<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AUTONOMOUS TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF AUTONOMOUS TECHNOLOGIES CORPORATION]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 1998
To our Stockholders:
The Annual Meeting of Stockholders of Autonomous Technologies Corporation
(the "Company") will be held on Friday, June 12, 1998 at 9:00 a.m., local time,
at the Orlando Airport Marriott Hotel, 7499 Augusta National Drive, Orlando,
Florida 32822 (see map on back page). The Company's principal executive offices
are located at 2800 Discovery Drive, Orlando, Florida 32826. The phone number
at the Company's offices is (407) 384-1600. At the meeting, the following items
of business will be conducted:
1. To elect seven directors to serve until the next Annual Meeting and
until their successors have been elected and qualified;
2. To approve a proposal to amend the Company's 1995 Stock Option Plan to
increase the total number of shares from 1,750,000 to 2,250,000;
3. To act upon such other matters as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. Only stockholders of record at the close of business
on April 20, 1998 are entitled to notice of, and to vote at, the meeting and at
any postponement or adjournment thereof. A list of stockholders entitled to
vote at the Annual Meeting will be available for inspection at the offices of
the Company for ten business days prior to the meeting.
By Order of the Board of Directors
/s/ Monty K. Allen
------------------
Monty K. Allen
Vice President, Treasurer, Chief Financial Officer and
Secretary
Orlando, Florida
April 24, 1998
YOUR VOTE IS IMPORTANT. Please ensure that your shares will be represented at
the meeting by completing, signing and returning your proxy card in the envelope
provided, even if you plan to attend the meeting. Sending us your proxy will
not prevent you from voting in person at the meeting should you wish to do so.
<PAGE>
PROXY STATEMENT FOR
1998 ANNUAL MEETING OF STOCKHOLDERS
___________________________________________________________
PROXY INFORMATION
The accompanying proxy is solicited on behalf of the Board of Directors of
Autonomous Technologies Corporation (the "Company") for use at the Annual
Meeting of Stockholders to be held on Friday, June 12, 1998, at 9:00 a.m.
Eastern Daylight Time, or at any adjournment or adjournments thereof, at the
Orlando Airport Marriott Hotel, 7499 Augusta National Drive, Orlando, Florida
32822, and for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. If properly signed and returned and not revoked, the
proxy will be voted in accordance with the instructions it contains. The
persons named in the accompanying proxy will vote the returned proxy for the
Board of Director's slate of directors and for Proposal 2 unless contrary
instructions are given. At any time before it is voted, each proxy granted may
be revoked by the stockholder by a later dated proxy, by written revocation
addressed to the Secretary of the Company at 2800 Discovery Drive, Orlando,
Florida 32826 or by voting by ballot at the Annual Meeting.
This Proxy Statement, Notice of Annual Meeting and the accompanying proxy card
will be mailed to stockholders on or about April 24, 1998.
COMMON STOCK, VOTING PROCESS AND QUORUM FOR MEETING
The Company's Common Stock is the only class of security entitled to vote at the
Annual Meeting. Only stockholders of record at the close of business on April
20, 1998 will be entitled to vote on all matters to come before the meeting.
Each outstanding share of Common Stock entitles its holder to cast one vote for
each matter to be voted upon. On March 31, 1998, there were 10,540,056 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated to
determine whether or not a quorum is present. The presence at the Annual
Meeting, in person or by proxy, of the holders of a majority of the shares of
Common Stock outstanding on April 20, 1998 will constitute a quorum. All
proxies representing shares that are entitled to vote at the meeting will be
counted toward establishing a quorum, regardless of whether such proxies contain
abstentions or broker non-vote notifications.
SOLICITATION
The cost of preparing and mailing the enclosed material, which is estimated to
be $10,000, will be borne by the Company. The Company may use the services of
officers and employees of the Company (who will receive no additional
compensation) to solicit proxies. The Company intends to request banks and
brokers holding shares of the Company's stock to forward copies of the proxy
material to those persons for whom they hold shares and to request authority for
the execution of proxies. The Company will reimburse banks and brokers for
their out-of-pocket expenses.
1
<PAGE>
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Pursuant to the Company's Third Amended and Restated Articles of Incorporation,
the Board of Directors of the Company has fixed the number of directors at
seven. Each elected Director will serve until the next Annual Meeting of
Stockholders or until his successor shall be elected and shall qualify. Proxies
in the accompanying form which are signed and returned to the Company and not
revoked will be voted for the seven nominees listed in the table that follows,
except where authority is specifically withheld by the stockholder. All
nominees are incumbent directors. If any of the nominees should become unable
to accept election, or for good cause will not accept the election, the person
named in the proxy may vote for such other person or persons as may be
designated by the Board of Directors, if any. Each nominee named below has
indicated his willingness to accept election, and management has no reason to
believe that any of the nominees named below will be unable or unwilling to
serve.
The nominees for directors of the Company are as follows:
<TABLE>
<CAPTION>
Age (at
Principal Occupation or Employment during April 10,
Name the past five years 1998) Director Since
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Randy W. Frey /(2)/ Chairman of the Board and Chief Executive 40 1985
Officer of the Company since 1985;
President from 1985 to March 1998
- ---------------------------------------------------------------------------------------------------------------------------
Richard C. Capozza, Ph.D. Director and the Company's President and 56 1995
Chief Operating Officer since March 1998
and the Company's Executive Vice President
and Chief Operating Officer since
September 1995; Corporate Executive Vice
President for Science and Technology of
Pilkington Barnes Hind from 1990 to
September 1995
- ---------------------------------------------------------------------------------------------------------------------------
G. Arthur Herbert /(1)/(2)/ Director; Principal in a business 71 1992
consulting firm, CEO Advisors of Orlando,
Florida since 1989; Director of Techne
Corporation, a publicly-held diagnostics
firm
- ---------------------------------------------------------------------------------------------------------------------------
Stanley Ruffett /(1)/(2)/ Director; self-employed business 74 1992
consultant since 1989
- ---------------------------------------------------------------------------------------------------------------------------
Timothy Barabe /(1)/(2)/ Director (CIBA's designee on the Board); a 45 1995
Vice President for CIBA Vision since June
1993; and a Vice President of CIBA-GEIGY
Composites from 1990 to June 1993
- ---------------------------------------------------------------------------------------------------------------------------
Richard H. Keates, MD /(2)/ Director; consultant to the Company and 65 1996; also
Professor of Ophthalmology, New York 1992-1993
Medical College since 1997; formerly
Professor of Ophthalmology, University of
California, Irvine, from 1990 to 1997
- ---------------------------------------------------------------------------------------------------------------------------
Whitney A. McFarlin /(2)/ Director; Chairman, President and Chief 57 1997
Executive Officer of Angeion Corporation
since September 1993
- ---------------------------------------------------------------------------------------------------------------------------
/(1)/ Member of Audit Committee
- --------------------------------------
/(2)/ Member of Executive Compensation
Committee
- --------------------------------------
</TABLE>
2
<PAGE>
VOTE REQUIRED FOR APPROVAL OF ELECTION OF DIRECTORS
The affirmative vote of a majority of the shares of Common Stock having voting
power present in person or represented by proxy, a quorum being present, is
necessary to approve the election of each of the seven Director nominees.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors recommends a vote "for" the nominees listed herein.
INFORMATION CONCERNING THE OPERATION OF THE BOARD OF DIRECTORS
COMMITTEES
During the year ended December 31, 1997, there were eight meetings of the Board
of Directors, of which two were by telephonic participation. All of the
directors standing for re-election attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors held during the period for
which he served as a director and the total number of meetings held by the
Committees on which he may have served. The Board has two outstanding
committees, the Audit and Executive Compensation Committees.
The Audit Committee consists of Messrs. Ruffett (Chair), Herbert and Barabe.
The Audit Committee acts as a liaison between the Board and the independent
auditors and oversees the engagement of the independent auditors. The Audit
Committee reviews the planning and scope of the financial statement audits, the
results of those audits and the adequacy of the Company's accounting and control
practices. The Audit Committee held two meetings during 1997, both with
representatives of Arthur Andersen LLP present.
The Executive Compensation Committee consists of Messrs. Frey (Chair), Barabe,
Herbert, Keates, Ruffett and McFarlin. The Executive Compensation Committee
periodically reviews and approves compensation for the officers of the Company,
reviews and approves the Company's bonus and incentive programs, and sets the
compensation for Mr. Frey, who abstains during any such deliberations.
DIRECTOR COMPENSATION
Beginning in April 1997, the Board adopted a compensation arrangement setting
fees for non-employee directors to $2,000 per Board meeting attended and $1,000
per committee meeting attended (with the exception of Dr. Keates in accordance
with his consulting agreement - - see "Certain Transactions"). Also in April
1997, the Board instituted a plan of Board stock option participation whereby,
upon initial election to the Board, a non-employee member will receive a non-
qualified stock option from the Company's 1995 Stock Option Plan of 5,000 shares
with a ten year term that is immediately fully vested at an exercise price equal
to the Nasdaq closing price on the date of the first Board meeting attended by
the new member. The Board also instituted an annual grant of 2,000 shares to
non-employee members with a ten year term that is immediately fully vested at an
exercise price equal to the market price on the date of the member's re-election
to the Board (normally the Annual Meeting of the Shareholders). Dr. Keates is a
participant in this plan of Board stock option participation. Initial grants of
an option for 5,000 shares were made to Messrs. Barabe, Herbert, Keates and
Ruffett at an exercise price of $5.125 on April 7, 1997 and to Mr. McFarlin at
an exercise price of $5.375 on December 16,
3
<PAGE>
1997, and grants of 2,000 shares each to Messrs. Barabe, Herbert, Keates and
Ruffett at an exercise price of $3.75 upon re-election to the Board at the
Stockholders Meeting on June 12, 1997.
SECTION 16(A) REPORTING
The Company believes, based on representations by directors and officers, that
all required reports of ownership and changes in ownership of the Company's
Common Stock with the Securities Exchange Commission during 1997, on Forms 3, 4
or 5 have been filed during the period in a timely manner.
CERTAIN TRANSACTIONS
Dr. Richard H. Keates is retained by the Company under the terms of a three year
consulting agreement (the "Keates Agreement") whereby he serves as a Board
member and medical and clinical consultant. The Keates Agreement is currently
in its second year of operation and during that time, the Company pays him
$9,500 per month plus expenses. As a result of the Keates Agreement, Dr. Keates
does not receive Board or Committee service fees but does receive stock options
under the plan adopted by the Board in April 1997 regarding such grants.
Messrs. Herbert and Ruffett are under retainer to the Company for general
business and financial consulting, respectively, and are paid $1,000 per month
for such services.
4
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's compensation program for executive officers has three basic
tenets:
1. To provide competitive total compensation, and mix thereof, to attract
and retain qualified executive management;
2. To provide an incentive component of cash bonuses that encourages
achievement of short-term (one year or less) company goals;
3. To provide an incentive component of stock options that encourages
creation of long-term shareholder value.
In accordance with the executive "pay freeze" set in 1996 regarding substantive
progress in achieving milestones toward development of shareholder value, no
base salary increases were granted to executive officers in 1997. Executive
officers and all other employees were also eligible for up to five cash bonuses
based on Company performance milestones throughout the year (the 1997 Bonus
Plan). The Company achieved certain of the performance milestones, resulting in
the executive bonuses detailed later in this Proxy Statement.
During 1997, the Committee considered the matter of additional stock option
grants to executive officers. Each such officer who had been hired prior to
1997 was granted additional options (in addition to those which may have been
granted upon initial employment with the Company) as detailed below as to "Named
Officers." Additionally, a grant was made to a new executive officer to attract
him to the Company during 1997.
In 1998, there are similar short-term incentives available to all of the
executive officers upon successful attainment of certain Company goals for the
year. The scope of this short-term incentive opportunity for 1998 is similar to
that of 1997. All qualifying employees of the Company also participate in the
same plan with certain Company goals (the 1998 Bonus Plan).
1997 CHIEF EXECUTIVE OFFICER COMPENSATION
Randy Frey, Chairman of the Board and Chief Executive Officer, participates in
the 1998 Bonus Plan in addition to his base salary. Mr. Frey's base salary has
been set at a level of $200,000 per annum since May 1996. The Committee believes
this base salary level is competitive and equitable for the scope of his duties
and responsibilities heading a publicly-held company. As founder of the Company,
Mr. Frey holds 665,250 shares, or over 6%, of the Company's Common Stock in the
form of founder's stock. In light of this significant equity holding, the
Committee (and previous to the Committee existence, the full Board of Directors)
had not granted Mr. Frey stock options. However, in 1997, it was recognized
that the need for additional equity capital would continue to cause dilution to
Mr. Frey's stock position. Therefore the Board granted Mr. Frey incentive
stock options in December 1997 for 60,000 shares with an exercise price of
$5.375 with the Company's normal five year vesting for employee options. The
Board will review the matter of stock options to Mr. Frey in the future as
Company progress warrants.
5
<PAGE>
Submitted by the Executive Compensation Committee, excluding Mr. Frey as
Chairman:
/s/Stanley Ruffett /s/Timothy Barabe
/s/G. Arthur Herbert /s/Dr. Richard H. Keates
/s/Whitney A. McFarlin
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table describes the compensation earned in the last three fiscal
years to the Chief Executive Officer of the Company and each of the Company's
four most highly compensated executive officers (the "Named Officers") whose
1997 cash compensation was $100,000 or more.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Shares
Year Other Underlying Stock
Name and Principal Position (1) Salary Bonus Compensation Options
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Randy W. Frey /(2)/ 1997 $200,000 $32,000 $ 7,233 60,000
Chairman of the Board, President 1996 $171,877 $20,192 $ 6,967 -----
and Chief Executive Officer 1995 $ 93,753 $ 1,000 $ 5,603 -----
- ------------------------------------------------------------------------------------------------------------------------------------
Richard C. Capozza, Ph.D. /(3)/ 1997 $190,000 $30,400 $ 7,933 60,000
Executive Vice President and Chief 1996 $190,000 $29,231 $65,082 -----
Operating Officer 1995 $ 47,500 $ 1,000 $92,832 270,000
- ------------------------------------------------------------------------------------------------------------------------------------
George H. Pettit, MD, Ph.D. /(4)/ 1997 $150,000 $24,000 $ 7,211 20,000
Vice President of Research 1996 $ 75,000 $11,538 $12,504 100,000
1995 ----- ----- ----- -----
- ------------------------------------------------------------------------------------------------------------------------------------
Monty K. Allen /(5)/ 1997 $126,000 $20,160 $ 7,339 80,729
Vice President, Treasurer and 1996 $118,125 $18,577 $ 5,728 252
Chief Financial Officer; Secretary 1995 $ 42,538 $ 1,000 $23,438 52,500
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/1997 and 1996 are the calendar fiscal years ended December 31, 1997 and
1996, respectively; 1995 is the fiscal year comprised of nine months ended
December 31, 1995, when the Company made a fiscal year-end change.
/(2)/Mr. Frey's Other Compensation includes Company payments toward medical,
dental, and prescription drug card benefits, short and long-term disability
insurance and life insurance.
/(3)/Dr. Capozza's Other Compensation includes Company payments toward medical,
dental, and prescription drug card benefits, short and long-term disability
insurance and life insurance, and relocation expenses and related tax
gross-up thereon in 1995 and 1996. The tax gross-up has been accrued by
the Company in its financial statements for the year of occurrence of the
related relocation expenses and is paid to Dr. Capozza in the following
year. In addition to the amounts shown in the above table, Dr. Capozza
recognized $16,994 in earned income and had appropriate payroll taxes
withheld during 1997 as the result of a disqualifying disposition from a
stock option exercise. Dr. Capozza was employed by the Company in
September 1995. As a result, the 1995 amounts in the table above are for a
partial fiscal year.
/(4)/Dr. Pettit's Other Compensation includes Company payments toward medical,
dental, and prescription drug card benefits, short and long-term disability
insurance and life insurance,
6
<PAGE>
and relocation expenses in 1996. Dr. Pettit was employed by the Company in
July 1996. As a result, the 1996 amounts in the table above are for a
partial fiscal year.
/(5)/Mr. Allen's Other Compensation includes Company payments toward medical,
dental, and prescription drug card benefits, short and long-term disability
insurance and life insurance, and relocation expenses in 1995. In addition
to the amounts shown in the above table, Mr. Allen recognized $6,475 in
earned income and had appropriate payroll taxes withheld during 1997 as the
result of disqualifying dispositions from stock option exercises. Mr. Allen
was employed by the Company in August 1995. As a result, the 1995 amounts
in the table above are for a partial fiscal year.
The Company added long-term disability insurance to the benefits package of all
employees in May 1997. Previously, none of the Named Officers were receiving
Company-paid long-term disability insurance with the exception of Mr. Frey.
Option Grant Information
The following table sets forth information concerning options granted to the
Named Officers during the fiscal year ended December 31, 1997 under the
Company's 1995 Stock Option Plan and the Company's 1996 Employee Stock Purchase
Plan.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS MARKET POTENTIAL REALIZABLE VALUE AT
UNDERLYING GRANTED TO EXERCISE PRICE AT EXPIRES ASSUMED ANNUAL RATES OF STOCK
OPTION GRANTS EMPLOYEES IN PRICE ($/SH) DATE OF ON PRICE APPRECIATION FOR OPTION
Name 1997(3) GRANT DATE TERM(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------------------------
Randy W. Frey 60,000 10.3 $5.375 $5.375 12/16/07 $ 0 $202,783 $513,873
- -----------------------------------------------------------------------------------------------------------------------------------
Richard C. Capozza 60,000 10.3 $5.375 $5.375 12/16/07 $ 0 $202,783 $513,873
- -----------------------------------------------------------------------------------------------------------------------------------
George H. Pettit 20,000 3.4 $5.375 $5.375 12/16/07 $ 0 $ 67,594 $171,291
- -----------------------------------------------------------------------------------------------------------------------------------
Monty K. Allen /(2)/ 80,729 13.8 $6.844 $6.850 10/14/07 $444 $346,349 $876,960
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_________
/(1)/ The potential realizable value is based on the term of the option at the
time of grant. The assumed stock price appreciation of five and ten percent
is mandated by the rules of the Securities and Exchange Commission. The
potential realizable value is calculated by assuming that the market price on
the date of grant appreciates at the indicated rate for the entire term of the
option and that the option is exercised at the exercise price and sold on the
last day of its term at the appreciated price. No effects from individual
taxation are used in the calculations. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Company's Common
Stock, overall market conditions and the executive's continued employment with
the Company. The amounts represented in this table may not be achieved.
/(2)/ Mr. Allen's option grants includes 729 shares purchased during the year as
a participant in the Company's 1996 Employee Stock Purchase Plan. As a result
of the 15% discount from market price at which the plan allows option grants
to be made, Mr. Allen's market price at date of grant and exercise price for
all option grants displayed are different values on a weighted average basis.
As a result, Mr. Allen's potential realizable value in a scenario of 0%
assumed annual stock price appreciation represents the total dollar value of
the discount on the 729 shares granted and exercised during the year. These
729 shares represented 7.8% of the options granted under the elective 1996
Employee Stock Purchase Plan for 1997.
/(3)/ The percent of total options granted to employees in 1997 is calculated
without including a 60,000 share non-qualified stock option grant to Mr.
Terence A. Walts, a former consultant
7
<PAGE>
to the Company. The 60,000 share option grant has since been cancelled. See
"Employment Agreement" below.
Option Exercises in the Last Year and Year End Option Table
The following table provides information regarding stock option exercises by the
Named Officers in 1997.
OPTION EXERCISES IN THE LAST YEAR
<TABLE>
<CAPTION>
Shares Acquired Value
Name on Exercise Realized /(1)/
- -------------------------------------------------------------------------------
<S> <C> <C>
Randy W. Frey ----- -----
Richard C. Capozza 54,000 $306,000
- -------------------------------------------------------------------------------
George H. Pettit ----- -----
- -------------------------------------------------------------------------------
Monty K. Allen 21,729 $ 94,435
- -------------------------------------------------------------------------------
</TABLE>
/(1)/Value realized was determined by multiplying the number of shares exercised
by the difference between the exercise price per share and the closing price on
the exercise date.
The following table provides information regarding unexercised stock options
held by the Named Officers as of December 31, 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at Year-End Options at Year-End (1)
- ------------------------------------------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Randy W. Frey ----- 60,000 ----- $ 15,000
- ------------------------------------------------------------------------------------------------------------------
Richard C. Capozza 54,000(2) 222,000 $285,750 $872,250
- ------------------------------------------------------------------------------------------------------------------
George H. Pettit 20,000 100,000 ----- $ 5,000
- ------------------------------------------------------------------------------------------------------------------
Monty K. Allen ----- 111,500 ----- $166,688
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/Value based on the difference between the last reported sale of the
Company's Common Stock on the Nasdaq National Market of $5.625 per share on
December 31, 1997, and the exercise price of the options.
/(2)/Exercised after December 31, 1997 for Value Realized of $336,402.
The Company's 1995 Stock Option Plan, as amended, generally provides for
acceleration of vesting of outstanding options in the event of a "change in
control transaction." The acceleration provision provides for certain
alternatives to acceleration at the discretion of the Board of Directors in
order to comply with certain laws, rules and regulations.
Employment Agreement
The Company entered into an employment agreement dated June 2, 1995 with Mr.
Terence A. Walts. Mr. Walts served as a full-time sales and marketing
consultant to the Company in the capacity of Chief Marketing Officer under the
auspices of a 1995 Strategic Alliance Agreement ("SAA") with CIBA Vision Group
Management, Inc. ("CIBA") until March 1998. Although
8
<PAGE>
Mr. Walts was paid his base salary and benefits by CIBA, the Company provided
compensatory incentives to Mr. Walts during a period of nearly three years,
including an annual cash bonus of $50,000 and a common stock grant for 120,000
shares. Mr. Walts and the Company have agreed that Mr. Walts will not become an
employee of the Company in June 1998, as contemplated in the Strategic Alliance
Agreement between the Company and CIBA. Mr. Walts was a valuable consultant and
contributor to the Company and its progress over the last three years, and was
particularly instrumental in finalizing and supporting the Strategic Alliance
with CIBA.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee consisted of Messrs. Frey, Barabe, Herbert,
Keates, Ruffett and McFarlin during their respective periods of service in 1997.
Of the Committee members, Mr. Frey was the only member who was also an officer
or employee of the Company.
9
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following is a line graph presentation that compares an index of stockholder
return on a total return basis for the Company to the same measures for a broad
market index and for an index of peer companies from May 1, 1996, the date of
the Company's initial public offering, to December 31, 1997. The graph assumes
$100 invested on May 1, 1996 in the Company's Common Stock and each of the
indices. The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "ATCI."
[CAMPARISON OF TOTAL RETURN GRAPH]
The line marked "NASDAQ" is the aggregate Nasdaq Stock Market for both U.S. and
foreign issues (over 5,000 issues). The line marked "Peer" is an index of all
U.S. and foreign companies listed on the Nasdaq Stock Market with a Standard
Industrial Classification ("SIC") code within the range of 3840 to 3849 (almost
200 issues). The 384x SIC code is entitled Surgical, Medical and Dental
Instruments and Supplies.
10
<PAGE>
The actual data points embedded in the graph above are noted in the following
table. The information in the table was obtained from the Center for Research
in Security Prices at the University of Chicago Graduate School of Business.
<TABLE>
<CAPTION>
Date Autonomous NASDAQ Peer
- ------------------------------------------------------------------------
<S> <C> <C> <C>
5/1/96 100.0 100.0 100.0
- ------------------------------------------------------------------------
5/31/96 90.9 103.8 103.4
- ------------------------------------------------------------------------
6/28/96 71.2 98.9 94.4
- ------------------------------------------------------------------------
7/31/96 48.5 89.9 83.1
- ------------------------------------------------------------------------
8/30/96 66.7 95.1 86.6
- ------------------------------------------------------------------------
9/30/96 50.0 102.2 92.5
- ------------------------------------------------------------------------
10/31/96 50.0 101.1 86.3
- ------------------------------------------------------------------------
11/29/96 47.0 107.3 86.8
- ------------------------------------------------------------------------
12/31/96 48.5 107.1 89.5
- ------------------------------------------------------------------------
1/31/97 66.7 114.8 92.7
- ------------------------------------------------------------------------
2/28/97 72.7 108.7 91.5
- ------------------------------------------------------------------------
3/31/97 63.6 101.7 83.6
- ------------------------------------------------------------------------
4/30/97 60.6 104.7 81.3
- ------------------------------------------------------------------------
5/30/97 47.0 116.5 89.7
- ------------------------------------------------------------------------
6/30/97 50.0 120.1 91.1
- ------------------------------------------------------------------------
7/31/97 45.5 132.7 97.4
- ------------------------------------------------------------------------
8/29/97 43.2 132.3 97.8
- ------------------------------------------------------------------------
9/30/97 65.2 140.6 107.7
- ------------------------------------------------------------------------
10/31/97 74.2 133.0 105.4
- ------------------------------------------------------------------------
11/28/97 65.9 133.3 103.4
- ------------------------------------------------------------------------
12/31/97 68.2 131.1 102.6
- ------------------------------------------------------------------------
</TABLE>
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as best known to the Company
regarding the beneficial ownership of the Company's Common Stock as of March 31,
1998, unless otherwise indicated, by (1) each person known to the Company to own
more than 5% of the issued and outstanding Common Stock, (2) each of the
Company's directors, (3) each of the Named Officers, and (4) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Shares of Common Stock Approximate Percent
Beneficial Owner Beneficially Owned (1) Beneficially Owned
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CIBA Vision Group Management, Inc. (2)
11460 Johns Creek Parkway
Duluth, GA 30136 1,695,371 15.76%
- -----------------------------------------------------------------------------------------------------------
Timothy Barabe (2) 1,702,371 15.82%
- -----------------------------------------------------------------------------------------------------------
Dawson Samberg Capital Management, Inc. (3)
354 Pequot Avenue 1,000,000 9.30%
Southport, CT 06490
- -----------------------------------------------------------------------------------------------------------
Randy W. Frey (4) 665,250 6.18%
- -----------------------------------------------------------------------------------------------------------
Heartland Advisors, Inc. (5)
790 North Milwaukee Street
Milwaukee, WI 53202 615,000 5.72%
- -----------------------------------------------------------------------------------------------------------
Richard C. Capozza, Ph.D. (6) 132,259 1.23%
- -----------------------------------------------------------------------------------------------------------
G. Arthur Herbert (7) 70,150 *
- -----------------------------------------------------------------------------------------------------------
Stanley Ruffett (8) 36,850 *
- -----------------------------------------------------------------------------------------------------------
Richard H. Keates, MD (9) 35,950 *
- -----------------------------------------------------------------------------------------------------------
Monty K. Allen (10) 20,416 *
- -----------------------------------------------------------------------------------------------------------
George H. Pettit (11) 20,000 *
- -----------------------------------------------------------------------------------------------------------
Whitney A. McFarlin (12) 5,000 *
- -----------------------------------------------------------------------------------------------------------
All Directors and Executive Officers as a
Group (11 persons) (13) 2,688,246 24.99%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Represents beneficial ownership of less than one percent of the outstanding
Common Stock.
/(1)/The persons and entities in the table above have sole voting and investment
power with respect to all shares shown as beneficially owned by them,
except as noted in the footnotes below.
/(2)/The 1,695,371 shares are owned by CIBA Vision Group Management, Inc., a
wholly owned subsidiary of Novartis U.S., Inc., in turn a wholly owned
subsidiary of Novartis, Ltd. of Basel Switzerland, engaged in the business
of vision care products and services. The number of shares beneficially
owned does not include 171,713 shares that may be issuable on May 15, 1999
to CIBA under the terms of the 1995 Strategic Alliance Agreement. CIBA was
issued 438,821 shares in March 1998 under an amendment to the Strategic
Alliance Agreement, thereby reducing the shares that would have been
issuable on May 15, 1999. Mr. Barabe is an officer of CIBA, and he serves
on the Company's Board of Directors as the designee of CIBA. Mr. Barabe
disclaims beneficial ownership of the securities of the Company owned by
CIBA. Mr. Barabe holds for his personal account non-qualified stock
options for 7,000 shares which are exercisable within sixty days. As part
of the Strategic Alliance Agreement, the Company and certain of its
stockholders agreed to vote their shares
12
<PAGE>
of stock, then owned and thereafter acquired, in favor of the election of
CIBA's single designee to the Board of Directors for as long as CIBA shall
maintain 7.5% ownership of the Company on a fully diluted, common stock
equivalent basis.
/(3)/As reported by Dawson Samberg Capital Management, Inc. on Schedule 13-G
dated February 12, 1998. Includes a stock purchase warrant to purchase
135,000 shares of Common Stock exercisable through February 28, 1999 at
$3.33 per share.
/(4)/Excludes options to acquire 60,000 shares which are not exercisable within
60 days. Excludes 525 shares of Common Stock and a stock purchase warrant
to purchase 450 shares of Common Stock exercisable through February 28,
1999 at $3.33 per share held by Mr. Frey's mother, for which he disclaims
any beneficial ownership.
/(5)/As reported by Heartland Advisors, Inc. on Schedule 13-G dated January 23,
1998.
/(6)/Includes a stock purchase warrant to purchase 15,000 shares of Common Stock
exercisable through February 28, 1999 at $3.33 per share. Excludes options
to acquire 222,000 shares which are not exercisable within 60 days.
/(7)/Includes non-qualified options to acquire 7,000 shares which are
exercisable within 60 days and a stock purchase warrant to acquire 15,000
shares of Common Stock exercisable through February 28, 1999 at $3.33 per
share.
/(8)/Includes non-qualified options to acquire 7,000 shares which are
exercisable within 60 days.
/(9)/Includes non-qualified options to acquire 7,000 shares which are
exercisable within 60 days.
/(10)/Excludes options to acquire 111,763 shares which are not exercisable
within 60 days.
/(11)/Includes options to acquire 20,000 shares which are exercisable within 60
days. Excludes options to acquire 100,000 shares which are not exercisable
within 60 days.
/(12)/Includes non-qualified options to acquire 5,000 shares which are
exercisable within 60 days.
/(13)/Includes options to acquire 53,000 shares which are exercisable within 60
days and stock purchase warrants to acquire 30,000 shares of Common Stock
exercisable through February 28, 1999 at $3.33 per share. Excludes options
to acquire 593,763 shares which are not exercisable within 60 days.
13
<PAGE>
PROPOSAL NO. 2: APPROVAL OF AMENDED STOCK OPTION PLAN
On February 24, 1998, the Board of Directors approved, and recommended that the
Company's stockholders approve, an amendment to the Company's 1995 Stock Option
Plan (the "1995 Plan") to increase the Common Stock available in that plan from
1,750,000 shares to 2,250,000 shares. As of February 24, 1998, the most recent
date of grants made under the 1995 Plan, the Company has granted options on
1,602,430 shares, net of cancellations, out of the 1995 Plan's total
authorization of 1,750,000 shares, leaving 147,570 shares available for future
option grants.
It is the Company's practice to grant an option for a minimum of 1,000 shares to
each employee after completion of an initial probationary period. Additionally,
in the case of attracting certain technical, managerial or executive personnel,
stock options have been and are expected to remain an important part of the
compensatory package that the Company can offer. The Company wishes to remain
in a position to utilize stock options to assist in the accomplishment of the
Company's business objectives. Of the net options on 1,602,430 shares that have
been granted since the formation of the 1995 Plan, options on 835,500 shares
(approximately 52%) have been granted to attract four executive officers to join
the Company or were granted subsequent to employment to a total of six officers
for reward and retention. Also included in the 835,500 total are options
granted to members of the Board of Directors. The balance of 766,930 shares
(approximately 48%) have been granted to reward employee accomplishments in
periods prior to formation of the 1995 Plan, to attract and retain certain
technical and managerial personnel to employment, to reward accomplishments
since the 1995 Plan formation, and to implement the objective that all employees
hold an equity interest in the Company. The Board of Directors believes that the
total number of options in the Company's capitalization structure remains in the
normal range for a development stage, technology company that is cash
constrained due to lack of commercial revenue and profits before gaining FDA
approval for its product.
If this proposal is adopted by the Company's stockholders, section 3(a) of the
Company's 1995 Stock Option Plan would be changed to read as follows in its
entirety:
3. Stock Subject to Option
- --- -----------------------
(a) Total Number of Shares. The total number of shares of Stock which may be
----------------------
issued by the Company to all Optionees under this Plan is 2,250,000 shares. The
total number of shares of Stock which may be so issued may be increased only by
a resolution adopted by the Board of Directors and approved by the shareholders
of the Company.
VOTE REQUIRED FOR APPROVAL OF AMENDMENT OF THE COMPANY'S 1995 PLAN
The affirmative vote of a majority of the shares of Common Stock having voting
power present in person or represented by proxy, a quorum being present, is
necessary to approve the Amendment to the Company's 1995 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2, THE AMENDMENT TO
INCREASE THE AUTHORIZED COMMON STOCK UNDER THE COMPANY'S 1995 PLAN FROM
1,750,000 SHARES TO 2,250,000 SHARES.
14
<PAGE>
OTHER BUSINESS
The Board of Directors is not aware of any other matter that may be presented
for action at the Annual Meeting. Should any other matter requiring a vote of
the stockholders arise, the enclosed proxy card gives authority to the persons
listed on the card to vote at their discretion in the best interest of the
Company.
Representatives of Arthur Andersen LLP, the company's independent public
accountants, are expected to be present at the Annual Meeting to respond to
appropriate questions and to make a statement if the representatives so desire.
Arthur Andersen LLP has been the Company's independent public accountants
continuously since the audit performed as of March 31, 1993 and for the fiscal
year then ended. Arthur Andersen LLP also provides the service of preparing the
Company's Federal and state tax returns and filings, and their London and
Toronto offices have provided consulting services relating to import and VAT in
Europe.
STOCKHOLDER PROPOSALS FOR THE 1999 MEETING
Stockholder proposals that are intended to be presented at the Company's Annual
Meeting of stockholders to be held in 1999 must be received by the Company no
later than December 23, 1998 in order to be included in the proxy statement and
related proxy materials.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report for 1997, which contains the Company's
Form 10-K in its entirety, including the financial statements of the Company,
accompanies this proxy statement. The Company will provide an additional Form
10-K copy (or copies) to any stockholder as of the record date, who so requests
in writing. Such requests should be directed to Monty K. Allen, Secretary of the
Company at 2800 Discovery Drive, Orlando, Florida 32826.
The Company has chosen to mail its Annual Report and Financial Statement on Form
10-K with this proxy material to stockholders, such mailing to take place on or
around April 25, 1998.
15
<PAGE>
Location of the Annual Meeting of Stockholders of Autonomous Technologies
Corporation
Orlando Airport Marriott Hotel
7499 Augusta National Drive
Orlando, Florida 32822
[MAP ORLANDO AIRPORT TO MARRIOTT HOTEL]
Friday, June 12, 1998
9:00 a.m.
16
<PAGE>
[LOGO OF AUTONOMOUS TECHNOLOGIES
CORPORATION APPEARS HERE]
2800 DISCOVERY DRIVE
ORLANDO, FL 32826
407-384-1600
PROXY CARD
Randy W. Frey and Monty K. Allen, or either of them, are hereby authorized, with
full power of substitution, to represent and to vote the stock of the
undersigned at the Annual Meeting of Stockholders of the Company to be held on
June 12, 1998, or at any adjournment, upon such business as may properly come
before the meeting, including the following items as set forth in the Proxy
Statement.
1. Election of Directors. Nominees: Randy W. Frey, Richard C. Capozza,
---------------------
Ph.D., G. Arthur Herbert, Stanley Ruffett, Timothy Barabe, Richard H. Keates,
MD, and Whitney A. McFarlin.
For the above slate of nominees: [_]
- ---
Withheld for the above slate : [_]
- --------
If withheld for only part of the slate, please list the nominee(s) that you are
not in favor of:
______________________________________________________________________________
______________________________________________________________________________
2. Approve an amendment to the Company's 1995 Stock Option Plan to increase
------------------------------------------------------------------------
the number of shares available for grant from 1,750,000 to 2,250,000.
- --------------------------------------------------------------------
For the amendment to increase shares available in the 1995 Stock Option Plan:
- ---
[_]
Against the amendment to increase shares available in the 1995 Stock Option
- -------
Plan: [_]
You are encouraged to specify your choices by marking the appropriate box. This
Proxy, when properly executed, is voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this Proxy will be voted for
the election of Directors, and for the amendment to the Company's 1995 Stock
Option Plan to increase shares available for grant thereunder. The Proxies
cannot vote your shares unless you sign and return the Card. In their
direction, the Proxies are authorized to vote upon such other business as may
properly come before the meeting.
I plan to attend the meeting: [_]
Signature(s): _________________________________ Date: ________________
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
