laws provisions
therein to the extent those laws are not preempted by the Employee Retirement
Income Security Act of 1974, as amended.
A-5
<PAGE>
SUMMIT TECHNOLOGY, INC.
21 HICKORY DRIVE
WALTHAM, MA 02451
--------------
PROXY FOR ANNUAL MEETING OF
STOCKHOLDERS
JUNE 15, 1999
--------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Kelly and James A. Lightman, and
each of them singly, 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 Annual Meeting of Stockholders to be held at the
BankBoston Conference and Training Center, 100 Federal Street, Boston,
Massachusetts 02110, at 10:00 a.m., on June 15, 1999, and any adjournments
thereof. The proxy is further authorized to vote, in such proxy's discretion,
upon such other business as may properly come before the meeting, or any
adjournments thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
SEE REVERSE SIDE
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
1. ELECTION OF DIRECTORS:
FOR WITHHELD
NOMINEE FOR NOMINEE
[_] [_]
NOMINEE: JOHN A. NORRIS
FOR WITHHELD
NOMINEE FOR NOMINEE
[_] [_]
NOMINEE: ROBERT J. PALMISANO
2. APPROVAL OF 1999 OUTSIDE DIRECTORS' COMPENSATION PLAN:
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: , 1999
--------------------------------- --------------
(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.)
