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:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Pace Medical, Inc.
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(Name of Registrant as Specified In Its Charter)
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(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:
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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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(4) Date Filed:
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PACE MEDICAL, INC.
391 Totten Pond Road
Waltham, Massachusetts 02451
NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD JUNE 8, 2001
A Special Meeting in Lieu of Annual Meeting of Stockholders of Pace
Medical, Inc., a Massachusetts corporation, will be held on Friday, June 8,
2001, at 2:00 P.M. Eastern Daylight Time, at the Winchester Country Club, 468
Mystic Street, Winchester, Massachusetts, for the following purposes:
1. To fix the number of Directors at three and to elect a Board of
Directors for the ensuing year.
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 10, 2001 as
the record date for determining the stockholders having the right to receive
notice of and to vote at the Annual Meeting.
The business matters enumerated above are discussed more fully in the
accompanying Proxy Statement. If you do not expect to be present at the meeting
and wish your shares of Common Stock to be voted, you are requested to sign and
mail promptly the enclosed Proxy which is being solicited on behalf of the Board
of Directors. A return envelope, which requires no postage if mailed in the
United States, is enclosed for that purpose.
By order of the Board of Directors,
DRUSILLA F. HAYS, CLERK
April 25, 2001
PACE MEDICAL, INC.
PROXY STATEMENT
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 8, 2001
This Proxy Statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of Pace Medical, Inc. (the "Company") of
Proxies for use at the Special Meeting in Lieu of Annual Meeting of Stockholders
of the Company to be held, pursuant to the accompanying Notice of Special
Meeting in Lieu of Annual Meeting, on Friday, June 8, 2001, and at any
adjournment or adjournments thereof (the "Annual Meeting"). Action will be taken
at the Annual Meeting to fix the number of Directors at three and to elect the
number of Directors so fixed.
If a stockholder specifies in his/her Proxy how it is to be voted, it will
be voted in accordance with such specification. Any stockholder giving a Proxy
in the accompanying form retains the power to revoke it at any time prior to the
exercise of the powers conferred thereby. Any stockholder, who attends the
Annual Meeting in person, will not be deemed thereby to revoke his/her Proxy
unless such stockholder affirmatively indicates there his/her intention to vote
the shares in person.
The Company's principal executive offices are located at 391 Totten Pond
Road, Waltham, Massachusetts 02451. The Company mailed this Proxy Statement and
related form of Proxy on or about April 25, 2001 to the holders of record of its
shares of Common Stock at the close of business on April 10, 2001.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The holders of record of shares of Common Stock of the Company at the close
of business on April 10, 2001 may vote at the Annual Meeting. On that date,
there were outstanding 3,354,870 shares of Common Stock.
Each share of Common Stock is entitled to one vote on each of the matters
listed in the Notice of Annual Meeting. Approval of the matters presently
planned to come before the Annual Meeting requires the affirmative vote of the
holders of a majority of the shares represented and voting at the Annual
Meeting. Abstentions will, and broker non-votes will not, be counted as being
represented at the Annual Meeting.
As of April 10, 2001, the only stockholders known to the Company to be the
beneficial owners of more than 5% of the Company's outstanding shares of Common
Stock were Ralph E. Hanson, who is a nominee for election as a director, and
Paul J. LaRaia, M.D. of 45 Ravine Road, Wellesley, Massachusetts 02481, who is
the beneficial owner of 331,000 shares of Common Stock or 9.9% of the
outstanding Common Stock. The number of shares owned beneficially by Mr. Hanson
and the percentage of the outstanding Common Stock represented by such shares is
set forth in tabular form under DIRECTORS AND NOMINEES.
ELECTION OF DIRECTORS
It is the intention of the persons named as Proxies in the accompanying form
of Proxy (unless authority to vote therefor is specifically withheld) to fix the
number of directors for the ensuing year at three and to vote for the election
as directors of the persons named in the following table, all of whom are now
directors of the Company, to serve until the next annual meeting of stockholders
and until their successors are elected and qualified. In the event, however,
that any of the nominees becomes unavailable (which is not now anticipated by
the Company), the persons named as Proxies have discretionary authority to vote
either for a substitute or to fix the number of directors to be elected at less
than three. The Board of Directors has no reason to believe that any of the said
persons will be unwilling or unable to serve if elected.
DIRECTORS AND NOMINEES
Each of the nominees named in the following table has furnished the
respective information shown:
NUMBER OF
SHARES
BENEFICIALLY
YEAR FIRST OWNED AS OF
NAME, ADDRESS & PRINCIPAL BECAME APRIL 10, PERCENTAGE
OCCUPATION OR EMPLOYMENT(1) AGE DIRECTOR 2001 OF CLASS
- ----------------------------------------------------- --- ---------- ------------ ----------
Ralph E. Hanson...................................... 72 1985 1,048,000(2) 29.8%
Pace Medical, Inc.
391 Totten Pond Road
Waltham, Massachusetts 02451
President, Chief Executive Officer, Treasurer and
Chairman of the Company
Derrick Ebden........................................ 50 1985 124,000(3) 3.6%
Managing Director
APC Cardiovascular Ltd.
18 Macon Court
Macon Way
Crewe
Cheshire CW1 1EA, England(4)
George F. Harrington................................. 64 1986 127,000(5) 3.7%
Boston Equity Management Co.
13 Waldron Court
Marblehead, Massachusetts 01945
President of Boston Equity Management Co., a
private investment management firm
Directors and Officers as a Group.................... 1,299,000(6) 35.7%
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(1) Unless otherwise specified, each individual has had the same principal
employment during the past five years as indicated above.
2
(2) Includes 100,000 shares of Common Stock which Mr. Hanson has a right to
acquire within 60 days pursuant to the exercise of options. Includes 73,000
shares and options to acquire 60,000 shares held by Mr. Hanson's spouse,
beneficial ownership of which is disclaimed by Mr. Hanson.
(3) Includes 50,000 shares of Common Stock which Mr. Ebden has a right to
acquire within 60 days pursuant to the exercise of options.
(4) Mr. Ebden has been Managing Director of APC Cardiovascular Ltd., a
distributor of medical devices, since March, 1990. Prior to that time,
Mr. Ebden served as the Managing Director of the Company's subsidiary, APC
Medical Ltd., and had been a Vice President of the Company since its
incorporation. See "Transactions with Management".
(5) Includes 50,000 shares of Common Stock which Mr. Harrington has a right to
acquire within 60 days pursuant to the exercise of options.
(6) Includes 260,000 shares of Common Stock which officers and directors have a
right to acquire within 60 days pursuant to the exercise of options.
Mr. Hanson, as beneficial owner of 29.8% of the outstanding Common Stock of
the Company, may be deemed a controlling person of the Company under the
Securities Exchange Act of 1934.
The Board of Directors did not formally meet during fiscal 2000, but took
action by unanimous written consent on three occasions.
The Board of Directors has no standing audit, compensation or nominating
committees.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company's directors and executive
officers and any other persons holding more than ten percent of the Company's
Common Stock are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in their ownership to the Securities and
Exchange Commission. During the fiscal year ended December 31, 2000, except as
described below, all of these filing requirements were satisfied. In making
these disclosures, the Company has relied solely on written representations of
its directors, executive officers, and ten percent stockholders, and copies of
reports that they have filed with the Securities and Exchange Commission.
Mr. Hanson filed a Form 4 to report one purchase by him of shares of the
Company's Common Stock after the date specified therefor.
EXECUTIVE COMPENSATION
1. SUMMARY OF ANNUAL COMPENSATION
The table set forth below shows the annual compensation for the three fiscal
years ended December 31, 2000 paid by the Company to Ralph E. Hanson, the
President and Chief Executive Officer of the Company (the "named executive
officer"). No other executive officer received a total annual salary and bonus
in excess of $100,000 in any such fiscal year.
3
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL AWARDS
COMPENSATION ----------------------
NAME AND -------------------- OTHER ANNUAL SECURITIES UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS (#)
- --------------------------------- -------- --------- -------- --------------- ----------------------
Ralph E. Hanson 2000 139,063 -- -- --
President & Chief 1999 127,688 -- -- --
Executive Officer 1998 121,401 -- -- --
2. STOCK OPTIONS
The table set forth below shows information regarding the value of
unexercised stock options held by the named executive officer at December 31,
2000.
AGGREGATE OPTION VALUES AT FISCAL YEAR END
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NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FY-END (#) VALUE OF UNEXERCISED
--------------------------- IN-THE-MONEY OPTIONS
NAME EXERCISABLE UNEXERCISABLE AT FY-END (1)
- ---- ----------- ------------- --------------------
Ralph E. Hanson.................................... 50,000 0 $ 0
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(1) Represents the fair market value of the Company's Common Stock on
December 31, 2000 ($0.32 per share based on the closing quote on such date
on the OTC Bulletin Board) minus the exercise price per share, of the
exercisable options, multiplied by the number of shares subject to the
options.
Mr. Hanson was not granted any options or other equity-based compensation
during the fiscal year ended December 31, 2000 and did not exercise any options
during such fiscal year.
3. EMPLOYMENT CONTRACTS
On June 1, 1998, the Company entered into a three year employment agreement
with Mr. Hanson. Under the terms of this agreement, Mr. Hanson agreed to serve
as the Company's President and Chief Executive Officer at salary of not less
than $125,000 per annum, and the Company agreed that he would be eligible for
such fringe benefits as are generally made available by the Company to its
employees. In addition, the agreement also imposes upon Mr. Hanson certain
confidentiality requirements and certain restrictions regarding his ability to
compete with the Company following the termination of his employment.
4. DIRECTOR COMPENSATION
The Company's directors receive no cash compensation in consideration for
serving on the Board of Directors. However, in January, 2001, the Company
granted to each of George F. Harrington and Derrick Ebden a five year
non-qualified stock option to purchase 50,000 shares of Common Stock at an
exercise price of $.32 per share, which was determined by the Board of Directors
to be the fair market value of the Company's Common Stock on the date of grant.
4
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March, 1990, the Company entered into an agreement with APC
Cardiovascular Ltd. ("Cardiovascular"), a company in which Derrick Ebden, a
Director of the Company, is Managing Director and a principal stockholder,
pursuant to which Cardiovascular was appointed the sole distributor of the
Company's products outside of North and South America on normal trade terms.
Such agreement does not have a fixed term, but is terminable by either party
upon one year's advance written notice. The Company made sales to Cardiovascular
of approximately $690,444 during 2000 and $700,711 during 1999. All such sales
were made on normal trade terms.
SELECTION OF INDEPENDENT PUBLIC AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year. It is not expected that
representatives of Deloitte & Touche LLP will be present at the Annual Meeting.
For the year ended December 31, 2000, the Company's fees to Deloitte & Touche
LLP were as follows: Audit Fees: $37,500; Financial Information Systems Fees:
$0; All Other Fees (including fees for services pertaining to tax preparation):
$8,500. The Board of Directors has considered whether the provision of non-audit
services by Deloitte & Touche LLP is compatible with maintaining auditor
independence.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 2000, including financial statements and the opinion of Deloitte &
Touche LLP thereon, is being mailed herewith to each of the Company's
stockholders of record at the close of business on April 10, 2001.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual
meeting of the Company must be received by the Company at its principal
executive offices by December 26, 2001 for inclusion in the Company's proxy
statement and form of proxy relating to that meeting and must comply with the
applicable requirements of the federal securities laws.
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than that shown above. However, if any
such other business should come before the Annual Meeting, it is the intention
of the persons named in the enclosed form of Proxy to vote the Proxies with
respect to any such business in accordance with their best judgment.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit Proxies otherwise than by use of
the mail, in that certain officers and regular employees of the Company, without
additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain Proxies. The Company will also request persons, firms, and
corporations holding shares in their names, or in the names of their nominees,
which shares are beneficially owned by others, to send this proxy material to
and obtain Proxies from such beneficial owners and will reimburse such holders
for their reasonable expenses in doing so.
By order of the Board of Directors,
DRUSILLA F. HAYS, CLERK
April 25, 2001
5
PACE MEDICAL, INC.
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS - JUNE 8, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned stockholder in Pace Medical, Inc. hereby appoints Ralph
E. Hanson and George F. Harrington, and each of them, attorneys, agents
and proxies, with power of substitution to each, to vote all shares of
Common Stock that the undersigned is entitled to vote at the Special
Meeting in Lieu of Annual Meeting of Stockholders of Pace Medical, Inc.
to be held at 2:00 P.M., Friday, June 8, 2001, at the Winchester
Country Club, 468 Mystic Street, Winchester, Massachusetts, and at any
adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO CONTRARY INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THE
PROXY STATEMENT, AND, IN THE BEST JUDGMENT OF THE PROXIES, UPON ANY
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
(CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE.)
SEE REVERSE SIDE
/X/ Please mark votes as
in this example.
1. To fix the size of the Board at three and to elect the nominees named
in the Proxy Statement.
Nominees: Ralph E. Hanson, George F. Harrington
and Derrick Ebden
/ / For / / Withheld
/ /
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For, except vote withheld from the following nominee(s)
2. To vote and act upon any other business which may properly come before
the Meeting or any adjournments thereof.
/ / For / / Against / / Abstain
Signature(s): Date:
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Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.