SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Section 14a-12
SURGICAL LASER TECHNOLOGIES, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant):
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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 the 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: __________________________________________________________
[SLT LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 19, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Surgical Laser
Technologies, Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, July 19, 2000 at 9:00 a.m., local time, at the offices of the
Company's counsel, Duane, Morris & Heckscher LLP, 4200 One Liberty Place, 1650
Market Street, Philadelphia, Pennsylvania 19103, for the following purposes:
1. To elect five directors to serve until the 2001 Annual Meeting and
until their respective successors are elected;
2. To ratify the appointment of Grant Thornton LLP as independent
accountants of the Company for the fiscal year ending December 31, 2000;
3. To consider and vote upon a proposal to adopt the Company's 2000
Equity Incentive Plan; and
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only stockholders of record at the close of business on May 29, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
A copy of the Company's Annual Report for its fiscal year ended January 2,
2000 is being mailed to stockholders with this Notice.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the 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 meeting may vote in person even if he has returned a proxy.
By Order of the Board of Directors,
Davis Woodward
Secretary
Montgomeryville, Pennsylvania
June 14, 2000
SURGICAL LASER TECHNOLOGIES, INC.
PROXY STATEMENT FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Surgical Laser Technologies, Inc. (the "Company") for use at the Annual Meeting
of Stockholders to be held Wednesday, July 19, 2000 at 9:00 a.m., local time,
and at any adjournment thereof (the "Annual Meeting"), for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at the offices of the Company's counsel, Duane, Morris &
Heckscher LLP, 4200 One Liberty Place, 1650 Market Street, Philadelphia,
Pennsylvania 19103. The Company's executive offices are located at 147 Keystone
Drive, Montgomeryville, Pennsylvania 18936. The Company's telephone number at
that location is (215) 619-3600.
These proxy solicitation materials were first mailed on or about June 14,
2000 to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on May 29, 2000 are
entitled to receive notice of and to vote at the Annual Meeting. At the record
date, 1,977,965 shares of the Company's Common Stock, par value $.01 per share
(the "Common Stock") were issued and outstanding.
As of May 29, 2000, the following persons were known to the Company to be
the beneficial owners of more than 5% of the Company's Common Stock:
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
- --------------------------------------------------------------------- --------- --------
Steven T. Newby...................................................... 183,000(1) 9.25%
6116 Executive Blvd.
Rockville, MD 20852
Kontron Instruments Holding N.V...................................... 139,130 7.03%
Julianaplein 22
Curacao, Netherlands Antilles
- ------------------
(1) Information furnished by stockholder as of January 31, 2000.
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 the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting in person. Any such notice of
revocation should be sent to: Surgical Laser Technologies, Inc., 147 Keystone
Drive, Montgomeryville, Pennsylvania 18936, attention: Davis Woodward,
Secretary.
1
VOTING AND SOLICITATION
On all matters presented to the Company's stockholders for a vote, the
holders of Common Stock vote as a single class, and the holder of each share of
Common Stock is entitled to one vote per share. The holders of Common Stock do
not have cumulative voting rights in the election of directors.
The affirmative vote of the holders of a plurality of the shares of the
Company's Common Stock present, in person or by proxy, and entitled to vote at
the Annual Meeting is required for the election of each director. The
affirmative vote of the holders of a majority of the shares of the Company's
Common Stock present, in person or by proxy, and entitled to vote at the Annual
Meeting is required for the ratification of the appointment of the independent
auditors and adoption of the Company's 2000 Equity Incentive Plan (collectively,
the "Proposals").
Abstention from voting will have the practical effect of voting against the
Proposals since an abstention represents one less vote for the Proposals. Broker
non-votes will have no effect on the Proposals since they will not represent
shares entitled to vote thereon at the Annual Meeting. Abstentions and broker
non-votes on the election of directors will have no effect since they will not
represent votes cast at the Annual Meeting for the purpose of electing
directors.
The cost of this solicitation will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners. Proxies may also be solicited on behalf of the Company by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone or telegram.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the 2001 Annual Meeting of Stockholders must be received
by the Company no later than February 14, 2001 in order that they may be
included, subject to compliance with applicable federal securities laws and
regulations, in the proxy statement and form of proxy relating to that meeting.
In addition, the persons named as proxies on the form of proxy to be mailed
in connection with the solicitation of proxies on behalf of the Company's Board
of Directors for use at the 2001 Annual Meeting of Stockholders will be
authorized to vote in their discretion on any stockholder proposal not included
in the Company's Proxy Statement if the Company does not receive written notice
of such proposal by April 30, 2001. Such proxy holders' authority to vote in
their discretion on stockholder proposals as to which the Company does receive
notice by April 30, 2001 will be determined in accordance with the rules of the
Securities and Exchange Commission.
2
ELECTION OF DIRECTORS
NOMINEES
Five directors are to be elected at the Annual Meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's five nominees named below. Each of the nominees, except for James Lee
Stafford, is now a director of the Company with a term expiring at the Annual
Meeting. Vincenzo Morelli is not standing for re-election, and his term will
expire upon the election of his successor at the Annual Meeting. In the event
that any nominee of the Company is unable or declines to serve as a director at
the time of the Annual Meeting, the proxies will be voted for any nominee
designated by the present Board of Directors to fill the vacancy. The Company is
not aware of any nominee who will be unable or will decline to serve as a
director.
The names of the nominees, and certain information about them as of May 29,
2000, are set forth below.
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- --------------------------------------------- --- --------------------------------------------- --------
Richard J. DePiano........................... 58 Chairman and Chief Executive Officer of 1986
Escalon Medical Corporation
Sheldon M. Bonovitz.......................... 63 Chairman and Partner, Duane, Morris & 1985
Hecksher LLP, Counsel to the Company
Jay L. Federman.............................. 62 Ophthalmologist and attending Surgeon and 1987
Co-Director Director of Research, Wills Eye
Hospital and Chief of Ophthalmology at
Medical College of Pennsylvania
Michael R. Stewart........................... 43 President and Chief Executive Officer of the 1999
Company
James Lee Stafford........................... 59 Certified Public Accountant and Managing N/A
Partner of Watkins, Ward and Stafford
Directors will serve until the 2001 Annual Meeting and until the due
election of their respective successors.
Except as set forth below, each of the nominees has been engaged in his
principal occupation described above for the past five years. There are no
family relationships among directors or officers of the Company.
Richard J. DePiano has served as the Chairman of the Board of Directors of
Registrant since July 1995. Since March 1997, Mr. DePiano has served as Chairman
and Chief Executive Officer of Escalon Medical Corp., of which he is also a
director. Mr. DePiano has been the Chief Executive Officer of The Sandhurst
Company, L.P. and the Managing Director of The Sandhurst Venture Fund since
1986.
Sheldon M. Bonovitz has been a partner in the law firm of Duane, Morris &
Heckscher LLP, Philadelphia, Pennsylvania, since 1969, where he also serves as
Chairman and a member of the management committee. Mr. Bonovitz also serves as a
director of Comcast Corporation, PRWW, Ltd. and eResearchTechnology, Inc.
3
Jay L. Federman, M.D. has been an attending surgeon at Wills Eye Hospital,
Philadelphia, Pennsylvania, since 1980 and an ophthalmologist in private
practice since 1968. Dr. Federman was a founder of SITE Microsurgical Systems,
Inc. and serves as a director of Escalon Medical Corp. and Chief of
Ophthalmology at the Medical College of Pennsylvania.
Michael R. Stewart has served as President and Chief Executive Officer of
the Company since July 1999. Prior to Mr. Stewart's appointment as President and
Chief Executive Officer, he served as the Company's Vice President and Chief
Financial Officer since October 1990.
James Lee Stafford, CPA has been a partner in the regional accounting firm
of Watkins, Ward and Stafford, West Point, Mississippi, since 1968, where he
also serves as Managing Partner and Chairman of the Executive Committee. Mr.
Stafford was also a principal owner of Surgical Innovations & Services, Inc.,
Tuscaloosa, Alabama, which was acquired by the Company on June 1, 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE NOMINEES
LISTED ABOVE.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
of Registrant as of May 29, 2000 by each director and nominee for director, each
executive officer named in the Summary Compensation Table and by all directors
and executive officers as a group. The persons named in the table below have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws where
applicable and the information contained in the table and notes thereto.
SHARES BENEFICIALLY
OWNED
--------------------
NAME NUMBER PERCENT
- ----------------------------------------------------------------------- ------- -------
Jay L. Federman........................................................ 62,739(1) 3.15%
Davis Woodward......................................................... 51,688(2) 2.58%
Richard J. DePiano..................................................... 45,900(3) 2.28%
Michael R. Stewart..................................................... 35,359(4) 1.76%
Sheldon M. Bonovitz.................................................... 24,000(5) 1.20%
Vincenzo Morelli....................................................... 14,000(6) *
James Lee Stafford..................................................... --(7) --
All directors and executive officers as a group (6 persons)............ 233,686(8) 11.05%
- ------------------
* Less than one percent.
(1) Includes 15,900 shares which Dr. Federman has the right to acquire under
outstanding stock options exercisable within 60 days after May 29, 2000 and
2,499 shares owned by Dr. Federman's child. Dr. Federman disclaims
beneficial ownership of such 2,499 shares.
(2) Includes 26,906 shares which Mr. Woodward has the right to purchase under
outstanding stock options exercisable within 60 days after May 29, 2000.
(3) Includes 30,900 shares which Mr. DePiano has the right to acquire under
outstanding stock options exercisable within 60 days after May 29, 2000.
4
(4) Includes 34,073 shares which Mr. Stewart has the right to purchase under
outstanding stock options exercisable within 60 days after May 29, 2000.
(5) Represents 18,900 shares which Mr. Bonovitz has the right to acquire under
outstanding stock options exercisable within 60 days after May 29, 2000 and
5,100 shares owned by a pension trust of which Mr. Bonovitz is the
beneficiary.
(6) Includes 3,000 shares held of record by Olive Branch Corp., a Liberian
corporation controlled by members of Mr. Morelli's family. Mr. Morelli
disclaims beneficial ownership of such shares. Also includes 10,000 shares
which Mr. Morelli has the right to purchase under outstanding stock options
exercisable within 60 days after May 29, 2000.
(7) Excludes 105,000 shares issued as of June 1, 2000 to Mr. Stafford pursuant
to the Company's acquisition of Surgical Innovations & Services, Inc.
(8) Includes 136,679 shares which such persons have the right to purchase under
stock options exercisable within 60 days after May 29, 2000.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings during
the fiscal year ended January 2, 2000. All directors attended such meetings of
the Board of Directors and meetings of the committees upon which such director
served.
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee. The Executive Committee also serves as the Nominating
Committee.
The Executive Committee currently consists of directors Stewart, Bonovitz
and DePiano. The Executive Committee exercises the full authority of the Board
of Directors between meetings of the Board of Directors. The Executive Committee
held two meetings in the fiscal year ended January 2, 2000.
The Executive Committee, in its capacity as Nominating Committee, will
consider stockholder nominations of candidates for director provided that the
nominating stockholder furnishes the Secretary of the Company, not less than 120
days prior to the first anniversary of the immediately preceding annual meeting
of stockholders, written information about such candidate equivalent to the
information concerning the candidates nominated by the Company's Board of
Directors contained in the Company's proxy statement for the immediately
preceding annual meeting of stockholders.
The Audit Committee currently consists of directors DePiano and Federman.
The Audit Committee reviews and evaluates the Company's accounting principles
and its systems of internal accounting controls, addresses specific financial
issues and takes action relating to the financial reporting of the Company. The
Audit Committee held one meeting in the fiscal year ended January 2, 2000.
The Compensation Committee currently consists of directors Bonovitz,
DePiano and Federman. When requested by the Board of Directors, the Compensation
Committee administered the Company's 1986 Incentive Stock Option Plan, 1986
Non-Qualified Stock Option Plan and Equity Incentive Plan, under which no
additional options may be granted, and will have similar responsibility for the
Company's 2000 Equity Incentive Plan if it is adopted by the stockholders at the
Annual Meeting. The Compensation Committee also reviews other compensation plans
and, when requested by the Board of Directors, establishes methods of
compensation. The Compensation Committee held one meeting during the fiscal year
ended January 2, 2000.
5
DIRECTOR COMPENSATION
Each director of the Company who is not an officer or employee of the
Company (an "Outside Director") receives an annual retainer of $15,000 and a fee
of $500 for each committee meeting attended other than meetings held in
conjunction with meetings of the Board of Directors.
The Company also maintains the Second Amended and Restated Stock Option
Plan for Outside Directors (the "Outside Director Plan"). In accordance with the
terms of the Outside Director Plan, each Outside Director received options to
purchase 6,000 shares every three years, provided that if the Outside Director
served as Chairman throughout the prior three-year period, the option was for
9,000 shares, and each new Outside Director received options to purchase 6,000
shares of Common Stock on the fifteenth day after election as an Outside
Director, provided that if the Outside Director was elected to serve as
Chairman, the option granted was for 9,000 shares. All such options are
exercisable at 100% of the fair market value of the Common Stock on the date of
grant and remain exercisable to the extent vested until the earliest to occur of
the expiration of ten years from the date of grant, three years from cessation
of service as a director due to disability, one year from cessation of service
as a director due to death or three months from cessation of service as a
director for any other reason. The options are exercisable in three equal
consecutive annual installments commencing one year from the date of grant.
Notwithstanding the foregoing, all options granted under the Outside Director
Plan become fully exercisable upon consummation of any business combination
transaction involving the sale of all or substantially all of the assets of the
Company to, or the acquisition of shares of the Company's Common Stock
representing more than 50% of the votes which all stockholders of the Company
are entitled to cast by, any person not affiliated with the Company, directly or
indirectly, through one or more affiliates, or any other transaction or series
of transactions having a similar effect.
An aggregate 77,000 shares of Common Stock were reserved for issuance under
the Outside Director Plan, of which 1,800 shares have been exercised and 62,700
shares are subject to outstanding options. No additional options may be granted
under the Outside Director Plan; future options granted to Outside Directors
will be granted under the 2000 Equity Incentive Plan, subject to stockholders'
approval. See "Approval of 2000 Equity Incentive Plan".
EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain information with respect to
compensation paid by the Company during each of the three fiscal years ended
January 2, 2000, January 3, 1999 and December 28, 1997 to the chief executive
officers of the Company and the other executive officers of the Company whose
annual salary and bonus in 1999 exceeded $100,000.
6
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL AWARDS ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME & PRINCIPAL POSITION YEAR SALARY($) (#)(1) ($)(2)
- ------------------------------------------------------------- ---- ------------ ------------ ------------
W. Keith Stoneback(3)........................................ 1999 $123,750 -- $117,163(5)
President, Chief Executive 1998 229,327 -- 4,905
Officer and Director 1997 225,000 10,000(4) 38,275(6)
Michael R. Stewart(7)........................................ 1999 169,507 50,000 643
President, Chief Executive 1998 153,932 -- 643
Officer and Director 1997 143,843 5,000(4) 643
Davis Woodward(8)............................................ 1999 132,384 27,500(9) 1,285
Vice President, Chief 1998 127,392 -- 1,285
Financial Officer 1997 119,664 4,000(4) 1,285
- ------------------
(1) Restated as necessary to give effect to the one-for-five reverse Common
Stock split implemented on January 8, 1999.
(2) Except as noted in footnotes 5 and 6, represents payments of premiums for
certain supplementary life insurance coverage.
(3) Mr. Stoneback served as President, Chief Executive Officer and a Director
from August 1996 to July 1999.
(4) These options were granted in 1998 for services rendered in 1997.
(5) Includes $111,202 in severance payments made by the Company to Mr. Stoneback
pursuant to the terms of his Severance Agreement.
(6) Includes $32,314 in moving and relocation payments made by the Company to
Mr. Stoneback pursuant to the terms of his Employment Agreement.
(7) Mr. Stewart was appointed President and Chief Executive Officer in July
1999. Prior to his appointment as President and Chief Executive Officer, Mr.
Stewart served as the Company's Vice President and Chief Financial Officer.
(8) Mr. Woodward was appointed Vice President and Chief Financial Officer in
October 1999. Prior to his appointment as Chief Financial Officer, Mr.
Woodward served as the Company's Vice President, Legal and Tax Affairs.
(9) These options were granted in 2000 for services rendered in 1999.
7
The following table sets forth information with respect to options granted
during the fiscal year ended January 2, 2000 to the persons named in the Summary
Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL
OPTIONS RATES OF STOCK
GRANTED TO PRICE APPRECIATION
EMPLOYEES FOR OPTION TERM
OPTIONS IN FISCAL EXERCISE -------------------
NAME GRANTED(#) YEAR PRICE EXPIRATION DATE 5% 10%
- --------------------------------------- ---------- ---------- -------- --------------- ------- --------
Michael R. Stewart..................... 50,000 47.3% $ 1.56 October 5, 2009 $49,133 $124,511
The following table sets forth information with respect to options held at
January 2, 2000 by the persons named in the Summary Compensation Table above. No
options were exercised by such persons during the fiscal year ended January 2,
2000. No outstanding options were in the money at January 2, 2000. If
applicable, the information presented in the following table was restated to
give effect to the one-for-five reverse Common Stock split implemented on
January 8, 1999.
FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED OPTIONS
AT FISCAL YEAR END
-----------------------------
NAME EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------- ----------- -------------
Michael R. Stewart.............................................. 27,272 59,668
Davis Woodward.................................................. 22,106 7,334
EMPLOYMENT AND OTHER AGREEMENTS
Effective July 1999, Mr. Stoneback resigned as the Company's President and
Chief Executive Officer. Mr. Stoneback received as severance benefits his base
salary, auto allowance, health, disability and executive life insurance until
December 31, 1999.
In October 1999, the Company entered into an employment agreement with
Michael R. Stewart pursuant to which Mr. Stewart will serve as the Company's
President and Chief Executive Officer through December 31, 2000 and, thereafter,
for successive one-year terms absent at least three months' prior written notice
of termination by either party. Mr. Stewart's annual base salary under the
agreement is $185,000 and his agreement provides that he will be eligible for a
bonus of 50% of base salary pursuant to bonus programs developed by the Board of
Directors based on objective criteria related to the Company's results of
operations. No bonus was paid for services under the 1999 bonus program. If Mr.
Stewart's employment is terminated by the Company without cause during the
initial or any renewal term of the agreement (other than following a change in
control as described below), Mr. Stewart will be entitled to severance benefits
equal to continuation of his base salary, health, disability and life insurance
for a one-year period and the right to exercise options which are not then
exercisable for a period equal to the lesser of: (1) one year from the date of
termination for all options granted after 1996 and five years from the date of
termination for all options granted before 1997 or (2) the original term of such
options. If Mr. Stewart's employment is terminated without cause within two
years following a change in control or if Mr. Stewart resigns his employment
8
within two years after a change in control following (a) the relocation of Mr.
Stewart's principal business location by more than 35 miles, (b) a significant
reduction in Mr. Stewart's duties and responsibilities from those existing prior
to the change in control or (c) a reduction in Mr. Stewart's then-current base
salary, Mr. Stewart will be entitled to severance benefits equal to continuation
of his base salary and his health, disability and life insurance for a one-year
period and the right to exercise any options granted under the agreement which
are not otherwise exercisable for a period equal to the lesser of: (1) one year
from the date of termination for all options granted after 1996 and five years
from the date of termination for all options granted before 1997 or (2) the
original term of such options. Mr. Stewart was also granted under the agreement
options to purchase 50,000 shares of the Company's Common Stock at the market
price. The Company provides long-term disability insurance equal to 60% of Mr.
Stewart's base salary, a $1 million life insurance policy and automobile,
vacation, and other insurance benefits as are available to the Company's other
senior executive officers. During the term of the agreement and for a period of
one year thereafter, Mr. Stewart is prohibited from competing with the Company
in any respect, interfering with the Company's business relationships or
soliciting business from the Company's customers.
In June 1992, the Company adopted a severance benefits program for certain
key employees, including Mr. Woodward. Under the terms of this program, a
participant whose employment is terminated by the Company other than for cause
and other than following a change in control is entitled to continue receiving
his then-current base salary and coverage under the medical, dental,
supplemental life and supplemental disability insurance policies, if any, being
provided at the time of termination for a specified period, with the obligation
to provide such insurance coverage terminating in the event the participant is
provided substantially the same coverage from a new employer. Mr. Woodward is
entitled to continue receiving such base salary and insurance coverage for a
period of one year under the foregoing circumstances. In addition, if, within
two years following a change in control of the Company, a participant's
employment is terminated without cause or the participant resigns following (a)
the relocation of his principal business location, (b) a significant reduction
in the duties or responsibilities from those existing prior to the change in
control, or (c) a reduction in his then-current base salary, then, in any such
event, the participant is also entitled to continue receiving his then-current
base salary and coverage under the aforementioned insurance program (subject to
the restriction described above) for a specified period. Mr. Woodward is
entitled to continue receiving his respective base salary for a period of 12
months under such circumstances. In addition, under such circumstances, Mr.
Woodward is also entitled to continue receiving the aforementioned insurance
coverages for a period of 12 months, and all unvested options which he holds
become exercisable in full and all outstanding options remain exercisable for
the lesser of the remaining scheduled term thereof or an extended exercise
period, which is one year for options granted after December 1996 and five years
for options granted before January 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Sheldon M. Bonovitz, a director of the Company and a member of the
Executive Committee and the Compensation Committee, is Chairman and a partner of
Duane, Morris & Heckscher LLP, which serves as the Company's primary legal
counsel.
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is reviewed and administered
by the whole Board of Directors. This report reflects the Company's compensation
philosophy as endorsed by the Board and resulting compensation actions taken by
the Company.
9
Compensation Philosophy and Objectives
The Company's executive compensation program has been designed to:
o support a pay-for-performance philosophy that differentiates compensation
amounts based on both corporate and individual performance;
o provide market-competitive compensation opportunities;
o reward executives for long-term strategic management and the enhancement
of stockholder value through delivering appropriate ownership in the
Company; and
o attract top talent and retain and motivate key executives whose abilities
are critical to the long-term success and competitiveness of the Company.
Executive Compensation Components
To meet the above-stated compensation objectives, the Company has
structured a compensation program comprised of base salary, annual incentive
opportunities, long-term incentive opportunities in the form of stock options
and restricted stock, and benefits typically offered to executives.
Base salaries for executives are targeted to be competitive with other
technology-based companies with revenues of $10-$50 million. Individual salaries
are considered for adjustment annually; adjustments are based upon the general
movement in external salary levels, individual performance and potential, and/or
changes in duties and responsibilities. Excluding the chief executive officer,
whose compensation is discussed in greater detail below, the base salary
increase for the named executive effective for 1999 was 4%.
Effective for 1997, the Company adopted an executive staff Bonus Program
which is based entirely on objective criteria. Under this program, certain
management personnel, including executive officers, were entitled to a bonus
only if the Company achieved 100% of its budgeted 1999 operating income, which
was reviewed and approved by the Board of Directors at the beginning of the
fiscal year. The amount of any bonus would be a percentage of base salary that
is fixed based on the participant's position. For 1999, the Committee did not
award any bonuses to the named executives under the Bonus Program due to the
Company's failure to achieve its budgeted operating income.
The long-term incentive opportunities are designed to link the interests of
the executive with those of the stockholders. Stock option grants provide an
incentive that focuses the executive's attention on managing the Company from
the perspective of an owner with an equity stake in the business. The value of
these stock options is tied to the future performance of the Company's stock.
Chief Executive Officer Compensation
Effective July 1999, Mr. Stoneback resigned as the Company's President and
Chief Executive Officer. Mr. Stoneback received as severance benefits his base
salary, auto allowance, health, disability and executive life insurance until
December 31, 1999. No bonus was awarded to Mr. Stoneback for services rendered
in 1999.
10
The specific compensation actions for Mr. Stewart were as follows:
Pursuant to his employment agreement, Mr. Stewart is entitled to an
annual base salary of $185,000 and was granted options to purchase 50,000
shares of Common Stock at the market price. Mr. Stewart is also entitled to
a bonus of 50% of his base salary under a bonus program developed by the
Board of Directors based on the Company achieving objective operating
targets. No bonus was awarded to Mr. Stewart for services rendered in 1999.
The Board of Directors believes that Mr. Stewart's initial base salary
and option grant represent a competitive compensation package. At the same
time, the Board of Directors believes that it limited the Company's cash
compensation obligations, consistent with the Company's operating expense
reduction efforts, while providing a strong incentive to improve the
Company's operating results through a purely objective bonus program.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the deductibility for
corporate income tax purposes of compensation paid to certain executive
officers. The Board of Directors has carefully considered the impact of this
provision on the compensation awarded to those executive officers during 1999.
The Board of Directors has determined that compensation paid to executive
officers under current plans would be less than the $1 million limit and,
therefore, deductible for Federal income tax purposes.
Submitted by the Board of Directors:
Sheldon M. Bonovitz, Esq. Richard J. DePiano Jay L. Federman, M.D.
Vincenzo Morelli Michael R. Stewart
11
PERFORMANCE GRAPH
The following graph sets forth a comparison of cumulative total return
since January 1, 1995 among the Company, the Nasdaq Composite Index and a peer
group selected by the Company. The comparison of total return on investment
(change in year-end stock price plus reinvested dividends) for each of the
periods assumes that $100 was invested on January 1, 1995 in each of the
Company, the Nasdaq Composite Index and a weighted index of the issuers in the
peer group described below.
In the printed version of the document, a line graph
appears which depicts the following plot points:
Dec. 94 Dec. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99
------- ------- ------- ------- ------- -------
Surgical Laser Tech Inc. 100 58.82 73.51 69.13 16.18 15.29
Nasdaq Composite 100 141.33 123.04 122.53 140.91 180.66
Peer Group 100 144.42 153.68 165.62 106.09 162.53
- ------------------
(1) In 1993, the Company defined its peer group for purposes of this performance
graph to be all publicly traded companies with a Standard Industrial
Classification Code of 3845 (electromedical apparatus) having market
capitalization as of December 31, 1992 ranging from $20 million to $100
million. Except as noted below with respect to certain periods during which
certain companies ceased independent operations or were no longer public
companies, the Company continues to use as its peer group the companies that
met the criteria set forth above, which are: 4-D Neuroimaging (Formerly
Biomagnetic Technologies, Inc.), American Dental Technologies, Inc.,
Arrhythmia Research Technology, Inc., Bio-Logic Systems Corp., Candela
Corp., Criticare Systems Inc., Fonar Corp., Imatron Inc., Laser Industries
Ltd., (used through December 31, 1997), Laserscope, Lunar Corporation,
Medstone International, Inc. (formerly Cytocare, Inc.), Non-Invasive
Monitoring Systems, Inc., Q-Med, Inc., Somanetics Corporation, Trimedyne,
Inc., Valley Forge Scientific Corp., and Work Recovery, Inc.
12
CERTAIN TRANSACTIONS
Effective June 1, 2000, Surgical Innovations & Services, Inc., an Alabama
corporation ("Old SIS"), was merged with and into SLT Subsidiary, Inc., a wholly
owned subsidiary of the Company which, in connection with the merger, changed
its name to "Surgical Innovations & Services, Inc." ("SIS"). Pursuant to the
merger, the Company issued an aggregate of 350,000 shares of its Common Stock
and paid an aggregate of $300,000 in cash to the former shareholders of Old SIS.
James Lee Stafford, a nominee for director of the Company, was a director and a
30% shareholder of Old SIS and, in connection with the merger, received cash in
the amount of $90,000 and 105,000 shares of the Company's Common Stock. Robert
L. Crutchfield, the Company's Vice President for Business Development and
President of SIS, was President, Chief Executive Officer, a director and a 40%
shareholder of Old SIS and, in connection with the merger, received cash in the
amount of $120,000 and 140,000 shares of the Company's Common Stock.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Grant Thornton LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 2000. The affirmative vote of the holders of a majority
of the outstanding Common Stock present in person or by proxy at the Annual
Meeting is required to ratify the appointment of Grant Thornton LLP. The shares
represented by the enclosed proxy will be voted as directed. If no choice is
specified in the proxy, the shares represented by the enclosed proxy will be
voted "FOR" the selection of Grant Thornton LLP, as the Company's independent
accountants. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF SUCH APPOINTMENT. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Arthur Andersen LLP was engaged by the Company in 1988 and audited the
Company's financial statements for each fiscal year since the fiscal year ended
January 1, 1989 through the fiscal year ended January 2, 2000. In June 2000, at
the recommendation of the Audit Committee and with the approval of the Executive
Committee, the Company retained Grant Thornton LLP to replace Arthur Andersen
LLP as its independent accountants. The Board of Directors believes that Grant
Thornton LLP offers independent accounting services with a fee structure that is
favorable to the Company and in-line with the Company's continuing efforts to
reduce operating expenses. The reports of Arthur Andersen LLP on the Company's
financial statements for the last two fiscal years contained no adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainties,
audit scope, or accounting principles. There were no disagreements between
Arthur Andersen LLP and the Company on any matter of accounting practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of Arthur Andersen LLP, would have caused them to
make reference thereto in their reports on the Company's financial statements
for the last two fiscal years and any subsequent interim period. Representatives
of Arthur Andersen LLP and Grant Thornton LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions.
13
APPROVAL OF 2000 EQUITY INCENTIVE PLAN
GENERAL
On May 25, 2000, the Executive Committee of the Board of Directors of the
Company, based on the recommendation of the Compensation Committee, adopted,
subject to stockholder approval at the Annual Meeting, the Company's 2000 Equity
Incentive Plan (the "Plan"). The Company adopted the Plan because the ten-year
periods during which grants could be made under its current Equity Incentive
Plan and Second Amended and Restated Stock Option Plan for Outside Directors
have expired. A total of 250,000 shares of Common Stock are reserved for
issuance under the Plan. The Plan permits the granting of options ("Options") to
purchase Common Stock of the Company, including Options intended to qualify as
incentive options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and Options not intended to so
qualify ("Nonqualified Options"), and restricted stock awards ("Awards") to
consultants, directors, officers and other employees of the Company and any
subsidiary of the Company who are in positions in which their decisions, actions
and counsel significantly impact upon the profitability and success of the
Company or such subsidiary.
PROPOSAL
At the Annual Meeting, stockholders entitled to vote are being asked to
approve and adopt the Plan. The affirmative vote of a majority of the
outstanding Common Stock present in person or by proxy at the Annual Meeting is
required to approve the Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" ADOPTION OF THE PLAN. The Plan is summarized below.
PURPOSE
The purposes of the Plan are to further the growth, development and
financial success of the Company and any subsidiary by providing additional
incentives to those officers, directors, employees and consultants who are
responsible for the management of the business affairs of the Company and any
subsidiary, and which will enable them to participate directly in the growth of
the capital stock of the Company. The Company intends that the Plan will
facilitate securing, retaining and motivating directors, officers, employees and
consultants of high caliber and potential.
ADMINISTRATION
The Plan is administered by the Company's Board of Directors (the "Board").
The Board has full and final authority, in its sole discretion, to interpret the
provisions of the Plan and to decide all questions of fact arising in its
application; to determine the people to whom Options and Awards shall be granted
under the Plan; to determine the type of Options or Awards to be made and the
amount, size and terms of each such Option or Award; to determine when an Option
or Award shall be granted; and to make all other determinations necessary or
advisable for the administration of the Plan. Notwithstanding the foregoing, the
Board may delegate to the Company's Compensation Committee the administration of
the Plan, but only the Board may amend or terminate the Plan. The Board may
delegate administration of the Plan to the Compensation Committee only if the
Compensation Committee is comprised of at least two directors, and only if all
of such directors are Non-Employee Directors (within the meaning of Rule
16b-3(b)(3) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any successor provision thereto, and only if each member
of the Compensation Committee is an "outside director" within the meaning of
Treas. Reg. 1.162-27(e)(3).
14
ELIGIBILITY
Persons eligible to receive Options or Awards under the Plan are limited to
those consultants, directors, officers and other employees of the Company and
any subsidiary (as defined in Section 424(f) of the Code, or any amendment or
substitute thereto), who are in positions in which their decisions, actions and
counsel significantly impact upon the profitability and success of the Company
and any subsidiary. Consultants and directors who are not also employees of the
Company or any subsidiary are not eligible to be awarded Incentive Options.
ANNUAL LIMITATIONS
No employee may be granted, in any given one-year period, Options or Awards
with respect to a number of shares of Common Stock that, as of the grant date,
represents more than 3% of the Common Stock outstanding as of the close of the
most recent fiscal quarter.
TERMS OF OPTIONS
The terms of Options granted under the Plan are determined by the Board at
the time of granting an Option. Each Option granted under the Plan is evidenced
by a written stock option agreement between the Company and the optionee and is
subject to the following terms and conditions.
Exercise of Options. The Board determines on the date of grant when
Options granted under the Plan become exercisable. An Option is exercisable by
giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased and tendering payment to the Company of the
purchase price. The acceptable methods of payment for shares issued upon
exercise of an Option are set forth in the option agreement but may include
cash, shares of the Company's Common Stock (including shares of Common Stock
issuable upon the exercise of the Option) or any combination thereof as
determined by the Board.
Exercise Price. The exercise price of Options granted under the Plan is
determined by the Board. The exercise price of Nonqualified Options may not be
less than 85% of the fair market value of the Common Stock on the date of grant
and the exercise price of Incentive Options may not be less than 100% of the
fair market value of the Common Stock on the date of grant. However, in the case
of Incentive Options granted to an optionee who owns more than 10% of the voting
power of all classes of stock of the Company, the exercise price must not be
less than 110% of the fair market value of the Common Stock on the date of
grant. For so long as the Common Stock is traded on the Nasdaq Stock Market or
listed on a stock exchange, the fair market value per share will be the closing
price on such market or exchange on the date of grant or, if such date is not a
business day, on the immediately preceding business day.
Termination of Employment. If an optionee ceases to serve as an employee
of the Company or any subsidiary for any reason other than death or disability,
Options may be exercised within three months (or such other period of time as is
determined by the Board) after such termination, but only to the extent that the
Options were exercisable on the date of termination.
Death or Disability. Upon the death or disability of an optionee, Options
may be exercised by the optionee or his successor or estate within one year (or
such other period of time as is determined by the Board) from the date of death
or disability, but only to the extent that the Options were exercisable on such
date.
Term and Termination of Options. Options expire ten years from the date of
grant, unless a shorter period is provided in the option agreement. An Incentive
Option granted to an optionee who owns more than 10% of the voting power of all
classes of stock of the Company may not have a term of more than five years. No
Option may be exercised by any person after the expiration of its term.
15
Limitation on Transferability. No Incentive Option and, unless otherwise
determined by the Board, no other Option granted under the Plan may be
transferred other than by will or the laws of descent and distribution. During
the optionee's lifetime, each Option will be exercisable only by the optionee or
any permitted transferee.
Acceleration of Options. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
into another corporation, in the discretion of the Board, outstanding Options
may become immediately exercisable in full. The Board may, in its discretion in
such instances, declare that any outstanding Options will terminate as of a date
fixed by the Board and give each optionee the right to exercise his Option as to
all shares subject to the Option.
Grants to Outside Directors. Each person who is or becomes a director of
the Company and is neither an officer of nor otherwise employed by the Company
or any subsidiary (an "Outside Director") is entitled to receive Nonqualified
Options ("Director Options") under the Plan. Individuals who first become
Outside Directors after adoption of the Plan will receive Options to purchase
10,000 shares on the 15th day after first being elected to the Board, with the
number increasing to 15,000 if the individual is elected to serve as Chairman.
Each Outside Director is also entitled to receive Options to purchase 10,000
shares upon completion of three years of service since the most recent grant of
options under the Plan or under the Company's Second Amended and Restated Stock
Option Plan for Outsider Directors, with the number increasing to 15,000 if the
Outside Director has served as Chairman during the three-year period. The
exercise price for all Director Options is 100% of the fair market value of the
Common Stock on the date of grant. Director Options are exercisable in three
equal consecutive annual installments commencing one year from the date of
grant, but all Director Options become immediately exercisable upon the
consummation of any business combination transaction involving the sale of all
or substantially all of the assets of the Company to, or the acquisition of
shares of the Company's Common Stock representing more than 50% of the votes
which all stockholders of the Company are entitled to cast by, any person not
presently an affiliate of the Company. Director Options terminate upon the
earliest to occur of: (a) ten years from the grant date; (b) one year after the
Outside Director's death if such death occurs while the optionee is an Outside
Director or within the three-month or three-year periods specified in the next
two clauses; (c) three months after the optionee ceases to serve as an Outside
Director for any reason other than death or disability, except as noted in
clause (b) above; or (d) three years after the optionee ceases to serve as an
Outside Director due to disability, except as noted in clause (b) above.
Other Provisions. The option agreements may contain such other terms,
provisions and conditions not inconsistent with the terms of the Plan as may be
determined by the Board.
RESTRICTED STOCK AWARDS
The Plan permits the grant of Awards, which are shares of Common Stock free
of any purchase price or for such purchase price as may be established by the
Board that vest at such time or times and on such terms, conditions and
performance criteria as the Board may determine. Recipients of Awards will have
all the rights of a stockholder with respect to such shares, including the right
to vote the shares and receive dividends and other distributions with respect to
the shares; provided, however, that such shares may not be sold, transferred or
disposed of or pledged until they become vested. Upon termination of the
grantee's employment, all such shares that are not then vested will
automatically be forfeited and transferred to the Company at no cost to the
Company. The Board may also impose other restrictions and conditions on the
shares. The Board may accelerate the vesting of shares in its discretion and on
such terms or conditions as it deems appropriate.
16
FEDERAL INCOME TAX CONSEQUENCES
The following description, which is based on existing laws, sets forth
certain of the federal income tax consequences of Options and Awards under the
Plan. This description may differ from the actual tax consequences of
participation in the Plan.
An optionee will not have taxable income upon the grant of an Option. In
the case of Nonqualified Options, the optionee will recognize ordinary income
upon the exercise of the Option in an amount equal to the excess, if any, of the
then fair market value of the shares acquired over the exercise price. The
Company will generally be able to take a deduction with respect to this amount
as compensation expense for federal income tax purposes. The optionee's tax
basis in the shares acquired will equal the exercise price plus the amount
taxable as compensation to the optionee. Upon a sale of the shares acquired upon
exercise, any gain or loss is generally long-term or short-term capital gain or
loss, depending on how long the shares are held. The required holding period for
long-term capital gain is presently one year. The optionee's holding period for
shares acquired upon exercise will begin on the date of exercise.
An optionee who receives Incentive Options generally incurs no federal
income tax liability at the time of grant or upon exercise of the options.
However, the spread will be an item of tax preference, which may give rise to
alternative minimum tax liability at the time of exercise. If the optionee does
not dispose of the shares before the date that is two years from the date of
grant and one year from the date of exercise, the difference between the
exercise price and the amount realized upon disposition of the shares will
constitute long-term capital gain or loss, as the case may be. Assuming both
holding periods are satisfied, the Company will not be entitled to a deduction
in connection with the Option. If, within two years from the date of grant or
one year from the date of exercise, the holder of shares acquired upon exercise
of an Incentive Option disposes of the shares (a "Disqualifying Disposition"),
the optionee will generally realize ordinary income at the time of the
Disqualifying Disposition equal to the difference between the exercise price and
the lesser of the fair market value of the shares on the date of exercise or the
amount realized on the Disqualifying Disposition. The amount realized upon such
a Disqualifying Disposition will generally be deductible by the Company for
federal income tax purposes.
If the purchase price upon exercise of an Option is paid with shares
already owned by the optionee, generally no gain or loss will be recognized with
respect to the shares used for payment, and the additional shares received will
be taxed as described herein. However, if payment of the purchase price upon
exercise of an Incentive Option is made with shares acquired upon exercise of an
Incentive Option before the shares used for payment have been held for the
two-year and one-year periods described above, use of such shares as payment
will be treated as a Disqualifying Disposition as described above.
The recipient of an Award normally will not recognize taxable income until
the stock is transferable by the grantee or no longer subject to a substantial
risk of forfeiture, whichever occurs earlier. When the stock is either
transferable or no longer subject to a substantial risk of forfeiture, the
grantee will recognize ordinary income in an amount equal to the fair market
value of the shares (less any amount paid for such shares) at that time. A
grantee may, however, elect to recognize ordinary income in the year in which
the Award is granted in an amount equal to the fair market value of the shares
(less any amount paid for the shares) at that time, determined without regard to
the restrictions. In such event, however, if the shares are later forfeited, no
deduction is allowed with respect to such forfeiture. The Company will generally
be entitled to a corresponding deduction at the same time, and in the same
amount, as the grantee recognizes ordinary income with respect to an Award. Any
gain or loss recognized by the grantee upon subsequent disposition of the shares
will be capital gain or loss.
The Company has the right to deduct from all grants paid in cash or other
compensation any taxes required to be withheld with respect to Options or Awards
under the Plan. The Company may require that the
17
participant pay to it the amount of any required withholding. The Board may
permit the participant to elect to have withheld from any shares issuable to him
in connection with the Plan a number of shares with a value equal to the
required tax withholding amount, subject to certain conditions and limitations.
OPTION GRANTS UNDER THE PLAN
Under the terms of the Plan, on May 26, 2000, Richard J. DePiano was
granted 15,000 Director Options and Sheldon M. Bonovitz and Jay L. Federman were
each granted 10,000 Director Options. In addition, effective June 1, 2000,
Robert L. Crutchfield, the Company's Vice President for Business Development,
was granted 30,000 Options under the Plan. Effective May 25, 2000, the Company
also granted options to other employees to purchase an aggregate of 400 shares
under the Plan. All such grants were made at 100% of the fair market value on
the date of grant and were subject to stockholder approval of the Plan. The
Board has made no other determination as to the Options or Awards to be granted,
or the number or identify of optionees or recipients of Awards under the Plan.
On June 5, 2000, the closing price of the Company's Common Stock was $2.13 as
reported on the Nasdaq Stock Market.
AMENDMENT AND TERMINATION
The Board of Directors may terminate or amend the Plan at any time, except
that without stockholder approval the Board of Directors may not increase the
maximum number of shares which may be issued under the Plan, extend the maximum
period during which any Option may be exercised, extend the term of the Plan,
amend the employees or classes of employees eligible to receive Options or
Awards under the Plan, change the minimum Option price or approve any other
amendment which would require stockholder approval pursuant to Treasury
Regulations Section 1.162-27(e)(4)(vi). The termination or any modification or
amendment of the Plan shall not, without the consent of a participant, affect
the participant's rights under an Option or Award previously granted. The Plan
terminates upon the earlier of the tenth anniversary of the date of its adoption
by the Board of Directors or the date on which all shares available for issuance
under the Plan shall have been issued pursuant to the exercise or cancellation
of Options and Awards granted under the Plan.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual 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.
It is important that your stock be represented at the Annual Meeting,
regardless of the number of shares which you hold. You are, therefore, urged to
execute and return, at your earliest convenience, the accompanying proxy in the
envelope, which has been enclosed.
By Order of the Board of Directors,
Davis Woodward
Secretary
Dated: June 14, 2000
18
SURGICAL LASER TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS JULY 19, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Michael R. Stewart and Davis
Woodward, and each or either of them, proxies of the undersigned, with full
power of substitution, to vote all of the shares of Common Stock of Surgical
Laser Technologies, Inc., (the "Company") which the undersigned may be entitled
to vote at the Annual Meeting of Stockholders of the Company to be held at the
offices of the Company's counsel, Duane, Morris & Heckscher LLP, 4200 One
Liberty Place, 1650 Market Street, Philadelphia, Pennsylvania 19103 on
Wednesday, July 19, 2000, at 9:00 a.m., local time, and at any adjournment
thereof as follows:
(Continued and to be signed on other side)
[X] Please mark your votes as in this example.
FOR all WITHHOLD Nominees: Sheldon M. Bonovitz
nominees listed AUTHORITY Richard J. DePiano
at right to vote for Jay L. Federman
except as marked all nominees James Lee Stafford
to the contrary listed at right Michael R. Stewart
[ ] [ ]
1. For the election
of five directors,
to serve until
their successors
are duly elected,
as described in
the accompanying
Proxy Statement.
INSTRUCTIONS: To withhold authority
to vote for any individual nominee,
strike a line through that nominee's name.
2. Proposal to ratify appointment FOR AGAINST ABSTAIN
of Grant Thornton LLP as the [ ] [ ] [ ]
Company's independent accountants
for the fiscal year ending
December 31, 2000.
3. Proposal to adopt the Company's FOR AGAINST ABSTAIN
2000 Equity Incentive Plan [ ] [ ] [ ]
The Board of Directors recommends a vote FOR the election of the nominees
listed and FOR proposals 2 and 3.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment
thereof.
This proxy will be voted as specified. If a choice is not specified, the proxy
will be voted FOR the election of the nominees for director and FOR proposals 2
and 3.
PLEASE, MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-PAID ENVELOPE.
SIGNATURE___________________________________ DATE__________________________
____________________________________________ DATE____________________, 2000
SIGNATURE IF HELD JOINTLY
Note: This proxy should be dated and signed by the stockholder exactly as his
name appears hereon. When shares are held by joint tenants, both should sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.