<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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Matritech, Inc.
------------------------------------------
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: not
---
applicable
----------
(2) Aggregate number of securities to which transactions applies: not
---
applicable
----------
(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): not
---
applicable
----------
(4) Proposed maximum aggregate value of transaction: not applicable
--------------
(5) Total fee paid: not applicable
--------------
[ ] 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: not applicable
--------------
(2) Form, Schedule or Registration Statement No.: not applicable
--------------
(3) Filing Party: not applicable
--------------
(4) Date Filed: not applicable
--------------
<PAGE>
MATRITECH, INC.
330 Nevada Street
Newton, Massachusetts 02460
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 18, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Matritech, Inc., a Delaware corporation (the "Company"), will be held on Friday,
June 18, 1999, at 10:00 a.m. local time, at the Sheraton Newton, 320 Washington
Street, Newton, Massachusetts 02458, for the following purposes:
I. To elect a Board of Directors for the ensuing year.
II. To ratify the selection of the firm of Arthur Andersen LLP as
auditors for the fiscal year ending December 31, 1999.
III. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only stockholders of record at the close of business on April 23, 1999 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors,
Robert W. Morgan, Secretary
Newton, Massachusetts
April 29, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE>
MATRITECH, INC.
330 Nevada Street
Newton, Massachusetts 02460
-------------------------------
PROXY STATEMENT
-------------------------------
For the Annual Meeting of Stockholders to be held on
June 18, 1999
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Matritech, Inc. (the "Company" or "Matritech") for use at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on Friday,
June 18, 1999 at 10:00 a.m. local time, at the Sheraton Newton, 320 Washington
Street, Newton, Massachusetts 02458.
Only stockholders of record as of April 23, 1999 (the "Record Date") will
be entitled to vote at the Annual Meeting and any adjournments thereof. As of
April 21, 1999, there were 21,724,217 shares of Common Stock, par value $.01 per
share, of the Company issued and outstanding. Each share of Common Stock
outstanding as of the Record Date will be entitled to one vote and stockholders
may vote in person or by proxy. Execution of a proxy will not in any way affect
a stockholder's right to attend the Annual Meeting and vote in person. Any
stockholder giving a proxy has the right to revoke it by written notice to the
Secretary of the Company at any time before it is exercised.
The persons named as attorneys in the proxies are directors and/or officers
of the Company. All properly executed proxies returned in time to be counted at
the Annual Meeting will be voted as stated below under "Voting Procedures." Any
stockholder giving a proxy has the right to withhold authority to vote for any
individual nominee to the Board of Directors by writing that nominee's name in
the space provided on the proxy.
In addition to the election of directors, the stockholders will consider a
proposal to ratify the selection of auditors, as further described in this proxy
statement. Where a choice has been specified on the proxy with respect to a
matter, the shares represented by the proxy will be voted in accordance with the
specifications and will be voted FOR if no specification is indicated.
The Board of Directors of the Company knows of no other matters to be
presented at the Annual Meeting. If any other matter should be presented at the
Annual Meeting upon which a vote may be properly taken, shares represented by
all proxies received by the Board of Directors will be voted with respect
thereto in accordance with the judgment of the persons named as attorneys in the
proxies.
An Annual Report, containing financial statements for the fiscal year ended
December 31, 1998, is being mailed together with this proxy statement to all
stockholders entitled to vote. This proxy statement and the form of proxy were
first mailed to stockholders on or about April 29, 1999.
<PAGE>
-2-
PROPOSAL I
ELECTION OF DIRECTORS
The directors of the Company are elected annually and hold office until the
next annual meeting of stockholders and until their successors have been elected
and qualified. Shares represented by all proxies received by the Board of
Directors and not so marked as to withhold authority to vote for any individual
nominee or for all nominees will be voted (unless one or more nominees are
unable to serve) FOR the election of the nominees named below. The Board of
Directors knows of no reason why any such nominee should be unable or unwilling
to serve, but if such should be the case, proxies will be voted for the election
of some other person or for fixing the number of directors at a lesser number.
Nominated for election to the Company's Board of Directors are: Stephen D.
Chubb; David L. Corbet; J. Robert Buchanan; David Rubinfien; Richard A.
Sandberg; T. Stephen Thompson and C. William Zadel. Mr. Thomas R. Morse, who
served on the Company's Board of Directors for 11 years, resigned as a director
on April 9, 1999 to devote more time to other activities. Mr. Sandberg was
elected by the Board of Directors on April 9, 1999 to fill the vacancy created
by Mr. Morse's resignation. Each of the nominees currently serves as a director
of the Company. A plurality of the votes cast by the stockholders present or
represented by proxy and entitled to vote at the Annual Meeting is required for
the election of directors. See "Voting Procedures."
Board of Directors Meetings and Committees
The Board of Directors met seven times during the fiscal year ended
December 31, 1998. The Audit Committee of the Board of Directors, of which
Messrs. Thompson and Zadel are members, oversees the accounting and tax
functions of the Company, including matters relating to the appointment and
activities of the Company's independent auditors. The Audit Committee met once
during the fiscal year ended December 31, 1998. The Compensation Committee of
the Board of Directors, of which Messrs. Rubinfien, Sandberg and Thompson are
members, reviews and makes recommendations concerning executive compensation,
and administers the 1992 Stock Plan, as amended (the "1992 Plan"), and the
Company's 1992 Employee Stock Purchase Plan. The Compensation Committee met
twice and acted by unanimous written consent four times during the year ended
December 31, 1998. The Board of Directors does not currently have a standing
nominating committee. With the exception of David L. Corbet, who attended five
out of the seven meetings of the Board of Directors, T. Stephen Thompson, who
attended seven out of the ten meetings of the Board of Directors and the
Compensation and Audit Committees, and Richard A. Sandberg, who did not join the
Board of Directors until April 9, 1999, each of the directors attended at least
75% of the aggregate of the total number of meetings of the Board of Directors
and of all Committees on which he served during the year ended December 31,
1998.
<PAGE>
-3-
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the nominees to be elected at the Annual
Meeting, and the executive officers of the Company, their ages as of April 29,
1999, and the positions currently held by each such person with the Company:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Stephen D. Chubb (1)....................... 55 Chairman, Director and Chief Executive Officer
David L. Corbet (1)........................ 45 Director, President and Chief Operating Officer
Robert W. Morgan (1)....................... 40 Vice President, Chief Financial Officer,
Treasurer and Secretary
Patrick A. Maley (1)....................... 49 Vice President, Sales and Marketing
Ying-Jye Wu, Ph.D. (1)..................... 50 Vice President, Research and Development
J. Robert Buchanan......................... 71 Director
David Rubinfien (2)........................ 77 Director
Richard A. Sandberg (2).................... 56 Director
T. Stephen Thompson (2)(3)................. 51 Director
C. William Zadel (3)....................... 55 Director
- -------------------------
</TABLE>
(1) Officers of the Company are elected annually by the Board of Directors and
serve until the next Annual Meeting of the Board of Directors and until
their respective successors are elected and qualified, or until their
earlier resignation or removal.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
Mr. Chubb, a founder of Matritech, has been Chairman since October 1993 and
a director and Matritech's Chief Executive Officer since the Company's inception
in 1987. Mr. Chubb was the Company's President until October 1993 and was also
Treasurer of the Company until March 1992. From 1984 to 1986, Mr. Chubb served
as President and Chief Executive Officer of T Cell Sciences, Inc., a publicly
traded biotechnology company. Prior to 1984, Mr. Chubb was President and Chief
Executive Officer of Cytogen Company, also a publicly traded biotechnology
company. He currently serves as a director of Charles River Laboratories, a
Division of Bausch and Lomb, a publicly traded medical products company and
i-STAT Corporation, a publicly traded medical equipment company.
Mr. Corbet has been Matritech's President, Chief Operating Officer and a
director since October 1993, and joined the Company in April 1993 as Executive
Vice President. Prior to joining Matritech and since 1991, Mr. Corbet had served
as President and Chief Operating Officer of T Cell Diagnostics, Inc., a
subsidiary of T Cell Sciences, Inc. which is a publicly traded biotechnology
company, and served in various other executive and managerial offices there
since 1985.
Mr. Morgan has been Matritech's Vice President, Chief Financial Officer,
Treasurer and Secretary since March 1999 and served as Acting Vice President,
Finance from November 1998 to March 1999. Mr. Morgan is a principal of Morgan &
Associates, a privately held financial advisory services company, which position
he has held since 1997 and which he held from 1987 to 1992. From 1996 to 1997,
Mr. Morgan was President, Chief Executive Officer and a director of America's
HealthCare Manager, Inc., a privately held healthcare service company, which he
founded. From 1992 to 1996, Mr. Morgan was Vice President - Operations, Chief
Financial Officer and Treasurer of ChemGenics Pharmaceuticals, Inc., a venture
backed biotechnology company, which he co-founded.
<PAGE>
-4-
Mr. Maley has been Matritech's Vice President, Sales and Marketing since
March 1999. From 1995 to 1998, Mr. Maley served as Vice President, Sales and
Marketing of ZOLL Medical Corporation, a publicly traded medical device company.
From 1992 to 1995, Mr. Maley served as Vice President, Marketing for Mansfield,
a division of Boston Scientific Corporation, a publicly traded medical device
company. Prior to 1992, Mr. Maley served as Vice President Sales/Marketing for
ASI, a urology start-up, and Alcon, a pharmaceutical and medical device company.
Dr. Wu has been Matritech's Vice President, Research and Development since
April 1999 and also from March 1995 to February 1997. From February 1997 to
April 1999, he was Matritech's Vice President, Product Development and from
December 1992 to March 1995 he was Matritech's Vice President, Research. From
June 1990 to December 1992, Dr. Wu was Director of Cell Biology at CytoMed,
Inc., a biotechnology company. From 1987 to 1990, Dr. Wu was a manager of
research and development at Pharmacia ENI Diagnostics, Inc., a biotechnology
company.
Dr. Buchanan has served as a director of Matritech since June 1996. From
1994 to 1996, Dr. Buchanan was Chairman of Worldcare, Limited, a telemedicine
company. From 1982 until his retirement in 1994, Dr. Buchanan served as General
Director of Massachusetts General Hospital. From 1977 to 1982, Dr. Buchanan
served as President of the Michael Reese Medical Center and Associate Dean of
the Pritzker School of Medicine at the University of Chicago and from 1969 to
1977 served as Dean of Cornell Medical College. Dr. Buchanan currently serves as
a director of i-STAT Corporation, a publicly traded medical equipment company;
Charles River Laboratories, a Division of Bausch and Lomb, a publicly traded
medical products company; and Premier Practice Management, Inc., a privately
held physician practice management company.
Mr. Rubinfien has served as a director of Matritech since May 1988. Mr.
Rubinfien was Chairman and President of Systemix Inc., a biotechnology company,
from 1989 through 1991 and President and Chief Executive Officer of Microgenics
Company, a medical diagnostics company, from 1985 through 1987. Mr. Rubinfien
currently serves as a director of Molecular Biosystems, Inc., a publicly traded
biomedical company; Biocircuits, Inc., a publicly traded biomedical company; and
several private companies.
Mr. Sandberg has served as a director of Matritech since April 1999. Mr.
Sandberg is a private investor and serves as Chairman of the Board of Lifecodes
Corporation, a DNA diagnostics company, which position he has held since May
1997. He also serves as chairman or director of other private companies in the
healthcare, energy and database fields. From 1983 to 1998, Mr. Sandberg served
in a variety of positions, including Chairman, Chief Executive Officer and Chief
Financial Officer at DIANON Systems, Inc., a publicly traded oncology marketing
and database company. Mr. Sandberg currently serves as a director of UroMed
Corporation, a publicly traded medical device company.
Mr. Thompson has served as a director of Matritech since May 1994. Mr.
Thompson is President, Chief Executive Officer and a director of Immtech
International, Inc., a privately held biopharmaceutical company, which positions
he has held since 1992. From 1986 to 1992, Mr. Thompson held a number of
management positions, most recently as President and Chief Executive Officer, at
Amersham Corporation, a subsidiary of Amersham International plc., which is a
publicly traded life science and health care company.
Mr. Zadel has served as a director of Matritech since December 1995. Mr.
Zadel is Chairman, President, Chief Executive Officer and a director of
Millipore Corporation, a publicly traded laboratory equipment company, which
positions he has held since April 1996. From 1985 through 1995, Mr. Zadel served
as President and Chief Executive Officer of Ciba Corning Diagnostics
Corporation, a biotechnology company. Mr. Zadel currently serves, and has served
since 1989, as a director of Kulicke & Soffa Industries, Inc., a publicly traded
semiconductor assembly equipment company.
<PAGE>
-5-
SECURITIES OWNERSHIP OF
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of April 21, 1999, certain information
regarding the ownership of shares of the Company's Common Stock by: (i) each
person who, to the knowledge of the Company, owned beneficially more than 5% of
the shares of Common Stock of the Company outstanding at such date, (ii) each
director and nominee of the Company, (iii) each Named Officer (as defined below)
and (iv) all current directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature
-----------------
of Beneficial Percent of
------------- ----------
Name Ownership (1) Class (2)
---- ------------- ---------
<S> <C> <C>
Stephen D. Chubb (3)................................................... 516,517 2.4%
David L. Corbet (4).................................................... 192,185 *
Ying-Jye Wu (5)........................................................ 85,791 *
JoAnn Jasinski (6)..................................................... 12,786 *
J. Robert Buchanan (7)................................................. 37,500 *
David Rubinfien (8).................................................... 39,649 *
Richard A. Sandberg ................................................... 0 *
T. Stephen Thompson (9)................................................ 50,149 *
C. William Zadel (10).................................................. 36,050 *
Forstmann-Leff Associates, Inc. (11)
590 Madison Avenue
New York, NY 10022.................................................. 2,216,750 10.2%
FLA Advisers L.L.C. (12)
590 Madison Avenue
New York, NY 10022................................................... 2,083,750 9.6%
Zero Stage Capital VI Limited Partnership (13)
101 Main Street, 17th Floor
Cambridge, MA 02142................................................. 2,325,581 10.7%
All executive officers and directors as a group
(10 persons)(14)....................................................... 957,841 4.3%
- -----------------------------
</TABLE>
* Indicates less than 1%
(1) Except as indicated in footnotes to this table, the persons named in this
table have sole voting and investment power with respect to all shares of
Common Stock owned based upon information provided to the Company by the
directors, officers and principal stockholders.
(2) The number of shares of Common Stock deemed outstanding for this
calculation includes (i) 21,724,217 shares of Common Stock outstanding on
April 21, 1999 and (ii) all Common Stock underlying stock options which are
currently exercisable or will become exercisable within 60 days of April
21, 1999 by the person or group in question.
<PAGE>
-6-
(3) Mr. Chubb's beneficial ownership includes 115,715 shares issuable upon
exercise of outstanding stock options which are exercisable on April 21,
1999 or within 60 days thereafter.
(4) Mr. Corbet's beneficial ownership includes 187,119 shares issuable upon
exercise of outstanding stock options exercisable on April 21, 1999 or
within 60 days thereafter. Mr. Corbet holds all of his issued shares
jointly with his wife.
(5) Dr. Wu's beneficial ownership includes 79,491 shares issuable upon exercise
of outstanding stock options exercisable on April 21, 1999 or within 60
days thereafter.
(6) Ms. Jasinski's beneficial ownership includes 12,786 shares issuable upon
exercise of outstanding stock options which are exercisable on April 21,
1999 or within 60 days thereafter. Ms. Jasinski resigned from the Company
in March 1999.
(7) Dr. Buchanan's beneficial ownership includes 37,500 shares issuable upon
exercise of outstanding stock options exercisable on April 21, 1999 or
within 60 days thereafter.
(8) Mr. Rubinfien's beneficial ownership includes 39,649 shares issuable upon
exercise of outstanding stock options exercisable on April 21, 1999 or
within 60 days thereafter.
(9) Mr. Thompson's beneficial ownership includes 39,649 shares issuable upon
exercise of outstanding stock options exercisable on April 21, 1999 or
within 60 days thereafter.
(10) Mr. Zadel's beneficial ownership includes 35,050 shares issuable upon
exercise of outstanding stock options exercisable on April 21, 1999 or
within 60 days thereafter.
(11) Includes 2,115,650 shares with respect to which Forstmann-Leff Associates,
Inc. ("FLA") shares voting and dispositive power. The beneficial ownership
of FLA includes shares beneficially owned by FLA Asset Management Inc.
("FLAM") and FLA Advisers L.L.C. ("FLALLC").
All statements contained herein with respect to FLA are based solely upon
information contained in Amendment No. 3 to Schedule 13G filed with the SEC
on behalf of FLA on February 12, 1999.
(12) Includes 2,083,750 shares with respect to which FLALLC shares voting and
dispositive power.
All statements contained herein with respect to FLALLC are based solely
upon information contained in Amendment No. 3 to Schedule 13G filed with
the SEC on behalf of FLALLC on February 12, 1999.
(13) Zero Stage Capital Associates VI, LLC, the general partner of Zero Stage
Capital VI Limited Partnership, and Zero Stage Capital Co., Inc. may also
be deemed to beneficially own these shares. Mr. Chubb, the Company's
Chairman and Chief Executive Officer, is a limited partner of Zero Stage
Capital VI Limited Partnership.
(14) Includes 534,173 shares issuable upon exercise of outstanding stock options
exercisable on April 21, 1999 or within 60 days thereafter. Excludes all
shares beneficially owned by Ms. Jasinski who resigned from the Company in
March 1999.
<PAGE>
-7-
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
Executive Compensation
The following table summarizes the compensation paid or accrued by the
Company for services rendered for its fiscal year ended December 31, 1998 to Mr.
Chubb, the Company's Chairman and Chief Executive Officer, Mr. Corbet, Dr. Wu
and Ms. Jasinski, the next three most highly compensated executive officers of
the Company as of December 31, 1998 (the "Named Officers"). No other executive
officers earned total salary and bonus exceeding $100,000 during 1998. The
Company did not grant any restricted stock awards or stock appreciation rights
("SARs") and did not make any long-term incentive plan payouts during 1998:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Awards
------ All
Securities Other
Name and Salary Bonus Underlying Compensation
Principal Position Year ($) ($) Options(#) ($)(1)
- ------------------ ---- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Stephen D. Chubb 1998 $212,669 $24,882 47,300 $205
Chairman, Director and 1997 205,461 33,825 8,456 156
Chief Executive Officer 1996 176,000 37,488 209,721 236
David L. Corbet 1998 $182,931 $17,836 37,400 $205
Director, President and 1997 176,663 24,269 6,067 156
Chief Operating Officer 1996 165,000 29,288 158,374 226,336
Ying-Jye Wu 1998 $132,739 $11,814 18,200 $205
Vice President, Research 1997 125,261 16,875 4,219 150
and Development 1996 118,800 17,321 55,034 234
JoAnn Jasinski (2) 1998 $128,630 $13,249 19,200 $202
Vice President, Sales 1997 48,186 4,567 41,142 36
and Marketing 1996 ---------- --------- -------- ----------
- --------------------
</TABLE>
(1) Such compensation represents insurance premiums paid by the Company with
respect to term life insurance for such individual. With respect to Mr.
Corbet, the 1996 figure also includes an additional $226,100 of ordinary
income recognized upon the exercise of the option to purchase, and
subsequent "disqualifying disposition," as defined in Section 422(c)(2) of
the Internal Revenue Code of 1986, as amended, of 30,000 shares of the
Company's Common Stock.
(2) Ms. Jasinski joined the Company as Vice President, Sales and Marketing in
August 1997 and held such position until her resignation in March 1999.
<PAGE>
-8-
Options
The following table sets forth information concerning options granted
during the fiscal year ended December 31, 1998 under the Company's 1992 Plan to
the Named Officers:
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year/(1)/
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(2) for Option Term (9)
- -------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total
Underlying Options
Options Granted to Exercise Expiration Date
Name Granted Employees Price 5%($) 10%($)
(#) in Fiscal ($/Share)
Year(%)(10)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen D. Chubb 15,000 (3) 5.54% $2.438 6-19-08 $22,999 $58,283
15,000 (4) 5.54 2.438 6-19-08 22,999 58,283
8,650 (3) 3.20 1.44 12-31-08 7,834 19,852
8,650 (4) 3.20 1.44 12-31-08 7,834 19,852
David L. Corbet 18,750 (5) 6.93 2.438 6-19-08 28,748 72,854
6,250 (6) 2.31 2.438 6-19-08 9,583 24,285
3,100 (6) 1.15 1.44 12-31-08 2,807 7,114
6,200 (3) 2.29 1.44 12-31-08 5,615 14,229
3,100 (7) 1.15 1.44 12-31-08 2,807 7,114
Ying-Jye Wu 5,000 (3) 1.85 2.438 6-19-08 7,666 19,428
5,000 (4) 1.85 2.438 6-19-08 7,666 19,428
8,200 (8) 3.03 1.44 12-31-08 7,426 18,819
JoAnn Jasinski 10,000 (8) 3.69 2.438 6-19-08 15,332 38,855
9,200 (8) 3.40 1.44 12-31-08 8,332 21,114
-------------------------
</TABLE>
(1) The Company did not grant any SARs in 1998.
(2) Stock options were granted under the Company's 1992 Plan at an exercise
price equal to the fair market value of the Company's Common Stock on the
date of grant.
(3) The options have a term of ten years from the date of grant and become
exercisable as to 50% of the shares covered on each of the third and fourth
anniversaries of the date of grant.
(4) The options have a term of ten years from the date of grant and become
exercisable as to 50% of the shares covered on each of the first two
anniversaries of the date of grant.
(5) The options have a term of ten years from the date of grant and become
exercisable as to 33-1/3% of the shares covered on each of the second,
third and fourth anniversaries of the date of grant.
(6) The options have a term of ten years from the date of grant and become
exercisable as to 100% of the shares covered on the first anniversary of
the date of grant.
(7) The options have a term of ten years from the date of grant and become
exercisable as to 100% of the shares covered on the second anniversary of
the date of grant.
<PAGE>
-9-
(8) The options have a term of ten years from the date of grant and become
exercisable as to 25% of the shares covered on each of the first four
anniversaries of the date of grant.
(9) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the Company's Common Stock over the term of the options. These numbers
are calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercise and the future
performance of the Company's Common Stock. There can be no assurance that
the rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the individuals.
(10) A total of 270,725 options were granted to employees in 1998 under the
Company's 1992 Plan.
The following table sets forth certain information concerning options held
by the Named Officers on December 31, 1998.
Aggregated Option Exercises In Last Fiscal Year And
Fiscal Year-End Option Values/(1)/
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money Options
Unexercised Options at at December 31, 1998 ($)(2)
Shares Acquired Value December 31, 1998 (#) Exercisable/
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stephen D. Chubb.................... -- -- 106,975/158,502 $0/$3,737
David L. Corbet..................... -- -- 177,455/123,387 2,080/2,678
Ying-Jye Wu......................... -- -- 74,574/49,879 0/1,771
JoAnn Jasinski...................... -- -- 10,286/50,056 0/1,987
- ---------------
</TABLE>
(1) The Company has never granted any SARs.
(2) Value is based on the difference between the option exercise price and
$1.656, the fair market value of the Company's Common Stock on December 31,
1998, the last trading day for the fiscal year ended 1998, multiplied by
the number of shares of Common Stock underlying the options.
Compensation of Directors
Currently, non-employee directors do not receive cash compensation for
attendance at meetings of the Board of Directors and of its committees, but
receive compensation in the form of options to purchase Common Stock of the
Company pursuant to the Company's 1992 Non-employee Director Stock Option Plan
(the "Director Plan"). The Director Plan includes two types of option grants:
(a) each non-employee director who first became or becomes a member of the Board
of Directors on or after June 7, 1996 is automatically granted on the date of
such election without further action by the Board, an option to purchase 10,000
shares of the Company's Common Stock ("Initial Option") which vests over a
four-year period and (b) annually, each non-employee director is automatically
granted as of the date of the Annual Meeting of Stockholders in such year an
option, which vests over a one-year period, to purchase 10,000 shares of Common
Stock ("Annual Option"). Any non-employee who becomes a director after the
Annual Meeting of Stockholders in any year shall be entitled to receive, in
addition to the Initial Option, a fraction of the Annual Option equal to (x)
divided by twelve (12), where (x) equals
<PAGE>
-10-
the number of complete months remaining until the first anniversary of the
preceding Annual Meeting of Stockholders. All options granted pursuant to the
Director Plan have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant and expire ten years after the date
of grant. Directors are also reimbursed for their expenses incurred in attending
meetings of the Board of Directors and committees thereof.
Directors who are employees of the Company receive no additional
compensation for service on the Board of Directors or its committees.
Compensation Committee Report
The Compensation Committee of the Board of Directors (the "Committee") is
currently composed of David Rubinfien, Richard A. Sandberg and T. Stephen
Thompson, none of whom is currently an officer or employee of the Company.
During 1998, Thomas R. Morse served on the Committee and was replaced upon his
resignation on April 9, 1999 by Mr. Sandberg. Mr. Sandberg took no part in the
Committee actions referred to in this Report.
The functions of the Committee are to establish salaries and incentive
compensation for the Company's executive officers and to administer the 1992
Plan and the 1992 Employee Stock Purchase Plan.
The Company's executive compensation programs are designed (i) to attract
and retain experienced and well qualified executives capable of leading the
Company to meet its business objectives, and (ii) to motivate them to enhance
long-term stockholder value. In setting the compensation level for executive
officers, the Committee is guided by the following considerations:
. Compensation levels should be competitive with compensation generally
being paid to executives in the biotechnology industries to ensure the
Company's ability to attract and retain superior executives;
. Each individual executive officer's compensation should reflect the
performance of the Company as a whole, the performance of the
officer's business unit, if applicable, and the performance of the
executive officer; and
. A significant portion of executive officer compensation should be paid
in the form of equity-based incentives to link closely stockholder and
executive interests and to encourage stock ownership by executive
officers.
An executive's total compensation package includes a cash salary and bonus
determined by the Committee, long-term incentive compensation in the form of
stock options and various benefits, including a 401(k) retirement plan and
medical insurance plans that are available to all employees of the Company.
Salaries of the Company's Chief Executive Officer and the next three most highly
compensated executives during fiscal 1998 are listed in the "Summary
Compensation Table" found on page 7. The Committee reviews executive salaries at
least once per year and, while it is not required to do so, it may in its
discretion increase these salaries. The Committee attempts to keep the Company's
compensation programs competitive by comparing them with those of other local
and national companies in the industry. The Committee also attempts to balance
the compensation level for an individual executive against his or her specific
job requirements, including the individual's influence on obtaining corporate
objectives.
<PAGE>
-11-
Cash Compensation. The Committee sets the annual salaries for individual
executives by reviewing the salaries historically paid at the Company, the
salaries paid by the Company's competitors to persons holding comparable
positions and compensation studies prepared by independent third parties. The
Committee determines any increases in annual salaries and bonuses based on a
comparison of the executive's actual performance against his or her performance
objectives, as well as on various subjective factors. The performance objectives
for each executive depend on his or her area of responsibility and may include
achievement of the performance objectives in the areas of product
commercialization, clinical trials, corporate partnering, and financings, as
well as other financial objectives. Among the subjective factors considered by
the Committee are the executive's ability to provide leadership, to develop the
Company's business, to promote the Company's image with its customers and
stockholders and to manage the Company's continuing growth. The Committee also
solicits and considers performance reviews and recommendations from senior
management in establishing compensation levels for all but the Chief Executive
Officer.
Equity Compensation. The Company's equity compensation program is designed
to (i) provide long-term incentives to executive officers, (ii) tie compensation
to creating long-term shareholder value, (iii) encourage executive officers to
remain with the Company and promote the Company's business, and (iv) provide
executives with the opportunity to obtain significant, long-term stock ownership
in the Company's Common Stock.
The Committee has granted options to executive officers as the long-term
incentive component of the executive officers' total compensation package. The
Committee generally grants options that become exercisable over a four-year
period as a means of encouraging executives to remain with the Company and to
promote its success. In fiscal 1998, the Committee only awarded the Company's
executives stock options with exercise prices equal to the market price of the
Common Stock on the date of grant. As a result, executives will benefit from
these stock option grants only to the extent that the price of the Company's
Common Stock increases and the Company's stockholders have also benefited.
In deciding whether to grant options and in determining the number of
shares to be subject to such options, the Committee generally reviews the option
holdings of each of the executive officers, including the number of unvested
options and the then-current value of such unvested options. The number of
options granted to certain of the most highly compensated executive officers of
the Company in fiscal 1998 is set forth in the table captioned "Option Grants in
Last Fiscal Year" found on page 8. The total options held by each of these
executives at December 31, 1998 is set forth in the table captioned "Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values" found on
page 9.
CEO Compensation. With respect to the compensation of the Company's Chief
Executive Officer, Mr. Chubb's 1998 salary was increased to $212,669 from
$205,461 in 1997. In addition, Mr. Chubb was granted a cash bonus in the amount
of $24,882 for 1998. On June 19, 1998 he received options under the Company's
1992 Plan to purchase up to 30,000 shares of the Company's Common Stock at an
exercise price of $2.438 per share, and on December 31, 1998 he received options
under the Company's 1992 Plan to purchase up to 17,300 shares of the Company's
Common Stock at an exercise price of $1.44 per share. These options become
exercisable over a four-year period from the date of grant. All options granted
to Mr. Chubb during 1998 expire ten years from the date of grant and have
exercise prices equal to 100% of the fair market value of the Company's Common
Stock as of the date of grant. In arriving at the level of compensation for Mr.
Chubb, the Committee attempted to measure Mr. Chubb's contribution to the
progress made by the Company during 1998 toward the achievement of the Company's
principal objectives, but the Committee does not find it practicable to quantify
or assign relative weight to the factors on which the Chief Executive Officer's
compensation is based. The Committee concluded that the Company had made
significant progress during 1998 towards achieving its
<PAGE>
-12-
objectives, including entering into an agreement with Curtin Matheson
Scientific, a division of Fisher Healthcare Company, L.L.C. for the distribution
of the Company's NMP22(R) Test Kit for bladder cancer, development on new assays
and building commercial relationships.
Tax Matters. Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), generally prevents publicly held corporations from
deducting, for federal income tax purposes, compensation in excess of $1 million
paid to certain executives, with certain exceptions. The Committee has
considered these requirements and exceptions and it is the Committee's present
intention that, so long as it is consistent with its overall compensation
objectives, substantially all executive compensation will be deductible for
federal income tax purposes.
Respectfully submitted,
David Rubinfien
Richard A. Sandberg
T. Stephen Thompson
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are David Rubinfien, Richard A.
Sandberg and T. Stephen Thompson. No member of the Committee is currently, or
has ever been, an officer or employee of the Company or any of its subsidiaries,
or had any relationship with the Company during the last fiscal year that would
require disclosure herein.
During the 1998 fiscal year no executive officer of the Company served as a
member of a compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors), nor served as a director, of another entity, one of whose
executive officers serves as a director of the Company or serves on the
Company's Compensation Committee.
<PAGE>
-13-
Stock Performance Graph
The Stock Performance Graph set forth below compares the cumulative total
stockholder return on the Company's Common Stock from December 31, 1993 to
December 31, 1998, with the cumulative total return of the Nasdaq Market Index
and the Company's four digit SIC Code Index over the same period. The comparison
assumes $100 was invested on December 31, 1993 in the Company's Common Stock, in
the Nasdaq Market Index and in the four digit SIC Code Index and assumes
reinvestment of dividends, if any.
Comparison of Cumulative Total Return /(l)(2)/
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C>
Matritech, Inc. 100.00 55.56 120.37 251.85 144.44 49.08
SIC Code 2835 100.00 94.04 159.53 146.31 120.37 139.90
Nasdaq Market Index 100.00 104.99 136.18 169.23 207.00 291.96
</TABLE>
(1) This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933 or
the Securities Exchange Act of 1934 whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
(2) The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on the graph was
obtained from Media General Financial Services, a source believed to be
reliable, but the Company is not responsible for any errors or omissions in
such information.
<PAGE>
-14-
PROPOSAL II
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1999. Arthur Andersen LLP has served as the Company's
auditors since fiscal 1987. It is expected that a member of the firm will be
present at the Annual Meeting with the opportunity to make a statement if so
desired and will be available to respond to appropriate questions. Stockholder
ratification of the Company's independent public accountants is not required
under Delaware law or under the Company's Amended and Restated Certificate of
Incorporation or its Amended and Restated By-Laws. If the stockholders do not
ratify the selection of Arthur Andersen LLP as the Company's independent public
accountants for the fiscal year ended December 31, 1999, the Company's Board of
Directors will evaluate what would be in the best interests of the Company and
its stockholders and consider whether to select new independent public
accountants for the current fiscal year or whether to wait until the completion
of the audit for the current fiscal year before changing independent public
accountants. The Board of Directors recommends a vote FOR the ratification of
this selection.
VOTING PROCEDURES
The presence, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to establish a quorum for the transaction of business. Shares
represented by proxies pursuant to which votes have been withheld from any
nominee for director, or which contain one or more abstentions or broker
"non-votes," are counted as present for purposes of determining the presence or
absence of a quorum for the Annual Meeting. A "non-vote" occurs when a broker or
other nominee holding shares for a beneficial owner votes on one proposal, but
does not vote on another proposal because the broker does not have discretionary
voting power and has not received instructions from the beneficial owner.
Proposal I. Directors are elected by a plurality of the votes cast, in
person or by proxy, at the Annual Meeting. The seven nominees receiving the
highest number of affirmative votes of the shares present or represented and
voting on the election of directors at the Annual Meeting will be elected as
directors. Shares represented by all proxies received by the Board of Directors
and not so marked as to withhold authority to vote for any individual nominee or
for all nominees will be voted (unless one or more nominees are unable to serve)
for the election of the nominees. Where the stockholder properly withheld
authority to vote for a particular nominee or nominees, such stockholder's
shares will not be counted toward such nominee or nominees' achievement of a
plurality.
Other Matters. For all other proposals submitted to the stockholders at the
Annual Meeting, the affirmative vote of the majority of shares present, in
person or represented by proxy, and voting on that proposal is required for
approval. Abstentions, as well as broker "non votes," are not considered to have
been voted for such proposal and have the practical effect of reducing the
number of affirmative votes required to achieve a majority for such proposal by
reducing the total number of shares from which the majority is calculated. If
any other matter not discussed in this Proxy Statement should be presented at
the Annual Meeting upon which a vote may be properly taken, shares represented
by all proxies received by the Board of Directors will be voted with respect
thereto in accordance with the judgment of the persons named as attorneys in the
proxies.
<PAGE>
-15-
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company pursuant to SEC Rule 14a-8 must be received at the
Company's principal executive offices not later than December 31, 1999. The
deadline for providing timely notice to the Company of matters that stockholders
otherwise desire to introduce at the next annual meeting of stockholders is
March 30, 2000. In order to curtail controversy as to the date on which a
proposal was received by the Company, it is suggested that proponents submit
their proposals by Certified Mail, Return Receipt Requested.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock (collectively, "Reporting Persons") to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
of the Company. Such persons are required by regulations of the SEC to furnish
the Company with copies of all such filings. Based on its review of the copies
of such filings received by it with respect to the fiscal year ended December
31, 1998 and written representations from certain Reporting Persons, the Company
believes that all Reporting Persons complied with all Section 16(a) filing
requirements in the fiscal year ended December 31, 1998.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company. Proxies
will be solicited principally through the mails. Further solicitation of proxies
from some stockholders may be made by directors, officers and regular employees
of the Company personally, by telephone, telegraph or special letter. No
additional compensation, except for reimbursement of reasonable out-of-pocket
expenses will be paid for any such further solicitation. In addition, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the name of a nominee. The Company will reimburse such persons for their
reasonable out-of-pocket costs.
<PAGE>
Appendix A
----------
MATRITECH, INC.
Annual Meeting of Stockholders of MATRITECH, INC.
to be held on June 18, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MATRITECH, INC.
The undersigned, revoking all prior proxies, hereby appoints Stephen D.
Chubb and David L. Corbet, and each of them, with full power of substitution, as
proxies to represent and vote as designated herein, all shares of Common Stock
of Matritech, Inc. (the "Company") which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders of the Company
to be held at the Sheraton Newton, 320 Washington Street, Newton, Massachusetts
02458 on Friday, June 18, 1999 at 10:00 a.m. local time, and at all adjournments
thereof, upon matters set forth in the Notice of Annual Meeting of Stockholders
and Proxy Statement dated April 29, 1999, a copy of which has been received by
the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES AND FOR THE PROPOSAL IN ITEM 2. THE
PROXIES ARE AUTHORIZED, IN THEIR DISCRETION, TO VOTE UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
<PAGE>
-2-
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
MATRITECH, INC.
Withhold
1.) Election of Directors - To elect seven For All From All For All
members to the Board of Directors to serve until Nominees Nominees Except
the next Annual Meeting of Stockholders and
until their successors have been elected and [_] [_] [_]
qualified.
NOMINEES: J. Robert Buchanan, Stephen D. Chubb,
David L. Corbet, David Rubinfien, Richard A.
Sandberg, T. Stephen Thompson and C. William
Zadel.
- -------------------------------------
Instruction: To withhold authority to vote for
one or more of the nominees listed above, mark
the "For All Except" box and write the
nominee(s) name(s) in the space provided above.
2.) To ratify the selection of the firm of For Against Abstain
Arthur Andersen LLP as auditors for the fiscal
year ending December 31, 1999. [_] [_] [_]
3.) To transact such other business as may
properly come before the meeting and any
adjournments thereof.
Mark box at right if you will attend the [_]
Annual Meeting.
Mark box at right if an address change or [_]
comment has been noted on the reverse side of
this card.
RECORD DATE SHARES:
The Board of Directors Recommends a Vote FOR the foregoing proposals.
Please be sure to sign and date this Proxy. Date:
--------------------------
- ----------------------------------- -------------------------------
Stockholder sign here Co-owner sign here
<PAGE>
-3-
MATRITECH, INC.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of
Matritech that require your immediate attention and approval.
These are discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted, then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, June 18,
1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
MATRITECH, INC.
