<PAGE>
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SCHEDULE 14A
(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
[X] Definitive Proxy Statement
[_] Confidential, for Use of the Commission (as permitted by Rule 14a-
6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SYMPHONIX DEVICES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 8, 2000
----------------
TO THE STOCKHOLDERS OF SYMPHONIX DEVICES, INC.:
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of
Symphonix Devices, Inc. will be held on November 8, 2000 at 9:00 a.m., local
time, 2331 Zanker Road, San Jose, California 95131, for the following
purposes:
1. To approve the terms of an equity financing of $26 million pursuant to
which Symphonix will issue to certain new investors the voting stock
of Symphonix in an amount equal to approximately 31% of the total
number of shares of the common stock of Symphonix outstanding after
giving effect to this financing.
2. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
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 September 14, 2000,
the record date, are entitled to notice of and to vote at the special meeting.
All stockholders are cordially invited to attend the special meeting.
However, to assure your representation at the special meeting, you are urged
to mark, sign, date and return the enclosed proxy as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any stockholder
attending the special meeting may vote in person even if he or she has
returned a proxy.
FOR THE BOARD OF DIRECTORS
/s/ Kirk B. Davis
Kirk B. Davis
President and Chief Executive
Officer
San Jose, California
October 17, 2000
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE, AND RETURN IT IN THE ENCLOSED ENVELOPE. YOUR STOCK WILL BE VOTED IN
ACCORDANCE WITH THE INSTRUCTIONS YOU HAVE GIVEN IN THE PROXY. YOUR PROXY MAY
BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY SIGNING AND RETURNING A LATER-
DATED PROXY WITH RESPECT TO THE SAME SHARES, BY FILING WITH THE SECRETARY OF
THE COMPANY A WRITTEN REVOCATION BEARING A LATER DATE OR BY ATTENDING AND
VOTING IN PERSON AT THE SPECIAL MEETING.
<PAGE>
SYMPHONIX DEVICES, INC.
----------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
----------------
General
The enclosed proxy is solicited on behalf of the board of directors of
Symphonix Devices, Inc., a Delaware corporation, for use at a special meeting
of stockholders to be held on November 8, 2000, at 9:00 a.m., local time, or
at any adjournment of the meeting. The special meeting will be held at the
headquarters of Symphonix located at 2331 Zanker Road, San Jose, California
95131. The telephone number at that meeting location is (408) 232-0710.
These proxy solicitation materials were mailed on or about October 17, 2000,
to all stockholders entitled to vote at the meeting.
Record Date and Principal Share Ownership
Stockholders of record at the close of business on September 14, 2000, the
record date, are entitled to notice of and to vote at the special meeting.
Symphonix has only one class of shares outstanding, designated common stock,
$0.001 par value per share. At the record date, 13,382,124 shares of common
stock were issued and outstanding and held of record by approximately 5,200
stockholders. No shares of the preferred stock of Symphonix were outstanding.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of
Symphonix a written notice of revocation or a duly executed proxy bearing a
later date or by attending the special meeting and voting in person.
Voting and Solicitation
Each stockholder is entitled to one vote for each share of common stock held
as of the record date.
The cost of soliciting proxies will be borne by Symphonix. Symphonix expects
to reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Symphonix has retained Corporate Investor Communications as
proxy solicitors and expects to pay approximately $10,000 for this service.
Proxies may also be solicited by certain of the directors, officers and
regular employees of Symphonix, without additional compensation, personally or
by telephone or facsimile.
Quorum; Abstentions; Broker Non-Votes
Votes cast by proxy or in person at the special meeting will be tabulated by
the Inspector of Elections appointed for the meeting and will determine
whether or not a quorum is present.
The required quorum for the transaction of business at the special meeting
is a majority of the votes eligible to be cast by holders of shares of common
stock issued and outstanding on the record date. Shares that are voted "FOR",
"AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the special meeting with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, Symphonix believes that abstentions
should be counted for purposes of determining both (i) the
<PAGE>
presence or absence of a quorum for the transaction of business and (ii) the
total number of votes cast with respect to a proposal. In the absence of
controlling precedent to the contrary, Symphonix intends to treat abstentions
in this manner. Accordingly, abstentions will have the same effect as a vote
against the proposal.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of votes cast with respect to the particular proposal on which the
broker has expressly not voted. Accordingly, Symphonix intends to treat broker
non-votes in this manner. Thus, a broker non-vote will not affect the outcome
of the voting on a proposal.
Any proxy which is returned using the form of proxy enclosed and which is
not marked as to a particular item will be voted for the issuance of the
shares of common stock of Symphonix and as the proxy holders deem advisable on
other matters that may come before the meeting, as the case may be with
respect to the items not marked.
Deadline for Receipt of Stockholder Proposals
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules established by
the Securities and Exchange Commission. Proposals of stockholders of Symphonix
that are intended to be presented by such stockholders at the 2001 annual
meeting of Symphonix stockholders must be received by Symphonix no later than
January 13, 2001 to be considered for inclusion in the proxy statement and
form of proxy relating to that meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information known to Symphonix with respect
to the beneficial ownership of its common stock as of September 14, 2000, by
(i) each person who is known to Symphonix to own beneficially more than 5% of
the outstanding shares of common stock, (ii) each director, (iii) each named
executive officer as defined in Item 402(a)(3) of Regulation S-K, and (iv) all
directors and executive officers as a group. Except as otherwise noted, the
stockholders named in the table have sole voting and investment power with
respect to all common stock shown as beneficially owned by them, subject to
applicable community property laws.
2
<PAGE>
<TABLE>
<CAPTION>
Common Stock Approximate
Beneficially Percentage
Beneficial Owner Owned Owned (1)
---------------- ------------ -----------
<S> <C> <C>
Siemens Audiologische Technik GmbH (2)............. 2,026,062 15.2%
c/o Siemens Corporation
1301 Avenue of the Americas
New York, NY 10014
Roger Radke (3).................................... 2,026,062 15.2%
Entities Affiliated with Mayfield (4).............. 1,682,649 12.6%
2800 Sand Hill Road, 2nd Floor
Building 4, Suite 210
Menlo Park, CA 94025
Entities Affiliated with Sierra Ventures (5)....... 1,175,007 8.8%
3000 Sand Hill Road
Building 4, Suite 210
Menlo Park, CA 94025
Coral Partners IV, Limited Partnership............. 1,099,964 8.2%
60 South Sixth Street, Suite 3510
Minneapolis, MN 55402
Kirk B. Davis (6).................................. 700,517 5.2%
Geoffrey R. Ball (7)............................... 636,239 4.8%
B.J. Cassin (8).................................... 413,053 3.1%
Bob H. Katz (9).................................... 288,950 2.2%
R. Michael Crompton (10)........................... 219,008 1.6%
Patrick J. Rimroth (11)............................ 219,008 1.6%
Terence J. Griffin (12)............................ 175,000 1.3%
Gary M. Saxton (13)................................ 175,000 1.3%
James M. Corbett (14).............................. 70,000 *
Petri T. Vainio (15)............................... 82,703 *
George G. Montgomery III (16)...................... 60,000 *
Alfred G. Merriweather (17)........................ 115,476 *
617 Arboleda Drive
Los Altos, CA 94023
Harry S. Robbins (18).............................. 88,000 *
1 Loggerhead Lane
Manalapan, FL 33462
All directors and executive officers as a group (16
persons) (19)..................................... 5,479,016 33.5%
</TABLE>
--------
* Less than 1%
(1) Applicable percentage ownership is based on 13,352,124 shares of common
stock outstanding as of September 14, 2000 together with applicable
options or warrants for such stockholder. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, based on factors including voting and investment power with
respect to shares subject to the applicable community property laws.
Shares of common stock subject to options or warrants currently
exercisable or exercisable within 60 days after September 14, 2000 are
deemed outstanding for computing the percentage ownership of the person
holding such options, but are not deemed outstanding for computing the
percentage of any other person.
3
<PAGE>
(2) Includes 1,026,062 shares issuable within 60 days after September 14,
2000 pursuant to a Common Stock Purchase Agreement dated as of December
1, 1999.
(3) Consists of 2,026,062 shares beneficially owned by Siemens Audiologische
Technik GmbH, which includes 1,026,062 shares issuable within 60 days
after September 14, 2000 pursuant to a Common Stock Purchase Agreement
dated as of December 1, 1999. Dr. Radke, a director of the company, is
managing director of Siemens Audiologische GmbH and disclaims beneficial
ownership over these shares.
(4) Consists of 1,567,446 shares held by Mayfield VII, 82,499 shares held by
Mayfield Associates Fund II and 32,704 shares held by Mayfield VII
Management Partners.
(5) Consists of 1,130,892 shares held by Sierra Ventures IV, 44,115 shares
held by Sierra Ventures IV International.
(6) Includes options to purchase 600,000 shares exercisable within 60 days
after September 14, 2000. Mr. Davis joined Symphonix as President and
Chief Executive Officer in August 1999.
(7) Includes options to purchase 25,000 shares exercisable within 60 days
after September 14, 2000.
(8) Consists of 234,963 shares held in the name of the Cassin Family Trust,
over which Mr. Cassin holds voting and dispositive power, (ii) 95,387
shares held by Cassin Family Partners, a California Limited Partnership,
over which Mr. Cassin holds voting and dispositive power. Includes
options to purchase up to 82,703 shares exercisable within 60 days after
September 14, 2000.
(9) Consists of 162,792 shares held in the name of the Bob Katz Trust, over
which Mr. Katz holds voting and dispositive power. Includes options to
purchase up to 126,158 shares exercisable within 60 days after September
14, 2000.
(10) Includes options to purchase up to 202,507 shares exercisable within 60
days after September 14, 2000.
(11) Includes options to purchase up to 108,698 shares exercisable within 60
days after September 14, 2000. 110,310 of such shares are held in the
name of the Rimroth Family Trust. Mr. Rimroth holds voting and
dispositive power over all such shares.
(12) Includes options to purchase up to 175,000 shares exercisable within 60
days after September 14, 2000. Mr. Griffin joined Symphonix as Chief
Financial Officer in April 2000.
(13) Includes options to purchase up to 175,000 shares exercisable within 60
days after September 14, 2000. Mr. Saxton joined Symphonix as Vice
President of Sales and Marketing in November 1999.
(14) Includes options to purchase up to 60,000 shares exercisable within 60
days after September 14, 2000.
(15) Consists of options to purchase 82,703 shares exercisable within 60
days after September 14, 2000.
(16) Includes options to purchase up to 60,000 shares exercisable within 60
days after September 14, 2000.
(17) Consists of 115,476 shares held in the name of the Merriweather Family
Trust. Mr. Merriweather holds voting and dispositive power over all
such shares. Mr. Merriweather resigned as Chief Financial Officer
effective January 1, 2000 and is no longer involved with Symphonix.
(18) All such shares are held in the name of the Robbins Family Trust. Mr.
Robbins holds voting and dispositive power over all such shares. Mr.
Robbins resigned as President and Chief Executive Officer of Symphonix
effective August 16, 1999. Mr. Robbins resigned from the board of
directors effective April 1, 2000 and is no longer involved with
Symphonix.
(19) Includes Mr. Robbins and Mr. Merriweather, former officers of Symphonix
Devices.
4
<PAGE>
PROPOSAL NO. 1
APPROVAL OF TERMS OF EQUITY FINANCING
Background of the Financing
General. The stockholders are being asked to approve the private issuance
and sale by Symphonix of shares of its common stock in a private placement of
$26 million to certain investors on the terms and conditions outlined below.
This financing, if approved by the stockholders of Symphonix, would only occur
upon the fulfillment of certain conditions.
THIS PROXY STATEMENT IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OF THE COMPANY. THE SECURITIES REFERRED TO IN THIS
PROXY STATEMENT HAVE NOT BEEN REGISTERED FOR SALE BY THE COMPANY UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SO OFFERED OR SOLD ABSENT SUCH REGISTRATION
UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.
The Financing. During the past year, the management and the board of
directors of Symphonix has recognized Symphonix's need for additional working
capital. After due investigation of the options available to Symphonix and due
deliberation, the board of directors determined the terms and conditions of
the financing, including the amount of money to be raised and the price at
which the shares would be offered. The major terms of the financing are set
forth below:
(a) Equity Capital to Be Raised and Price of Shares to Be Issued. The
amount of equity capital to be raised pursuant to the financing is
$26 million. The shares of common stock issued in the financing will
be sold at a per share price of $4.064, which was determined as 80%
of the average of the closing price of Symphonix common stock for the
thirty-three (33) day period ending on September 18, 2000.
Accordingly, a total of approximately 6.4 million shares of Symphonix
common stock will be issued to the investors at the closing of the
financing.
(b) Adjustment to Purchase Price. In the event the market price of
Symphonix declines, Symphonix may be required to issue additional
shares of common stock to the investors at no additional cost to the
investors pursuant to a purchase price adjustment. The purchase price
adjustment allows the investors, at any time during the two-year
period following the closing of the financing, to calculate an
adjusted per share purchase price equal to the average closing market
price of the common stock as reported on the Nasdaq National Market
for the thirty-three (33) consecutive trading days immediately
preceding the date of the adjustment. Those investors who desire to
participate in this purchase price adjustment will receive additional
shares of common stock equal to the difference between the number of
shares which each investor could have purchased based on the adjusted
per share purchase price at the investor's original investment amount
and the number of shares originally purchased. Each investor may
participate in a purchase price adjustment only once during the two-
year period.
A possible consequence of the investors' right to adjust their purchase
price is that the investors could gain control of a majority of the
voting power of Symphonix. For purposes of example, assuming no changes
in the capitalization of Symphonix after September 14, 2000, the
investors could hold more than 50% of the voting stock of Symphonix if,
as a result of the purchase price adjustment, the adjusted per share
price of Symphonix common stock fell below approximately $1.80.
(c) Right to Maintain. If Symphonix issues any additional securities
after the financing (excluding certain issuances such as, for
example, stock options pursuant to the Symphonix's stock option
plans) the investors will have the right to purchase a portion of
these additional securities at the lowest price that such additional
securities are sold in such an amount as to enable each investor to
maintain its percentage ownership of the total outstanding common
stock.
5
<PAGE>
(d) Registration Obligations. Within 10 days of the closing of the
financing, Symphonix, at its expense, is required to file with the
Securities and Exchange Commission a registration statement
registering the resale of the shares of common stock issued to the
investors. Symphonix is required to maintain the effectiveness of
such registration statement for up to one year.
In addition, once the effectiveness of the registration statement
described above has expired, Symphonix will be required to file a
registration statement on Form S-3 once every six months, at the
request of the investors, to register shares held by the investors and
to maintain the effectiveness of each such registration statement for
up to 90 days.
Finally, if Symphonix determines to register any shares of common stock
for itself or stockholders other than the investors, it will be
obligated to register the shares of any investor that so requests (with
certain exceptions).
(e) Indemnification of Investors. Symphonix has agreed to enter into
indemnification agreements with J.P. Morgan and Patricof, as
stockholders, to indemnify them for any event or occurrence related
to the fact that they are deemed affiliates of Symphonix or arising
from any action or inaction on their part based upon their status as
affiliates of Symphonix. Symphonix has also agreed to add J.P. Morgan
Capital, L.P. and Patricof, as stockholders, to its current directors
and officers liability insurance policy.
(f) Appointment of Members to the Board of Directors. So long as J.P.
Morgan and Patricof each hold at least 1,203,315 shares of common
stock, Symphonix has agreed that its board of directors will nominate
one individual designated by each of J.P. Morgan and Patricof to the
slate of nominees recommended by the board of directors to the
stockholders at each annual meeting of the stockholders. In addition,
Symphonix has agreed that its board of directors and management will
vote all shares for which they hold proxies or otherwise are entitled
to vote in favor of the nominees designated by J.P. Morgan and
Patricof.
(g) Limitations on Acquisitions. Symphonix has agreed not to acquire any
other business or business entity in any transaction in which the
total consideration paid by Symphonix exceeds $10 million without the
prior written consent of J.P. Morgan and Patricof.
(h) Limitations on Issuance of New Securities. Symphonix has agreed not
to issue, for two years from the closing of the financing, securities
senior to the common stock with respect to dividends, liquidation
preference, voting rights, registration rights or redemption rights,
or any common stock sold at a discount from its fair market value in
a transaction in which Symphonix receives at least $5 million in
proceeds, without the prior written consent of J.P. Morgan and
Patricof.
(i) Exemption from Registration. The proposed financing is intended to be
exempt from the registration requirements of the Securities and
Exchange of 1933 Act, as amended, and Symphonix expects to rely upon
the Regulation D "safe harbor" provisions, or other exemptions,
promulgated thereunder.
Stockholder Approval
The 20% Rule. The issuance by Symphonix of the common stock is subject to
stockholder approval pursuant to Rule 4460(i)(D)(ii) of the Rules of the
National Association of Securities Dealers, Inc. This Rule requires companies
to obtain stockholder approval before the sale or issuance of common stock (or
securities convertible into common stock) in a transaction other than a public
offering where (i) the price per share is less than the greater of (a) the
market value of a share of common stock or (b) the per share book value, and
(ii) the amount of the common stock to be issued (or issuable upon conversion)
is or will be greater than 20% of the common stock or voting power of
Symphonix outstanding prior to such issuance.
The proposed financing will result in the issuance of common stock of
Symphonix of an amount in excess of 20% of the currently outstanding common
stock of Symphonix and at a price which is less than the market value of a
share of the common stock of Symphonix, based on recent closing prices.
6
<PAGE>
Use of Proceeds
Symphonix intends to use the proceeds of the financing for general corporate
purposes.
Dilutive Effect
The financing will have a dilutive effect on current stockholders in that
the percentage ownership of current stockholders of Symphonix will decline as
a result of the financing. The number of shares issued pursuant to the
financing will increase substantially the number of shares of common stock
currently outstanding. In the event the investors exercise the purchase price
adjustment, the percentage ownership of current stockholders will decline
further and the number of shares of common stock outstanding will increase.
The pro forma net tangible book value of Symphonix as of August 31, 2000 was
$5,732,000 or $.40 per share of common stock, based upon 14,458,832 shares of
common stock outstanding on that date (including 1,026,062 shares of common
stock issued on September 19, 2000 to Siemens Audiologische Technik GmbH
pursuant to a Common Stock Purchase Agreement dated December 1, 1999). Pro
forma net tangible book value per share represents Symphonix's total tangible
assets less total liabilities divided by the pro forma number of outstanding
shares of common stock. For purposes of the table immediately below, dilution
per share represents the difference between the amount per share paid by the
investors and the pro forma net tangible book value per share after the
financing. This dilution illustration is based on the price per share of the
stock and does not reflect changes in percentage ownership of the common stock
for voting purposes, another form of dilution discussed below. After giving
effect to the sale of 6,397,632 shares of common stock at a purchase price of
$4.064 per share, and after deducting estimated offering expenses of
approximately $125,000, the pro forma net tangible book value of Symphonix as
of the closing would be $31,607,000 or $1.51 per share. This represents an
immediate increase of pro forma net tangible book value of $1.11 per share to
existing stockholders and an immediate dilution in pro forma net tangible book
value of $2.55 per share to the investors, as illustrated in the following
table:
<TABLE>
<S> <C> <C>
Price per share................................................ $4.06
Pro forma net tangible book value per share before the
offering.................................................... $ .40
Increase attributable to new investors....................... $1.11
Pro forma net tangible book value per share after the
offering...................................................... $1.51
Dilution per share to the investors............................ $2.55
</TABLE>
The following table summarizes, on a pro forma basis as of August 31, 2000
the potential dilutive effect, for percentage ownership purposes, of the
financing on existing stockholders, where Symphonix raises $26 million through
the sale of 6,397,632 shares of common stock.
<TABLE>
<CAPTION>
Shares Percentage
---------- ----------
<S> <C> <C>
Outstanding Common Stock (1)........................... 14,458,832 69%
New Common Stock....................................... 6,397,632 31%
---------- ---
Total................................................ 20,856,464 100%
========== ===
</TABLE>
--------
(1) Includes 1,026,062 shares issued on September 19, 2000 to Siemens
Audiologische Technik GmbH pursuant to a Common Stock Purchase Agreement
dated December 1, 1999.
Interest of Certain Persons in the Transaction. In consideration of the
recommendations of the Symphonix Board of Directors with respect to the
transaction, you should be aware of the interest of one director in the
transaction. B.J. Cassin, a member of the board of directors, will increase
his beneficial ownership in Symphonix by 246,062 shares of common stock
through the sale of those shares to certain of his affiliates pursuant to the
financing.
7
<PAGE>
Advantages and Disadvantages of the Proposed Equity Financing
Advantages. Before voting, each stockholder should consider the following
advantages of the financing:
. the financing will provide capital to assist in the commercial
introduction into the U.S. market of the semi-implantable Vibrant
Soundbridge product, which was recently approved by the Food and Drug
Administration, and which Symphonix believes is critical to its long
term success;
. the financing will provide capital for ongoing research and development
efforts; and
. the financing will provide capital for general corporate purposes.
Disadvantages. Before voting, each stockholder should also consider the
following disadvantages of the financing:
. the investors, as a group, may control a majority of the voting power
of Symphonix if the market price of the common stock declines
sufficiently;
. the per share price of Symphonix common stock may decline because of
the issuance of the common stock to the investors at a below market
price and the subsequent registration of such common stock;
. the percentage ownership of Symphonix by existing stockholders will
decline;
. Symphonix will incur both one-time and recurring expenses as a result
of this financing;
. Symphonix has agreed that its board of directors will nominate and vote
for designees to its board of directors of J.P. Morgan and Patricof;
and
. Symphonix will face restrictions on acquisitions of more than $10
million and new stock issuances.
Stockholders are requested in this Proposal One to approve the issuance of
shares in a financing of $26 million pursuant to which Symphonix will issue
common stock that will result in the issuance of approximately 31% of the
outstanding securities of Symphonix, and the issuance of additional securities
if the investors subsequently elect to adjust their purchase price. The
affirmative vote of the holders of a majority of the common stock present in
person or represented by proxy and entitled to vote at the special meeting
will be required to approve such issuance.
Vote Required
Affirmative votes constituting a majority of the votes cast will be required
to approve and ratify the terms of the financing.
THE BOARD OF DIRECTORS OF SYMPHONIX UNANIMOUSLY RECOMMENDS A VOTE FOR THE
APPROVAL OF THE TERMS OF THE EQUITY FINANCING.
OTHER MATTERS
Symphonix knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent
as the board of directors may recommend.
/s/ Kirk B. Davis
Kirk B. Davis
Chairman of the Board
San Jose, California
October 17, 2000
8
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SYMPHONIX DEVICES, INC.
SPECIAL MEETING OF STOCKHOLDERS
November 8, 2000
The undersigned stockholder of Symphonix Devices, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Special Meeting of
Stockholders and Proxy Statement each dated October 17, 2000 and hereby appoints
Kirk. B. Davis as attorney-in-fact, with full power of substitution, on behalf
and in the name of the undersigned to represent the undersigned at the Special
Meeting of Stockholders of Symphonix Devices, Inc. to be held on November 8,
2000 at 9:00 a.m., local time, at the Company's principal executive offices
located at 2331 Zanker Road, San Jose, CA 95131 and at any postponement or
adjournment thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side.
<PAGE>
[1702-SYMPHONIX DEVICES.] [FILE NAME: ZSYMSA.ELX] [VERSION-(1)]
[10/05/00] [ORIG. 10/06/00]
DETACH HERE
[X]Please mark
votes as in
this example.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED "FOR" PROPOSAL NO. 1 AND AS THE PROXY HOLDERS DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Proposal to approve the private issuance and sale by the [___] [___] [___]
Company of shares of its Common Stock to certain investors.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [___]
Please sign exactly as your name appears hereon. If
the stock is registered in the names of two or more
persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add
their titles. If signer is a corporation, please give
full corporate name and have a duly authorized
officer sign, stating title. If signer is a
partnership, please sign in partnership name by
authorized person.
Please sign, date and promptly return this proxy in
the enclosed return envelope which is postage prepaid
if mailed in the United States.
</TABLE>
Signature:____________ Date:________ Signature:____________ Date:_________
