<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 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):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Urologix, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 19, 1997
Notice is hereby given that the Annual Meeting of Shareholders of Urologix,
Inc. will be held at Marquette Hotel, 710 Marquette Avenue, Minneapolis,
Minnesota, on Wednesday, November 19, 1997 at 10:30 a.m., local time, for the
following purposes:
1. To elect two directors to hold office for a term of three years or until
their respective successors have been elected.
2. To amend the Company's 1991 Amended and Restated Stock Option Plan to
increase the number of shares under the plan and to satisfy the
requirements of Section 162(m) of the Internal Revenue Code of 1986, as
amended.
3. 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, 1997 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 15, 1997
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 19, 1997 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 15, 1997.
The total number of shares outstanding and entitled to vote at the meeting
as of October 3, 1997 consisted of 9,341,196 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, 1997 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, 1997 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
executive officer of the Company, and (iv) all directors and executive
officers 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 OF NUMBER OF SHARES PERCENTAGE
BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
------------------- --------------------- ------------------
<S> <C> <C>
John Reid....................... 563,837 6.0%
195 Bunker Hill Avenue
Stratham, NH 03885
Boston Scientific Corporation... 587,500 6.3%
One Boston Scientific Place
Natick, MA 01670
Mitchell Dann................... 494,357(2) 5.3%
14405 21st Avenue North
Minneapolis, MN 55447
Jack E. Meyer................... 171,711 1.8%
Buzz Benson..................... 25,334(3) *
Janet Effland................... 29,049(4) *
Michael R. Henson............... 9,903(5) *
Paul A. LaViolette.............. 590,000(6) 6.3%
Robert R. Momsen................ 18,727(7) *
David C. Utz, M.D............... 19,250 *
John P. Costello................ 14,062 *
Wesley E. Johnson, Jr. ......... 33,124 *
Jonathan R. McGrath............. 88,489 *
David W. Powell................. 9,375 *
W. Allen Putnam................. 73,457 *
All directors and executive
officers as a group (13
persons)....................... 1,576,838 16.4%
</TABLE>
- --------
* Indicates ownership of less than one percent.
(1) Includes options to purchase the following number of shares, which are or
will become exercisable within 60 days of October 3, 1997: Mr. Dann,
20,000 shares; Mr. Meyer, 60,064 shares; Mr. Benson, 2,500 shares; Ms.
Effland, 2,500 shares; Mr. Henson, 2,500 shares; Mr. LaViolette, 2,500
shares; Mr. Momsen, 2,500 shares; Dr. Utz, 14,750 shares; Mr. Costello,
14,062 shares; Mr. Johnson 21,874 shares, Mr. McGrath 82,233 shares, Mr.
Powell, 9,375 shares; Mr. Putnam 25,358 shares; and all officers and
directors as a group, 260,216 shares.
(2) Includes 5,358 shares owned by M. Dann & Co. Profit Sharing Trust.
(3) Includes 1,561 shares owned individually by Mr. Benson and 21,273 shares
owned by the Piper Venture Management III Fund Limited Partnership, the
general partner of Piper Jaffray Healthcare Fund Limited Partnership. Mr.
Benson, a director of the Company, is a partner in such partnership
2
<PAGE>
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.
(4) Includes 12,721 shares owned individually by Ms. Effland and 13,828 shares
owned by CIN Ventures Nominees, Ltd., which is managed by Patricof & Co.
Ventures, Inc. Ms. Effland, a director of the Company, is a General
Partner and Vice-President of Patricof & Co. Ventures, Inc. and, as such,
may be deemed to share voting and investment power with respect to such
shares. Ms. Effland disclaims beneficial ownership of such shares except
to the extent of her respective interest in such shares arising from her
interest in the partnership.
(5) Includes 499 shares owned by the Henson Family Trust, of which Mr. Henson
is a trustee.
(6) Includes 587,500 shares owned by Boston Scientific Corporation. Mr.
LaViolette is a Senior Vice President and Group President of Boston
Scientific Corporation. Mr. LaViolette disclaims beneficial ownership of
shares held by Boston Scientific Corporation.
(7) Includes 16,227 shares owned by the Momsen Living Trust, of which Mr.
Momsen is a trustee.
3
<PAGE>
PROPOSAL 1
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. Benson and LaViolette expire at the Annual Meeting of
Shareholders following fiscal 1997, the terms of Messrs. Henson and Momsen and
Ms. Effland expire at the Annual Meeting of Shareholders following fiscal 1998
and the terms of Messrs. Meyer and Dann and Dr. Utz expire at the Annual
Meeting of Shareholders following fiscal year 1999. Vacancies on the Board of
Directors and newly created directorships can be filled by vote of a majority
of the directors then in office.
Two directors will be elected at the Annual Meeting to serve until the
Annual Meeting of Shareholders following fiscal year 2000 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 otherwise indicated, each nominee and each continuing
director has been engaged in his 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 2000
Buzz Benson (43)......... Mr. Benson has served as a director of the Company
since August 1992. Mr. Benson has been the Managing
Director of Piper Jaffray Ventures since November
1992 and is a Partner in the Piper Jaffray
Healthcare Funds, a series of venture capital funds
focused on investments in emerging companies in the
healthcare industry. From November 1988 to November
1992, Mr. 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, and several privately-held
medical companies.
Paul A. LaViolette (40).. Mr. LaViolette has served as a director of the
Company since April 1996. 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
4
<PAGE>
Bard. Previously, he was with the Kendall Company,
Hospital Products Division.
Directors serving continuing terms
Janet G. Effland (49).... 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 United States 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, a medical diagnostics equipment
company, and several privately-held medical
companies.
Michael R. Henson (51)... 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 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. Hensen 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 Squibb Company.
Mr. Henson is presently a director of Endosonics
Corp.
Robert R. Momsen (50).... 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
venture capital firm. Mr. Momsen is also a director
of COR Therapeutics, Inc., Coulter Pharmaceutical,
Inc. and Progenitor, Inc., each of which is a
biopharmaceutical company, Innovasive Devices,
Inc., a tissue repair system company, Integ
Incorporated, a medical diagnostic company, and
ArthroCare Corporation, a manufacturer of
arthroscopic surgical equipment and several
privately-held medical companies.
Mitchell Dann (37)....... 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, Inc.
5
<PAGE>
Jack E. Meyer (54)....... 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., a medical
device company, 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 medical device
company. Mr. Meyer currently is a director of
BestWay, Inc.
David C. Utz, M.D. (73).. Dr. Utz has been a director of the Company since
September 1994. He is an emeritus consultant, Mayo
Clinic. Dr. Utz was Professor of Urology, Mayo
Medical School, and a consultant in urology from
1957 to 1988. 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 145 publications and 28
abstracts and editorials.
Vote Required. The affirmative vote of a majority of the shares of common
stock represented at the meeting in person or by proxy is required for the
election of the two nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES.
Meetings. The Board of Directors met eleven times during fiscal year 1997.
Each director attended more than seventy-five percent of the meetings of the
Board of Directors and Board committees on which the director served.
Board Committee Meetings. The Compensation Committee, which is currently
comprised of Messrs. Henson, LaViolette 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 six times in fiscal 1997.
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
twice in fiscal 1997.
The Company does not have a nominating committee. However, the Company's
Bylaws provide that a notice of proposed shareholder nominations for the
election of directors must be timely given in writing to the Secretary of the
Company prior to the meeting at which directors are to be elected. To be
timely, the notice must be given by such shareholder to the Secretary of the
Company not less than 60 days nor more than 90 days prior to a meeting date
corresponding to the previous year's Annual Meeting. The notice to the Company
from a shareholder who intends to nominate a person at the meeting for
election as a director must contain certain information about such shareholder
and the person(s) nominated by such shareholder, including, among other
things, the name and address of
6
<PAGE>
record of such shareholder, a representation that the shareholder is entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting, the name, age, business and residence addresses and principal
occupation of each nominee, such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee(s), and the consent of each nominee to serve as a director if
so elected. The Company may also require any proposed nominee to furnish other
information reasonably required by the Company to determine the proposed
nominee's eligibility to serve as director. If the presiding officer of a
meeting of shareholders determines that a person was not nominated in
accordance with the foregoing procedure, such person will not be eligible for
election as a director.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jack E. Meyer............. 54 Director, President and Chief Executive Officer
John P. Costello.......... 41 Executive Vice President, Sales and Marketing
Wesley E. Johnson, Jr. ... 39 Vice President, Finance, Chief Financial Officer,
Treasurer and Secretary
Jonathan R. McGrath....... 43 Vice President, Research and Development
David W. Powell........... 40 Vice President, Operations
W. Allen Putnam........... 50 Vice President, Regulatory and Quality
</TABLE>
The following is a brief summary of the business experience of each of the
executive officers, except for Mr. Meyer, who is described above under
"Election of Directors."
Mr. Johnson has been the Vice President of Finance and Chief Financial
Officer of Urologix since September 1995. He was also elected Secretary in
March 1996 and elected Treasurer in December 1996. Prior to joining Urologix,
Mr. Johnson served as Vice President, Finance and Chief Financial Officer of
Orthofix Inc., formerly American Medical Electronics, Inc., from December 1986
to September 1995.
Mr. Costello has served as Executive Vice President, Sales and Marketing for
the Company since February 1997. Prior to joining Urologix, Mr. Costello
served as Vice President of Sales and Marketing for FemRX, Inc. and
Cardiovascular Imaging Systems, Inc. over the past four years. In addition,
Mr. Costello served as Vice President of Sales for the Critical
Care/Angioplasty division of Baxter Healthcare.
Mr. McGrath has been the Vice President of Research and Development for
Urologix since October 1994. Prior to joining Urologix, Mr. McGrath served as
Vice President of Research and Development of Schneider U.S.A. from March 1990
to September 1994. Prior to 1990, Mr. McGrath co-founded Harbor Medical
Devices, where he served as Vice President from February 1987 to February
1990. In addition, Mr. McGrath has held various positions at Medi-Tech, Inc.,
Ladd Medical, Inc., and Ladd Research Industries, Inc.
Mr. Powell has served as Vice President, Operations for the Company since
September 1996. From 1991 through May 1996, Mr. Powell served in a variety of
positions of increasing responsibility with Gymania Corporation and certain
related companies including Playpal Inc. and Playpal Sales Corporation. Each
of the latter two companies was engaged in the business of international
sales, design and technical service of large commercial creative play
structures. During this time, Mr. Powell was asked to serve as President of
Playpal Inc., a financially troubled Florida corporation. Mr. Powell
7
<PAGE>
became President of Playpal in approximately March 1995 and continued as its
President until Paypal filed a petition for Chapter 11 protection in
approximately May 1996. Subsequent to Mr. Powell's resignation, Playpal filed
a petition for bankruptcy under Chapter 7 in late 1996. From 1988 to 1991, Mr.
Powell was Vice President, Operations for Vitaphore Corporation, a medical
device company. From 1980 to 1988, Mr. Powell held various positions with
Baxter Healthcare and American Hospital Supply Corporation.
Mr. Putnam has been the Vice President, Regulatory and Quality for the
Company since October 1994 and was Vice President of Operations from December
1993 to October 1994. Before joining Urologix, Mr. Putnam served as President
and Chief Operating Officer of Uroplasty, Inc. from June 1992 to November
1993. Uroplasty was a wholly-owned subsidiary of Bioplasty, Inc., a breast
implant company, and both companies filed for Chapter 11 bankruptcy protection
in April 1993. Mr. Putnam also held the position of Vice President of Quality
Assurance and Regulatory Affairs at St. Jude Medical, Inc. from December 1989
to June 1992. In addition, Mr. Putnam has held various positions at Bio-
Vascular, Inc., Minnetonka, Inc., Hollister Corporation, and Baxter-Travenol
Laboratories.
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending June 30, 1997, 1996
and 1995, 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 1997, whose total cash compensation exceeded $100,000 during
fiscal year 1997 (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............. 1997 $175,000 $ 22,096 -- 25,000
President and Chief 1996 157,500 13,452 -- 50,000
Executive Officer 1995 150,000 -- --
Wesley E. Johnson, Jr..... 1997 118,334 18,194 -- --
Vice President, Finance 1996(2) 83,417 -- $42,224 73,930
and Chief Financial
Officer, Treasurer and
Secretary
Jonathan R. McGrath....... 1997 145,198 13,044 -- --
Vice President, Research 1996 135,000 2,654 -- --
and Development 1995(3) 95,083 -- -- 19,290
W. Allen Putnam........... 1997 112,919 12,949 -- --
Vice President, Regulatory 1996 107,661 10,747 -- 24,290
and Quality 1995(4) 100,417 4,000 -- 65,000
David W. Powell........... 1997(5) 105,414 18,777 -- 50,000
Vice President, Operations
</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. Johnson began employment with the Company on September 27, 1995. The
fiscal 1996 Other Annual Compensation to Mr. Johnson consisted of
reimbursement of relocation expenses.
(3) Mr. McGrath began employment with the Company on October 10, 1994.
(4) Mr. Putnam was Vice President of Operations from December 20, 1993 until
October 1994, when he became Vice President, Regulatory and Quality.
(5) Mr. Powell began employment with the Company on September 9, 1996.
9
<PAGE>
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, 1997:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO MARKET PRICE APPRECIATION
EMPLOYEES EXERCISE PRICE FOR OPTION TERM
OPTIONS IN FISCAL PRICE ON DATE EXPIRATION ----------------------
NAME GRANTED YEAR PER SHARE OF GRANT DATE 5% 10%
- ---- ------- ---------- --------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Jack E. Meyer........... 25,000 11% $18.50 $18.50 03/19/07 $ 290,864 $ 737,106
</TABLE>
Option Exercises and Year-End Values
Stock options were exercised by the Named Executive Officers during the
fiscal year ended June 30, 1997. 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, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT FISCAL YEAR END
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT JUNE 30, 1997 AT JUNE 30, 1997(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Jack E. Meyer........... 10,000 $156,000 51,875/142,657 $691,125/$1,443,106
Wesley E. Johnson....... -- -- 24,731/42,949 $ 367,305/$589,485
Jonathan R. McGrath..... 5,000 75,750 29,822/89,468 $424,466/$1,273,404
W. Allen Putnam......... 16,250 249,438 10,134/47,468 $ 85,645/$540,204
David W. Powell......... 3,100 16,663 6,275/40,625 $ 22,747/$147,266
</TABLE>
- --------
(1) Represents the difference between the fair market value of the shares on
the date of exercise and the exercise price multiplied by the number of
option shares exercised.
(2) The value of unexercised options is calculated by determining the
difference between the fair market value of the shares underlying the
options at June 30, 1997 and the exercise price of the options, times the
number of options outstanding. Fair market value was determined based on a
per share price of $17.00, which is the closing price for the Company's
common stock on June 30, 1997, 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. 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.
10
<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 examines a
variety of factors including salaries for executives holding comparable
positions in similarly situated companies, including 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.
Chief Executive Officer Compensation
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. Mr. Meyer's salary was set at $175,000 for fiscal 1997 and has been
set at $180,000 for fiscal 1998. The important elements used by the Company in
establishing Mr. Meyer's compensation for fiscal 1997, including the payment
of a $22,096 bonus for Mr. Meyer and the granting of an option to Mr. Meyer to
purchase 25,000 shares, included (i) the Company's ability to build upon its
relationship with Boston Scientific Corporation and commence sale of its
Targis(R) System in Europe; (ii) the Company's success in obtaining, through
Nihon Kodhen, its distribution partner in Japan, approval from Japan's
Ministry of Health and Welfare to market the Company's Targis(R) System in
Japan; (iii) the Company's success in obtaining approval to submit its pre-
market approval ("PMA") application for the Targis(R) System to the United
States Food and Drug Administration and the filing of
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the PMA application in April 1997; (iv) the Company's successful negotiation
of a patent license agreement; and (v) the Company's successful recruitment of
additional executives and managers needed to position the Company for the
commencement of product marketing in the United States.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
JANET G. EFFLAND MICHAEL R. HENSON ROBERT R. MOMSEN PAUL A. LA VIOLETTE
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
common stock of the Company from May 30, 1996, the date of the Company's
initial public offering, to June 30, 1997, the end of the Company's fiscal
year, with the cumulative total return of the Nasdaq Stock Market 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).
[LINE GRAPH APPEARS HERE]
COMPARISON OF 13 MONTH CUMULATIVE TOTAL RETURN*
AMONG UROLOGIX, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST HEALTHCARE (EXCLUDING BIOTECHNOLOGY) INDEX
<TABLE>
<CAPTION>
DATE UROLOGIX, INC NASDAQ STOCK MARKET-US HAMBRECHT & QUIST HEALTHCARE
- ---- ------------- ---------------------- ----------------------------
<S> <C> <C> <C>
5/30/96 $100 $100 $100
6/96 96 96 96
6/97 121 117 120
</TABLE>
* $100 INVESTED ON 5/30/96 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS.
COMPENSATION OF DIRECTORS
Under the terms of the Company's 1991 Stock Option Plan, 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. 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. Each director is also reimbursed for expenses
associated with attending Board of Directors
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meetings. Beginning in April 1996, non-employee directors are paid $1,000 per
board meeting and $500 per committee meeting.
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. Mr. Meyer's salary was set at $175,000 for fiscal year 1997 and has
been set at $180,000 for fiscal year 1998. Under the agreement, the Company
has agreed that if Mr. Meyer's employment is terminated without cause, it will
pay him his salary for a period of twelve months or until he has secured
alternative employment, whichever occurs first. The Company also has in place
severance agreements with its other executive officers. Under the terms of
their respective agreements, the Company has agreed that, if the employment of
the executive officer is terminated without cause, the Company will pay the
executive officer's salary for a period of six months or until such person 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, 1997,
all reports filed by insiders were done in a timely manner, with the exception
of a Form 4 filing by William Amaden, submitted late with respect to a
transaction occurring in the month of June 1997.
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<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE COMPANY'S
AMENDED AND RESTATED 1991 STOCK PLAN
GENERAL INFORMATION
On August 1, 1991, the Company's Board of Directors adopted the Urologix,
Inc. 1991 Stock Plan (the "Stock Plan"). The purpose of the Stock Plan is to
attract and retain executives and other key employees, directors and
consultants, as well as to reward such persons who contribute to the
achievement of the Company's success, by giving them a proprietary interest in
the Company. The Stock Plan authorizes the granting of stock options, stock
appreciation rights ("SARs"), restricted stock and deferred stock awards.
AMENDMENTS TO THE STOCK PLAN
The Company is submitting for shareholder approval amendments to the Stock
Plan (i) to increase the number of shares of common stock for issuance under
the Stock Plan from 1,550,910 shares to 1,950,910 shares, and (ii) to limit to
500,000 shares the number of options that can be granted to any one person in
one fiscal year.
The Stock Plan currently authorizes the issuance of 1,550,910 shares of
Common Stock pursuant to awards granted under the Stock Plan. The Board of
Directors has amended the Stock Plan, subject to shareholder approval, to
increase the total number of shares issuable under the Stock Plan to 1,950,910
shares. As of June 30, 1997, 310,204 shares had been issued under the Stock
Plan, 973,737 shares were reserved for issuance pursuant to existing options
and 266,969 shares were available for future grant. No SARs, restricted stock
or deferred stock awards have been made under the Plan. The Board of Directors
has deemed it prudent to increase the shares available for grants under the
Stock Plan to facilitate and future awards under the Stock Plan.
The Company has also added a provision to the Stock Plan that provides that
the Company may not, in any one fiscal year, grant options and stock
appreciation rights to purchase more than 500,000 shares to any one person
under the Stock Plan. The new provision is designed to ensure that the Stock
Plan complies with Section 162(m) of the Internal Revenue Code, which limits
the deductibility of certain executive compensation over $1.0 million per year
unless certain conditions are met.
Pursuant to the authority granted to the Board of Directors under the Stock
Plan, the Board of Directors has also amended the Stock Plan to comply with
the new Rule 16b-3, established by the Securities and Exchange Commission, and
Section 162(m) of the Internal Revenue Code. These other amendments include
the clarification that the Stock Plan may be administered by the entire Board
of Directors or by a committee (the "Committee") of at least two directors who
all meet the definition of a "non-employee director" under Rule 16b-3 and the
definition of an "outside director" under Section 162(m), and that members of
the Board of Directors are eligible to receive awards under the Stock Plan
other than the automatic option grant to directors for service on the Board.
The Stock Plan is summarized below:
Eligibility. Officers, other key employees of the Company and any
subsidiaries, members of the Board of Directors and consultants are eligible
to be granted stock options, SARs, restricted stock or deferred stock under
the Stock Plan. Currently, approximately 100 employees, as well as all the
Company's non-employee directors are eligible to participate in the Stock
Plan. The Board of Directors, or the Committee, selects optionees and
participants and determines the number of shares, the price, the term and the
vesting provisions for each award.
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<PAGE>
Stock Options. The Stock Plan permits the granting of two types of options:
(i) Incentive Stock Options, which are intended to qualify under Section 422
of the Internal Revenue Code, and (ii) Non-Qualified Stock Options. No
Incentive Stock Option may be granted under the Stock Plan after August 1,
2004. The option price of an Incentive Stock Option may not be less than 100%
of the fair market value of the Company's common stock on the date of grant,
and the exercise price of a Non-Qualified Option may not be less than 85% of
the fair market value on the date of grant. If an employee owns more than 10%
of the combined voting power of the Company's outstanding voting stock, the
option price shall be no less than 110% of the fair market value on the date
of grant. The closing price of the Company's common stock on the Nasdaq
National Market on June 30, 1997 was $17.00.
The term of each option is established by the Committee, but shall not
exceed 10 years (five years in the event of an optionee who owns more than 10%
of the combined voting power of the Company's outstanding voting stock). Each
option will become exercisable at such time and on such conditions as
determined by the Committee. Each Member of the Board of Directors who is not
an employee of the Company is automatically granted, on the date such director
is first elected to the Board, a Non-Qualified Option to purchase 10,000
shares of common stock at an option price equal to the fair market value on
the date of grant. The term of each such option is ten years and the options
become exercisable as to 25% of the total shares after each consecutive year
following the date of grant.
Stock Appreciation Rights. A stock appreciation right ("SAR") is a right
given to a person in conjunction with a stock option. The SAR enables the
option holder to elect to receive the difference between the option exercise
price and the market price of the stock in cash or stock, or a combination of
both. The option holder surrenders the option to the Company and receives the
"gain" in cash or stock. As of the date of this Proxy, no SARs have been
granted under the Stock Plan.
Restricted Stock. The Board of Directors (or the Committee) may issue shares
of restricted stock to participants in the Stock Plan which are conditioned
upon the achievement of specified performance goals. The recipient of an award
of restricted stock has no rights with respect to the stock unless and until
the recipient has achieved those goals. As of the date of this Proxy, no
restricted stock has been issued under the Stock Plan.
Deferred Stock. Similar to restricted stock, deferred stock awards may be
issued under the Stock Plan which are conditioned upon the attainment of
specified performance goals. The provisions of deferred stock awards and
restricted stock awards need not be the same with respect to each recipient.
As of the date of this Proxy, no deferred stock has been issued under the
Stock Plan.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not realize taxable income upon either the granting or
exercise of an Incentive Stock Option. However, upon exercise of the Incentive
Stock Option, the amount by which the fair market value of any shares
exercised exceeds the option price is an item of tax preference for purposes
of the alternative minimum tax. Upon the sale of such stock, the optionee
generally will recognize capital gain or loss if the stock has been held for
at least two years from the date of the option grant and at least one year
after the stock was purchased. Such capital gain or loss will be treated as
long-term capital gain or loss and taxed at a maximum rate of 20% if the stock
was held for at least 18 months, and will be treated as mid-term capital gain
or loss and taxed at a maximum rate of 28% if the stock was held for more than
12 months but less than 18 months. If the applicable holding periods are not
satisfied, then any gain realized in connection with the disposition of such
stock will generally be taxable as compensation income in the year in which
the disposition occurred, to the extent of the difference between the fair
market value of such stock on the date of exercise and the option exercise
price. The balance of any gain will be characterized as capital gain. The
Company is entitled to a tax deduction to the extent, and at the time, that
the participant realizes compensation income.
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<PAGE>
An optionee also will not realize taxable compensation income upon the grant
of a Non-Qualified Stock Option. When an optionee exercises a Non-Qualified
Stock Option, he or she realizes taxable compensation income at that time
equal to the difference between the aggregate option price and the fair market
value of the stock on the date of exercise. Upon the disposal of stock
acquired pursuant to a Non-Qualified Option, the optionee's basis for
determining taxable gain or loss will be the sum of the option price paid for
the stock plus any related compensation income recognized by the optionee, and
such gain or loss will be long-term or short-term capital gain or loss
depending on whether the optionee has held the shares for more than one year.
The grant of restricted stock and deferred stock will not result in
immediate income for the participant or a deduction for the Company for
federal income tax purposes, assuming the shares are not transferable and
subject to restrictions creating a "substantial risk of forfeiture," as
intended by the Company. If the shares are transferable or there are no such
restrictions or deferral periods, the participant will generally realize
compensation income upon receipt of the award. Otherwise, any participant
generally will realize taxable compensation income when any such restriction
or deferral period lapses. The amount of such income will be the value of the
common stock on that date, less any amount paid for the shares. Dividends paid
on the common stock and received by the participant during the restricted
period or deferral period would also be taxable compensation income to the
participant. In any event, the Company will be entitled to a tax deduction to
the extent, and at the time, that the participant realizes compensation
income. A participant may elect, under Section 83(b) of the Internal Revenue
Code, to be taxed on the value of the stock at the time of award. If this
election is made, the fair market value of the stock at the time of the award
is taxable to the participant as compensation income and the Company is
entitled to a corresponding deduction.
REGISTRATION WITH SEC
The Company has filed a Registration Statement covering the offering of the
shares under the Stock Plan with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended. If Proposal Two is
adopted, the Company intends to file a similar Registration Statement covering
the 400,000 additional shares available for issuance under the Stock Plan.
VOTE REQUIRED
Shareholder approval of the amendments to the Stock Plan requires the
affirmative vote of the holders of a majority of shares of common stock
represented at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENTS AS SET FORTH IN PROPOSAL TWO.
16
<PAGE>
CERTAIN TRANSACTIONS
M. Dann & Co., Inc., a company owned by Mitchell Dann, the Company's
Chairman, currently provides consulting services to the Company and received
$87,650 in consulting fees during fiscal 1997.
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. 1998 Annual Meeting of
Shareholders is expected to be held on or about November 18, 1998, and proxy
materials in connection with that meeting are expected to be mailed on or
about October 15, 1998. Shareholder proposals prepared in accordance with the
proxy rules must be received by the Company on or before June 17, 1998.
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, 1997 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, 1997. The Company has
selected Arthur Andersen LLP to serve as independent public accountants for
the Company for the fiscal year ended June 30, 1998. 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
The Company's Annual Report to Shareholders for the fiscal year ended June
30, 1997 is being mailed to shareholders with this Proxy Statement.
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, 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
17
<PAGE>
UROLOGIX, INC.
14405 21ST AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55447
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 19, 1997
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated October 15, 1997, hereby appoints Mitchell Dann, Jack E. Meyer
and Wesley E. Johnson, or any one or more of them, proxies (each with full
power to act alone and with the power of substitution and revocation), to
represent the undersigned and to vote as designated below, all shares of Common
Stock of Urologix, Inc. held of record in the name of the undersigned at the
close of business on October 3, 1997, at the Annual Meeting of Shareholders to
be held on November 19, 1997, or at any adjournment or adjournments, hereby
revoking all former proxies.
THE UROLOGIX, INC. BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE
FOLLOWING PROPOSALS:
1.ELECTION OF DIRECTORS:
[_] FOR the nominees listed below (except as indicated to the
contrary)
[_] WITHHOLD AUTHORITY to vote for the
nominees listed below
BUZZ BENSONPAUL A. LA VIOLETTE
(INSTRUCTION: To withhold authority to vote for an individual nominee draw a
line through the nominee's name above):
2. PROPOSAL TO APPROVE CERTAIN AMENDMENTS TO THE UROLOGIX, INC. 1991 AMENDED
AND RESTATED STOCK OPTION PLAN.
[_] FOR[_] AGAINST[_] ABSTAIN
3. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON ANY OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued, and to be completed and signed, on the reverse side)
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR
LISTED ON THE REVERSE SIDE, "FOR" PROPOSAL NUMBER 2 AND, IN THE DISCRETION OF
THE PROXIES, ON ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN exactly as name appears on this card. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
Dated: ______________________ , 1997
------------------------------------
------------------------------------
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
