<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UROLOGIX, 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):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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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Notes:
<PAGE>
Urologix, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 20, 1996
Notice is hereby given that the Annual Meeting of Shareholders of Urologix,
Inc. will be held at Radisson Plaza Hotel, 35 South Seventh Street,
Minneapolis, Minnesota, on Thursday, November 20, 1996 at 10:30 a.m., local
time, for the following purposes:
1. To elect three directors to hold office for a term of three years or
until their respective successors have been elected.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed October 3, 1996 as the record date for the
determination of shareholders entitled to notice of and to vote at the
meeting.
By Order of the Board of Directors
/s/ Wesley E. Johnson, Jr.
Wesley E. Johnson, Jr., Secretary
Minneapolis, Minnesota
October 17, 1996
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO
ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES
AND VOTE IN PERSON IF THEY SO DESIRE. THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
<PAGE>
Urologix, Inc.
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Urologix, Inc. (the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders to
be held on November 20, 1996 or any adjournment or adjournments thereof. The
cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegraph or in person. The Company may also
request banks and brokers to solicit their customers who have a beneficial
interest in the Company's common stock registered in the names of nominees and
will reimburse such banks and brokers for their reasonable out-of-pocket
expenses.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by
revocation of a written proxy by request in person at the Annual Meeting; if
not so revoked, the shares represented by such proxy will be voted. The
Company's principal offices are located at 14405 Twenty-First Avenue North,
Minneapolis, Minnesota 55447, and its telephone number is (612) 475-1400. The
mailing of this proxy statement to shareholders of the Company commenced on or
about October 21, 1996.
The total number of shares outstanding and entitled to vote at the meeting
as of October 3, 1996 consisted of 9,135,681 shares of common stock, $.01 par
value. Each share of common stock is entitled to one vote. Only shareholders
of record at the close of business on October 3, 1996 will be entitled to vote
at the meeting. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at the Annual Meeting of Shareholders
constitutes a quorum for the transaction of business.
Under Minnesota law, each item of business properly presented at a meeting
of shareholders generally must be approved by the affirmative vote of the
holders of a majority of the voting power of the shares present, in person or
by proxy, and entitled to vote on that item of business. If the shares present
and entitled to vote on that item of business would not constitute a quorum
for the transaction of business at the meeting, however, then the item must be
approved by a majority of the voting power of the minimum number of shares
that would constitute such a quorum. Votes cast by proxy or in person at the
Annual Meeting of Shareholders will determine whether or not a quorum is
present. Abstentions will be treated as shares that are present and entitled
to vote for purposes of determining the presence of a quorum, but as unvoted
for purposes of determining the approval of the matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote
with respect to that matter.
1
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table includes information as of October 3, 1996 concerning
the beneficial ownership of common stock of the Company by (i) the only
shareholders known to the Company to hold more than five percent of the common
stock of the Company, (ii) each of the directors of the Company, (iii) each
Named Executive Officer listed in the Summary Compensation Table, and (iv) all
officers and directors of the Company as a group. Unless otherwise indicated,
all beneficial owners have sole voting and investment power over the shares
held.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------- ------------------ ------------------
<S> <C> <C>
Funds Managed by
Patricof & Co.
Ventures, Inc.......... 909,092(1) 10.0%
445 Park Avenue
New York, NY 10022
InterWest Partners IV... 701,474 7.7%
3000 Sandhill Road
Menlo Park, CA 94025
John Reid............... 600,337 6.6%
775 Applegarden Rd.
Minnetrista, MN 55364
Boston Scientific
Corporation............ 587,500 6.4%
One Boston Scientific
Place
Natick, MA 01670
Mitchell Dann........... 577,675(2)(3) 6.3%
14405-21st Ave. No.
Minneapolis, MN 55447
Investment Advisers,
Inc.................... 559,899(4) 6.1%
3700 First Bank Place
Minneapolis, MN 55440
Jack E. Meyer........... 139,832(3) 1.5%
Buzz Benson............. 271,191(5) 2.9%
Janet Effland........... 909,092(6) 10.0%
Michael R. Henson....... 58,903(3) **
Paul A. LaViolette...... 587,500(7) 6.8%
Robert Momsen........... 701,474(8) 8.1%
David C. Utz, M.D....... 17,000(3) **
William R. Amaden....... 24,500(3) **
Wesley E. Johnson, Jr... 17,500(3) **
Jonathan R. McGrath..... 40,000(3)(5) **
W. Allen Putnam......... 38,188(3) **
All directors and
executive officers as a
group (13 persons)..... 3,983,192(2)(3)(5)(6)(7)(8) 36.3%
</TABLE>
- --------
* Indicates ownership of less than one percent.
2
<PAGE>
(1) Includes (i) 634,488 shares of Common Stock beneficially owned by APA
Excelsior III, L.P. ("Excelsior"), (ii) 241,876 shares of Common Stock
beneficially owned by Coutts & Co. (Jersey) Ltd., Custodian for APA
Excelsior III/Offshore, L.P. ("Coutts & Co."), and (iii) 32,728 shares of
Common Stock beneficially owned by CIN Venture Nominees, Ltd. ("CIN
Ventures") (see footnote (6)).
(2) Includes 5,358 shares owned by M. Dann & Co. Profit Sharing Trust.
(3) Includes options to purchase the following number of shares, which are or
will become exercisable within 60 days of October 3, 1996: Mr. Dann,
14,218 shares; Mr. Meyer, 29,687 shares; Mr. Henson, 3,375 shares; Dr.
Utz, 9,500 shares, Mr. Amaden 22,500 shares; Mr. Johnson 6,250 shares, Mr.
McGrath 40,000 shares, Mr. Putnam 8,125 shares. All officers and directors
as a group, 133,655 shares.
(4) These shares are held by a group of IAI funds.
(5) Includes 271,191 shares owned by the Piper Jaffray Healthcare Fund Limited
Partnership. Mr. Benson, a director of the Company, is a partner in such
partnership and, as such, may be deemed to share voting and investment
power with respect to such shares. Mr. Benson disclaims beneficial
ownership of such shares except to the extent of his respective interest
in such shares arising from his interest in the partnership.
(6) Includes (i) 634,488 shares beneficially owned by Excelsior, (ii) 241,876
shares beneficially owned by Coutts & Co., and (iii) 32,728 shares
beneficially owned by CIN Ventures. Ms. Effland is a general partner of
APA Excelsior III Partners, L.P., which is a general partner of Excelsior
and Coutts & Co. Ms. Effland is a Vice President of Patricof & Co.
Ventures, Inc., which acts as the investment manager for CIN Ventures. As
a result of these affiliations, Ms. Effland may be deemed to beneficially
own all shares beneficially owned by Excelsior, Coutts & Co., and CIN
Ventures and may be deemed to hold shared voting and investment power with
respect to such shares beneficially owned by Excelsior, Coutts & Co., and
CIN Ventures. Ms. Effland disclaims beneficial ownership of such shares
except to the extent of her pecuniary interest therein.
(7) Includes 587,500 shares owned by Boston Scientific Corporation. Mr.
LaViolette is Senior Vice President and Group President of Boston
Scientific Corporation. Mr. LaViolette disclaims beneficial ownership of
shares held by Boston Scientific Corporation.
(8) Includes 701,474 shares that are owned by InterWest Partners IV. Mr.
Momsen is a general partner of InterWest Management Partners IV, the
general partner of InterWest Partners IV. Mr. Momsen disclaims beneficial
ownership of these shares, except to the extent of his proportionate
partnership interest in InterWest Management Partners IV.
ELECTION OF DIRECTORS
Pursuant to the terms of the Amended and Restated Articles of Incorporation
of the Company, directors are divided into three classes, with the term of one
class expiring each year. As the term of each class expires, the successors to
the directors in that class will be elected for a term of three years. The
terms of Messrs. Dann and Meyer and Dr. Utz expire at the Annual Meeting of
Shareholders following fiscal year 1996, the terms of Messrs. Benson and
LaViolette expire at the Annual Meeting of Shareholders following fiscal year
1997 and the terms of Messrs. Henson and Momsen and Ms. Effland expire at the
Annual Meeting of Shareholders following fiscal year 1998. Vacancies on the
Board of Directors and newly created directorships can be filled by vote of a
majority of the directors then in office.
Three directors will be elected at the Annual Meeting to serve until the
Annual Meeting of Shareholders following fiscal year 1999 or until their
successors are elected. The Board of Directors has nominated for election the
persons named below. Each nominee is currently a director and was elected by
the shareholders. It is intended that proxies will be voted for the named
nominees. Unless
3
<PAGE>
otherwise indicated, each nominee and each continuing director has been
engaged in his or her present occupation as set forth below, or has been an
officer with the organization indicated, for more than five years. The Board
of Directors believes that the nominees named below will be able to serve, but
should any nominee be unable to serve as a director, the persons named in the
proxies have advised that they will vote for the election of such substitute
nominee as the Board of Directors may propose.
The names of each nominee and the other directors filling unexpired terms
are set forth below, based upon information furnished to the Company by the
nominee and directors.
NAME AND AGE PRINCIPAL OCCUPATIONAND OTHER DIRECTORSHIPS
- --------- ----------------
Nominees proposed for election for term expiring at the Annual Meeting
following fiscal 1999
Mitchell Dann (36)....... Mr. Dann was a co-founder of the Company, has
served as a director since its inception in 1991
and served as acting President from June 1993 to
January 1994. He became Chairman of the Board in
March 1993. Mr. Dann is currently President of M.
Dann & Co., Inc., a venture capital advisory firm.
Prior to M. Dann & Co., Mr. Dann co-founded and
held the position of Managing Partner at IAI
Venture Capital Group, the venture capital division
of Investment Advisers, Inc. Mr. Dann has served as
a director of several private companies and is
currently a director of Cardiovascular Dynamics.
Mr. Dann holds a B.S. degree in Engineering;
Management from the University of Vermont.
Jack E. Meyer (53)....... Mr. Meyer has been the President and Chief
Executive Officer and a director of Urologix since
January 1994. Prior to joining Urologix, Mr. Meyer
served as President and Chief Executive Officer of
FiberOptic Sensor Technologies, Inc. from March
1993 to January 1994. From January 1992 to March
1993, Mr. Meyer was President and Chief Executive
Officer of Carelink, Inc., a medical device
company. From December 1982 to August 1991, Mr.
Meyer held the positions of Chief Operating Officer
and Executive Vice President at Quest Medical,
Inc., a publicly-traded medical device company. Mr.
Meyer currently is a director of BestWay Rental
Inc. He holds an M.B.A. and a B.S. degree from
Drake University.
David C. Utz, M.D. (72).. Dr. Utz has been a director of the Company since
September 1994. Dr. Utz was Professor of Urology at
Mayo Clinic and the Mayo Medical School from 1957
to 1988, and has served as a consultant in Urology
to the Mayo Clinic Scottsdale from 1988 to the
present. He holds an M.D. degree from St. Louis
University School of Medicine and a M.S. degree in
Urology from the University of Minnesota. Dr. Utz
has served in many medical and professional
urological associations and received numerous
prestigious awards in the field of urology. He has
been the author of over 143 publications and 28
abstracts and editorials.
Directors serving continuing terms
Buzz Benson (41)......... Mr. Benson has been a director of the Company since
August 1992. Mr. Benson has been the Managing
Director of and a Partner in the Piper Jaffray
Healthcare Fund, a venture capital fund, since
November 1992. From November 1988 to November 1992,
Mr.
4
<PAGE>
Benson was a Managing Director in the corporate
finance department of Piper Jaffray Inc. Mr. Benson
is also a director of Exogen, Inc., a medical
device company.
Janet G. Effland (48).... Ms. Effland has served as a director of the Company
since July 1994. Since 1988, Ms. Effland has been a
General Partner and Vice President of Patricof &
Co. Ventures, Inc. Prior to joining Patricof & Co.,
Ms. Effland was the managing director of a
portfolio of U.S. investments for CIN Investment
Company. From 1974 to 1984, Ms. Effland served as
Vice President of Qume Corporation and Courier
Terminal Systems, both subsidiaries of ITT
Corporation. Ms. Effland is also a director of
CYTYC Corporation and of several privately-held
medical companies.
Michael R. Henson (50)... Mr. Henson has served as a director of the Company
since September 1991. Mr. Henson has served as
President, Chief Executive Officer and Chairman of
the Board of Cardiovascular Dynamics, Inc. since
February 1995. From February 1988 to May 1995, Mr.
Henson served as Chief Executive Officer of
Endosonics Corporation, a publicly-held medical
device company. Mr. Henson has also served as
Chairman of the Board of Endosonics since February
1993. From April 1983 to February 1988, Mr. Henson
served as President and Chief Executive Officer of
Trimedyne, Inc., a manufacturer of medical lasers
and catheters. Prior to joining Trimedyne in 1983,
Mr. Henson held positions as Vice President for G.
D. Searle & Company, Director of Marketing for the
Hospital Products Division of Abbott Laboratories
and Marketing Manager for Bristol Myers and
Company.
Paul A. LaViolette (38).. Mr. LaViolette is a Senior Vice President and Group
President of Boston Scientific Corporation. He
joined Boston Scientific Corporation in 1994 as
President of Boston Scientific International and in
1995 became Group President for the Nonvascular
Businesses, which includes Microvasive Endoscopy
and Microvasive Urology. Previously, Mr. LaViolette
was with C. R. Bard for ten years, where he served
as President of Bard's USCI Division from 1993 to
1994 and its USCI Angioplasty Division from 1991 to
1993. Before that time, he held several other
marketing positions at Bard. Previously, he was
with the Kendall Company, Hospital Products
Division, in Boston. Mr. LaViolette graduated from
Fairfield University in Fairfield, Connecticut and
earned a master of business administration degree
from Boston College. Mr. LaViolette has served as a
director of the Company since April 1996.
Robert Momsen (49)....... Mr. Momsen has served as a director of the Company
since December 1992. Since 1981, Mr. Momsen has
been a general partner of InterWest Partners, a
group of venture capital management funds. Mr.
Momsen is also a director of COR Therapeutics,
Inc., a biopharmaceutical company, Ventritex, Inc.,
a medical device company, and ArthroCare
Corporation, a maker of arthroscopic tools.
- --------
The Board of Directors met 13 times during fiscal year 1996. Each current
director attended more than seventy-five percent of the meetings of the Board
of Directors and Board committees on which
5
<PAGE>
the director served, except Dr. Utz attended 9 of the 14 meetings of the Board
or Committee on which he served and Mr. LaViolette attended two of the three
meetings of the Board or the Committee on which he served.
The Compensation Committee, which is currently comprised of Messrs. Dann,
Henson and Momsen and Ms. Effland, is responsible for management of
compensation matters, including recommendations to the Board of Directors on
compensation arrangements for officers and incentive compensation for
employees of the Company. The Compensation Committee met four times in fiscal
1996.
The Audit Committee, which is currently comprised of Messrs. Benson and
LaViolette and Ms. Effland, supervises the financial affairs of the Company
and generally reviews the scope and results of the audit and other services
provided by the Company's independent accountants and reports the results of
their review to the full Board and to management. The Audit Committee met once
in fiscal 1996.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending June 30, 1996, 1995
and 1994, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued to those years, to Jack E. Meyer, the Company's
President and Chief Executive Officer, and to each of the four other most
highly compensated executive officers of the Company in office at the end of
fiscal year 1996, whose total cash compensation exceeded $100,000 during
fiscal year 1996 (together with Mr. Meyer, the "Named Executive Officers") in
all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) SECURITIES
----------------------------- UNDERLYING
NAME AND FISCAL OTHER ANNUAL OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (# SHARES)
------------------ ------ -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Jack E. Meyer.............. 1996 $157,500 -- -- 50,000
President and Chief 1995 150,000 -- -- --
Executive Officer 1994(2) 68,750 -- -- 237,500
Wesley E. Johnson, Jr...... 1996(3) 83,417 $42,224 73,930
Vice President, Finance
and CFO
Jonathan R. McGrath........ 1996 135,000 $ 2,654 -- 19,290
Vice President, 1995(4) 94,083 -- -- 100,000
Research & Development
W. Allen Putnam............ 1996 107,661 8,000 -- 24,290
Vice President, Operations 1995(5) 100,417 -- -- 65,000
William R. Amaden.......... 1996 113,375 16,500 -- 8,575
Managing Director of Europe 1995(6) 65,436 20,000 -- 60,000
</TABLE>
- --------
(1) None of the Named Executive Officers received an aggregate amount of
perquisites and other personal benefits exceeding $50,000 or 10% of the
officer's total annual salary and bonus for the fiscal year.
(2) Mr. Meyer became President and CEO effective January 26, 1994.
(3) Mr. Johnson began employment with the Company on September 27, 1995. The
other Annual Compensation to Mr. Johnson consisted of reimbursement of
moving expenses.
(4) Mr. McGrath began employment with the Company on October 10, 1994.
(5) Mr. Putnam became Vice President of Operations effective December 20,
1993.
(6) Mr. Amaden began employment with the Company in December 1994.
Option Grants
The following table contains information concerning the grant of stock
options under the Amended and Restated Urologix, Inc. 1991 Stock Option Plan
to the Named Executive Officers during the fiscal year ended June 30, 1996:
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------- POTENTIAL
% OF REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL
OPTIONS MARKET RATES OF STOCK
GRANTED PRICE PRICE
TO EXERCISE ON APPRECIATION FOR
EMPLOYEES PRICE DATE OPTION TERM(1)
OPTIONS IN FISCAL PER OF EXPIRATION -----------------
NAME GRANTED YEAR SHARE GRANT DATE 5% 10%
- ---- ------- --------- -------- ------ ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Jack E. Meyer........... 50,000 17.5% $14.00 $14.00 05/29/06 440,226 1,115,620
Wesley E. Johnson, Jr... 62,500 21.9% $ 0.60 $ 0.60 09/26/02 15,266 35,577
11,430 4.0% $14.00 $14.00 05/29/06 100,636 255,031
Jonathan R. McGrath..... 19,290 6.8% $14.00 $14.00 05/29/06 169,839 430,406
W. Allen Putnam......... 24,290 8.5% $14.00 $14.00 05/29/06 213,862 541,968
William R. Amaden....... 8,575 3.0% $14.00 $14.00 05/29/06 75,499 191,329
</TABLE>
Option Exercises and Year-End Values
Stock options were exercised by the Named Executive Officers during the
fiscal year ended June 30, 1996. The following table sets forth certain
information regarding exercised and unexercised options held by each of the
Named Executive Officers at the end of the fiscal year ended June 30, 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT FISCAL YEAR END
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT JUNE 30, 1996 AT JUNE 30, 1996(2)
NAME ON EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Jack E. Meyer........... 97,968 $39,187 0/189,532 $ 0/1,827,869
Wesley E. Johnson, Jr... 6,250 2,500 3,125/64,555 $ 40,313/685,313
Jonathan R. McGrath..... -- -- 27,500/91,700 $354,750/935,250
W. Allen Putnam......... 30,063 6,013 4,062/55,166 $ 53,212/404,476
William R. Amaden....... -- -- 15,000/53,575 $193,500/585,500
</TABLE>
- --------
(1) Based upon the difference between the option exercise price and fair
market value on the date of exercise.
(2) The value of unexercised options is calculated by determining the
difference between the fair value of the shares underlying the options at
June 30, 1996 and the exercise price of the options. Fair value was
determined based on a per share price of $13.50, which is the closing
price for the Company's common stock on June 28, 1996, the last trading
day in the Company's fiscal year.
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for administering the Company's compensation program with respect
to the Company's executive officers. Prior to May 30, 1996, the date of the
Company's initial public offering, decisions with respect to compensation were
made by the full Board of the Company upon recommendations of the Compensation
Committee. This report shall not be deemed incorporated by reference to any
filing under the Securities Act of 1933 or to the Securities Exchange Act of
1934 and shall not otherwise deemed to be filed under either Act.
8
<PAGE>
Compensation Philosophy
The compensation philosophy of the Company is to provide competitive levels
of compensation that are consistent with the Company's annual and long-term
performance goals, recognize individual initiative and achievements and assist
the Company in attracting and retaining qualified executives. In establishing
compensation for executive officers, the Company looks at a variety of
factors, including salaries for executives holding comparable positions in
similarly situated companies, particularly companies in the medical device
industry. The Company also seeks to establish an executive compensation
program that provides incentives that will reward officers for pursuing the
actions necessary to improve the Company's performance and increase long-term
shareholder value.
There are three elements to the Company's executive compensation program:
base salary, cash bonuses and long-term stock-based incentives. The Company
believes that there should be a strong relationship between executive
compensation and achievement of corporate goals.
Base Salary
Executive base salaries have been based upon past performance, experience,
responsibility and salary levels for persons holding similar positions in
similarly situated companies.
Cash Bonuses
Bonuses are awarded to executive officers in consideration of contributions
to the Company and the Company's overall performance and upon achievement of
specific established goals.
Stock Options
Stock options are generally granted to executive officers in connection with
their initial employment and periodically upon review of compensation levels
and past performance. The Committee believes that stock ownership by
management and stock-based performance compensation arrangements are
beneficial in aligning management and shareholder's interest in enhancing
shareholder value. Stock options have been awarded at an exercise price equal
to the fair market on the date of grant and therefore have value only if the
price of the Company's stock appreciates from the price on the date on which
the stock options are granted. In this way, the Company's executive officers
and shareholders benefit equally from such stock price appreciation. Stock
options are awarded in a manner consistent with the Company's objective to
provide a long-term equity interest in the Company and to provide an
opportunity for a greater financial reward if long-term performance is
sustained. To encourage a long-term perspective, options generally vest over a
four to five-year period. During fiscal year 1996, in connection with the
Company's initial public offering, the Company granted options to each of its
executive officers.
Chief Executive Officer Compensation
Prior to May 30, 1996, the Company was privately held. Accordingly, the
compensation of Mr. Meyer for the year ended June 30, 1996 was in large part
determined while the Company was a privately-held corporation. The important
elements used by the Company in setting Mr. Meyer's compensation for fiscal
1996, including the granting of an option to Mr. Meyer to purchase 50,000
shares, included (i) the Company's progress in achieving milestones in
connection with its product and market development and its clinical trials;
(ii) the Company's successful completion of a corporate partner relationship,
(iii) the Company's successful efforts in raising private financing to fund
its operations and its successful completion of an initial public offering.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
MITCHELL DANN JANET G. EFFLAND MICHAEL R. HENSON ROBERT MOMSEN
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mitchell Dann, the Chairman of the Board of the Company, served as a member
of the Company's Compensation Committee during the last fiscal year. In
addition, during the past fiscal year, Mr. Dann received compensation from the
Company for consulting services provided to the Company. See "Certain
Transactions."
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
common stock of the Company from May 29, 1996, the date of the Company's
initial public offering, to June 30, 1996, the end of the Company's fiscal
year, with the cumulative total return of the Nasdaq Stock Market-U.S. and the
Hambrecht & Quist Healthcare-Excluding Biotechnology Index over the same period
(assuming the investment of $100 on May 30, 1996, the date of the Company's
initial public offering, and the reinvestment of all dividends).
[Performance Graph Appears Here]
Hambrecht & Quist
Measurement Nasdaq Stock Healthcare--Excluding
Period Uroligix, Inc. Market--U.S. Biotechnology
- ----------- -------------- ------------ ---------------------
5/30/96 $100.00 $100.00 $100.00
5/31/96 $103.57 $100.82 $100.05
6/30/96 $ 96.43 $ 96.28 $ 95.83
COMPENSATION OF DIRECTORS
Under the terms of the Company' s 1991 Stock Option Plan, each person
currently serving as a non-employee director was granted a non-qualified option
to purchase 10,000 shares of the Company's Common Stock at a price equal to the
Company's initial public offering price ($14.00 per share). The options vest
over four years and expire ten years from the date of grant, subject to earlier
termination one year after the person ceases to be a director of the Company.
In addition, persons first elected as non-employee directors in the future will
receive options to purchase 10,000 shares at a price equal to fair market value
on the date of grant. Each director is also reimbursed for expenses associated
with attending Board of Directors meetings. Beginning in April 1996, non-
employee directors are paid $1,000 per board meeting and $500 per committee
meeting.
10
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EMPLOYMENT AGREEMENTS
On January 26, 1994, the Company entered into an employment agreement with
Jack Meyer under which Mr. Meyer agreed to serve as the Chief Executive
Officer and President of the Company at a salary of $150,000 per year, with
salary increases subject to the discretion of the Company's Board of
Directors. Effective January 1, 1996, Mr. Meyer's salary was increased to
$165,000. Under the agreement, the Company agreed to grant Mr. Meyer an option
to purchase 237,500 shares of Common Stock, vesting at various rates over a
six year period. In addition, the Company has agreed that if Mr. Meyer's
employment is terminated without cause, the Company will pay him his salary
for a period of twelve months or until he has secured alternative employment,
whichever occurs first. The Company has also entered into agreements with Mr.
Amaden setting forth his responsibility in the United Kingdom and Europe.
Under these agreements, both the Company and Mr. Amaden are required to give
60 days notice prior to termination of the agreements. The Company does not
have written employment agreements with the other named Executive Officers.
Under the terms of a letter agreement between the Company and Mr. McGrath, the
Company has agreed that if it terminates the employment of Mr. McGrath without
cause, it will pay him his salary for a period of six months or until he has
secured alternative employment, whichever occurs first.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. These insiders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file, including Forms 3, 4 and 5. During the fiscal year ended June 30, 1996,
all reports filed by insiders were fled in a timely manner.
CERTAIN TRANSACTIONS
M. Dann & Co., Inc., a company owned by Mitchell Dann, the Company's
Chairman, currently provides consulting services to the Company, for which it
is currently paid a monthly fee of $7,500. Mr. Dann received $40,970 as salary
for the period from June 30, 1994 to November 30, 1994 and his company
received consulting fees in the aggregate amount of $32,000 from December 1994
through June 30, 1995 and consulting fees in the aggregate amount of $86,000,
during fiscal 1996.
In December 1995, the Company issued 312,500 shares of Series D Preferred
Stock at a price of $8.00 per share, each convertible into one share of Common
Stock. In March 1996, the Company issued 326,306 shares of Series D Preferred
Stock at a price of $8.00 per share, each convertible into one share of Common
Stock. On the effective date of the Company's initial public offering, each
share of Series D Preferred Stock was converted into one share of Common Stock
of the Company.
Boston Scientific Corporation purchased 587,500 shares of these shares of
Series D Preferred Stock, Mitchell Dann purchased 1,565 shares Jack E. Meyer
purchased 813 shares, Michael Henson purchased 1,966 shares, Wesley E.
Johnson, Jr. purchased 5,000 shares and William R. Amaden purchased 2,000
shares. Paul A. LaViolette, a director of the Company, is a Senior Vice
President and Group Manager with Boston Scientific Corporation.
The Company entered into a Consulting Agreement with Dr. Utz, a director of
the Company, for the period from September 1, 1993 through August 31, 1994.
The agreement has been extended on a yearly basis and currently runs through
September 30, 1998. Dr. Utz provides consulting services to the Company in
connection with the Medical Advisory Board, as well as general consultation on
the Company's products and clinical evaluation of those products. In exchange
for his services, Dr. Utz is
11
<PAGE>
paid $24,000 per year and through June 30, 1996 had received non-qualified
stock options to purchase 27,000 shares of the Company's Common Stock under
this agreement and otherwise as a non-employee director of the Company and
member of the Company's Scientific Advisory Board.
SHAREHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission permit
shareholders of a company, after timely notice to the company, to present
proposals for shareholder action in the company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate
for shareholder action and are not properly omitted by company action in
accordance with the proxy rules. The Urologix, Inc. 1997 Annual Meeting of
Shareholders is expected to be held on or about November 20, 1997, and proxy
materials in connection with that meeting are expected to be mailed on or
about October 20, 1997. Shareholder proposals prepared in accordance with the
proxy rules must be received by the Company on or before June 20, 1997.
ANNUAL REPORT
An Annual Report of the Company setting forth the Company's activities and
containing financial statements of the Company for the fiscal year ended June
30, 1996 accompanies this Notice of Annual Meeting and proxy solicitation
material.
The accounting firm of Arthur Andersen, LLP has served as independent public
accountants for the Company for the year ended June 30, 1996. The Company has
selected Arthur Andersen, LLP to serve as independent public accountants for
the Company for the fiscal year ended June 30, 1997. The Company expects that
a representative from Arthur Andersen, LLP will attend the Annual Meeting and
be available to respond to appropriate shareholder questions.
GENERAL
Shareholders may receive without charge a copy of the Company's Annual
Report on Form 10-K, including financial statements and schedules thereto, as
filed with the Securities and Exchange Commission, by writing to: Urologix,
Inc., 14405 21st Avenue North, Minneapolis, Minnesota 55447, Attention: Wesley
E. Johnson, Jr. or by calling the Company at (612) 475-1400.
By the Order of the Board of
Directors
/s/ Wesley E. Johnson, Jr.
Wesley E. Johnson, Jr., Secretary
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- --------------------------------------------------------------------------------
UROLOGIX, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
For Annual Meeting of Shareholders
November 20, 1996
The undersigned hereby appoints Mitchell Dann, Jack E. Meyer and Wesley E.
Johnson, or any one or more of them, proxies with full power of substitution to
vote in their discretion cumulatively all shares of stock of Urologix, Inc. of
record in the name of the undersigned at the close of business on October 3,
1996 at the Annual Meeting of Shareholders to be held on November 20, 1996, or
at any adjournment or adjournments, hereby revoking all former proxies.
(To Be Signed On Reverse Side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
FOR the nominees WITHHOLD
listed at right AUTHORITY
(except as indicated to vote for the
1. ELECTION to the contrary) nominees listed at right
OF
DIRECTORS: [_] [_] Nominees:
JACK E. MEYER
MITCHELL DANN
DAVID C. UTZ, M.D.
(INSTRUCTION: To withhold authority to vote for an individual
nominee draw a line through the nominees name at right):
IN THEIR DISCRETION UPON ANY OTHER MATTERS COMING BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSAL (1) IN
ACCORDANCE WITH THE SPECIFICATIONS MADE AND "FOR" SUCH NOMINEES IF THERE IS NO
SPECIFICATION.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARE PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature Dated: , 1996
------------------ ------------------------- -------------
SIGNATURE IF HELD JOINTLY
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such; when shares have been issued in
names of two or more persons, all should sign.
- --------------------------------------------------------------------------------
