<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A NO. 1
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997, or
[ ] TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number: 0-28078
FemRx, Inc.
(Exact name of registrant as specified in its charter)
Delaware . 77-0389440 .
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1221 Innsbruck Drive Sunnyvale, CA 94089
(Address of principal executive office)
Registrant's telephone number, including area code: (408) 752-8580
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share
Preferred Stock, $0.001 par value per share
Indicate by check mark whether the registrant (1) has filed all reports required
by section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was reguired
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [ X ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of Registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $7,623,000 as of March 16, 1998, based upon the
closing price on the Nasdaq National Market reported for such date. Shares of
Common Stock held by each officer and director and by each person who owns 5% or
more of the outstanding Common Stock have been excluded in that such persons may
be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
There were 8,844,724 shares of Registrant's Common Stock issued and outstanding
as of March 16, 1998.
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Part III.
Item 10. Directors and Executive Officers of the Registrant
The information relating to Directors and Executive Officers of the Company
is contained in Part I, Item 1 of this report.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a)forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
Item 11. Executive Compensation
The following table shows for the fiscal years ended December 31, 1997,
1996, 1995, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at December 31, 1997 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
Annual
Compensation
Securities
Salary Bonus Underlying
Name and Principal Position Year ($) ($) Options (1)
--------------------------- ---- --- --- -----------
<S> <C> <C> <C> <C>
Andrew M. Thompson 1997 172,464 --- 80,000
President and Chief Executive Officer 1996 150,000 16,500 ---
1995 106,714 25,000 ---
George M. Savage, M.D. 1997 172,486 --- 80,000
Senior Vice President, Research and 1996 150,000 16,500 ---
Development 1995 106,714 25,000 ---
Edward W. Unkart 1997 144,357 --- 75,000
Vice President, Finance and 1996 125,008 11,563 ---
Administration, Chief Financial 1995(2) --- --- ---
Officer and Assistant Secretary
Jeffrey J. Christian 1997 155,458 --- 75,000
Vice President, Engineering 1996 142,789 17,325 ---
1995(2) --- --- 5,000
Marshall Tsuruda 1997 124,041 --- 110,000
Vice President, Operations 1996(3) --- --- 50,000
1995 --- --- ---
</TABLE>
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(1) Repriced options treated as new grants.
(2) Messrs. Unkart and Christian were employed by the Company for less than a
full year during the fiscal year ended December 31, 1995 and for that
reason, earned less than $100,000 in compensation from the Company.
(3) Mr. Tsuruda was employed by the Company for less than a full year during
the fiscal year ended December 31, 1996 and for that reason, earned less
than $100,000 in compensation from the Company.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1995 Stock
Option Plan (the "1995 Plan"). The 1995 Plan was adopted by the Board of
Directors in April 1995 and has been amended three times, most recently in March
1997, subject to stockholder approval. Pursuant to the 1995 Plan, the Company
may grant incentive and nonstatutory stock options to key employees, directors
of or consultants or advisors to the Company. A total of 1,955,625 shares of
Common Stock is authorized for issuance under the 1995 Plan.
At February 28, 1998, options covering an aggregate of 109,816 shares of
the Company's Common Stock had been exercised under the 1995 Plan, 1,520,911
shares were outstanding, and 324,898 shares (plus any shares that might in the
future be returned to the plan as a result of cancellations or expiration of
options) remained available for future grant under the 1995 Plan. During the
year ended December 31, 1997, under the 1995 Plan, the Company granted to all
current executive officers as a group options to purchase 420,000 shares at an
exercise prices ranging from $2.56 to $2.9375 per share and to all employees and
consultants (excluding current executive officers) as a group options to
purchase 904,000 shares at exercise prices ranging from $2.00 to $4.125 per
share.
The 1995 Plan is administered by the Board of Directors and the
Compensation Committee. No vesting is required under the 1995 Plan, although it
may be imposed by the Board of Directors. The maximum term of a stock option
under the 1995 Plan is 10 years, but if the optionee at the time of grant has
voting power over more than 10% of the Company's outstanding capital stock, the
maximum term of an incentive stock option is five years. The exercise price of
stock options granted under the 1995 Plan is determined by the Board of
Directors. Options granted under the 1995 Plan are generally non-transferable.
The exercise price may be paid in cash or any other form of consideration that
may be acceptable to the Board of Directors.
Options generally terminate three months after termination of the
optionee's employment or relationship as a consultant or director unless such
termination is caused by the permanent disability or death of the optionee. The
1995 Plan may be amended at any time by the Board of Directors, although certain
amendments would require stockholder approval. The 1995 Plan will terminate in
April 2005, unless earlier terminated by the Board of Directors.
The following tables show for the fiscal year ended December 31, 1997,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers:
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<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants (4) Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of
Securities Options Stock Price
Underlying Granted to Exercise or Appreciation for
Option Employees in Base Price Expiration Option Term ($)(3)
Name Granted (#) Fiscal Year(1) ($/Sh)(2) Date 5% ($) 10% ($)
- ---- ----------- -------------- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Andrew M. Thompson 80,000 6.04% $2.9375 03/02/07 147,790 374,530
George M. Savage, M.D. 80,000 6.04% $2.9375 03/02/07 147,790 374,530
Edward W. Unkart 75,000 5.66% $2.9375 03/02/07 138,553 351,122
Jeffrey J. Christian 75,000 5.66% $2.9375 03/02/07 138,553 351,122
Marshall Tsuruda 60,000 4.53% $2.9375 03/02/07 110,843 280,897
50,000(5) 3.78% $2.5675 03/26/06 75,487 196,093
</TABLE>
(1) Based on an aggregate of 1,324,000 options, including 384,750 repriced
options, granted to employees and directors of the Company in fiscal 1997,
including the Named Executive Officers set forth in the "Summary
Compensation Table" above and directors.
(2) The exercise price is equal to the closing price as reported on the Nasdaq
National Market on the last market trading day preceding the date of grant.
(3) The potential realizable value is calculated based on the term of the
option at the time of grant (ten years or nine years in the case of options
repriced on March 11, 1997). Stock price appreciation of five percent and
ten percent is assumed pursuant to rules promulgated by the Commission and
does not represent the Company's prediction of its stock price performance.
The potential realizable value at 5% and 10% appreciation is calculated by
assuming that the exercise price appreciates at the indicated rate for the
entire term of the option and that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price.
(4) Each of the options listed in the table was granted under the 1995 Plan and
was immediately exercisable. The shares purchasable thereunder are subject
to repurchase by the Company at the original exercise price paid per share
upon the optionee's cessation of service prior to vesting in such shares.
The repurchase right lapses and the optionee vests in the shares subject
to, or issued upon exercise of, the options as to 1/8th of the shares on
the sixth month anniversary of the date of grant and in monthly
installments thereafter for 42 months.
(5) Option repriced on March 11, 1997.
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<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal 1997, and Fiscal Year-End Option Values
Number of Securities
Underlying
Unexercised Value of Unexercised
Options at In-the-Money
Shares December 31, 1997 Options at
Acquired Value (#) December 31, 1997 ($)
On Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable(1)
- ---- --- --- ------------- ----------------
<S> <C> <C> <C> <C>
Andrew M. Thompson --- --- 18,333/61,667 $0/$0
George M. Savage, M.D. --- --- 18,333/61,667 $0/$0
Edward W. Unkart --- --- 17,187/57,813 $0/$0
Jeffrey J. Christian --- --- 22,187/57,813 $9,453/$0
Marshall Tsuruda --- --- 34,583/75,417 $0/$0
</TABLE>
(1) Based on the closing price as reported on the Nasdaq National Market as of
December 31, 1997 ($2.5625), minus the exercise price, multiplied by the
number of shares underlying the option.
Employee Stock Purchase Plan
In January 1996, the Company adopted the Employee Stock Purchase Plan (the
"Purchase Plan") covering an aggregate of 150,000 shares of Common Stock. The
Purchase Plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Code. Under the Purchase Plan, the Board of
Directors may authorize participation by eligible employees, including officers,
in periodic offerings following the adoption of the Purchase Plan. The offering
period for any offering will be no more than 27 months.
Employees are generally not eligible to participate unless they are
employed by the Company or an affiliate of the Company for at least 20 hours per
week and are employed by the Company or a subsidiary of the Company designated
by the Board for at least five months per calendar year. Employees who
participate in an offering can have up to 15% of their earnings withheld and
applied to the purchase of Common Stock on specified dates determined by the
Board of Directors. The price of Common Stock purchased under the Purchase Plan
will be equal to 85% of the lower of the fair market value of the Common Stock
on the commencement date of each offering period or the relevant purchase date.
Employees may end their participation in the offering at any time during the
offering period, and participation ends automatically on termination of
employment with the Company.
In the event of a merger, dissolution, consolidation, certain reverse
mergers or certain acquisitions, the Board of Directors has discretion to
provide that each right to purchase Common Stock will be assumed or an
equivalent right substituted by the successor corporation, or the Board may
shorten the offering period and provide for all sums collected by payroll
deductions to be applied to purchase stock immediately prior to such
transaction. The Purchase Plan will terminate at the Board's discretion, subject
to the limitation that no such action may adversely affect any outstanding
rights to purchase Common Stock.
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401(k) Plan
In December 1995, the Company adopted an employee savings plan (the "401(k)
Plan") covering the Company's employees who have not elected out of 401(k) Plan
participation. Pursuant to the 401(k) Plan, eligible employees may elect to
reduce their current compensation by up to the lesser of 20% of their annual
compensation or the statutorily prescribed annual limit ($9,500 in 1997) and
have the amount of such reduction contributed to the 401(k) Plan. In addition,
eligible employees may make roll-over contributions to the 401(k) Plan from a
tax-qualified retirement plan. The 401(k) Plan is intended to qualify under
Section 401 of the Code so that contributions by employees or by the Company to
the 401(k) Plan, and income earned on the 401(k) Plan contributions, are not
taxable to employees until withdrawn from the 401(k) Plan, and so that
contributions by the Company, if any, will be deductible by the Company when
made. The trustee under the 401(k) Plan, at the direction of each participant,
invests the 401(k) Plan employee salary deferrals in selected investment
options.
Compensation of Directors
Directors do not currently receive any cash compensation from the Company
for their service as members of the Board of Directors, although they are
eligible for reimbursement for their expenses incurred in connection with
attendance at Board and Committee meetings in accordance with Company policy.
Each non-employee director of the Company also receives stock option grants
under the 1996 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). Only non-employee directors of the Company are eligible to receive
options under the Directors' Plan. Options granted under the Directors' Plan are
intended by the Company not to qualify as incentive stock options under the
Code.
Option grants under the Directors' Plan are non-discretionary. Pursuant to
the terms of the Directors' Plan, each non-employee director who was serving on
the date of the Company's initial public offering was granted on such date an
option to purchase 20,000 shares of Common Stock. In addition, each non-employee
director subsequently elected to the Board will automatically be granted on the
date of his or her election to the Board an option to purchase 20,000 shares of
Common Stock (the "Initial Grant"). On the one year anniversary date of the
Company's initial public offering, or the anniversary date of a non-employee
directors' election to the Board, if such non-employee director was not serving
in such capacity as of the date of the Company's initial public offering, and
each one-year anniversary thereafter, each member of the Company's Board of
Directors who is not an employee of the Company and has served as a non-employee
director for at least the full six month period prior, is automatically granted
an option to purchase 5,000 shares of Common Stock of the Company (the "Annual
Grant"). No other options may be granted at any time under the Directors' Plan.
The exercise price of options granted under the Directors' Plan is 100% of the
fair market value of the Common Stock subject to the option on the date of the
option grant. The Initial Grant under the Directors' Plan will generally vest at
the rate of 1/48th of the shares monthly. Annual Grants under the Directors'
Plan will vest entirely on, but not before, the first annual anniversary of the
Annual Grant. The term of options granted under the Directors' Plan is ten
years. In the event of a merger, dissolution, consolidation, certain reverse
mergers or certain acquisitions, options outstanding under the Directors' Plan
will automatically become fully vested and will terminate if not exercised prior
to the consummation of the transaction.
At February 28, 1998, there were 200,000 shares of the Company's Common
Stock authorized for issuance under the Directors' Plan. During the last fiscal
year, the Company granted options covering an aggregate of 25,000 shares to the
non-employee directors of the Company, at exercise prices ranging from $2.6875
to $3.00 per share. The fair market value of such Common Stock on the date of
grants was $2.6875 and $3.00 per share (based on the closing price as reported
on the Nasdaq National Market for the day preceding the date of grant). As of
February 28, 1998, no options had been exercised under the Directors' Plan.
6
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors ("Committee") is composed
of Messrs. McLane and Young, none of whom are currently officers or employees of
the Company. The Committee is responsible for establishing the Company's
compensation programs for all employees, including executives. For executive
officers, the Committee evaluates performance and determines compensation
policies and levels.
Compensation Philosophy
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract, retain
and reward executive officers and other key employees who contribute to the
long-term success of the Company and to motivate them to enhance long-term
stockholder value. Key elements of this philosophy are:
The Company pays competitively with leading medical device companies with
which the Company competes for talent. To ensure that pay is competitive,
the Company regularly compares its pay practices with these companies and
sets it pay parameters based on this review.
The Company maintains the FemRx Annual Bonus Plan to provide motivation to
achieve specific operating goals and to generate rewards that bring total
compensation to competitive levels.
The Company provides significant equity-based incentives for executives and
other key employees to ensure that they are motivated over the long-term to
respond to the Company's business challenges and opportunities as owners
and not just as employees.
Base Salary. The Committee annually reviews each executive officer's base
salary. When reviewing base salaries, the Committee considers individual and
corporate performance, levels of responsibility, prior experience, breadth of
knowledge and competitive pay practices.
Annual Incentive. The FemRx Annual Bonus Plan, an annual incentive award
plan, is the variable pay program for officers and other senior managers of the
Company to earn additional annual compensation. The actual incentive award
earned depends on the extent to which Company and individual performance
objectives are achieved. At the start of each year, the Committee and the full
Board of Directors review and approve the annual performance objectives for the
Company and individual officers. The Company objectives consist of operating,
strategic and financial goals that are considered to be critical to the
Company's fundamental long-term goal building stockholder value.
After the end of the year, the Committee evaluates the degree to which the
Company has met its goals and establishes a total incentive award pool under the
FemRx Annual Bonus Plan. Individual awards are determined by evaluating each
participant's performance against objectives and allocating a portion of the
award pool based on the participant's contributions during the year. Awards are
paid in cash and distributions are made in the February following the
performance year.
Long-Term Incentives. The Company's long-term incentive program consists of
the 1995 Plan and the Purchase Plan. The option program utilizes vesting periods
(generally four years) to encourage key employees to continue in the employ of
the Company. Through option grants, executives receive significant equity
incentives to build long-term stockholder value. Grants are made at 100% of fair
market value on the date of grant. Executives receive value from these grants
only if the Company's Common Stock appreciates over the long-term. The size of
option grants is determined based on competitive practices at leading companies
in the medical device industry and the Company's philosophy of significantly
linking executive compensation with stockholder interests. In March 1997, the
Board granted options to purchase an aggregate of 370,000 shares of Common Stock
of the Company to the Named Executive Officers at an exercise price of $2.9375,
the fair market value of the Common Stock on the date of grant.
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The Company established the Purchase Plan both to encourage employees to
continue in the employ of the Company and to motivate employees through
ownership interest in the Company. Under the Purchase Plan, employees, including
officers, may have up to 15% of their earnings withheld for purchases of Common
Stock on certain dates specified by the Board. The price of Common Stock
purchased will not be less than the lesser of an amount equal to 85% of the
lower of the fair market value of the Common Stock on the commencement date of
the offering or the relevant purchase date.
Corporate Performance and Chief Executive Officer Compensation
Mr. Thompson's base salary during 1997 as President and Chief Executive
Officer was $175,000. Following the Committee's review of compensation paid by
leading medical device companies, the Committee set Mr. Thompson's base annual
salary through 1998 at $175,000. This amount, in addition to the annual
incentive provided by the FemRx Annual Bonus Plan, was estimated to provide an
annual cash compensation level at the average as compared to a selected group of
leading medical device companies. In setting this amount, the Committee took
into account (i) its belief that Mr. Thompson is one of the CEOs of leading
medical device companies who has significant and broad-based experience in the
medical device industry, (ii) the scope of Mr. Thompson's responsibility, and
(iii) the Board's confidence in Mr. Thompson to lead the Company's continued
development.
Federal Tax Consideration
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code.
The 500,000 shares per person limitation in the 1995 Plan is intended to
comply with the provisions of Section 162(m) of the Code. The Compensation
Committee intends to continue to evaluate the effects of the statute and the
Treasury regulations and to comply with Code Section 162(m) in the future to the
extent consistent with the best interests of the Company.
Option Repricing Information
On March 3, 1997, the Compensation Committee approved an offer to employees
of the Company to reprice outstanding options granted between January 30, 1996
and December 17, 1996 (the "Repricing Program"). Under the Repricing Program, as
of March 11, 1997, 384,750 options were converted into repriced options with an
exercise price of $2.5625 (based on the closing price as reported on the Nasdaq
National Market on the last market trading day preceding the day of grant). As
consideration for the grant of repriced options, optionees were prohibited from
exercising the repriced options for a period of six months after the date such
repriced options were granted.
The following table sets forth, as to all executive officers of the
Company, certain information concerning the repricing of all officers' options
since the Company's inception.
<TABLE>
<CAPTION>
Option Repricing Since Inception
Length of
Number of Market Original
Securities Price of Exercise Option Term
Underlying Stock at Price at New Remaining at
Options Time of Time of Exercise Date of
Name Date Repriced Repricing Repricing Price Repricing
---- ---- -------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Marshall Tsuruda 03/11/97 50,000 $2.5625 $9.00 $2.5625 9 years
</TABLE>
8
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CONCLUSION
Through the plans described above, a significant portion of the Company's
compensation program and Mr. Thompson's compensation are contingent on Company
performance, and realization of benefits is closely linked to increases in
long-term stockholder value. The Company remains committed to this philosophy of
pay for performance, recognizing that the competitive market for talented
executives and the volatility of the Company's business may result in highly
variable compensation for a particular time period.
COMPENSATION COMMITTEE
James W. McLane
Philip M. Young
Compensation Committee Interlocks and Insider Participation
As stated above, the Compensation Committee consists of Messrs. McLane and
Young. The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate.
(1) Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this form 10-K/A, in whole or in part, the following
report and Performance Graph shall not be incorporated by reference into
any such filings. The Committee's objective is to set executive
compensation at the market average when compared to leading companies in
the medical device industry. The primary components of executive
compensation are base salary, annual incentives and long-term equity
incentives.
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Performance Measurement Comparison(1)
The following graph shows the total stockholder return of an investment of $100
in cash on March 27, 1996 for (i) the Company's Common Stock, (ii) the Nasdaq
Stock Market (U.S.) Index and (iii) the Standard & Poor's Health Care (Medical
Products and Supplies) Index. All values assume reinvestment of the full amount
of all dividends and are calculated as of the end of each month:
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT
EDGAR Representation of Data Points used in Printed Graphic
S&P Health Care
Nasdaq Stock (Medical Products
FemRx, Inc. Market - US and Supplies)
3/27/96 $100 $100 $100
3/96 108 100 99
6/96 120 109 98
9/96 92 112 109
12/96 50 118 110
3/97 30 112 109
6/97 42 132 130
9/97 29 154 135
12/97 28 145 137
___________
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
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Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 28, 1998 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table employed by the Company in that capacity on February 28,
1998; (iii) all executive officers and directors of the Company as a group; and
(iv) all those known by the Company to be beneficial owners of more than five
percent of its Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
------------------------------
Number of Percent of
Beneficial Owner Shares Total
---------------- ------ -----
<S> <C> <C>
Sprout Group (2) .............................. 2,222,184 25.03%
3000 Sand Hill Road
Building 3, Suite 170
Menlo Park, CA 94025
U.S. Venture Partners (3) ..................... 1,093,748 12.37%
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
Andrew M. Thompson (4) ........................ 483,128 5.45%
George M. Savage, M.D. (5) .................... 483,128 5.45%
Arnold J. Kresch, M.D. (6) .................... 461,001 5.21%
Gail Gaumer Schulze (7) ....................... 31,040 *
Kathleen D. LaPorte (8) ....................... 2,222,184 25.03%
James W. McLane (9) ........................... 22,083 *
Philip M. Young (10) .......................... 1,124,788 12.67%
Jeffrey J. Christian (11) ..................... 199,008 2.24%
Edward W. Unkart (12) ......................... 108,819 1.23%
Marshall Tsuruda (13).......................... 53,863 *
All executive officers and directors as
a group (12 persons)(14) ...................... 4,469,469 52.19%
</TABLE>
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "Commission"). Unless otherwise indicated in
the footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
8,844,464 shares outstanding on February 28, 1998, adjusted as required by
rules promulgated by the Commission.
(2) Represents 1,359,618 shares held by Sprout Capital VII, L.P. ("SVII"),
714,700 shares held by Sprout Capital VI, L.P. ("SVI") and 113,181 shares
held by DLJ Capital Corporation ("DLJ"). Also includes 34,685 shares
issuable pursuant to option exercisable within 60 days of February 28, 1997
by DLJ. DLJ is the Managing General Partner of both SVI and SVII.
Ms. LaPorte, a director of the Company, is a general partner of DLJ
Associates VI, L.P. and DLJ Associates VII, L.P., the general partners of
SVI and SVII, respectively. Ms. LaPorte disclaims beneficial ownership of
the shares held by such entities, except to the extent of her pecuniary
interest therein. Ms. LaPorte may be deemed to exercise voting and
investment power over the shares held by affiliates of Sprout Group.
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(3) Represents 946,093 shares held by U.S. Venture Partners IV, L.P. ("USVP
IV"), 114,843 shares held by Second Ventures II, L.P. ("SVLP II") and
32,812 shares held by USVP Entrepreneur Partners II, L.P. ("USVEP II").
Mr. Young, a director of the Company, is a general partner of Presidio
Management Group IV, L.P., the general partner of each of USVP IV, SVLP II
and USVEP II. Mr. Young disclaims beneficial ownership of the shares held
by such entities, except to the extent of his pecuniary interest therein.
Mr. Young may be deemed to exercise voting and investment power over the
shares held by affiliates of U.S. Venture Partners.
(4) Represents 448,128 shares held by The Thompson Family Trust, of which
Mr. Thompson and his wife are trustees, and 10,000 shares held by
Savage-Thompson Management, of which Mr. Thompson is a partner. Also
includes 25,000 shares issuable pursuant to options exercisable within 60
days of February 28, 1998.
(5) Represents 448,128 shares held by The George and Nancy Savage Living Trust,
of which Dr. Savage and his wife are trustees, and 10,000 shares held by
Savage-Thompson Management, of which Dr. Savage is a partner. Also includes
25,000 shares issuable pursuant to options exercisable within 60 days of
February 28, 1998.
(6) Represents 451,626 shares held by Kresch Medical Research, LLC. Also
includes 9,375 shares issuable pursuant to options exercisable within 60
days of February 28, 1998 by Dr. Kresch. Dr. Kresch is an owner and the
sole manager of Kresch Medical Research, LLC and may be deemed to exercise
voting and investment power over the shares held by such entity.
(7) Represents 31,040 shares issuable pursuant to options exercisable within 60
days of February 28, 1998.
(8) Includes 2,187,499 shares held by entities affiliated with Sprout Group.
Also includes 34,685 shares issuable pursuant to options exercisable within
60 days of February 28, 1998 to DLJ. Ms. LaPorte, a director of the
Company, disclaims beneficial ownership of the shares held by such
entities, except to the extent of her pecuniary interest therein.
(9) Includes 17,083 shares issuable pursuant to options exercisable within 60
days of February 28, 1998.
(10) Includes 1,093,748 shares held by entities affiliated with U.S. Venture
Partners. Mr. Young, a director of the Company, disclaims beneficial
ownership of the shares held by such entities, except to the extent of his
pecuniary interest therein. Also includes 31,040 shares issuable pursuant
to options exercisable within 60 days of February 28, 1998.
(11) Includes 1,721 shares held by Mr. Christian's son. Also includes 28,437
shares issuable pursuant to options exercisable within 60 days of
February 28, 1998.
(12) Includes 78,125 shares held by Takei Unkart Family Trust, of which
Mr. Unkart and his wife are trustees. Also includes 23,437 shares issuable
pursuant to options exercisable within 60 days of February 28, 1998.
(13) Includes 43,750 shares issuable pursuant to options exercisable within 60
days of February 28, 1998.
(14) Includes 306,450 shares issuable pursuant to options exercisable within 60
days of February 28, 1998 by the officers and directors as a group.
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Item 13. Certain Relationships and Related Transactions
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
By-laws.
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