<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ECLIPSE SURGICAL TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
ECLIPSE SURGICAL TECHNOLOGIES, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 1998
------------------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Eclipse
Surgical Technologies, Inc., a California corporation (the "Company"), will be
held on Wednesday, April 29, 1998, at 7:30 a.m. local time, at the San Jose
Fairmont, 170 South Market Street, San Jose, CA 95113, for the following
purposes:
1. To elect five directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected and qualified.
2. To ratify the appointment of Coopers & Lybrand L.L.P as independent
accountants of the Company for the fiscal year ending December 31, 1998.
3. To transact such other business as may properly come before the meeting,
including any motion to adjourn to a later date to permit further
solicitation of proxies, if necessary, 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 March 10, 1998, are entitled to notice of and to vote at the meeting
and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Shareholders attending the
meeting may vote in person even if they have returned a Proxy.
Sincerely,
Jeffrey D. Saper
SECRETARY
Sunnyvale, California
March 20, 1998
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 ENCLOSED ENVELOPE.
<PAGE>
ECLIPSE SURGICAL TECHNOLOGIES, INC.
----------------
PROXY STATEMENT FOR 1998
ANNUAL MEETING OF SHAREHOLDERS
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of ECLIPSE SURGICAL TECHNOLOGIES, INC., a California corporation (the
"Company"), for use at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held Wednesday, April 29, 1998, at 7:30 a.m. local time, or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Shareholders. The Annual Meeting will be held at the
San Jose Fairmont, 170 South Market Street, San Jose, CA 95113. The telephone
number of the Company's office is (408) 747-0120.
These proxy solicitation materials and the Company's Annual Report to
Shareholders for the year ended December 31, 1997, including financial
statements, were first mailed on or about March 20, 1998, to all shareholders
entitled to vote at the meeting.
RECORD DATE; OUTSTANDING SHARES
Shareholders of record at the close of business on March 10, 1998 (the
"Record Date") are entitled to notice of and to vote at the meeting. The Company
has one series of Common Shares outstanding, designated Common Stock, no par
value. At the Record Date, 16,898,618 shares of the Company's Common Stock were
issued and outstanding and held of record by 169 registered shareholders.
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 (a) delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or (b) attending the meeting and voting in person.
VOTING AND SOLICITATION
Each shareholder is entitled to one vote for each share of Common Stock held
on the Record Date. Every shareholder voting for the election of directors
(Proposal One) may cumulate votes and give one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of shares that
the shareholder is entitled to vote, or distribute votes on the same principle
among as many candidates as the shareholder may select. However, votes cannot be
cast for more than five candidates. However, no shareholder is entitled to
cumulate votes for a particular candidate unless that 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, before the voting, of his
intention to cumulate votes. On all other matters, each share of Common Stock
has one vote. A quorum, representing the holders of a majority of the
outstanding shares of Common Stock on the Record Date, must be present or
represented for the transaction of business at the Annual Meeting. Abstentions
and broker nonvotes will be counted in establishing the quorum.
This solicitation of proxies is made by the Company and all related costs
will be borne by the Company. The Company may reimburse brokerage firms and
other persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to those beneficial owners. Proxies may also be
solicited by certain of the Company's directors, officers and regular employees,
without additional compensation, personally, by telephone or by telegram.
<PAGE>
DEADLINE FOR SHAREHOLDER PROPOSALS
Shareholder proposals that are intended to be presented at the Company's
1999 Annual Meeting must be received by the Company no later than December 31,
1998, to be considered for inclusion in the proxy statement and form of proxy
relating to that Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of five directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's five nominees named below, all of whom are presently directors
of the Company. If 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 is designated by the present Board to fill the vacancy. The Company
is not aware of any nominee who will be unable or who will decline to serve as a
director. If additional individuals 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) that will assure the election of as many of
the nominees listed below as possible. In that event, the specific nominees to
be voted for will be determined by the proxy holders. The term of office for
each person elected as a director will continue until the next Annual Meeting of
Shareholders or until a successor has been duly elected and qualified.
VOTE REQUIRED
If a quorum is present and voting, the five nominees receiving the highest
number of affirmative votes will be elected to the Board. Abstentions and broker
nonvotes are not counted in the election of directors.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Douglas Murphy-Chutorian, M.D................... 43 Chairman of the Board and Chief Executive Officer
Richard L. Mueller, Jr.......................... 42 President, Chief Operating Officer and Director
Robert L. Mortensen(1)(2)....................... 63 Director
Iain M. Watson(1)(2)............................ 42 Director
Alan L. Kaganov, Sc.D........................... 59 Director
</TABLE>
- ------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
All directors hold office until the next annual meeting of shareholders or
until their successors have been elected and qualified. Officers serve at the
discretion of the Board and are appointed annually. There are no family
relationships between the directors or officers of the Company.
DOUGLAS MURPHY-CHUTORIAN, M.D. has been Chairman of the Board and Chief
Executive Officer of the Company since June 1989. Dr. Murphy-Chutorian was also
Chairman of the Board of Atlantis Catheter Company, Inc. ("Atlantis") from
November 1993 to March 1996 when Atlantis was acquired by Biocompatibles
International plc. Dr. Murphy-Chutorian is an interventional cardiologist and
served as a Clinical Assistant Professor in the Department of Cardiology and
Cardiovascular Medicine at Albert Einstein College of Medicine (Montefiore
Division) and Stanford University Medical Center from 1986 through July 1990. He
is currently a member of the voluntary clinical staff of Stanford University
Medical Center
2
<PAGE>
and of Montefiore Medical Center. Dr. Murphy-Chutorian received his M.D. degree
from the College of Physicians and Surgeons, Columbia University, completed his
residency at New York University/Bellevue Hospital and completed his cardiology
training at Stanford University Medical Center.
RICHARD L. MUELLER, JR. has been President and Chief Operating Officer of
the Company since December 1995. From May 1994 until December 1995, Mr. Mueller
was Vice President of Research and Development at Heartport, Inc., a
minimally-invasive cardiac surgery company. From November 1990 until May 1994,
Mr. Mueller was Director of Research and Development at Origin Medsystems, Inc.,
an endosurgical device manufacturer. From March 1987 until November 1990, Mr.
Mueller was Director of New Product Development at Devices for Vascular
Intervention, Inc., a coronary atherectomy manufacturer. Mr. Mueller holds a
B.S.E.E. degree from Northwestern Polytechnic University and a B.S. degree in
business management from Westminster College.
ROBERT L. MORTENSEN has been a director of the Company since April 1992.
Since 1984, Mr. Mortensen has been either President or Chairman of the Board and
a director of Lightwave Electronics Corporation, a solid-state laser company
that he founded. He holds an M.B.A. from Harvard University.
IAIN M. WATSON has been a director of the Company since April 1992. Since
September 1993, Mr. Watson has been President of HAL Investments, Inc., an
investment company. From 1980 to September 1993, Mr. Watson held various
positions with the Boston Consulting Group, a management consulting firm. Mr.
Watson holds an M.B.A. from Harvard University.
ALAN L. KAGANOV, SC.D. has been a director of the Company since January
1997. Since July 1996, Dr. Kaganov has been a Venture Partner at U.S. Venture
Partners. From May 1993 to June 1996 Dr. Kaganov was Vice President of Business
Development and Strategic Planning at Boston Scientific Corporation. From June
1991 until December 1992 he was President and CEO of EP Technologies, a
catheter-based electrophysiology company. Dr. Kaganov has a Masters and
Doctorate of Science in biomedical engineering from Columbia University and an
M.B.A. from New York University.
BOARD MEETINGS AND COMMITTEES
The Board held a total of five meetings during fiscal 1997. All directors
attended all five meetings of the Board and its committees. The Board has an
Audit Committee and a Compensation Committee. The Board has no nominating
committee or any committee performing such functions.
The Audit Committee, which consisted of Robert L. Mortensen and Iain M.
Watson during fiscal 1997, is responsible for overseeing the Company's
independent accountants and reviewing the Company's internal financial
procedures and controls. The Audit Committee met one time during fiscal 1997.
The Compensation Committee, which consisted of Robert L. Mortensen and Iain
M. Watson during fiscal 1997, is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. The Compensation Committee also administers various of
the Company's incentive compensation and benefit plans. The Compensation
Committee met one time during fiscal 1997. As of March 1998, the Compensation
Committee consisted of Messrs. Mortensen and Watson.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has selected Coopers & Lybrand L.L.P., independent accountants, to
audit the consolidated financial statements of the Company for the fiscal year
ending December 31, 1998, and recommends that shareholders vote for ratification
of that appointment. Notwithstanding this selection, the Board, in its
discretion, may direct the appointment of new independent accountants at any
time during the year, if the
3
<PAGE>
Board feels that such a change would be in the best interest of the Company and
its shareholders. If there is a negative vote on ratification, the Board will
reconsider its selection.
Coopers & Lybrand L.L.P. has audited the Company's financial statements
annually since 1989. Representatives of Coopers & Lybrand L.L.P. are expected to
be present at the meeting with the opportunity to make a statement if they
desire to do so. They are also expected to be available to respond to
appropriate questions.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the votes cast is required to ratify
the Board's selection. In addition, the affirmative votes must represent at
least a majority of the required quorum. If the shareholders reject the
nomination, the Board will reconsider its selection.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS.
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information regarding
the compensation of the Chief Executive Officer and each of the four other most
highly compensated officers of the Company (each, a "Named Executive Officer")
for services rendered in all capacities to the Company for the fiscal years
ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY ($) BONUS ($) OPTIONS/SARS COMPENSATION(1)
- ------------------------------------------------- ----------- ---------- ----------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Douglas Murphy-Chutorian, M.D. .................. 1997 $ 267,099 $ 22,119 -- $ 55
Chairman of the Board and Chief Executive 1996 228,552 33,746 -- 830
Officer 1995 207,130 -- -- 320
Richard L. Mueller, Jr. ......................... 1997 193,327 15,166 -- 35
President and Chief Operating Officer 1996 163,423 22,263 -- 648
1995 -- -- 750,000 --
Barbara A. Dreblow(2) ........................... 1996 107,058 15,813 -- 258
Chief Financial Officer 1995 100,000 -- -- 66
Linda Fenney, M.D. .............................. 1997 176,554 13,964 20,000 32
Vice President, Medical Affairs 1996 133,340 18,063 -- 767
1995 -- -- 64,500 --
William E. Picht ................................ 1997 170,373 21,120 -- 33
Vice President, Operations
Stuart D. Harman ................................ 1997 127,654 10,012 -- 23
Vice President, Product Development 1996 109,857 16,185 -- 412
1995 100,666 -- 106,029 112
</TABLE>
- ------------------------
(1) Life insurance premiums.
(2) On February 28, 1998, Barbara A. Dreblow ceased to be an employee of the
Company and is currently a consultant to the Company. Ms. Dreblow's contract
to provide consulting services expires December 31, 1998. In 1997, Ms.
Dreblow was not a Named Executive Officer.
4
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1997
The following tables set forth information regarding stock options granted
to and exercised by the Named Executive Officers during the Company's fiscal
year ended December 31, 1997, the last day of the Company's 1997 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES % OF TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN FISCAL PRICE PER EXPIRATION ----------------------
NAME GRANTED YEAR SHARE DATE 5% 10%
- --------------------------------------- ----------- ------------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas Murphy-Chutorian, M.D.......... -- -- -- -- -- --
Richard L. Mueller, Jr................. -- -- -- -- -- --
Barbara A. Dreblow..................... -- -- -- -- -- --
Linda Fenney, M.D...................... 20,000 5% $ 9.50 01/24/07 $ 119,490 $ 302,811
William E. Picht....................... -- -- -- -- -- --
Stuart D. Harman....................... -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Each of these options was granted pursuant to the Company's Option Plan.
(2) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), shown are the hypothetical gains or "option spreads" that
would exist for the respective options. These gains are based on assumed
rates of annual compounded stock price appreciation of 5% and 10% from the
date the option was granted over the full option term. The 5% and 10%
assumed rates of appreciation are mandated by the rules of the Commission
and do not represent the Company's estimate or projection of future
increases in the price of its Common Stock.
OPTIONS OUTSTANDING IN FISCAL YEAR 1997
The following table sets forth certain information for the year ended
December 31, 1997 concerning exercised, exercisable and unexercisable stock
options held by each of the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTIONS
-------------------------------------------------------
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END: FISCAL YEAR-END(1):
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------ ----------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas Murphy-Chutorian, M.D............. -- -- -- -- -- --
Richard L. Mueller, Jr.................... -- -- 500,026 249,974 $ 2,102,609 $ 1,051,141
Barbara A. Dreblow........................ 24,900 $ 174,636 125,100 -- 555,657 --
Linda Fenney, M.D......................... -- -- 43,002 41,498 180,823 90,399
William E. Picht.......................... -- -- 31,253 43,747 -- --
Stuart D. Harman.......................... -- -- 84,661 35,339 359,213 148,600
</TABLE>
- ------------------------
(1) The value for an "in the money" option represents the difference between the
exercise price of such option as determined by the Company's Board of
Directors and the fair market value of the Company's Common Stock at
December 31, 1997, multiplied by the total number of shares subject to the
option.
5
<PAGE>
DIRECTOR COMPENSATION
Directors who are not compensated as employees or consultants to the Company
receive a retainer of $10,000 per year for serving on the Board of Directors,
plus fees of $1,500 per board meeting and $1,500 per committee meeting, provided
such committee meeting does not occur on the same day as a board meeting.
The Company also has a Director Stock Option Plan for non-employee
directors. Directors Iain M. Watson and Robert L. Mortensen were each granted an
option to purchase an aggregate of 7,500 shares of Common Stock pursuant to such
plan in fiscal 1997 and director Alan L. Kaganov was granted options to purchase
an aggregate of 22,500 shares of Common Stock pursuant to such plan in fiscal
1997. Mr. Kaganov was also granted options to purchase 77,500 shares of Common
Stock pursuant to the Company's Dual Stock Option Plan in fiscal 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers,
Inc. Executive officers, directors and greater-than-ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely in its review of the copies of such forms
received by it or written representations from certain reporting persons, the
Company believes that, with respect to 1997, all executive officers, directors
and ten percent shareholders of the Company complied with all applicable filing
requirements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists of
Messrs. Mortensen and Watson. No member of the Compensation Committee has a
relationship that would constitute an interlocking relationship with executive
officers or directors of another entity.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Board reviews and
approves the Company's executive compensation policies. The Committee
administers the Company's various incentive plans, including the Stock Option
Plan and the Employee Stock Purchase Plan, sets compensation policies applicable
to the Company's executive officers and evaluates the performance of the
Company's executive officers. The compensation levels of the Company's executive
officers for the fiscal year ended December 31, 1997, including base salary
levels, potential bonuses and stock option grants were determined by the
Committee at the beginning of the fiscal year. The following is a report of the
Committee describing compensation policies and rationale applicable with respect
to the compensation paid to the Company's executive officers for the fiscal year
ended December 1997.
The members of the Compensation Committee of the Board of Directors are
Messrs. Mortensen and Watson, neither of whom is an employee of the Company.
COMPENSATION PHILOSOPHY
The Company's executive compensation programs are designed to attract,
motivate and retain executives who will contribute significantly to the
long-term success of the Company and the enhancement of stockholder value. In
addition to base salary, certain elements of total compensation are payable in
the form of variable incentive plans tied to the performance of the Company and
the individual, and in the equity-based plans designed to closely align
executive and stockholder interests.
6
<PAGE>
BASE SALARY
Base salary for executives, including that of the chief executive officer,
is set according to the responsibilities of the position, the specific skills
and experience of the individual and the competitive market for executive
talent. In order to evaluate the competitive position of the Company's salary
structure, the Committee makes reference to compensation surveys of comparable
companies in the high-technology sector, the Company's industry and its
geographic location. Executive salary levels are set to approximate average
rates, with the intent that superior performance under incentive bonus plans
will enable the executive to elevate his total cash compensation levels that are
above average of comparable companies. The Committee reviews salaries annually
and adjusts them as appropriate to reflect changes in market conditions and
individual performance and responsibilities.
STOCK OPTION PLAN
The Committee believes that the Company's Stock Option Plan (the "Option
Plan") is an essential tool to link the long-term interests of stockholders and
employees, especially executive management, and serves to motivate executives to
make decisions that will, in the long run, give the best returns to
stockholders. Stock options are generally granted when an executive joins the
Company, with subsequent grants also taking into account the individual's
performance and the vesting status of previously granted options. These options
typically vest over a three year period and are granted at an exercise price
equal to the fair market value of the Company's Common Stock at the date of
grant. The size of initial option grants is based upon the position,
responsibilities and expected contribution of the individual. This approach is
designed to maximize stockholder value over a long term, as no benefit is
realized from the option grant unless the price of the Company's Common Stock
has increased over a number of years.
In addition to the Option Plan, executive officers are eligible to
participate in the Company's Employee Stock Purchase Plan. This plan allows
employees to purchase the Company's Common Stock at a price equal to 85% of the
lower of the fair market value at the beginning of the offering period or the
fair market value at the end of the purchase period.
Other elements of executive compensation include life and long-term
disability insurance, medical benefits and a 401(k) deferred compensation plan
with no Company matching contribution for the fiscal year ended December 31,
1997. All such benefits are available to all regular, full-time employees of the
Company.
PERFORMANCE GRAPH
The following graph sets forth the Company's total cumulative stockholder
return as compared to the Nasdaq Index and a peer group of companies selected by
the Company (the "Peer Group"), consisting of five companies whose primary
business is sales and manufacture of surgical devices for the period May 31,
1996 (the date of the Company's initial public offering) through December 31,
1997. The companies in the peer group are Circadian Inc., PLC Systems Inc.,
Health Watch Inc., Cardiogenesis Corp. and Trimedyne Inc. Total stockholder
return assumes $100 invested at the beginning of the period in the Common Stock
of the Company, the stocks represented in the Nasdaq Index and the stocks
represented in the Peer Group Index, respectively. Total return also assumes
reinvestment of dividends; the Company has paid no dividends on its Common
Stock.
Historical stock price performance should not be relied upon as indicative
of future stock price performance.
7
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
THE ABOVE GRAPH WAS PLOTTED USING THE FOLLOWING
DATA:
<S> <C> <C> <C>
Eclipse Surgical Nasdaq Index Peer Group Index
Technologies,
Inc.
05/31/96 $100 $100 $100
06/30/96 $83 $95 $81
09/30/96 $73 $99 $88
12/31/96 $53 $104 $76
03/31/97 $36 $98 $72
06/30/97 $48 $116 $76
09/30/97 $54 $136 $71
12/31/97 $36 $127 $59
</TABLE>
Notes:
A. The lines represent quarterly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. The index level for all series was set to $100.0 on 05/31/96.
All information contained herein is obtained from sources believed to be
accurate and reliable, but, because of the possibility of human and mechanical
error as well as other factors, all information is provided 'as is' without
warranty of any kind, and The Nasdaq Stock Market, Inc. expressly disclaims all
express and implied warranties of any kind and makes no representations or
warranties, express or implied, to any person or entity, as to the accuracy,
timeliness, completeness, merchantability or fitness for any particular purpose.
8
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 10, 1998 as to (i) each
person who is known by the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock; (ii) each director and Named
Executive Officer; and (iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-----------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT OF TOTAL
- ------------------------------------------------------------------------------------- ---------- -----------------
<S> <C> <C>
Douglas Murphy-Chutorian, M.D.(1) ................................................... 4,937,697 29.2%
c/o Eclipse Surgical Technologies, Inc.
1049 Kiel Court, Sunnyvale, CA 94089
Tawfeek Shaheen ..................................................................... 1,090,689 6.5%
Box 316, Sonoma, CA 95476
Richard L. Mueller, Jr.(2) .......................................................... 546,688 3.2%
Iain M. Watson(3) ................................................................... 229,965 1.4%
Barbara A. Dreblow(4) ............................................................... 125,100 *
Robert L. Mortensen(5) .............................................................. 72,696 *
Linda Fenney, M.D.(6) ............................................................... 55,682 *
William E. Picht(7) ................................................................. 38,126 *
Stuart D. Harman(8) ................................................................. 91,051 *
Alan L. Kaganov, Sc.D.(9) ........................................................... 7,500 *
All directors and executive officers as a group (13 persons)(10) .................... 6,145,115 36.4%
</TABLE>
- ------------------------
* Percentage of shares beneficially owned is less than one percent of total.
(1) Includes an aggregate of 3,453,724 shares of Common Stock held by Leslie
Murphy-Chutorian, the wife of Dr. Murphy-Chutorian, and by Mrs.
Murphy-Chutorian as custodian for their minor children.
(2) Consists of options to purchase an aggregate of 541,688 shares of Common
Stock exercisable within 60 days of the date hereof.
(3) Includes options and warrants to purchase an aggregate of 107,793 shares of
Common Stock exercisable within 60 days of the date hereof.
(4) Consists of options to purchase an aggregate of 125,100 shares of Common
Stock exercisable within 60 days of the date hereof.
(5) Consists of options to purchase an aggregate of 72,696 shares of Common
Stock exercisable within 60 days of the date hereof.
(6) Consists of options to purchase an aggregate of 53,807 shares of Common
Stock exercisable within 60 days of the date hereof.
(7) Consists of options to purchase an aggregate of 37,502 shares of Common
Stock exercisable within 60 days of the date hereof.
(8) Consists of options to purchase an aggregate of 90,550 shares of Common
Stock exercisable within 60 days of the date hereof.
(9) Consists of options to purchase an aggregate of 7,500 shares of Common Stock
exercisable within 60 days of the date hereof.
(10) Includes options and warrants to purchase an aggregate of 1,075,920 shares
of Common Stock exercisable within 60 days of the date hereof. See notes 2,
3, 4, 5, 6 and 7 above.
OTHER MATTERS
The Company knows of no other matters to be submitted at 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.
THE BOARD OF DIRECTORS
Dated: March 20, 1998
9
<PAGE>
DETACH HERE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ECLIPSE SURGICAL TECHNOLOGIES, INC.
1998 ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1998
The undersigned shareholder of ECLIPSE SURGICAL TECHNOLOGIES, INC. hereby
acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated March 20, 1998, and hereby appoints Tara Spangler
proxy and attorney-in-fact, with full power of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 1998 Annual
Meeting of Shareholders of ECLIPSE SURGICAL TECHNOLOGIES, INC., to be held on
April 29, 1998 at 7:30 a.m., local time, at the San Jose Fairmont, and at any
adjournments 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 matters set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
DETACH HERE
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1, AND
"FOR" ITEM 2.
1. ELECTION OF DIRECTORS:
NOMINEES: Douglas Murphy-Chutorian, M.D., Richard L. Mueller, Jr.,
Robert L. Mortensen, Iain M. Watson, Alan L. Kaganov, Sc.D.
FOR WITHHELD
/ / / /
/ /______________________________________
For all nominees except as noted above
2. PROPOSAL TO RATIFY APPOINTMENT OF COOPERS AND LYBRAND L.L.P.
AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1998.
FOR AGAINST ABSTAIN
/ / / / / /
3. To transact such other business as may properly come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please sign exactly as name appears hereon. Joint owners
should each sign. Executors, administrators, trustees, guardians
or other fiduciaries should give full title as such. If signing for a
corporation, please sign in full corporate name by a duly
authorized officer.
Signature: Date: Signature: Date:
