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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive addition materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LASERSCOPE
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
LASERSCOPE
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 22, 1995
---------------------
TO THE SHAREHOLDERS OF LASERSCOPE:
Notice is hereby given that the Annual Meeting of Shareholders of Laserscope
(the "Company"), a California corporation, will be held at the Fairmont Hotel,
170 South Market Street, San Jose, California, on Thursday, June 22, 1995 at
9:00 a.m. local time, for the following purposes:
1. To elect the following directors to serve for the ensuing year and
until their successors are elected: Herbert M. Dwight, Benjamin L. Holmes,
E. Walter Lange, Robert V. McCormick, Rodney Perkins, M.D. and Robert J.
Pressley, Ph.D.
2. To authorize an amendment to the Company's 1994 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 250,000 shares to an aggregate of 575,000 shares.
3. To ratify the appointment of Ernst & Young LLP as the independent
auditors for the Company for the fiscal year ending December 31, 1995.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 24, 1995 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. If you decide to attend
the meeting, you may vote in person even if you returned a proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
CRAIG W. JOHNSON
SECRETARY
San Jose, California
April 27, 1995
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return it
in the envelope provided.
<PAGE>
[LASERSCOPE LOGO]
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PROXY STATEMENT FOR 1995 ANNUAL MEETING OF SHAREHOLDERS
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Laserscope (the "Company"), a California corporation, for use at the Annual
Meeting of Shareholders to be held Thursday, June 22, 1995 at 9:00 a.m. local
time, or at any adjournment or postponement thereof, for the purposes set forth
in this Proxy Statement and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the Fairmont Hotel, 170 South
Market Street, San Jose, California 95113. The Company's principal executive
offices are located at 3052 Orchard Drive, San Jose, California 95134-2011. The
Company's telephone number at that location is (408) 943-0636.
These proxy solicitation materials were mailed on or about April 27, 1995 to
all shareholders entitled to vote at the meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Dennis LaLumandiere, Inspector of Elections) a written notice of revocation or a
duly executed proxy bearing a later date or by attending the meeting and voting
in person.
VOTING AND SOLICITATION
Every shareholder voting for the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
shareholder, or distribute the shareholder's votes on the same principle among
as many candidates as the shareholder thinks fit, provided that votes cannot be
cast for more than the number of directors authorized by the Company's bylaws.
However, no shareholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes. On all other
matters, each share has one vote.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of the Company's transfer agent.
The Inspector of Elections will also determine whether or not a quorum is
present. Except with respect to the election of directors where cumulative
voting is invoked and except in certain other specific circumstances, the
affirmative vote of a majority of shares REPRESENTED AND VOTING at a duly held
meeting at which a quorum is present (which shares voting affirmatively also
constitute a majority of the required quorum) is required under California law
for approval of proposals presented to shareholders. In general, California law
also provides that a quorum consists of a majority of the shares ENTITLED TO
VOTE, represented either in person or by proxy. The Inspector of Elections will
treat abstentions as shares that are present and ENTITLED TO VOTE for purposes
of determining the presence of a quorum but as not VOTING for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
Any proxy which is returned using the form of proxy enclosed and which is not
marked as to a particular item will be voted for the election of directors, for
the approval of the amendment to the Company's 1994 Stock Option
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Plan, for ratification of the appointment of the designated independent auditors
and as the proxy holders deem advisable on other matters that may come before
the meeting, as the case may be with respect to the item not marked. If a broker
indicates on the enclosed proxy or its substitute that it does not have
discretionary authority as to certain shares to vote on a particular matter
("broker non-votes"), those shares will not be considered as VOTING with respect
to that matter. While there is no definitive specific statutory or case law
authority in California concerning the proper treatment of abstentions and
broker non-votes, the Company believes that the tabulation procedures to be
followed by the Inspector of Elections are consistent with the general statutory
requirements in California concerning voting of shares and determination of a
quorum.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone or telegram.
RECORD DATE AND SHARE OWNERSHIP
Only shareholders of record at the close of business on April 24, 1995 are
entitled to notice of and to vote at the meeting. As of April 24, 1995,
6,983,092 shares of the Company's Common Stock were issued and outstanding.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company's bylaws currently provide for seven directors. At the Annual
Meeting, the Board of Directors has nominated six directors to be elected to
serve until the next Annual Meeting and until their successors are elected and
qualified at the meeting. The Company's Board of Directors proposes to fill the
remaining seat (resulting from a director who has chosen not to seek reelection
for reasons unrelated to the Company) at such time as it has identified a
qualified candidate. Unless otherwise instructed, the proxy holders will vote
the proxies received by them for the Company's six nominees named below, all of
whom are presently directors of the Company. In the event that any nominee of
the Company is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will assure the election of as many of the
nominees listed below as possible, and, in such event, the specific nominees for
whom the proxy holders will vote will be determined by the proxy holders.
Assuming a quorum is present, the nominees for director receiving the greatest
number of votes cast at the Annual Meeting will be elected, up to the number of
directors authorized by the Company's bylaws. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Shareholders or until his or her successor has been elected and qualified.
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The nominees' names, ages as of December 31, 1994, and certain information
about them are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- ----------------------------- ---- ----------------------------------------------------- --------
<S> <C> <C> <C>
Herbert M. Dwight 64 Chairman of the Board of Directors, President and 1991
Chief Executive Officer of Optical Coating
Laboratory, Inc.
Benjamin L. Holmes 60 Retired Vice President and General Manager of the 1992
Medical Products Group of Hewlett-Packard Company
E. Walter Lange 62 Business consultant; former Group Vice President, Eli 1992
Lilly & Co.
Robert V. McCormick 50 President and Chief Executive Officer of the Company 1992
Rodney Perkins, M.D. 57 Chairman of the Board of Directors of the Company; a 1984
practicing otologic surgeon; President of the
California Ear Institute at Stanford, a clinic
specializing in the diagnosis and treatment of
hearing disorders; and President of Project HEAR, a
non-profit research organization
Robert J. Pressley, Ph.D. 62 President of Silicon Video Corporation 1984
</TABLE>
Except as set forth below, each of the nominees has been engaged in the
principal occupation set forth next to his name above during the past five
years. There is no family relationship between any director or executive officer
of the Company.
Herbert M. Dwight has been a director of the Company since December 1991.
Mr. Dwight has been Chairman, President and Chief Executive Officer of Optical
Coating Laboratory, Inc. since August 1991. From July 1988 to August 1991, Mr.
Dwight was Chairman and President of Superconductor Technologies, Inc., a
developer of products based on high-temperature superconductors. Prior to
joining Superconductor Technologies, Inc., Mr. Dwight served in various
executive positions, including Chairman and Chief Executive Officer, at Spectra
Physics, Inc., an industrial laser manufacturer. Mr. Dwight is also a director
of Applied Materials, Inc., a manufacturer of semiconductor equipment, Applied
Magnetics Corp., a manufacturer of magnetic heads for electronic recording, and
Trans Ocean Limited, a container leasing corporation.
Benjamin L. Holmes has been a director of the Company since January 1992.
Mr. Holmes was General Manager of the Medical Products Group of Hewlett-Packard
Company ("HP") from 1983 until his retirement in December 1994, and a Vice
President of HP from 1985 until December 1994. Mr. Holmes was employed by HP
from 1960 until December 1994.
E. Walter Lange has been a director of the Company since January 1992. Mr.
Lange has over 31 years of experience in the pharmaceuticals industry, having
served in a variety of executive positions at Eli Lilly & Co. from 1960 through
1991, most recently as Group Vice President, Marketing, Planning and
Development.
Robert V. McCormick has been President of the Company since December 1991
and Chief Executive Officer since July 1992. Between December 1991 and July 1992
he also served as the Company's Chief Operating Officer. He has been a director
of the Company since July 1992. Mr. McCormick also served as the Company's
Senior Vice President of Marketing and Field Operations from April 1991 to
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December 1991. Mr. McCormick was employed by Acuson Corporation, a manufacturer
of medical imaging equipment, from 1983 to April 1991 in a variety of sales and
marketing executive positions, including Vice President of Marketing and Field
Operations from January 1989 to April 1991.
Rodney Perkins, M.D. is a co-founder of the Company and has been Chairman of
the Board of Directors since its founding. Dr. Perkins also served as the
Company's Chief Executive Officer from February to May 1987, and from October
1991 to July 1992. He further served as the President of the Company from
October to December 1991. Dr. Perkins, a specialist in otologic surgery, is
President of the California Ear Institute at Stanford and has been in private
practice since 1968. He is a Professor of Surgery at Stanford University School
of Medicine, and is the founder and President of Project HEAR, a non-profit
medical institute for ear research and education. Dr. Perkins is a founder of
Collagen Corporation, a biomaterials company, and a member of its Board of
Directors. Dr. Perkins is also Chairman of the Board of Directors of ReSound
Corporation, a hearing health care company.
Robert J. Pressley, Ph.D. is a co-founder of the Company and has been a
director since its founding. He has been President of Silicon Video, a developer
of electronic products, since January 1991 and also served as its Chief
Executive Officer from January 1991 to January 1994. Dr. Pressley was the
founder of XMR, Inc., a manufacturer of laser systems, and served as XMR's Chief
Executive Officer from March 1979 until March 1990.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings during
the year ended December 31, 1994. The Board of Directors has an Audit Committee
and a Human Resources Committee. It does not have a nominating committee or a
committee performing the functions of a nominating committee.
The Audit Committee of the Board of Directors consists of Messrs. Marshall,
Lange and Holmes. The Audit Committee held six meetings during 1994. The Audit
Committee recommends engagement of the Company's independent auditors, and is
primarily responsible for approving the services performed by the Company's
independent accountants and for reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls.
The Human Resources Committee of the Board of Directors consists of Dr.
Pressley, Mr. Dwight and Dr. Perkins. It held five meetings during 1994. The
Human Resources Committee makes recommendations to the Board of Directors
regarding the Company's executive compensation policy, and approves and makes
recommendations to the Board of Directors concerning the grant of stock options.
No incumbent director attended fewer than 75% of the aggregate number of
meetings of the Board of Directors and meetings of the committees of the Board
of Directors that he was eligible to attend.
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors receive a retainer of $2,000
per quarter and $500 per meeting of the Board of Directors attended. In
addition, non-employee members of the Board of Directors receive options to
purchase shares of the Company's Common Stock pursuant to its 1990 Directors'
Stock Option Plan (the "Directors' Option Plan"). The Directors' Option Plan
provides for the grant of nonstatutory options to non-employee directors of the
Company at an exercise price not less than the fair market value of the
Company's Common Stock on the date of grant. Under the Directors' Option Plan,
persons who were non-employee directors as of October 18, 1991, as well as
persons who have joined the Board since that date through election by the
shareholders of the Company or appointment by the Board of Directors to fill a
vacancy, have been granted an option to purchase 45,000 shares of the Company's
Common Stock. Options issued pursuant to this plan vest and become exercisable
over three years with respect to each optionee who remains a director and expire
five years after the date of grant. Directors who are employees of the Company
do not receive any additional compensation for their services as a director.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ALL OF THE NOMINEES LISTED
ABOVE.
4
<PAGE>
PROPOSAL NO. 2
AMENDMENT OF THE 1994 STOCK OPTION PLAN
At the Annual Meeting, shareholders are being asked to approve an amendment
to the 1994 Stock Option Plan (the "1994 Option Plan") that would increase the
shares reserved for issuance thereunder by 250,000 shares to an aggregate of
575,000 shares.
GENERAL
The Company's 1994 Option Plan provides for the grant of options to
employees and consultants of the Company. The aggregate number of shares
reserved for issuance under the 1994 Option Plan includes options previously
granted and exercised under the 1994 Option Plan. The increase in shares
reserved for issuance under the 1994 Option Plan has been necessitated by the
hiring of new employees and the grant of additional stock options to current
employees as previously granted options vest and become exercisable. The
increase will provide sufficient additional stock to continue the Company's
policy of equity ownership by employees and consultants as an incentive to
contribute to the Company's success. The 1994 Option Plan was adopted by the
Board of Directors in March 1994 and approved by the shareholders in June 1994.
A total of 325,000 shares of Common Stock has been reserved for issuance under
the 1994 Option Plan. Subject to shareholder approval, this amount would be
increased to an aggregate of 575,000 shares.
Options granted under the 1994 Option Plan may be either "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or nonstatutory stock options at the discretion of the
Board of Directors and as reflected in the terms of the written option
agreement. The 1994 Option Plan is not a qualified deferred compensation plan
under Section 401(a) of the Code, and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
As of March 31, 1995 and without giving effect to the amendments to the 1994
Option Plan, no shares had been issued upon exercise of options granted under
the 1994 Option Plan, options for 153,000 shares were outstanding under the 1994
Option Plan and 172,000 shares remained available for future grants. As of March
31, 1995, the fair market value of shares subject to outstanding options was
$592,875, based upon the closing price of the Common Stock as reported on the
Nasdaq National Market on such date.
During the year ended December 31, 1994, (i) no options to purchase shares
of Common Stock were granted under the 1994 Option Plan to the current executive
officers as a group (6 persons), (ii) no options to purchase shares of Common
Stock were granted under the 1994 Option Plan to current directors who are not
executive officers as a group (6 persons) and (iii) options to purchase 18,000
shares of Common Stock were granted under the 1994 Option Plan to all employees,
including current officers who are not executive officers, as a group (9 persons
as of December 31, 1994).
PURPOSE
The purposes of the 1994 Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business.
ADMINISTRATION
The 1994 Option Plan may be administered by the Board of Directors or by a
committee of the Board of Directors. The 1994 Option Plan is currently
administered by the Board of Directors and the Human Resources Committee of the
Board of Directors. Members of the Board of Directors receive no additional
compensation for their services in connection with the administration of the
1994 Option Plan. All questions of interpretation of the 1994 Option Plan are
determined by the Board of Directors or its committee and its decisions are
final and binding upon all participants.
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<PAGE>
ELIGIBILITY
The 1994 Option Plan provides that either incentive stock options or
nonstatutory options may be granted to employees (including officers and
directors who are also employees) of the Company or any of its subsidiaries. In
addition, the 1994 Option Plan provides that nonstatutory options may be granted
to consultants (not including directors who are not compensated for their
services or are paid only a director's fee by the Company) of the Company or any
of its subsidiaries. The Board of Directors or its committee selects the
optionees and determines the number of shares to be subject to each option. In
making such determination, there are taken into account the duties and
responsibilities of the optionee, the value of the optionee's services, the
optionee's present and potential contribution to the success of the Company, and
other relevant factors.
The 1994 Option Plan provides that the maximum number of shares of Common
Stock which may be granted under options to any one employee during any fiscal
year shall be 325,000, subject to adjustment as provided in the 1994 Option
Plan. This limitation is intended to preserve the Company's ability to deduct
for federal income tax purposes any compensation expense relating to stock
options granted to certain executive officers under the 1994 Option Plan.
Without this limitation, federal tax legislation enacted in 1993 might not allow
the Company to deduct such compensation expense.
In addition to the foregoing limitation on discretion for certain grants,
there is also a limit on the aggregate market value of shares subject to all
incentive stock options that may be granted to an optionee during any calendar
year.
TERMS OF OPTIONS
Each option is evidenced by a stock option agreement between the Company and
the optionee. Each option is subject to the following additional principal terms
and conditions:
(a) EXERCISE OF THE OPTION. The Board of Directors or its committee
determines when options may be exercised. In general, such options become
exercisable on a ratable basis over four years with respect to employees and
over two to four years with respect to consultants. An option is exercised by
giving written notice of exercise to the Company specifying the number of full
shares of Common Stock to be purchased and by tendering of payment of the
purchase price. The purchase price of the shares purchased upon exercise of an
option shall be paid in consideration of such form as is determined by the Board
of Directors or its committee and specified in the option agreement, and such
form of consideration may vary for each option.
(b) EXERCISE PRICE. The exercise price of each option granted under the
1994 Option Plan is determined by the Board of Directors or its committee and
may not be less than 100% of the fair market value of the Common Stock on the
date the option is granted; provided, however, that nonstatutory options may be
granted to persons other than the Company's Chief Executive Officer or its other
four most highly compensated officers whose compensation is required to be
reported to shareholders under the Securities Exchange Act of 1934 at exercise
prices of not less than 50% of the fair market value on the date the option is
granted. The fair market value per share is equal to the closing price on the
Nasdaq National Market on the date of grant. In the case of an option granted to
an optionee who owns more than 10% of the voting power of all classes of stock
of the Company, its parent or subsidiaries, the exercise price must not be less
than 110% of the fair market value on the date of the grant.
(c) TERMINATION OF EMPLOYMENT. If the optionee's employment or consulting
relationship terminates for any reason other than disability or death, options
under the 1994 Option Plan may be exercised not later than three months (or such
other period of time not exceeding six months in the case of a nonstatutory
stock option as is determined by the Board of Directors or its committee) after
such termination and may be exercised only to the extent the option was
exercisable on the date of termination. In no event may an option be exercised
by any person after the expiration of its term.
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(d) DISABILITY. If an optionee is unable to continue his or her employment
or consulting relationship with the Company as a result of his total and
permanent disability, options may be exercised within six months (or such other
period of time not exceeding 12 months as is determined by the Board of
Directors or its committee) of termination and may be exercised only to the
extent the option was exercisable on the date of termination, but in no event
may the option be exercised after its termination date.
(e) DEATH. Under the 1994 Option Plan, if an optionee should die while
employed or retained by the Company, and such optionee has been continuously
employed or retained by the Company since the date of grant of the option, the
option may be exercised within six months after the date of death (or such other
period of time, not exceeding six months, as is determined by the Board of
Directors or its committee) by the optionee's estate or by a person who acquired
the right to exercise the option by bequest or inheritance to the extent the
optionee would have been entitled to exercise the option had the optionee
continued living and remained employed or retained by the Company for three (3)
months after the date of death, but in no event may the option be exercised
after its termination date.
If an optionee should die within 30 days (or such other period of time not
exceeding three months as is determined by the Board of Directors or its
committee) after the optionee has ceased to be continuously employed or retained
by the Company, the option may be exercised within six months after the date of
death by the optionee's estate or by a person who acquired the right to exercise
the option by bequest or inheritance to the extent that the optionee was
entitled to exercise the option at the date of termination, but in no event may
the option be exercised after its termination date.
(f) TERM OF OPTIONS. The 1994 Option Plan provides that options granted
under the 1994 Option Plan have the term provided in the option agreement. In
general, these agreements provide for a term of five years. Incentive stock
options granted to an optionee who, immediately before the grant of such option,
owned more than 10% of the total combined voting power of all classes of stock
of the Company, its parents or subsidiaries, may not in any case have a term of
more than five years. No option may be exercised by any person after its
expiration.
(g) OPTION NOT TRANSFERABLE. An option is not transferable by the optionee
other than by will or the laws of descent and distribution, and is exercisable
only by the optionee during his or her lifetime and in the event of the
optionee's death by a person who acquires the right to exercise the option by
bequest or inheritance or by reason of the optionee's death.
(h) ACCELERATION OF OPTIONS. In the event of a merger or consolidation in
which the Company is not the surviving entity, the Board of Directors is
obligated to accomplish either a substitution or assumption of options or give
30 days' notice of the acceleration of the optionee's right to exercise his or
her outstanding options as to some or all of the optioned stock at any time
within 30 days of such notice. The exercisability of options held by the
Company's executive officers may also be accelerated upon the occurrence of such
events. See "Transactions with Management and Others."
(i) OTHER PROVISIONS. The option agreement may contain such other terms,
provisions and conditions not inconsistent with the 1994 Option Plan as may be
determined by the Board of Directors or its committee.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization that results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, appropriate adjustment shall be made in the exercise price of each
outstanding option, the number of shares subject to each option, the annual
limitation on grants to employees, as well as the number of shares available for
issuance under the 1994 Option Plan. In the event of the proposed dissolution or
liquidation of the Company, each option will terminate unless otherwise provided
by the Board of Directors or its committee.
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AMENDMENT AND TERMINATION
The Board of Directors may amend the 1994 Option Plan at any time or from
time to time or may terminate it without approval of the shareholders; provided,
however, that shareholder approval is required for any amendment to the 1994
Option Plan that increases the number of shares that may be issued under the
1994 Option Plan, modifies the standards of eligibility, modifies the limitation
on grants to employees described in the 1994 Option Plan or results in other
changes which would require shareholder approval to qualify options granted
under the 1994 Option Plan as performance-based compensation under Section
162(m) of the Code, or so long as the Company has a class of equity securities
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), materially increases the benefits to participants that may
accrue under the 1994 Option Plan. However, no action by the Board of Directors
or shareholders may alter or impair any option previously granted under the 1994
Option Plan. The 1994 Option Plan shall terminate in April 2004, provided that
any options then outstanding under the 1994 Option Plan shall remain outstanding
until they expire by their terms.
FEDERAL INCOME TAX ASPECTS OF THE 1994 OPTION PLAN
Options granted under the 1994 Option Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonstatutory options.
If an option granted under the 1994 Option Plan is an incentive stock
option, under U.S. tax laws the optionee will recognize no income upon grant of
the incentive stock option and incur no tax liability due to the exercise unless
the optionee is subject to the alternative minimum tax. The Company will not be
allowed a deduction for federal income tax purposes as a result of the exercise
of an incentive stock option regardless of the applicability of the alternative
minimum tax. Upon the sale or exchange of the shares at least two years after
grant of the option and one year after receipt of the shares by the optionee,
any gain will be treated as long-term capital gain under U.S. tax laws. If these
holding periods are not satisfied, the optionee will recognize ordinary income
equal to the difference between the exercise price and the lower of the fair
market value of the stock at the date of the option exercise or the sale price
of the stock. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an officer, director, or
10% shareholder of the Company. The Company will be entitled to a deduction in
the same amount as the ordinary income recognized by the optionee. Any gain
recognized on such a premature disposition of the shares in excess of the amount
treated as ordinary income will be characterized under U.S. tax laws as long-
term capital gain if the sale occurs more than one year after exercise of the
option or as short-term capital gain if the sale is made earlier. For years
beginning after 1990, the tax rate on long-term capital gains under U.S. tax
laws is capped at 28%. Capital losses are allowed under U.S. tax laws in full
against capital gains plus $3,000 of other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income under U.S. tax laws at the time he or she is granted a nonstatutory
option. However, upon its exercise, under U.S. tax laws the optionee will
recognize ordinary income for tax purposes measured by the excess of the then
fair market value of the shares over the exercise price. In certain
circumstances, where the shares are subject to a substantial risk of forfeiture
when acquired or where the optionee is an officer, director or 10% shareholder
of the Company, the date of taxation may be deferred unless the optionee files
an election with the Internal Revenue Service under Section 83(b) of the Code.
The income recognized by an optionee who is also an employee of the Company will
be subject to tax withholding by the Company by payment in cash or out of the
current earnings paid to the optionee. Upon resale of such shares by the
optionee, any difference between the sales price and the exercise price, to the
extent not recognized as ordinary income as provided above, will be treated
under U.S. tax laws as capital gain or loss, and will qualify for long-term
capital gain or loss treatment if the shares have been held for more than one
year.
8
<PAGE>
REQUIRED VOTE
The affirmative vote of a majority of shares of Common Stock represented and
voting at the Annual Meeting with respect to the amendment to the 1994 Option
Plan (which shares voting affirmatively also constitute a majority of the
required quorum) is required for its approval.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE AMENDMENT OF THE 1994 STOCK
OPTION PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
to audit the financial statements of the Company for the fiscal year ending
December 31, 1995 and recommends that the shareholders vote for ratification of
such appointment. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection. Ernst & Young LLP has audited
the financial statements of the Company and its predecessor corporation and
partnership since inception. Representatives of Ernst & Young LLP are expected
to be present at the meeting and will have the opportunity to make a statement
if they desire to do so. They are also expected to be available to respond to
appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS VOTING IN FAVOR OF THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
9
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 1995 as to (i) each person who is known by the
Company to own beneficially more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table beginning on page 15, and (iv)
all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
-----------------------------
NUMBER (2) PERCENT OF TOTAL
---------- ----------------
<S> <C> <C>
Thomas B. Boyd.................................................................................... 17,562 *
Herbert M. Dwight................................................................................. 45,000 *
Michael B Gioffredi (3)........................................................................... 3,194 *
Benjamin L. Holmes................................................................................ 45,000 *
E. Walter Lange................................................................................... 45,000 *
Harry A. Marshall (4)............................................................................. 61,836 *
Robert V. McCormick............................................................................... 221,223 3.1%
Rodney Perkins, M.D............................................................................... 171,467 2.4%
Robert J. Pressley, Ph.D.......................................................................... 66,016 *
Joseph F. Rondinone............................................................................... 31,244 *
Eli Wismer........................................................................................ 55,434 *
All directors and executive officers as a group (12 persons)...................................... 797,936 10.5%
<FN>
- ------------------------
* Less than 1%.
(1) The persons named in this table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the other footnotes to this table.
(2) Includes with respect to each named person the following shares subject to
options exercisable within 60 days of March 31, 1995: Mr. Boyd -- 16,562;
Mr. Dwight -- 45,000; Mr. Holmes -- 45,000; Mr. Gioffredi -- 0; Mr. Lange
-- 45,000; Mr. Marshall -- 45,000; Mr. McCormick -- 172,290; Dr. Perkins --
105,000; Dr. Pressley -- 45,000; Mr. Rondinone -- 30,728; Mr. Wismer --
41,936.
(3) Mr. Gioffredi terminated his employment with the Company in February 1995.
(4) Mr. Marshall is not standing for reelection to the Company's Board of
Directors for reasons not related to the Company.
</TABLE>
10
<PAGE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, 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 AND
THE PERFORMANCE GRAPH ON PAGE 14 SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS.
REPORT OF THE HUMAN RESOURCES COMMITTEE
EXECUTIVE COMPENSATION PHILOSOPHY
In order to achieve the broader goals of the Company and its shareholders,
compensation programs for all Laserscope employees, including executive
officers, have been developed to provide incentives and rewards for the
accomplishment of these goals.
Goal setting throughout the Company is a key element underlying the
Company's compensation program. At the start of each year, a number of corporate
goals are established by the Chief Executive Officer and the other executive
officers, covering a broad range of business objectives such as financial
performance, business diversification and employee retention and morale
enhancement. Similarly, each executive officer establishes for his or her area
of responsibility a number of goals that contribute to corporate goals.
Individual employees also have goals that in turn contribute to the goals for
that employee's department. Corporate goals are communicated within the Company
by each executive and at company-wide meetings. Accomplishment of Company goals
are reviewed at quarterly meetings with all employees to provide an
understanding of how personal goals interrelate to corporate goals. Progress
toward individual goals are reviewed during the year and the extent to which
goals have been accomplished is a factor in assessing employees' performance and
compensation.
The Company's executive officers have a particular responsibility for the
achievement of the Company's broad business goals and, accordingly, their
compensation is determined by reference both to individual performance and to
corporate performance. Of these two elements, corporate performance can have the
most significant impact on executives' compensation through cash bonuses and the
value of stock options.
The three specific objectives of the Company's executive compensation
programs are:
1. PROVIDING PERFORMANCE BASED PAY -- Laserscope believes that it is
important to reward individual executives for their individual performance as
well as for the overall performance of the Company.
2. REMAINING COMPETITIVE -- To attract and retain talented individuals, it
is important to maintain compensation levels and programs that are competitive
in the employment market.
3. PROVIDING SHAREHOLDER RETURN -- Ultimately, management's responsibility
is to generate a return for the Company's shareholders. Consequently, it is
critical to establish programs that align management's interests with those of
the Company's shareholders.
COMPENSATION OF EXECUTIVE OFFICERS
The three key elements of Laserscope's executive compensation are (i)
salary, (ii) annual cash bonuses and (iii) stock options. The Committee believes
that these three elements satisfy the compensation objectives stated above.
Salaries are generally reviewed at the end of each year and adjusted after
taking into account factors such as individual performance and experience level,
market surveys, level of responsibility and salary levels within the Company.
Cash bonus targets are established at the beginning of each year and are
based on corporate financial performance for the year and individual goals for
each executive. For 1995 (as in 1994) no cash bonus is payable unless the
Company achieves targeted budgeted levels of operating profit. If the Company
achieves a specified level of operating profit, then each executive becomes
eligible for a target level of bonus. The target bonus increases as actual
profit increases. The portion of the bonus
11
<PAGE>
that is actually paid is based on an assessment of the individual executive's
performance. In the case of the Vice President of North American Sales and
Education, cash bonus is primarily a commission arrangement with payouts
depending solely on the level of orders. In addition, a small component of this
executive's total bonus is based on the accomplishment of individual goals.
Stock options are a key element in aligning the interests of management and
shareholders, since they incentivize executives to maximize shareholder value
over time. Value accrues to executives only as the value of the Company's stock
appreciates. Vesting schedules are used to encourage a long-term commitment to
the Company by its executive officers. The level of stock options held by each
executive officer are reviewed at the end of each year and additional awards are
considered to optimize the level of incentives and rewards.
Specific recommendations with respect to each of these three compensation
elements for the executive officers (except the President and Chief Executive
Officer) are made by the President and Chief Executive Officer, with the final
decisions being made by the Human Resources Committee and reviewed by the Board
of Directors (except that the Human Resources Committee has exclusive and final
authority with respect to the grant of stock options to executive officers of
the Company). In the case of the Chief Executive Officer, the Human Resources
Committee determines any actions to be taken and such actions are reviewed by
the Board of Directors except that the Human Resources Committee has exclusive
and final authority with respect to the grant of stock options to this
individual.
COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Robert V. McCormick has served as the Company's President since December
1991. He was Chief Operating Officer from December 1991 to July 1992 and since
July 1992 has been President and Chief Executive Officer. Mr. McCormick's salary
was increased by 5% to $248,063 effective December 26, 1994. The Committee
believes that this increase was appropriate in light of Mr. McCormick's
successful efforts to reduce the Company's expenditures and therefore improve
profitability, as well as to maintain an appropriate base salary level relative
to those provided to executives of companies similar to the Company. More
importantly, the Committee structured Mr. McCormick's compensation to maintain a
long term focus on the recovery of Laserscope's business and stock price.
Consequently, the most significant elements of Mr. McCormick's potential
compensation (bonuses and stock options) are premised on substantial
improvements in the Company's operating performance.
Mr. McCormick is eligible for a target cash bonus of up to 30% of his base
salary, if the Company achieves its budgeted level of operating profit. In the
event that this budgeted profit level is exceeded, Mr. McCormick's bonus may be
higher. Based on the Company's performance in 1994, Mr. McCormick did not
receive a cash bonus.
Mr. McCormick was granted an option to purchase 120,000 shares of Common
Stock (vesting over four years) in February 1995 at an exercise price of $4.00.
Mr. McCormick has previously been granted options to purchase a total of 250,000
shares of Common Stock at exercise prices of $4.63 to $5.75 with vesting periods
of four to five years, depending on the specific option granted.
HUMAN RESOURCES COMMITTEE
Herbert M. Dwight
Rodney Perkins, M.D.
Robert J. Pressley, Ph.D. (Chairman)
12
<PAGE>
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are currently no employee directors serving on the Human Resources
Committee. The following non-employee directors serve on the Human Resources
Committee: Herbert M. Dwight, Rodney Perkins, M.D., and Robert J. Pressley,
Ph.D.
Dr. Perkins is the Chairman of the Board of Directors of the Company and has
also served as an executive officer of the Company during various times in the
past. Most recently, Dr. Perkins served as the Company's President and Chief
Executive Officer from October 1991 to December 1991, and as its Chief Executive
Officer from October 1991 to July 1992. During both of these periods, Dr.
Perkins was an executive officer only in a transitional role pending the
appointment of a permanent Chief Executive Officer. During the period from
October 1991 through July 1992, Dr. Perkins was paid a salary for his service as
President and Chief Executive Officer at an annual rate of $100,000. Dr.
Perkins' aggregate compensation from the Company while serving as Chief
Executive Officer was $77,237. In addition, in connection with such service, Dr.
Perkins was granted an option to purchase 60,000 shares of the Company's Common
Stock in October 1991 pursuant to the Company's 1984 Stock Option Plan. This
option, which was originally granted for a term of five years at an exercise
price of $7.125 per share, was repriced in June 1992 to an exercise price of
$5.75 per share in exchange for a delay in vesting. The option is exercisable
ratably over a 24-month period commencing June 26, 1992.
In January 1993, Dr. Perkins entered into a consulting agreement with the
Company pursuant to which he is paid $4,000 per month for consulting services
beyond his current responsibilities as Chairman of the Board.
Dr. Perkins also purchased an aggregate of 16,667 shares of the Company's
Common Stock on September 11, 1989 under the Company's 1984 Stock Purchase Plan
at an aggregate price of $75,002. Dr. Perkins purchased such shares through
promissory notes in favor of the Company bearing interest at the annual rate of
9% and secured by the shares purchased. At December 31, 1994, Dr. Perkins owed
an aggregate of $119,775 under such notes, the largest amount of indebtedness
owed by him to the Company at any time during 1994.
Dr. Perkins is also Chairman of the Board of Directors and a member of the
Board of Directors' Human Resources Committee of ReSound Corporation, a publicly
traded hearing health care company. The Company and ReSound Corporation have not
conducted any business with each other in the past and the Company does not
presently anticipate doing so in the future.
Dr. Perkins was also a founding shareholder of AcuVasive (formerly Envision
Surgical Systems), a manufacturer of microvisualization catheter products
("AcuVasive"). The Company has a commercial relationship with AcuVasive, Mr.
McCormick is a member of its Board of Directors and Dr. Perkins, Mr. Dwight and
the Company are each holders of AcuVasive's capital stock. See "Transactions
with Management and Others."
The Company purchases certain component parts for its laser products from
Optical Coating Labs, Inc. ("OCLI"). Mr. Dwight is currently Chairman, President
and Chief Executive Officer of OCLI. During 1994, the Company purchased products
costing approximately $103,000 from OCLI. At present, OCLI is the sole supplier
of these components.
See "Proposal No. 1 -- Election of Directors -- Compensation of Directors"
for a discussion of certain information with respect to directors serving on the
Human Resources Committee.
13
<PAGE>
PERFORMANCE GRAPH
The following graph summarizes cumulative total shareholder return data
(assuming reinvestment of dividends) for the period since December 31, 1989. The
graph assumes that $100 was invested on December 31, 1989 (i) in the Common
Stock of Laserscope, (ii) in the CRSP Total Return Index for the Nasdaq Stock
Market (U.S. companies), and (iii) in the MG Medical Instruments and Supplies
Index (provided by Media General Financial Services, Inc.). The stock price
performance on the following graph is not necessarily indicative of future stock
price performance.
COMPARISON OF TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LASERSCOPE (LSCP) CRSP NASDEQ INDEX (U.S.) MG MEDICAL INSTRUMENTS AND SUPPLIES INDEX
<S> <C> <C> <C>
12/31/89 100 100 100
12/31/90 263 85 119
12/31/91 80 136 207
12/31/92 55 159 184
12/31/93 58 181 156
12/31/94 38 177 171
</TABLE>
14
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows the compensation received by the Company's Chief
Executive Officer and the four other most highly compensated executive officers
of the Company for 1994 and the compensation received by each such individual
for the Company's two prior years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------- OPTION/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2)(3) (SHARES)(4) COMPENSATION(5)
- ---------------------------------------- ---- ----------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert V. McCormick 1994 $236,250 -- -- $ 2,045
President and Chief 1993 $225,000 -- 40,000 $ 1,927
Executive Officer 1992 $216,000 -- 250,000 $ 1,720
Thomas B. Boyd 1994 $183,428(6) $ 20,000 65,000 $ 1,471
Senior Vice President of 1993 -- -- -- --
Operations and Finance 1992 -- -- -- --
Michael D. Gioffredi (7) 1994 $128,140(8) -- 35,000 $ 1,662
Vice President of Marketing 1993 $ 23,250(9) $ 15,373 25,000 --
1992 $ -- -- -- --
Joseph F. Rondinone 1994 $125,000 -- 25,000 $ 1,250
Vice President of Research 1993 $162,766(10) -- 27,000 $ 1,136
and Development 1992 $ 52,880 $ 10,000 30,000 $ 381
Eli Wismer 1994 $153,399(11) $ 78,160 50,000 $ 1,927
Vice President of 1993 $193,953(11) $ 83,135 20,000 $ 1,786
North American 1992 $148,000(11) $ 57,963 45,000 $ 2,264
Sales and Education
<FN>
- ------------------------
(1) Includes amounts deferred under the Company's 401(k) plan.
(2) Includes bonuses earned in the indicated fiscal year and paid in the
subsequent fiscal year. Excludes bonuses paid in the indicated fiscal year
but earned in the preceding fiscal year.
(3) Executive officers are entitled to discretionary bonuses based on
individual and corporate performance. These bonuses are determined by the
Board of Directors based on the recommendation of the Human Resources
Committee. See "Report of the Human Resources Committee."
(4) All options granted in 1991 were canceled in June 1992 upon the grant of
new options in a repricing of options. The repriced options granted in June
1992 have a term of five years and become exercisable at the rate of 25% at
the end of each year following the grant date, except that (i) both the
term and vesting of the new options commenced on the earlier of June 26,
1992 or one year after the original grant date, and (ii) one option
exercisable for 50,000 shares granted to Mr. McCormick pursuant to such
repricing vests according to the formula stated in the following sentence.
All other options granted in 1992 have 10-year terms and become exercisable
cumulatively at the rate of 10% of the total in equal monthly installments
during the first year following the grant date, 15% during the second year,
20% during the third year, 25% during the fourth year and 30% during the
fifth year. All options granted in 1993 and 1994 to new employees and
officers of the Company have 5-year terms and become exercisable
cumulatively at the rate of 12.5% of the total six months after the vesting
commencement date (first date of employment for new employees and date of
grant for officers), and 1/48 of the shares subject to the option in equal
monthly installments thereafter. All options granted in 1993 and 1994 to
existing employees also have 5-year terms but become exercisable
cumulatively at the rate of 1/48 of the shares subject to the option in
equal monthly installments following their respective grant date. All
unvested
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
options are subject to earlier termination in the event of the termination
of participant's relationship with the Company. All options were granted at
market value on the date of grant. In the event that certain change in
control events were to occur, the options would be assumed or equivalent
options substituted by a successor corporation, unless the Board of
Directors determined that the options should become immediately
exercisable. The exercise price may be paid, subject to certain conditions,
by delivery of already owned shares or with the proceeds from the sale of
the option shares. In addition the Management Continuity Agreements entered
into between the Company and each of its executive officers may affect the
vesting and manner of exercise of options granted by the Company to these
individuals. See "Transactions with Management and Others."
(5) Consists of the Company's contributions to its 401(k) plan for the benefit
of the named executive officers.
(6) Includes salary paid to Mr. Boyd during the period beginning on his
commencement of employment in April 1994 and $79,578 paid to Mr. Boyd in
connection with the relocation of his principal residence to the San Jose
metropolitan area.
(7) Mr. Gioffredi terminated his employment with the Company in February 1995.
(8) Includes $8,140 paid to Mr. Gioffredi in connection with the relocation of
his principal residence to the San Jose metropolitan area.
(9) Includes salary paid to Mr. Gioffredi during the period beginning on his
commencement of employment in October 1993 and $4,788 paid to Mr. Gioffredi
in connection with the relocation of his principal residence to the San
Jose metropolitan area.
(10) Includes salary paid to Mr. Rondinone during the period beginning on his
commencement of employment in July 1992 and $47,766 paid to Mr. Rondinone
in connection with the relocation of his principal residence to the San
Jose metropolitan area.
(11) Includes the following amounts paid to Mr. Wismer in connection with the
relocation of his principal residence to the San Jose metropolitan area:
1994 -- $13,399; 1993 -- $53,953; and 1992 -- $8,000.
</TABLE>
16
<PAGE>
STOCK OPTION GRANTS IN 1994
The following table sets forth information for the named executive officers
with respect to grants of options to purchase Common Stock of the Company made
in 1994 and the value of all options held by such executive officers on December
31, 1994.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OR OPTION TERM (3)
GRANTED IN FISCAL BASE PRICE EXPIRATION ----------------------
NAME (SHARES)(1) YEAR(2) (PER SHARE) DATE 5% 10%
- ------------------------------------- ------------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert V. McCormick.................. -- -- -- -- -- --
Thomas B. Boyd....................... 40,000(4) 9.7% $ 6.125 4/01/99 $ 67,700 $ 149,600
25,000(5) 6.1% $ 5.375 6/10/99 $ 37,100 $ 82,000
Michael D. Gioffredi................. 35,000(5) 8.5% $ 5.375 6/10/99 $ 52,000 $ 114,900
Joseph F. Rondinone.................. 25,000(5) 6.1% $ 5.375 6/10/99 $ 37,100 $ 82,000
Eli Wismer........................... 50,000(5) 12.1% $ 5.375 6/10/99 $ 74,300 $ 164,100
<FN>
- ------------------------
(1) For a description of the material terms of the options, see footnote 4 of
the Summary Compensation Table.
(2) The Company granted options to employees for an aggregate of 411,950 shares
of Common Stock during 1994.
(3) Gains are reported net of the option exercise price but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on future performance of the Company's Common Stock, as well as
the optionee's continued employment through the vesting period.
(4) Options listed were granted on April 1, 1994.
(5) Options listed were granted on June 10, 1994.
</TABLE>
17
<PAGE>
AGGREGATED OPTION EXERCISES IN 1994
AND YEAR-END OPTION VALUES
The following table sets forth information for the named executive officers
with respect to exercises in 1994 of options to purchase Common Stock of the
Company.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT 12/31/94: AT 12/31/94:
SHARES ------------------- --------------------
ACQUIRED ON VALUE (EXERCISABLE/ (EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE) (1) UNEXERCISABLE) (1)
- -------------------------------------------------- ------------- ------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Robert McCormick.................................. -- -- 122,291/167,709 -- / --
Thomas B. Boyd.................................... -- -- 9,791/55,209 -- / --
Michael D. Gioffredi (2).......................... -- -- 11,145/48,855 -- / --
Joseph F. Rondinone............................... -- -- 22,812/59,188 -- / --
Eli Wismer........................................ -- -- 33,812/81,188 -- / --
<FN>
- ------------------------
(1) Based on the closing price of the Company's Common Stock as reported on the
Nasdaq National Market on December 31, 1994 of $3.625 per share.
(2) Mr. Gioffredi terminated his employment with the Company in February 1995.
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Dr. Perkins was a founding shareholder of AcuVasive (formerly EnVision
Surgical Systems), a manufacturer of microvisualization catheter products
("AcuVasive"), and is currently a member of its Board of Directors. The Company
is also party to a Product Development and Marketing Agreement with AcuVasive
dated June 4, 1993 (the "Development Agreement") pursuant to which AcuVasive has
agreed to develop certain microvisualization catheter products for which
Laserscope shall have worldwide, exclusive, royalty-free marketing rights
provided that Laserscope purchases certain minimum volumes of such products from
AcuVasive. Should Laserscope fail to meet such minimums, its market rights under
the Development Agreement become non-exclusive. During 1994, the Company made
development payments of $125,000 to AcuVasive under the Development Agreement
for research and development services. Robert McCormick is also a director of
AcuVasive, and Dr. Perkins, Mr. Dwight and the Company are each holders of
AcuVasive's capital stock.
In March 1994, the Company entered into Management Continuity Agreements
with each of its executive officers, which were amended in December 1994. These
agreements provide (1) for continued employment or salary continuation at the
Company or its successor for at least twelve (12) months following any Change in
Control of the Company (as defined below), at the same salary and with the same
benefit program as were in effect prior to such Change in Control, (2) that such
executives may, with thirty (30) days written prior notice, resign but will be
entitled to receive his or her current salary and level of benefits for the
remainder of the twelve (12) months following the Change in Control if, in
connection with such Change in Control the executive's duties or
responsibilities are materially reduced or executive is asked to relocate to a
facility or location more than 50 miles from the Company's current location, (3)
that all stock options exercisable for the Company's securities held by such
executives shall become immediately vested and shall be exercisable in full in
accordance with the provisions of the option agreement and plan pursuant to
which such option was granted, and (4) that upon the immediate vesting of stock
options, the optionee will have the right (subject to any limitations imposed by
Section 16 of the Securities Exchange Act of 1934 or other applicable securities
laws and only to the extent permitted by the terms of the applicable option
plan) to deliver a non-recourse promissory note (secured only by the pledged
shares for repayment), at the prime rate of interest determined as of the date
of the note, in payment of the exercise price for the outstanding options. For
purposes of the Management Continuity Agreements, a Change in Control of
18
<PAGE>
the Company shall be deemed to have occurred upon the happening of any of the
following events: (1) any acquisition of twenty percent (20%) or more of the
Company's then outstanding voting securities without the approval of the Board
of Directors, (2) any merger or consolidation in which the Company is not the
surviving entity, (3) approval of a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, or (4) a change in the composition of
the Board of Directors of the Company, as a result of which fewer than a
majority of the directors are incumbent directors.
The Company purchases certain component parts for its laser products from
Optical Coating Labs, Inc. ("OCLI"). Mr. Dwight is currently the President,
Chairman and Chief Executive Officer of OCLI. During 1994, the Company purchased
products costing approximately $103,000 from OCLI. At present, OCLI is the sole
supplier of these components.
The Company has sold Common Stock to certain employees and directors and
accepted promissory notes secured by that stock at annual interest rates of 9.0%
to 9.5% as payment for certain of those shares, including the following:
<TABLE>
<CAPTION>
INDEBTEDNESS
TOTAL TO THE COMPANY
SHARES AGGREGATE AS OF
PURCHASER PURCHASED PRICE 12/31/94 (1)(2)
- --------- ----------- --------- --------------
<S> <C> <C> <C>
Harry A. Marshall (3)................................................... 16,667 $ 75,001 $ 119,517
Rodney Perkins, M.D..................................................... 16,667 $ 75,001 $ 119,605
Robert J. Pressley, Ph.D................................................ 16,666 $ 74,997 $ 119,775
<FN>
- ------------------------
(1) In all cases, the amount shown was also the largest amount of indebtedness
owed to the Company at any time during 1994.
(2) Payment in the form of promissory notes in the above transactions was
approved in each case by a majority of the disinterested directors of the
Company and such sales were made pursuant to the Company's 1984 Stock
Purchase Plan, which was approved by the shareholders of the Company.
(3) Mr. Marshall is not standing for reelection to the Company's Board of
Directors for reasons not related to the Company.
</TABLE>
Dr. Perkins has received cash compensation from the Company and options to
purchase shares of Common Stock in connection with his service as an executive
officer of the Company as well as for con-sulting services to the Company beyond
his duties as an officer or director. See "Human Resources Committee Interlocks
and Insider Participation."
Non-employee members of the Company's Board of Directors receive cash
compensation and options to purchase shares of Common Stock in connection with
their service on the Board. See "Proposal No. 1 -- Election of Directors --
Compensation of Directors."
The Company has entered into indemnification agreements with each of its
directors and executive officers, which may require the Company, among other
things, to indemnify them against certain liabilities that may arise by reason
of their status or service as directors or officers, to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' and officers' liability insurance if
available on reasonable terms.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's securities and any subsequent changes in that ownership to the SEC.
Specific filing deadlines of these reports have been established and the Company
is required to disclose in this Proxy Statement any failure to file by these
dates during 1994. All
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of these filing requirements have been satisfied. In making this statement, the
Company has relied solely on written representations of its directors and
executive officers and any ten percent holders and copies of the reports that
they filed with the SEC.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 1996 Annual Meeting must be received by
the Company no later than December 28, 1995 in order that they may be included
in the proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed form of Proxy to vote the shares
they represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
CRAIG W. JOHNSON
SECRETARY
Dated: April 27, 1995
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LASERSCOPE
1994 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "APPLICABLE LAWS" shall have the meaning set forth in Section
4(a) below.
(c) "BOARD" shall mean the Board of Directors of the Company.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) below, if one is appointed.
(f) "COMMON STOCK" shall mean the Common Stock of the Company.
(g) "COMPANY" shall mean Laserscope, a California corporation.
(h) "CONSULTANT" shall mean any person who is engaged by the Company
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, and any director of the Company whether compensated
for such services or not; provided that the term Consultant shall not include
directors who are not compensated for their services or are paid only a direc-
tor's fee by the Company.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator; provided that such leave is for
a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute. For purposes of this Plan, a change
in status from an Employee
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to a Consultant or from a Consultant to an Employee will not constitute a
termination of employment.
(j) "DIRECTOR" shall mean a member of the Board.
(k) "EMPLOYEE" shall mean any person, including Named Executives,
Officers and Directors, employed by the Company or any Parent or Subsidiary of
the Company. The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock as quoted on such system on the date of determination (if
for a given day no sales were reported, the closing bid on that day shall be
used), as such price is reported in THE WALL STREET JOURNAL or such other source
as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the bid and asked prices for the Common Stock or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(o) "NAMED EXECUTIVE" shall mean any individual who, on the last day
of the Company's fiscal year, is the chief executive officer of the Company (or
is acting in such capacity) or among the four highest compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.
(p) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(q) "OFFICER" shall mean a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
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(r) "OPTION" shall mean a stock option granted pursuant to the Plan.
(s) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(t) "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
(u) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(v) "PLAN" shall mean this 1994 Stock Option Plan.
(w) "RULE 16B-3" shall mean Rule 16b-3 promulgated under the Exchange
Act as the same may be amended from time to time, or any successor provision.
(x) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
(y) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 575,000 shares of Common Stock. The Shares may be authorized,
but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. Notwithstanding any other provision of the Plan, shares
issued under the Plan and later repurchased by the Company shall not become
available for future grant or sale under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF ADMINISTRATOR.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3
and by the legal requirements relating to the administration of incentive stock
option plans, if any, of applicable securities laws and the Code (collectively,
the "Applicable Laws"), the Plan may (but need not) be administered by different
administrative bodies with respect to Directors, Officers who are not Directors
and Employees who are neither Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.
With respect to grants of Options to Employees or Consultants who are also
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in
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compliance with Rule 16b-3 as it applies to a plan intended to qualify
thereunder as a discretionary plan and Section 162(m) of the Code as it applies
so as to qualify grants of Options to Named Executives as performance-based
compensation, or (B) a Committee designated by the Board to administer the Plan,
which Committee shall be constituted (I) in such a manner as to permit the
Plan to comply with Rule 16b-3 as it applies to a plan intended to qualify
thereunder as a discretionary plan, (II) in such a manner as to qualify grants
of Options to Named Executives as performance-based compensation under Section
162(m) of the Code and (III) in such a manner as to satisfy the Applicable
Laws.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to grants of Options to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws.
(iv) GENERAL. Once a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 4(a), such Committee shall continue
to serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary plan, and to
the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(m) of the Plan;
(ii) to select the Employees and Consultants to whom Options
may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any
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restriction or limitation, or any vesting acceleration or waiver of forfeiture
restrictions regarding any Option and/or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator shall
determine, in its sole discretion);
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of
any deemed earnings on any deferred amount during any deferral period); and
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options may be granted only to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he or she is
otherwise eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of Stock Options are exercisable for the first time by an Optionee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 20 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 16 of the Plan.
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7. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
8. LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be granted under options to
any Employee under this Plan for any fiscal year of the Company shall be
325,000.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant;
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of the grant;
(B) granted to a person who, at the time of the grant of
such Option, is a Named Executive of the Company, the per share Exercise Price
shall be no less than 100% of the Fair Market Value on the date of grant;
(C) granted to any person other than a Named Executive,
the per Share exercise price shall be no less than 50% of the Fair Market Value
per Share on the date of grant.
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(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from
the total number of Shares as to which the Option is exercised that number of
Shares having a Fair Market Value on the date of exercise equal to the exercise
price for the total number of Shares as to which the Option is exercised, (6)
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds required to pay the exercise price, (7) delivery of an
irrevocable subscription agreement for the Shares that irrevocably obligates the
option holder to take and pay for the Shares not more than twelve months after
the date of delivery of the subscription agreement, (8) any combination of the
foregoing methods of payment, or (9) such other consideration and method of
payment for the issuance of Shares to the extent permitted under Applicable
Laws. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.
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Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time, not exceeding three (3) months as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) after the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent that he or she was entitled to exercise it at the date of such
termination. To the extent that the Optionee was not entitled to exercise the
Option at the date of such termination, or if the optionee does not exercise
such Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 10(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Code), he or she
may, but only within six (6) months (or such other period of time not exceeding
twelve (12) months as is determined by the Administrator, with such determina-
tion in the case of an Incentive Stock Option being made at the time of grant of
the Option) from the date of such termination (but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent he or she was entitled to
exercise it at the date of such termination. To the extent that he or she was
not entitled to exercise the Option at the date of termination, or if he does
not exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his
death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months (or such
other period of time, not exceeding twelve (12) months, as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) following the date of death (but
in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance but only to
the extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee or Consultant
six (6) months (or such other period of time as is determined by the
Administrator as provided above) after the date of death, subject to the
limitation set forth in Section 5(b); or
(ii) within three (3) months (or such other period of time not
exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of
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Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.
(e) RULE 16B-3. Options granted to persons subject to Section 16(b)
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
11. WITHHOLDING TAXES. As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option. The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.
12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").
Any surrender by an Officer or Director of previously owned
Shares to satisfy tax withholding obligations arising upon exercise of this
Option must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
All elections by an Optionee to have Shares withheld to satisfy
tax withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
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(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of
the Administrator;
(d) if the Optionee is an Officer or Director, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
13. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. The designation of a
beneficiary by an Optionee will not constitute a transfer. An Option may be
exercised, during the lifetime of the Optionee, only by the Optionee or a
transferee permitted by this Section 13.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, the number of shares of Common
Stock that have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, the maximum number of shares of Common
Stock for which Options may be granted to any employee under Section 8 of the
Plan, and the price per share of Common Stock covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Administrator. The Administrator may,
in the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of a date fixed by the Administrator and
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give each Optionee the right to exercise his or her Option as to all or any part
of the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Administrator determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, that the Optionee shall have the right to exercise the Option as
to some or all of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable. If the Administrator makes an Option
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be exercisable for a period of thirty (30) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
15. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
16. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 20 of the
Plan:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 14 of the
Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options;
(iii) any change in the limitation on grants to employees as
described in Section 8 of the Plan or other changes which would
require shareholder approval to qualify Options granted hereunder as
performance-based compensation under Section 162(m) of the Code; or
(iv) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefits accruing to
participants under the Plan.
(b) SHAREHOLDER APPROVAL. If any amendment requiring shareholder
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 20 of the Plan.
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<PAGE>
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
19. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
20. SHAREHOLDER APPROVAL.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted. Such shareholder approval shall be obtained in the manner
and to the degree required under applicable federal and state law.
(b) In the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
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<PAGE>
(c) If any required approval by the shareholders of the Plan itself
or of any amendment thereto is solicited at any time otherwise than in the
manner described in Section 20(b) hereof, then the Company shall, at or prior to
the first annual meeting of shareholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
Officer or Director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the
Plan substantially the same information that would be required (if proxies to be
voted with respect to approval or disapproval of the Plan or amendment were then
being solicited) by the rules and regulations in effect under Section 14(a) of
the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to shareholders.
21. INFORMATION TO OPTIONEES. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company.
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<PAGE>
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF LASERSCOPE
1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Laserscope, a California corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy
Statement, each dated April 27, 1995, and hereby appoints Robert V. McCormick
and Thomas Boyd or either of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 1995 Annual Meeting of Shareholders of
Laserscope to be held on June 22, 1995 at 9:00 a.m., local time, at the Fairmont
Hotel, 170 South Market Street, San Jose, California 95113 and at any
adjournment or postponement thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the following matters, and, in their discretion, upon such other
matters that may properly come before the meeting and any adjournment(s)
thereof.
(To be Signed on Reverse Side)
SEE REVERSE
SIDE
<PAGE>
/x/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD AUTHORITY
1. Election of / / / /
Directors
Nominees: Herbert M. Dwight; Benjamin L. Holmes; E. Walter Lange;
Robert V. McCormick; Rodney Perkins, M.D.; Robert J. Pressley, Ph.D.
If you wish to withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list to the right.
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment / / / / / /
to the Company's 1994 Stock Option
Plan to increase the number of
shares of Common Stock reserved
for issuance thereunder by
250,000 shares to an aggregate of
575,000 shares.
3. Proposal to ratify the appointment / / / / / /
of Ernst & Young LLP as the
independent auditors of the Company
for the year ending December 31,
1995.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS;
(2) FOR THE AMENDMENT OF THE 1994 STOCK OPTION PLAN; (3) FOR RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS, AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT
SHOULD ADD THEIR TITLES. IF SIGNER IS A CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY AUTHORIZED OFFICER SIGN, STATING TITLE. IF
SIGNER IS A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
SIGNATURE(S) _____________________________________ DATE ______________, 1995
