SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
SURGICAL LASER TECHNOLOGIES, INC.
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(Name of Registrant as Specified in its Charter)
SURGICAL LASER TECHNOLOGIES, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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:
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(4) Proposed maximum aggregate value of transaction:
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Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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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Notes:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 10, 1996
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 Thursday, October 10, 1996 at 10:00 a.m., local time, at the offices
of the Company's counsel, Duane, Morris & Heckscher, 4200 One Liberty Place,
1650 Market Street, Philadelphia, Pennsylvania 19103, for the following
purposes:
1. To elect six directors to serve until the 1997 Annual Meeting and
until their respective successors are elected;
2. To approve an amendment to the Company's Equity Incentive Plan to
increase the number of shares reserved for issuance thereunder from
1,800,000 to 2,100,000;
3. To ratify the appointment of Arthur Andersen LLP as independent
accountants of the Company for the fiscal year ending December 29, 1996;
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 September 6, 1996
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 December
31, 1995 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
September 10, 1996
SURGICAL LASER TECHNOLOGIES, INC.
PROXY STATEMENT FOR 1996 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 Thursday, October 10, 1996 at 10:00 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, 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 September
10, 1996 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 September 6, 1996 are
entitled to receive notice of and to vote at the Annual Meeting. At the record
date, 9,881,509 shares of the Company's Common Stock, par value $.01 per share
(the 'Common Stock') were issued and outstanding.
As of September 6, 1996, 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 OF
NAME AND ADDRESS SHARES CLASS
- ------------------------------------------------------ ----------- -----------
State of Wisconsin Investment Board................... 892,589(1) 9.03%
121 East Wilson Street
Madison, WI 53703
Kontron Instruments Holding N.V....................... 695,652 7.04%
Julianaplein 22
Curacao, Netherlands Antilles
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(1) Information furnished by stockholder as of February 7, 1996.
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, Montgomeryille, 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 approval of the amendment to the Company's Equity
Incentive Plan and for the ratification of the appointment of the independent
auditors (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 1997 Annual Meeting of Stockholders must be received
by the Company no later than May 13, 1997 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.
Notwithstanding the foregoing, if the Company's 1997 Annual Meeting of
Stockholders is held more than 30 calendar days before October 10, 1997, as is
currently anticipated, the Company shall notify the stockholders of such earlier
date by which any such stockholder proposals must be received by the Company.
ELECTION OF DIRECTORS
NOMINEES
Six 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 six nominees named below, all of whom are currently directors of the
Company. 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.
2
The names of the nominees, and certain information about them, are set
forth below.
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------------------ --- ------------------------------------------------ -----------
Richard J. DePiano.............................. 55 Chairman of the Board of Directors of the 1986
Company; Managing Director, The Sandhurst
Venture Fund
W. Keith Stoneback.............................. 43 President and Chief Executive 1996
Officer of the Company
Sheldon M. Bonovitz............................. 59 Vice Chairman and Partner, Duane, Morris & 1985
Heckscher, Counsel to the Company
Jay L. Federman................................. 58 Attending Surgeon and Co-Director of 1987
Research, Wills Eye Hospital
Terry A. Fuller, Ph.D........................... 48 Executive Vice President and Chief Operating 1994
Officer of the Company
Vincenzo Morelli................................ 42 Chief Executive Officer, Kontron Instruments 1995
Holding N.V.
Nominees elected as directors will serve for a term of one year or 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. Except as noted
below, 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
the Company since July 1995. 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.
W. Keith Stoneback has served as President and Chief Executive Officer of
the Company since August 1996. From 1988 until 1994, he served in several senior
management positions for AMSCO International, Inc., a leading manufacturer and
marketer of sterilizers, surgical tables, lights and decontamination equipment
for the hospital and life science markets, most recently as Corporate Vice
President, with responsibility for worldwide manufacturing, marketing and
research and development for the capital equipment and supplies business. From
November 1994 until joining the Company, Mr. Stoneback pursued personal
investment and business related interests.
Sheldon M. Bonovitz has been a partner in the law firm of Duane, Morris &
Heckscher, Philadelphia, Pennsylvania, since 1969, where he also serves as Vice
Chairman and a member of the management committee. Mr. Bonovitz also serves as a
director of Comcast Corporation and Mediq Incorporated. Mr. Bonovitz has also
taught at the University of Pennsylvania Law School.
Jay L. Federman, M.D. has been an attending surgeon and Co-Director of
Research of Wills Eye Hospital, Philadelphia, Pennsylvania, since 1980. Dr.
Federman was a founder of SITE Microsurgical Systems, Inc.
Terry A. Fuller, Ph.D. has served as Executive Vice President and Chief
Operating Officer of the Company since June 1993. From August 1990 until June
1993, Dr. Fuller served as the Company's Executive Vice President of Technology
and Manufacturing, assuming responsibility for the
3
Company's education programs in November 1992. From July 1990 until August 1990,
he served as Vice President of Technology and New Business Development of the
Company.
Vincenzo Morelli has served as Chief Executive Officer and a director of
Kontron Instruments Holding N.V. since 1993. From 1990 through 1992, Mr. Morelli
served as Executive Vice President of New Holland (ex-Geotech), a joint venture
of Fiat and Ford Motor Company. From 1985 until 1990, Mr. Morelli served as
President and Chief Operating Officer of General Electric Company's European
Medical Systems Division.
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 the Company as of September 6, 1996 by each director, each executive officer
named in the Summary Compensation Table below 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
- ---------------------------------------------------------------- ----------- -----------
James R. Appleby, Jr............................................ 376,050(1) 3.69%
Jay L. Federman................................................. 320,203(2) 3.21%
Richard J. DePiano.............................................. 217,250(3) 2.19%
Sheldon M. Bonovitz............................................. 157,131(4) 1.58%
Terry A. Fuller................................................. 152,866(5) 1.53%
Ewald Lehrmann.................................................. 66,115(6) *
Michael R. Stewart.............................................. 62,196(7) *
Davis Woodward.................................................. 59,580(8) *
Vincenzo Morelli................................................ 30,000(9) *
W. Keith Stoneback.............................................. 0 *
All directors and executive officers as a group (8 persons)..... 999,226(10) 9.67%
- ------------------
* Less than one percent.
(1) Includes 302,700 shares which Mr. Appleby has the right to acquire under
outstanding stock options exercisable within 60 days after September 6,
1996 and 10,000 shares owned jointly with his wife.
(2) Includes 86,000 shares which Dr. Federman has the right to acquire under
outstanding stock options exercisable within 60 days after September 6,
1996 and 12,499 shares owned by Dr. Federman's child. Dr. Federman
disclaims beneficial ownership of such 12,499 shares.
(3) Includes 52,250 shares which Mr. DePiano has the right to acquire under
outstanding stock options exercisable within 60 days after September 6,
1996. Also includes 90,000 shares owned by Mr. DePiano's wife. Mr. DePiano
disclaims beneficial ownership of such 90,000 shares.
(4) Includes 62,250 shares which Mr. Bonovitz has the right to acquire under
outstanding stock options exercisable within 60 days after September 6,
1996, 19,027 shares owned by Mr. Bonovitz' wife and 29,238 shares owned by
trusts of which Mr. Bonovitz is trustee for the benefit
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of Mr. Bonovitz' children. Mr. Bonovitz disclaims beneficial ownership of
the 48,265 shares owned by his wife and such trusts. Also includes 29,119
shares owned by the Marital Trust Under the Will of Robert H. Fleisher,
Deceased. Mr. Bonovitz is one of the four trustees of such trust and
disclaims beneficial ownership of such 29,119 shares.
(5) Includes 135,366 shares which Dr. Fuller has the right to purchase under
outstanding stock options exercisable within 60 days after September 6,
1996.
(6) Includes 61,466 shares which Mr. Lehrmann has the right to purchase under
outstanding stock options exercisable within 60 days after September 6,
1996.
(7) Includes 55,766 shares which Mr. Stewart has the right to purchase under
outstanding stock options exercisable within 60 days after September 6,
1996.
(8) Includes 46,666 shares which Mr. Woodward has the right to purchase under
outstanding stock options exercisable within 60 days after September 6,
1996.
(9) Includes 15,000 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 September 6, 1996.
(10) Includes 448,299 shares which such persons have the right to acquire under
stock options exercisable within 60 days after September 6, 1996. Excludes
shares beneficially owned by Messrs. Appleby and Lehrmann, who were not
executive officers or directors of the Company as of September 6, 1996. See
'Employment and Other Agreements.'
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of nine meetings during
the fiscal year ended December 31, 1995. No director attended fewer than 75% of
the total of all such meetings of the Board of Directors and meetings of the
committees upon which such director served other than Mr. Morelli, who attended
three of the five meetings of the Board of Directors held during 1995 while he
served as a director.
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 Stoneback, 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 December 31, 1995.
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 Bonovitz.
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 December 31, 1995.
5
The Compensation Committee currently consists of directors Bonovitz,
DePiano and Federman. The Compensation Committee administers the Company's 1986
Incentive Stock Option Plan, 1986 Non-Qualified Stock Option Plan and Equity
Incentive Plan. The Compensation Committee also reviews other compensation plans
and establishes methods of compensation. The Compensation Committee held three
meetings in the fiscal year ended December 31, 1995.
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 a Stock Option Plan for Outside Directors (the
'Outside Director Plan'), pursuant to which: (a) on May 11, 1990, each Outside
Director on such date received options to purchase 9,000 shares of Common Stock;
(b) on May 11, 1990, each Outside Director who was a member of the Executive
Committee on such date received options to purchase an additional 3,750 shares
of Common Stock; (c) each Outside Director who had completed three years of
service as an Outside Director on or before April 30, 1992 received options to
purchase 4,500 shares of Common Stock on such date; (d) each Outside Director
who had completed at least three years of service as an Outside Director on May
26, 1994 (the '1994 Grant Date') was granted options to purchase 45,000 shares,
provided that if the Outside Director served as Chairman on the 1994 Grant Date,
the option granted was for 60,000 shares; (e) each Outside Director who had not
completed three years of service as an Outside Director on the 1994 Grant Date
will, on the last trading day coinciding with or immediately following the
completion of such three years of service, be granted options to purchase 30,000
shares, provided that if the Outside Director serves as Chairman throughout such
three-year period, such option will be for 45,000 shares; (f) for each three
years of service after the 1994 Grant Date since the most recent grant of
options to an Outside Director, the Outside Director will be granted options to
purchase 30,000 shares, provided that if the Outside Director served as Chairman
throughout such three-year period, the option will be for 45,000 shares and
(g) each person who became an Outside Director after the 1994 Grant Date or
hereafter becomes an Outside Director in the future received or will receive
options to purchase 30,000 shares of Common Stock on the fifteenth day after
election as an Outside Director, provided that if the Outside Director is
elected to serve as Chairman, the option granted will be for 45,000 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. Options granted on
May 11, 1990 were fully exercisable when granted. Options granted on the 1994
Grant Date were exercisable 15,000 shares on the date of grant, with the balance
exercisable in three equal consecutive annual installments commencing one year
from the 1994 Grant Date. All other options granted under the Outside Director
Plan are or will be 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.
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An aggregate 385,000 shares of Common Stock are currently reserved for
issuance under the Outside Director Plan, of which 9,000 shares have been issued
and 228,000 shares are subject to outstanding options.
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
December 31, 1995, January 1, 1995 and January 2, 1994 to the chief executive
officer of the Company and the other four most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------------------- ALL OTHER
NAME AND -------------------- RESTRICTED COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) STOCK AWARDS($) OPTIONS(#) ($)(1)
- ---------------------------------------- ---- --------- --------- --------------- --------- -----------------
James R. Appleby, Jr. (2) 1995 $281,960 $ 0 $ 0 50,000(3) $ 2,190
President, Chief Executive 1994 265,346 58,520 0 30,000(4) 2,190
Officer and Director 1993 257,067 51,500(5) 9,088(5) 150,000(6) 2,190
Terry A. Fuller 1995 186,507 0 0 40,000(3) 25,341(7)
Executive Vice President 1994 175,492 38,709 0 20,000(4) 46,102(7)(8)
and Chief Operating Officer 1993 169,671 27,200(5) 2,400(5) 100,000(6) 32,071(8)
Ewald Lehrmann (2) 1995 147,039 0 0 0 1,038
Vice President and 1994 138,329 30,512 0 15,000(4) 1,038
Managing Director of 1993 133,769 10,720(5) 946(5) 25,000(6) 1,014
International Operations
Michael R. Stewart 1995 118,023 0 0 30,000(3) 643
Vice President and Chief 1994 110,528 24,380 0 15,000(4) 643
Chief Financial Officer 1993 106,533 17,131(5) 1,511(5) 25,000(6) 628
Davis Woodward 1995 109,296 0 0 30,000(3) 1,285
Vice President, Legal and 1994 99,102 21,859 0 15,000(4) 1,285
Tax Affairs 1993 95,835 15,360(5) 2,711(5) 25,000(6) 1,255
- ------------------
(1) Except as noted in footnotes 6-7, represents payments of premiums for
certain supplementary life insurance coverage.
(2) Mr. Appleby served as President, Chief Executive Officer and a director
until August 1996. Mr. Lehrmann served as Vice President and Managing
Director of International Operations until May 1996.
(3) These options were granted in 1996 for services rendered in 1995.
(4) These options were granted in 1995 for services rendered in 1994.
(5) In January 1994, the Compensation Committee awarded performance bonuses for
services rendered in 1993 and determined to pay such bonuses in the form of
restricted stock at a per share price equal to 85% of the fair market value
of the Common Stock on the date of grant, except that the Compensation
Committee determined to pay the named executive officers other than Messrs.
Appleby and Woodward 50% of their respective bonus in cash and the balance
in shares of restricted stock. A portion of such shares awarded in 1994 was
subject to forfeiture if the officer's employment was terminated other than
without cause within six months after the grant date (except in certain
circumstances involving a change of control in the Company), with the number
of shares subject to forfeiture equal to (a) the product of (i) the number
of restricted shares awarded multiplied by (ii) the fair market value on the
date of forfeiture minus (b) the amount of the bonus listed under 'Bonus' in
the above table divided by (c) the fair market value on the date of
forfeiture. The difference between the aggregate market value of the
restricted shares on the grant date and the amount of the bonus approved by
the Compensation Committee is set forth in the above table under the caption
'Long-Term Compensation Awards -- Restricted Stock Awards.'
(6) These options were granted in 1994 for services rendered in 1993.
7
(7) Includes $24,000 and $14,000 in royalties paid by the Company to Fuller
Research Corporation in 1995 and 1994 respectively, pursuant to a License
Agreement between those parties. Terry A. Fuller is the President and
principal stockholder of Fuller Research Corporation.
(8) Includes $30,761 in lease payments by the Company to Fuller Research
Laboratories, a sole proprietorship owned by Dr. Fuller, pursuant to a Lease
Agreement between those parties relating to certain equipment.
The following table sets forth information with respect to options granted
during the fiscal year ended December 31, 1995 to the persons named in the
Summary Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ----------------------------
NAME GRANTED(#)(1) FISCAL YEAR PRICE DATE 5% 10%
- ------------------------ ------------ ----------------- ----------- ---------------- ------------- -------------
James R. Appleby, Jr. 30,000 18.1% $2.625 January 13, 2005 $49,525 $125,507
Terry A. Fuller 20,000 12.1 2.625 January 13, 2005 33,017 83,671
Ewald Lehrmann 15,000 9.0 2.625 January 13, 2005 24,763 62,754
Michael R. Stewart 15,000 9.0 2.625 January 13, 2005 24,763 62,754
Davis Woodward 15,000 9.0 2.625 January 13, 2005 24,763 62,754
- ------------------
(1) All of these options are exercisable in five equal consecutive annual
installments commencing one year from the date of grant (January 13, 1995),
subject to acceleration of exercisability under certain circumstances
following a change in control of Company.
The following table sets forth information with respect to options held at
December 31, 1995 by the persons named in the Summary Compensation Table above.
No options were exercised by such persons during the fiscal year ended December
31, 1995. None of the options held at fiscal year-end set forth below were in
the money at December 31, 1995.
FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED OPTIONS
AT FISCAL YEAR END (1)
------------------------------
NAME EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------- ---------------
James R. Appleby, Jr. 232,700 160,000
Terry A. Fuller 91,033 101,667
Ewald Lehrmann 47,333 36,867
Michael R. Stewart 41,033 38,667
Davis Woodward 31,933 40,267
- ------------------
(1) The average weighted exercise price for the aggregate unexercised options
set forth in the table above is as follows for each of the named persons:
Mr. Appleby--$5.23; Dr. Fuller--$3.88; Mr. Lehrmann--$4.49; Mr.
Stewart--$4.35; and Mr. Woodward--$4.14.
8
EMPLOYMENT AND OTHER AGREEMENTS
In August 1996, the Company entered into an employment agreement with W.
Keith Stoneback pursuant to which Mr. Stoneback will serve as the Company's
President and Chief Executive Officer through December 31, 1999 and, thereafter,
for successive one-year terms absent at least three months' prior written notice
of termination by either party. Mr. Stoneback's annual base salary under the
agreement is $225,000, and he will be eligible for a bonus of up to 50% of base
salary pursuant to a program to be developed by the Board of Directors based on
objective criteria related to the Company's results of operations. If Mr.
Stoneback'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. Stoneback 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 but would have become exercisable on the next anniversary of
the agreement. If Mr. Stoneback's employment is terminated without cause within
three months following a change in control, Mr. Stoneback will be entitled to
severance benefits equal to continuation of his base salary and his health,
disability and life insurance for a period of eighteen months, subject to
mitigation in the last six months of such period, and the right to exercise any
options granted under the agreement which are not otherwise exercisable. Mr.
Stoneback was also granted options to purchase 300,000 shares of the Company's
Common Stock at the market price. The Company provides long term disability
insurance equal to 60% of Mr. Stoneback'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. Stoneback 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.
Also in August 1996, the Company entered into an agreement with James R.
Appleby, Jr. pursuant to which Mr. Appleby resigned as President, Chief
Executive Officer and a director of the Company, but agreed to remain available
at Mr. Stoneback's request through December 31, 1996. Mr. Appleby will continue
to receive his current base salary of $225,000 and health, disability and life
insurance, together with the fringe benefits as are made available to the
Company's senior executive officers, through December 31, 1996. Thereafter, for
a period of one year, Mr. Appleby will receive as severance benefits his base
salary and the continuation of his health, disability and life insurance. In
addition, Mr. Appleby as of December 31, 1996 shall be entitled to exercise
those options which were not then exercisable but which would have become
exercisable by May 11, 1997, the anniversary date of his employment agreement,
and all options which are exercisable as of December 31, 1996 shall remain
exercisable through December 31, 1997.
Effective in May 1996, the Company and Mr. Lehrmann entered into an
agreement pursuant to which Mr. Lehrmann's employment was terminated and he
received as severance benefits, as contemplated by the Company's severance
program as described below, his base salary and life insurance for one year and,
unless he becomes entitled to comparable coverage from a new employer, his
health, dental and supplemental life insurance for the same one-year period. All
options held by Mr. Lehrmann shall continue to become exercisable through the
one-year severance period in accordance with their terms, and any options which
are otherwise exercisable may be exercised through the end of the one-year
severance period.
9
In June 1992, the Company adopted a severance benefits program for certain
key employees, including Messrs. Fuller, Lehrmann, Stewart and 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. Each of Messrs. Fuller, Stewart and Woodward is entitled to continue
receiving such base salary and insurance coverage for a period of one year under
the foregoing circumstances and, as noted above, Mr. Lehrmann was likewise
entitled to receive such benefits for a one year period. 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. Fuller
is entitled to continue receiving his base salary for a period of 18 months
under such circumstances and Messrs. Stewart and Woodward are entitled to
continue receiving their respective base salaries for a period of 12 months
under such circumstances. In addition, under such circumstances, each of Messrs.
Fuller, Stewart and Woodward is also entitled to continue receiving the
aforementioned insurance coverages for a period of 12 months, and all unvested
options which they hold become exercisable in full and all outstanding options
remain exercisable for the lesser of five years or the remaining scheduled term
thereof.
10
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
Compensation Committee, a committee of the Board of Directors composed of the
three outside directors listed at the end of this report. None of the members of
the Compensation Committee has any interlocking relationships with Company
executives that would call into question their independence as Committee
members.
This report reflects the Company's compensation philosophy as endorsed by
the Board of Directors and the Committee and resulting compensation actions
taken by the Company. The Committee approves all compensation awarded to the
chief executive officer and the four other named executive officers.
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.
Historically, base salaries for executives were targeted to be very
competitive with other technology-based companies with revenues of $50-$100
million. In 1996, the Committee determined to align base salaries to be more
competitive with technology-based companies with revenues comparable to the
Company's. 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 increases for the named
executives effective for 1996 averaged 3.4%.
The annual incentive awards, as governed by the Executive Staff Bonus
Program adopted in November 1991, are dependent primarily upon the financial
performance of the Company relative to pre-established targets and secondarily
on the personal performance of the executive. Specifically, executives are
eligible to receive a bonus (the 'Bonus Opportunity') calculated as a percentage
of their base salaries. The percentage of base salary which determines the Bonus
Opportunity is determined by multiplying the percentage of budgeted operating
income attained at year-end by a percentage, based on the executive officer's
position, ranging from 30% to 50%. Of the Bonus Opportunity, 60% is paid if the
Company attains at least 70% of the budgeted operating income and
11
40% is payable at the discretion of the Committee, in consultation with the
chief executive officer, based on an assessment of the personal performance of
the executive during the year. The Committee, without the chief executive
officer's consultation, assesses the personal performance of the chief executive
officer. The budgeted operating income goal is reviewed and approved by the
Board of Directors at the beginning of the fiscal year. For 1995, the Committee
did not award any bonuses to the named executives under the Executive Staff
Bonus Program due to the Company's overall performance and as part of the
Company's continuing effort to reduce expenditures.
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.
The Committee has approved a plan of targets for annual stock option grants
for the executive staff through 1996. The actual grants have been based on the
Company's financial performance and an assessment of the individual executive's
performance. However, the Committee retained the flexibility to vary from the
targets in the event it believed it appropriate to do so and has exercised this
flexibility where it believed additional incentives through option grants were
appropriate.
Chief Executive Officer Compensation
The specific compensation actions for Mr. Appleby were as follows:
o No bonus was awarded for services rendered in fiscal year 1995.
o Mr. Appleby received a grant of options to purchase 50,000 shares on
March 4, 1996 based on services rendered for fiscal year 1995.
o Effective on January 30, 1996, Mr. Appleby's base salary was reduced from
$281,960 to $225,000.
While external market conditions continue to contribute to the Company's
overall performance, the Committee determined to reduce Mr. Appleby's base
salary to a level which it believed to be more competitive with compensation
levels for companies with revenue levels comparable to those of the Company. For
the same reasons, coupled with the Company's continuing effort to reduce
expenditures, no bonus was awarded for 1995.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code placed limits on corporate tax
deductibility for compensation paid to certain executive officers. The
Compensation Committee has carefully considered the impact of this provision to
the compensation awarded to those executive officers during 1994. The Committee
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 Compensation Committee:
Sheldon M. Bonovitz, Esq. Richard J. DePiano Jay L. Federman, M.D.
12
PERFORMANCE GRAPH
The following graph sets forth a comparison of cumulative total return
since January 1, 1991 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, 1991 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 there is a graph with the following information:
INDEXED RETURNS
Years Ending Dec. 90 Dec. 91 Dec. 92 Dec. 93 Dec. 94 Dec. 95
- ------------ ------- ------- ------- ------- ------- -------
Surgical Laser Tech Inc 100 $ 28.08 $ 30.82 $ 13.35 $ 11.64 $ 6.85
CRSP NASDAQ Index Composite 100 160.48 186.75 213.08 208.25 294.42
Peer Group 100 129.51 96.87 82.26 54.39 84.03
- --------------
(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, with the exception of three such companies--Future Medical
Products, Inc., Biocontrol Technology, Inc. and Microterra, Inc.--whose
performance in 1991 reflected an extreme fluctuation. Management of the
Company believes that inclusion of these three companies would have reduced
the meaningfulness of the comparative data presented in the performance
graph. 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: Advanced NMR Systems, Inc.,
American Medical Electronics, Inc. (used through December 31, 1994),
American Dental Technologies, Inc., Arrythmia Research Technology, Inc.,
Bio-Logic Systems Corp., Biomagnetic Technologies, Inc., Birtcher Medical
Systems Inc. (used through December 31, 1994), Candela Corp., Criticare
Systems Inc., Fonar Corp., Imatron Inc., Interspec Inc. (used through
December 31, 1993), Laser Industries Ltd., Laser Photonics Inc. (used
through December 31, 1994), 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., Vital Heart Systems Inc. (used through December 31,
1994), and Work Recovery, Inc.
13
APPROVAL OF THE AMENDMENT
TO THE EQUITY INCENTIVE PLAN
GENERAL
In March 1990, the Executive Committee of the Company's Board of Directors
adopted the Equity Incentive Plan to supplement the Company's 1986 Incentive
Stock Option Plan and 1986 Non-Qualified Stock Option Plan because options to
purchase substantially all of the shares reserved for issuance thereunder had
been granted and to provide greater flexibility to the Compensation Committee in
making equity-based awards. The stockholders of the Company approved the Equity
Incentive Plan in May 1990. A total of 1,800,000 shares of Common Stock are
currently reserved for issuance under the Equity Incentive Plan. The Equity
Incentive Plan permits the granting of options to purchase Common Stock of the
Company, including options intended to qualify as incentive stock options under
Section 422A of the Code ('Incentive Options') and options not intended to
qualify ('Non-Qualified Options') and restricted stock awards ('Awards') to
officers and employees of and consultants to the Company and its Subsidiaries,
including directors of the Company who are also officers or employees of the
Company.
PROPOSAL
At the Annual Meeting, the stockholders entitled to vote are being asked to
approve and adopt an amendment to the Equity Incentive Plan to increase the
number of shares reserved for issuance thereunder from 1,800,000 to 2,100,000.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE 'FOR' ADOPTION OF THE
AMENDMENT TO THE EQUITY INCENTIVE PLAN.
NEW PLAN BENEFITS
No specifically determined benefits will be received, if the proposed
amendment to the Equity Incentive Plan is approved, by: (a) the persons named in
the Summary Compensation Table above; (b) all executive officers of the Company
as a group; (c) all current directors who are not executive officers as a group
and (d) all employees, including all current officers who are not executive
officers, as a group. However, the additional 300,000 shares which will be
available for the grant of options under the Plan if the proposed amendment is
approved will be eligible to be the subject of grants to employees, including
executive officers, of and consultants to the Company.
PURPOSE
The purposes of the Equity Incentive Plan are to further the growth,
development and financial success of the Company and its subsidiaries by
providing additional incentives to those officers, employees and consultants who
are responsible for the management and business affairs of the Company, which
will enable them to participate directly in the appreciation of the value of the
Company's Common Stock.
ADMINISTRATION
The Equity Incentive Plan is administered by the Compensation Committee,
which consists of at least three directors who are not employees of the Company.
The Compensation Committee is authorized to select from among the eligible
employees and consultants those individuals to whom
14
options or Awards are to be granted and to determine the number of shares to be
subject to, and the terms and conditions of, the options or Awards. The
Compensation Committee is also authorized to adopt, amend and rescind rules
relating to the administration of the Equity Incentive Plan and the
interpretation of options or Awards. The interpretation and construction of any
provision of the Equity Incentive Plan or any options or Awards granted
thereunder is within the sole discretion of the Compensation Committee, whose
determination is final and conclusive.
ELIGIBILITY
The Equity Incentive Plan provides that options or Awards may be granted to
officers and employees (including officers and employees who also serve as
directors) of and consultants to the Company or any subsidiary of the Company.
Incentive Options may be granted only to employees. The Compensation Committee
selects the grantees and determines the number of shares to be subject to each
option or Award. As of September 6, 1996, approximately 110 employees and
consultants were eligible to participate in the Equity Incentive Plan.
TERMS OF OPTIONS
The terms of options granted under the Equity Incentive Plan are determined
by the Compensation Committee at the time of granting an option. Each option
granted under the Equity Incentive Plan is evidenced by a written stock option
agreement between the Company and the optionee and is subject to the following
additional terms and conditions.
Exercise of Options. The Compensation Committee determines on the date of
grant when options granted under the Equity Incentive Plan become exercisable.
An option is exercised by giving written notice of exercise to the Company
specifying the number of full shares of Common Stock to be purchased and
tendering payment to the Company of the purchase price. The acceptable methods
of payment for shares to be issued upon exercise of an option are set forth in
the option agreement but may include cash, check, an exchange of shares of the
Company's Common Stock valued at their then fair market value or such other
consideration as determined by the Compensation Committee and as permitted under
the Delaware General Corporation Law.
Exercise Price. The exercise price of options granted under the Equity
Incentive Plan is determined by the Compensation Committee. The exercise price
of Non-Qualified Options may not be less than 85% of the fair market value of
the Common Stock on the date the option is granted 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 or value of
all classes of stock of the Company, the exercise price must not be less than
110% of the fair market value on the date of grant. For so long as the Company's
Common Stock is traded on the Nasdaq Stock Market or listed on a stock exchange,
the fair market value per share will be closing price on such system or exchange
on the date of grant.
Termination of Employee or Consultant Relationship. If the optionee ceases
to serve as an employee of or consultant to the Company for any reason (other
than death, retirement or total and permanent disability), options may be
exercised within three months (or such other period of time as is determined by
the Compensation Committee) after such termination, but only to the extent the
options were exercisable on the date of termination.
15
Death, Retirement or Disability. If an optionee is unable to continue to
serve as an employee of or consultant to the Company as a result of death,
retirement or total and permanent disability, options may be exercised by the
optionee or his successor at any time within one year (or such other period of
time as is determined by the Compensation Committee) from the date of death,
retirement or disability, but only to the extent 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, immediately before the grant of such option,
owns more than 10% of the total combined 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.
Nontransferability of Options. An option is not transferable by the
optionee, other than by will or the laws of descent and distribution, and is
exercisable only by the optionee during his lifetime or, in the event of his
death, by a person who acquires the right to exercise the option by bequest or
inheritance or by reason of the optionee's death.
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 Compensation Committee,
outstanding options may become immediately exercisable in full. The Compensation
Committee may, in its discretion in such instances, declare that any outstanding
option will terminate as of a date fixed by the Compensation Committee and give
each optionee the right to exercise his option as to all shares subject to
option.
Other Provisions. The option agreements may contain such other terms,
provisions and conditions not inconsistent with the terms of the Equity
Incentive Plan as may be determined by the Compensation Committee.
RESTRICTED STOCK AWARDS
The Equity Incentive Plan permits the grant of Awards, which are restricted
Common Stock bonuses that vest at such time or times and on such terms,
conditions and performance criteria as the Compensation Committee may determine.
Shares awarded as Awards will be issued in the name of the grantee and will be
delivered to the grantee, or an escrow holder, if any, as soon as reasonably
practicable after the Award is made and after the grantee has executed an award
agreement and any other documents that the Compensation Committee in its
discretion may require, without the payment of any cash consideration by the
grantee. Upon delivery, the grantee, or escrow holder, if any, will have all
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. Such shares may not be sold, transferred, otherwise 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 Compensation Committee
may also impose other restrictions and conditions on the shares. The
Compensation Committee may accelerate the vesting of shares in its discretion
and on such other terms or conditions as it deems appropriate.
16
ADJUSTMENTS IN CAPITALIZATION
The Equity Incentive Plan provides that the Compensation Committee will
make appropriate and equitable adjustments in the number and kind of shares that
may be issued on the exercise of options or Awards to maintain optionees' and
grantees' proportionate interest in the event of a reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend,
spin-off or combination of shares. Such adjustment to an outstanding option will
be made without change in the total price applicable to the option or the
unexercised portion thereof, except that any such adjustment with respect to an
Incentive Option will be made in such manner as not to constitute a
'modification' as defined in Section 425 of the Code.
AMENDMENT AND TERMINATION
The Equity Incentive Plan is not limited in duration, except that no option
or Award may be granted under the Equity Incentive Plan after March 23, 2000.
Without stockholder approval, no amendments may be made to the Equity Incentive
Plan to extend this date, to increase the limit on the aggregate number of
shares subject to the Equity Incentive Plan, except to reflect adjustments in
capitalization as described herein, to extend the term of an option beyond ten
years from the date of its grant or to change the minimum option price. In all
other respects, the Equity Incentive Plan can be amended, modified, suspended or
terminated by the Compensation Committee.
FEDERAL INCOME TAX CONSEQUENCES
The Equity Incentive Plan is not qualified under Section 401(a) of the
Code. The following description, which is based on existing laws, sets forth
certain of the federal income tax consequences of options and Awards under the
Equity Incentive Plan. This description may differ from the actual tax
consequences of participation in the Equity Incentive Plan.
A grantee receiving an option will not have taxable income upon the grant
of the option. In the case of Non-Qualified Options, the optionee will recognize
ordinary income upon the exercise of the Non-Qualified Option in an amount equal
to the difference between the option price and the fair market value of the
shares on the date of exercise. When the shares are sold, the grantee will
generally recognize capital gain or loss equal to the difference between (i) the
selling price of the shares and (ii) the sum of the option price and the amount
included in his income when the option was exercised.
Incentive Options granted under the Equity Incentive Plan are intended to
qualify as 'incentive stock options' under Section 422A of the Code. A purchase
of shares upon exercise of an 'incentive stock option' will not result in
recognition of income at that time. However, the excess of the fair market value
of the shares purchased over the exercise price will constitute an item of tax
preference. This preference will be included in the optionee's computation of
his 'alternative minimum tax.' However, generally, there will be no item of tax
preference if the stock is disposed of in the same taxable year in which the
Incentive Option is exercised.
If the optionee does not dispose of the shares issued to him upon the
exercise of an Incentive Option within one year of such issuance or within two
years from the date of the grant of such Incentive Option, whichever is later,
then any gain or loss realized by the optionee on a later sale or exchange of
such shares generally will be a long-term capital gain or long-term capital
loss. If the optionee sells the shares during such period, the sale will be
referred to as a 'disqualifying disposition.' In that event, the optionee will
recognize ordinary income for the year in which the
17
disqualifying disposition occurs equal to the amount, if any, by which the
lesser of the fair market value of such shares on the date of exercise of such
Incentive Option or the amount realized from such sale exceeded the amount the
optionee paid for such shares. Any additional gain realized generally will be
capital gain, which will be long-term or short-term depending on the holding
period for the shares. If the optionee disposes of the shares by gift during
such period, the transfer will be treated as a disqualifying disposition subject
to the rules described herein.
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 or one-year period described herein, use of such shares as payment will
be treated as a 'disqualifying disposition' of the shares used for payment
subject to the rules described herein.
Unless a Section 83 election is made, a grantee receiving an Award will not
have taxable income upon the receipt of the restricted stock but generally will
recognize ordinary income when the shares are no longer subject to forfeiture
upon termination of employment. If a Section 83 election is made, ordinary
income will be recognized at the time the Award is received. In such event,
however, if the shares are later forfeited upon termination of employment, no
deduction is allowed with respect to such forfeiture. The amount of such
ordinary income will be the fair market value of the shares at the time income
is recognized.
Any gain or loss recognized upon the sale of shares acquired pursuant to an
Award will generally be treated as capital gain or loss and will be long-term or
short-term depending upon the holding period of the shares.
The Company will be entitled to a tax deduction in connection with an
option or Award under the Equity Incentive Plan only in an amount equal to the
ordinary income realized by the grantee and at the time such grantee recognizes
such income provided the applicable withholding requirements are met. The
federal, state and local income tax consequences to any particular taxpayer will
depend upon his individual circumstances. In addition, various tax legislative
proposals are introduced in the Congress from time to time, and it is not
possible to predict which of the various proposals introduced will be enacted
into law, the form in which they finally may be enacted, the effective dates
thereof or the effect on the tax consequences of participation in the Equity
Incentive Plan.
CERTAIN TRANSACTIONS
Sheldon M. Bonovitz, a director of the Company, is a partner of Duane,
Morris & Heckscher, which serves as the Company's primary legal counsel.
Kontron Instruments Holding N.V., which owns more than 5% of the Company's
outstanding Common Stock, has affiliates that serve as the Company's
distributors throughout most of Europe. During 1995, total sales by the Company
to such affiliates were $792,000. Vincenzo Morelli, a director of the Company,
is the Chief Executive Officer and a director of Kontron Instruments.
18
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 29, 1996. 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 Arthur Andersen LLP. 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 has audited the
Company's financial statements for each fiscal year since the fiscal year ended
January 1, 1989. Representatives of Arthur Andersen 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.
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: September 10, 1996
19
APPENDIX A
SURGICAL LASER TECHNOLOGIES, INC. EQUITY INCENTIVE PLAN
1. Purpose. The purpose of the Surgical Laser Technologies, Inc. Equity
Incentive Plan (the "Plan") is to further the growth, development and
financial success of Surgical Laser Technologies, Inc. (the "Company")
and any subsidiary by providing additional incentives to those officers,
key 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 management employees and consultants
of high caliber and potential.
2. Administration. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Company's Board of Directors (the
"Board"). The Committee shall be elected pursuant to the Bylaws of the
Company and no member thereof shall have been eligible to participate in
the Plan in the year preceding his appointment or be eligible for awards
while serving on the Committee. The Committee shall have 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 employees and consultants to whom awards shall be made
under the Plan; to determine the type of awards to be made and the
amount, size and terms of each such award; to determine the time when
awards shall be granted; and to make all other determinations necessary
or advisable for the administration of the Plan.
3. Stock Subject to the Plan. The shares that may be issued under the Plan
shall not exceed in the aggregate 2,100,000 shares of common stock, par
value $.01, of the Company (the "Common Stock"). Such shares may be
authorized and unissued shares or shares issued and subsequently
reacquired by the Company. Except as otherwise provided herein, any
shares subject to an option or right which for any reason expires or is
terminated unexercised as to such shares shall again be available under
the Plan.
4. Eligibility to Receive Awards. Persons eligible to receive awards under
the Plan shall be limited to those consultants and to those officers and
other employees of the Company and any subsidiary (as defined in Section
425 of the Internal Revenue Code of 1986 (the "Code"), or any amendment
or substitute thereto), who may also be directors and who are in
positions in which their decisions, actions and counsel significantly
impact upon the profitability and success of the Company and any
subsidiary. Directors of the Company, who are not also officers or
employees of the Company or any subsidiary, shall not be eligible to
participate in the Plan. Moreover,
consultants shall not be eligible to be awarded stock options which are
intended to qualify as incentive stock options within the meaning of
Section 422A of the Code or any amendment or substitute thereto
("Incentive Stock Options").
5. Form of Awards. Awards may be made at any time and from time to time by
the Committee in the form of stock options to purchase shares of Common
Stock of the Company, restricted stock or any combination thereof. Stock
options may be options which are intended to qualify as Incentive Stock
Options or options which are not intended to so qualify ("Nonqualified
Stock Options").
6. Stock Options. Stock options for the purchase of Common Stock
("Options") shall be evidenced by written agreements in such form not
inconsistent with the Plan as the Committee shall approve from time to
time and which shall contain in substance the following terms and
conditions:
(a) Type of Option. Each option agreement shall identify the Options
represented thereby as Incentive Stock Options or Nonqualified
Stock Options, as the case may be.
(b) Option Price. Subject to the limitation set forth in Section
6(g)(ii), the purchase price of Common Stock subject to an
Incentive Stock Option shall not be less than 100% of the fair
market value of such stock on the date the Option is granted, as
determined by the Committee, but in no event less than the par
value of such stock. The purchase price of the Common Stock
subject to a Nonqualified Stock Option shall not be less than
85% of the fair market value of such stock on the date the
Option is granted, as determined by the Committee. For this
purpose, fair market value on any date shall mean the closing
price of the Common Stock, as reported in the Wall Street
Journal (or if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation
(NASDAQ) System), or if the Common Stock is not reported by
NASDAQ, the fair market value shall be as determined by the
Committee pursuant to Section 422A.
(c) Exercise Term. Each option agreement shall state the period or
periods of time within which the Option may be exercised, in
whole or in part, which shall be such period or periods of time
as may be determined by the Committee, provided that no Option
shall be exercisable after ten years from the date of grant
thereof. The Committee shall have the power to permit an
acceleration of previously established exercise terms, subject
to the requirements set forth herein, upon such circumstances
and subject to such terms and conditions as the Committee deems
appropriate.
-2-
(d) Exercise and Payment for Shares. Options may be exercised in
whole or in part, from time to time, by giving written notice of
exercise to the Secretary or his office, specifying the number
of shares to be purchased. The purchase price of the shares with
respect to which an Option is exercised shall be payable in full
with the notice of exercise in cash, Common Stock at fair market
value, or a combination thereof, as the Committee may determine
from time to time and subject to such terms and conditions as
may be prescribed by the Committee for such purpose.
(e) Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of
such Option and the issuance and delivery of such shares
pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933,
as amended, the Securities and Exchange Act of 1934 (the
"Exchange Act"), the rules and regulations promulgated
thereunder and the requirements of any stock exchange upon which
the Common Stock may then be listed, and shall be further
subject to the approval of counsel for the Company with respect
to such compliance. As a condition to the exercise of an Option,
the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of
law.
(f) Rights Upon Termination of Employment. In the event that an
optionee ceases to be an employee of the Company or any
subsidiary for any reason other than death, retirement, as
hereinafter defined, or disability (within the meaning of
Section 72(m)(7) of the Code or any substitute therefor), the
optionee shall have the right to exercise the Option during its
term within a period of three months after such termination to
the extent that the Option was exercisable at the time of
termination, or within such other period, and subject to such
terms and conditions, as may be specified by the Committee. In
the event that an optionee dies, retires or becomes disabled
prior to the expiration of his Option and without having fully
exercised his Option, the optionee or his successor shall have
the right to exercise the Option during its term within a period
of one (1) year after termination of employment due to death,
retirement or disability to the extent that the Option was
exercisable at the time of termination, or within such other
period, and subject to such terms and conditions, as may be
specified by the Committee. As used in this Section 6(f),
"retirement" means a termination of
-3-
employment by reason of an optionee's retirement at or after his
earliest permissible retirement date pursuant to and in
accordance with his employer's regular retirement plan or
personnel practices.
(g) Nontransferability. Each option agreement shall state that the
Option is not transferable other than by will or by the laws of
descent and distribution, and that during the lifetime of the
optionee the Option is exercisable only by him.
(h) Incentive Stock Options. In the case of an Incentive Stock
Option, each option agreement shall contain such other terms,
conditions and provisions as the Committee determines necessary
or desirable in order to qualify such Option as a tax-favored
option (within the meaning of Section 422A of the Code or any
amendment or substitute thereto or regulation thereunder)
including without limitation, each of the following, except that
any of these provisions may be omitted or modified if it is no
longer required in order to have an option qualify as a
tax-favored option within the meaning of Section 422A of the
Code or any substitute therefor:
(i) The aggregate fair market value (determined as of the
date the Option is granted) of the Common Stock with
respect to which Incentive Stock Options are first
exercisable under the terms of the option agreement by
any employee during any calendar year (under all plans
of the Company) shall not exceed $100,000; and
(ii) No Incentive Stock Option shall be granted to any
employee if at the time the Option is granted the
individual owns stock possessing more than ten
percent of the total combined voting power of all
classes of stock of the Company or its parent or its
subsidiaries unless at the time such Option is
granted the option price is at least 110 percent of
the fair market value of the stock subject to the
Option and such Option by its terms is not
exercisable after the expiration of five years from
the date of grant.
(i) Options may be granted under the Plan from time to time in
substitution for stock options held by employees of other
corporations who are about to become and who do
concurrently with the grant of such options become
employees of the Company or a subsidiary as a result of a
merger or consolidation of the employing corporation with
the Company or a subsidiary, or the acquisition by the
Corporation or a subsidiary of the assets of the employing
corporation, or the acquisition by the Company, or a
-4-
subsidiary of stock of the subsidiary. The terms and conditions
of the substitute options so granted may vary from the terms and
conditions set forth in this Section 6 of the Plan to such
extent as the Committee at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.
7. Restricted Stock Awards. Restricted stock awards under the Plan
shall consist of shares of Common Stock free of any purchase
price or for such purchase price as may be established by the
Committee, restricted against transfer, subject to forfeiture,
and subject to such other terms and conditions as are intended
to further the purpose of the Plan, and shall be evidenced by a
written restricted stock agreement in such form not inconsistent
with this Plan as the Committee shall approve from time to time,
which agreement shall contain in substance the following terms
and conditions:
(a) Restriction Period. Shares awarded pursuant to this Plan shall
be subject to such terms, conditions and restrictions, including
without limitation, prohibitions against transfer, substantial
risks of forfeiture and attainment of performance objectives for
such period or periods as shall be determined by the Committee.
The Committee shall have the power to permit, in its sole
discretion, an acceleration of the expiration of the applicable
restriction period with respect to any part or all of the shares
awarded to the participant.
(b) Restriction Upon Transfer. Restricted stock and the right to
vote such shares and to receive dividends thereon may not be
sold, assigned, transferred, exchanged, pledged, hypothecated,
or otherwise encumbered, except as herein provided, during the
restriction period applicable to such shares. Notwithstanding
the foregoing and except as otherwise provided in the Plan, the
participant shall have all other rights of a stockholder
including, but not limited to, the right to receive dividends
and the right to vote such shares.
(c) Certificates. Each certificate issued in respect of shares of
restricted stock awarded to a participant shall be deposited
with the Company or its designee and shall bear the following
legend:
This certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture provisions and restrictions
against transfer) contained in the Surgical Laser
Technologies, Inc. Equity Incentive Plan and an
Agreement entered into between the registered owner and
Surgical Laser Technologies, Inc. Release from
-5-
such terms and conditions shall be obtained only in
accordance with the provisions of the Plan and
Agreement, a copy of each is on file in the office of
the Secretary of Surgical Laser Technologies, Inc.
(d) Lapse of Restrictions. Each restricted stock agreement shall
also specify the terms and conditions upon which any
restrictions upon shares awarded under the Plan shall lapse, as
determined by the Committee. Upon the lapse of such
restrictions, a certificate for shares of Common Stock free of
the restrictive legend shall be issued to the participant or his
legal representative.
(e) Termination Prior to Lapse of Restrictions. In the event of a
participant's termination of employment prior to the lapse of
restrictions as determined pursuant to the provisions of
subparagraph (d), above, all shares as to which there still
remains unlapsed restrictions shall be forfeited by such
participant to the Company without payment of any consideration
by the Company, and neither the participant nor any successors,
heirs, assigns, or personal representatives of such participant
shall thereafter have any further rights or interest in such
shares or certificates.
8. Date of Grant. The date on which an award shall be deemed to have been
granted under this Plan shall be the date of the Committee's
authorization of the award or such later date as may be determined by
the Committee at the time the award is authorized. Notice of the
determination shall be given to each individual to whom an award is so
granted within a reasonable time after the date of such grant.
9. General Restrictions. Each award under the Plan shall be subject to the
requirement that if at any time the Committee shall determine that
(i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange, including
the NASDAQ National Market System, or under any state or federal law, or
(ii) the consent or approval of any government regulatory body, or
(iii) an agreement by the recipient of an award with respect to the
disposition of shares of Common Stock is necessary or desirable as a
condition of or in connection with the granting of such award or the
issuance or purchase of shares of Common Stock thereunder, such award
shall not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval, or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
10. Single or Multiple Agreements. Multiple forms of awards or
combinations thereof may be evidenced by a single agreement or
-6-
multiple agreements, as determined by the Committee in its sole
discretion.
11. Rights of a Shareholder. The recipient of any award under the Plan,
unless otherwise provided by the Plan, shall have no rights as a
shareholder with respect thereto unless and until certificates for
shares of Common Stock are issued and delivered to him.
12. Right to Terminate Service. Nothing in the Plan nor in any agreement
entered into pursuant to the Plan shall confer upon any participant the
right to continue in the service of the Company or any subsidiary as an
employee or consultant or affect any right which the Company or any
subsidiary may have to terminate the employment or consulting
relationship with such participant.
13. Withholding. Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have
the right to require the recipient to remit to the Company an amount
sufficient to satisfy any federal, state or local withholding tax
requirements prior to the delivery of any certificate or certificates
for such shares. Whenever under the Plan payments are to be made in
cash, such payments shall be net of an amount sufficient to satisfy any
federal, state or local withholding tax requirements. If and to the
extent authorized by the Committee, in its sole discretion, an optionee
may make an election, by means of a form of election to be prescribed by
the Committee, to have shares of Common Stock which are acquired upon
exercise of an Option withheld by the Company or to tender other shares
of Common Stock or other securities of the Company owned by the optionee
to the Company at the time of exercise of an Option to pay the amount of
tax that would otherwise be required by law to be withheld by the
Company as a result of any exercise of an Option from amounts payable to
such optionee, subject to the following limitations:
(i) such election shall be irrevocable;
(ii) such election shall be subject to the disapproval of the
Committee at any time;
(iii) if the optionee is a director, officer, or 10%
stockholder (an "Insider"), such election may not be
made within six months of the grant date of the Option
the exercise of which resulted in the tax withholding
obligation (except that this limitation shall not apply
in the event of death or disability of such person
occurring prior to the expiration of the six-month
period); and
(iv) if the optionee is an Insider, such election must be
-7-
made either (a) six months prior to the date that the amount
of tax to be withheld upon such exercise is determined or
(b) in any ten-day period beginning on the fourth business
day following the date of release by the Company for
publication of quarterly or annual summary statements of
sales or earnings of the Company.
Any securities so withheld or tendered will be valued by the Committee
as of the date of exercise.
14. Non-Assignability. No award under the Plan shall be assignable or
transferable by the recipient thereof except by will or by the laws of
descent and distribution or by such other means as the Committee may
approve. During the life of the recipient such award shall be
exercisable only by such person or by such person's guardian or legal
representative.
15. Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation determinations of the persons to
receive awards, the form, amount and timing of such awards, the terms
and provisions of such awards, and the agreements evidencing same) need
not be uniform and may be made selectively among persons who receive, or
are eligible to receive, awards under the Plan whether or not such
persons are similarly situated.
16. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the stockholders of the Company, the number of shares
of Common Stock covered by each outstanding Option and the number of
shares of Common Stock which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as
well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease
in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have
been "effected without receipt of consideration." Such adjustment shall
be made by the Committee, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
-8-
Company, each outstanding Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee. The Committee may, in the exercise of its sole discretion in
such instances, declare that each outstanding Option shall terminate as
of a date fixed by the Committee and give each optionee the right to
exercise his Option as to all or any part of the optioned Common Stock,
including shares as to which the Option would not otherwise be
exercisable. In the event of a proposed sale of all or substantially all
of the assets of the Company or any subsidiary, or the merger of the
Company or any subsidiary with or into another corporation, the affected
Options shall be assumed or an equivalent option shall be substituted by
such successor corporation or a parent or subsidiary of such successor
corporation, provided that the successor corporation consents to such
assumption or substitution. Moreover, the Committee may determine, in
the exercise of its sole discretion and in lieu of such assumption or
substitution, that the affected optionees shall have the right to
exercise their Options as to all of the optioned Common Stock, including
shares as to which the Option would not otherwise be exercisable. If the
Committee makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Committee
shall notify the optionee that the Option shall be fully exercisable for
a period of thirty (30) days from the date of such notice, and the
Option will terminate upon the expiration of such period.
17. Amendment. The Committee may terminate or amend the Plan at any time,
except that without shareholder approval the Committee may not increase
the maximum number of shares which may be issued under the Plan (other
than increases pursuant to Section 16 hereof), extend the maximum period
during which any Option may be exercised pursuant to Section 6(c)
hereof, extend the term of the Plan or change the minimum option price.
The termination or any modification or amendment of the Plan shall not,
without the consent of a participant, affect his rights under an award
previously granted.
18. Affect on Other Plans. Participation in this Plan shall not affect an
employee's eligibility to participate in any other benefit or incentive
plan of the Company or any subsidiary. Any awards made pursuant to this
Plan shall not be used in determining the benefits provided under any
other plan of the Company or any subsidiary unless specifically
provided.
19. Duration of the Plan. The Plan shall remain in effect until all awards
under the Plan have been satisfied by the issuance of shares or the
payment of cash, but no award shall be granted more than ten years after
the earlier of the date the Plan is adopted by the Company or is
approved by the Company's shareholders.
-9-
20. Forfeiture for Dishonesty. Notwithstanding anything to the contrary in
this Plan, if the Committee finds, by a majority vote, after full
consideration of the facts presented on behalf of both the Company and
any participant, that the participant has been engaged in fraud,
embezzlement, theft, commission of a felony or other dishonest conduct
in the course of his employment by the Company or any subsidiary which
damaged the Company or any subsidiary or that the participant has
disclosed trade secrets of the Company or any subsidiary, the
participant shall forfeit all unexercised Options and rights, all
restricted stock and all exercised Options or rights under which the
Company has not yet delivered the certificates or cash. The decision of
the Committee as to the cause of a participant's discharge and the
damage done to the Company or any subsidiary shall be final. No decision
of the Committee, however, shall affect the finality of the discharge of
such participant by the Company or any subsidiary in any manner.
21. No Prohibition on Corporate Action. No provision of this Plan shall be
construed to prevent the Company or any officer or director thereof from
taking any corporate action deemed by the Company or such officer or
director to be appropriate or in the Company's best interest, whether or
not such action could have an adverse effect on the Plan or any options,
rights or stock awards granted hereunder, and no participant or
participant's estate, personal representative or beneficiary shall have
any claim against the Company or any officer or director thereof as a
result of the taking of such action.
22. Use of Proceeds. The proceeds received by the Company from the
exercise of any stock option issued pursuant to the Plan or
from the grant of any stock award under the Plan shall be used
for general corporate purposes.
23. Indemnification. With respect to the administration of the Plan, the
Company shall indemnify each present and future member of the Committee
and the Board against, and each member of the Committee and the Board
shall be entitled without further act on his part to indemnity from the
Company for, all expenses (including the amount of judgments and the
amount of approved settlements made with a view to the curtailment of
costs of litigation, other than amounts paid to the Company itself)
reasonably incurred by him in connection with or arising out of, any
action, suit or proceeding in which he may be involved by reason of his
being or having been a member of the Committee and the Board, whether or
not he continues to be such member of the Committee and the Board at the
time of incurring such expenses; provided, however, that such indemnity
shall not include any expenses incurred by any such member of the
Committee and the Board (i) in respect of matters as to which he shall
be finally adjudged in any such action, suit or proceeding to have been
guilty of gross negligence or willful misconduct in the performance of
his duty as such member of the
-10-
Committee and the Board; or (ii) in respect of any matter in which any
settlement is effected for an amount in excess of the amount approved by
the Company on the advice of its legal counsel; and provided further
that no right of indemnification under the provisions set forth herein
shall be available to or enforceable by any such member of the Committee
and the Board unless within 60 days after institution of any such
action, suit or proceeding, he shall have offered the Company in writing
the opportunity to handle and defend same at its own expense. The
foregoing right of indemnification shall inure to the benefit of the
heirs, executors or administrators of each such member of the Committee
and the Board and shall be in addition to all other rights to which such
member of the Committee and the Board may be entitled as a matter of
law, contract or otherwise.
24. Miscellaneous Provisions.
(a) No participant or other person shall have any right with respect
to the Plan, the Common Stock reserved for issuance under the
Plan or in any award, contingent or otherwise, until written
evidence of the award shall have been delivered to the recipient
and all the terms, conditions and provisions of the Plan and the
award applicable to such recipient (and each person claiming
under or through him) have been met.
(b) No shares of Common Stock, other securities or property of the
Company, or other forms of payment shall be issued hereunder
with respect to any award unless counsel for the Company shall
be satisfied that such issuance will be in compliance with
applicable federal, state, local and foreign legal, securities
exchange and other applicable requirements.
(c) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act, that any
ambiguities or inconsistencies in construction of the Plan be
interpreted to give effect to such intention and that if any
provision of the Plan is found not to be in compliance with Rule
16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3.
(d) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under
the Plan, and rights to the payment of awards shall be no
greater than the rights of the Company's general creditors.
(e) By accepting any award or other benefit under the Plan, each
participant and each person claiming under or through
-11-
him shall be conclusively deemed to have indicated his
acceptance and ratification of, and consent to, any action taken
under the Plan by the Company, the Board or the Committee or its
delegates.
(f) The masculine pronoun shall include the feminine and neuter, and
the singular shall include the plural, where the context so
indicates.
As proposed to be amended through August 12, 1996.
-12-
SURGICAL LASER TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS OCTOBER 10, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints W. Keith Stoneback 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, 4200 One Liberty
Place, 1650 Market Street, Philadelphia, Pennsylvania 19103 on Thursday, October
10, 1996, at 10:00 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 nominees listed WITHHOLD AUTHORITY
at right except as marked to vote for the
to the contrary nominees listed at right
/ / / /
1. For the election of six 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.
Nominees: Sheldon M. Bonovitz
Richard J. DePiano
Jay L. Federman
Terry A. Fuller
Vincenzo Morelli
W. Keith Stoneback
2. PROPOSAL TO AMEND the Company's Equity Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL TO RATIFY appointment of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending December 29, 1996.
FOR / / AGAINST / / ABSTAIN / /
The Board of Directors recommends a vote FOR the election of the nominees
listed at left 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 _______________________, 1996
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.