SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2)
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NOVOSTE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
/ / 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 previous
filing by registration number, or the form or schedule and the
date of its filing.
<PAGE>
NOVOSTE CORPORATION
4350-C International Boulevard
Norcross, Georgia 30093
(770) 717-0904
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 1, 1998
To the Shareholders of
NOVOSTE CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Annual Meeting") of Novoste Corporation (the "Company") will be held at
the Atlanta Marriott Gwinnett Place, 1775 Pleasant Hill Road in Duluth, Georgia,
on Friday, May 1, 1998 at 9:00 a.m., local time, to consider and act upon the
following proposals:
1. To elect two (2) Class II Directors to serve until the
2001 Annual Meeting of Shareholders.
2. To approve amendments (the "Plan Amendments") to the
Company's Amended and Restated Stock Option Plan (the
"Plan"), which Plan Amendments (a) increase the number of
shares of Common Stock reserved for issuance thereunder
by 700,000 shares to 3,400,000 shares, (b) increase the
maximum number of shares from 100,000 shares to 350,000
shares with respect to options that may be granted to any
person or entity eligible within any one calendar year
and (c) allow the Stock Option and Compensation Committee
to determine as of the date of grant the acceleration, if
any, of the exercisability of a performance-based option
upon a "Change of Control" (as defined by the Plan) of
the Company.
3. To ratify the reappointment of Ernst & Young LLP as
independent auditors of the Company for the year ending
December 31, 1998.
4. To transact such other business as may properly come
before the Annual Meeting or any adjournment or
postponement thereof.
A proxy statement describing the matters to be considered at the
Annual Meeting is attached to this notice. Only holders of record of the
Company's Common Stock at the close of business on March 20, 1998, the Record
Date for the Annual Meeting, are entitled to notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors,
Cheryl R. Johnson
Secretary
Norcross, Georgia
March 31, 1998
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING
ARE REQUESTED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED
PROXY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
<PAGE>
NOVOSTE CORPORATION
4350-C INTERNATIONAL BOULEVARD
NORCROSS, GEORGIA 30093
(770) 717-0904
-------------
PROXY STATEMENT
-------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 1, 1998
-------------
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to holders of Common Stock, par
value $.01 per share (the "Common Stock"), of Novoste Corporation, a Florida
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company for use at its Annual Meeting of
Shareholders to be held on Friday, May 1, 1998, at the Atlanta Marriott Gwinnett
Place, in Duluth, Georgia, at 9:00 a.m., local time, and any and all
adjournments or postponements thereof (the "Annual Meeting"). The cost of the
solicitation will be borne by the Company. This Proxy Statement is being first
mailed to holders of the Common Stock on or about April 3, 1998.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, the shareholders will be asked to consider and
vote upon the following proposals:
1. To elect two (2) Class II Directors to serve until the
2001 Annual Meeting of Shareholders.
2. To approve amendments (the "Plan Amendments") to the
Company's Amended and Restated Stock Option Plan (the
"Plan"), which Plan Amendments (a) increase the number of
shares of Common Stock reserved for issuance thereunder
by 700,000 shares to 3,400,000 shares, (b) increase the
maximum number of shares from 100,000 shares to 350,000
shares with respect to options that may be granted to any
person or entity eligible within any one calendar year
and (c) allow the Stock Option and Compensation Committee
to determine as of the date of grant the acceleration, if
any, of the exercisability of a performance-based option
upon a "Change of Control" (as defined by the Plan) of
the Company.
3. To ratify the reappointment of Ernst & Young LLP as
independent auditors of the Company for the year ending
December 31, 1998.
4. To transact such other business as may properly come
before the Annual Meeting or any adjournment or
postponement thereof.
<PAGE>
VOTING AT THE ANNUAL MEETING
Only holders of record of Common Stock at the close of business on March
20, 1998 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting, each such holder of record being entitled to one vote per share of
Common Stock on each matter to be considered at the Annual Meeting. On the
Record Date, there were 10,420,837 shares of Common Stock issued and
outstanding.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting (5,210,419 shares of the 10,420,837 shares outstanding) is
necessary to constitute a quorum at the Annual Meeting. If a quorum is present,
the plurality vote of the total votes cast by the holders of Common Stock is
required to elect the two (2) Class II Directors. The approval of the Plan
Amendments and the ratification of the reappointment of Ernst & Young LLP as
independent auditors of the Company for the year ending December 31, 1998 will
require the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote.
If the enclosed proxy card is properly executed and returned to the Company
prior to voting at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon, subject to the
following conditions:
ELECTION OF DIRECTORS. Shares represented by a proxy that is marked
"WITHHELD" as to a vote for (i) all two (2) nominees or (ii) any individual
nominee(s) for election as directors and are not otherwise marked "FOR" the
other nominees, will not be counted in determining whether a plurality vote has
been received for the election of directors. In the absence of instructions,
shares represented by a proxy will be voted FOR all of the two (2) nominees. In
instances where brokers are prohibited from exercising discretionary authority
for beneficial owners who have not returned proxies (so called "broker
non-votes"), those shares will be disregarded and therefore will have no effect
on the outcome of the vote.
OTHER PROPOSALS. Shares represented by a proxy which is marked "ABSTAIN" on
any other proposal will not be counted in determining whether the requisite vote
has been received for such proposal. In the absence of instructions, shares
represented by a proxy will be voted FOR all of the proposals set forth in the
Notice of Annual Meeting and at the discretion of the proxies on any other
matters that may properly come before the Annual Meeting. In instances of broker
non-votes, those shares will not be included in the vote totals.
At any time prior to its exercise, a proxy may be revoked by the holder of
the Common Stock granting it by delivering written notice of revocation or a
duly executed proxy bearing a later date to the Secretary of the Company at the
address of the Company set forth on the first page of this Proxy Statement or by
attending the Annual Meeting and voting in person.
Proxies may be solicited on behalf of the Board by mail, telephone,
telecopy or in person and solicitation costs will be paid by the Company.
Directors, officers and regular employees of the Company may solicit proxies by
such methods without additional compensation. Banks, brokerage houses and other
institutions, nominees and fiduciaries will be requested to forward the
soliciting material to their principals and to obtain authorizations for the
execution of proxy cards and, upon request, will be reimbursed by the Company
for their reasonable expenses.
2
<PAGE>
TABLE OF CONTENTS
Page
----
Security Ownership of Certain Beneficial
Owners and Management............................................... 4
Election of Directors................................................. 6
Executive Compensation................................................ 10
Report of Stock Option and Compensation Committee
of Board of Directors on Executive Compensation..................... 13
Stock Performance Graph............................................... 16
Section 16 Proxy Statement Disclosure................................. 17
Approval of Amendments to Amended and Restated
Stock Option Plan................................................... 17
Ratification of Reappointment of Independent
Auditors............................................................ 24
Other Business........................................................ 25
Shareholder Proposals................................................. 25
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of the Common Stock by (i) each person known
by the Company to own beneficially five percent or more of the outstanding
Common Stock, together with their respective addresses, (ii) each director and
nominee for election as director, (iii) each executive officer named in the
Summary Compensation Table under "Executive Compensation" on page 10 of this
Proxy Statement and (iv) all executive officers and directors as a group:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE OF OUTSTANDING
NAME AND ADDRESS OWNED (1) SHARES OWNED (1)
- ---------------- ------------ -------------------------
<S> <C> <C>
Thomas D. Weldon (2)(3)(4)............................... 826,902 7.6%
Charles E. Larsen (4).................................... 676,161 6.3%
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees (5)(6)(12)................... 451,587 4.3%
C.G. Grefenstette and Thomas G. Bigley, Trustees (5)(7).. 582,112 5.6%
Venhill Limited Partnership (8)
158 Main Street
New Canaan, Connecticut 06840....................... 236,574 2.3%
Paul Tudor Jones, II (9)................................. 634,700 6.1%
President and Fellows of Harvard College
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, MA 02210.................................... 600,000 5.8%
Pieter J. Schiller (10).................................. 499,043 4.8%
Norman R. Weldon, Ph.D. (3)(11).......................... 373,071 3.6%
Joan M. Macdonald........................................ 61,050 *
Thomas K. Brooks......................................... 59,850 *
J. Stephen Holmes........................................ 20,000 *
William E. Whitmer....................................... 17,000 *
David N. Gill............................................ 16,250 *
Stephen I. Shapiro....................................... 14,850 *
Richard M. Johnston (12)................................. 3,000 *
William A. Hawkins....................................... -- *
All executive officers and directors
as a group (13 persons) (13) ............................ 2,068,963 18.1%
- -----------------------------
*Less than 1%.
</TABLE>
4
<PAGE>
(1) A person is deemed to be the beneficial owner of Common Stock that can
be acquired within 60 days from the Record Date upon the exercise of
options, and that person's options are assumed to have been exercised
(and the underlying shares of Common Stock outstanding) in determining
such person's percentage ownership. Accordingly, the following shares
issuable upon exercise of options have been included in the shares
beneficially owned by the following persons: Thomas D. Weldon --
388,375 shares; Charles E. Larsen -- 391,875 shares; Henry L. Hillman,
Elsie Hilliard Hillman and C.G. Grefenstette, Trustees -- 15,000
shares; Norman R. Weldon -- 5,000 shares; Joan M. Macdonald - 61,050
shares; Thomas K. Brooks -- 5,000 shares; J. Stephen Holmes -- 15,000
shares; William E. Whitmer -- 15,000 shares; David N. Gill -- 16,250
shares; Stephen I. Shapiro -- 5,000 shares and Pieter J. Schiller --
5,000 shares.
(2) Includes 15,000 shares held in trust for the benefit of Mr. Weldon's
children and 5,000 shares held by Mr. Weldon as custodian for his
nephew.
(3) Includes 122,571 shares held by The Weldon Foundation, Inc., a Florida
not-for-profit corporation in which Thomas D. Weldon and Norman R.
Weldon are directors. Mr. Weldon and Dr. Weldon disclaim beneficial
ownership of all shares held by The Weldon Foundation, Inc.
(4) Address is c/o Novoste Corporation, 4350-C International Blvd.,
Norcross, GA 30093.
(5) Address is 2000 Grant Building, Pittsburgh, PA 15219.
(6) Consists of 436,587 shares held by a trust for the benefit of Henry L.
Hillman (the "HLH Trust") and 12,500 shares subject to options which
were granted to Richard M. Johnston, an officer of The Hillman Company.
Pursuant to an agreement with The Hillman Company, if Mr. Johnston
exercises these options, he does so on behalf of The Hillman Company or
a wholly owned subsidiary thereof. The Trustees of the HLH Trust are
Henry L. Hillman, Elsie Hilliard Hillman and C.G. Grefenstette (the
"HLH Trustees"). The HLH Trustees share voting and investment power
with respect to the shares of record held by the HLH Trust. Does not
include an aggregate of 582,112 shares held by four trusts for the
benefit of members of the Hillman family (see note 7 below) or 236,574
shares owned by Venhill Limited Partnership (see note 8 below), as to
which shares the HLH Trustees (other than Mr. Grefenstette with respect
to the shares described in note 7 below) disclaim beneficial interest.
(7) Includes 145,528 shares held by each of four irrevocable trusts for the
benefit of members of the Hillman family (the "Hillman Family Trusts").
Mr. Grefenstette and Thomas G. Bigley are trustees of these four trusts
and share voting and dispositive power over the trusts' assets.
(8) Consists of 236,574 shares held by Venhill Limited Partnership. Howard
B. Hillman is the general partner of Venhill Limited Partnership and is
a step-brother of Henry L. Hillman.
(9) Pursuant to a Schedule 13D, dated October 22, 1997, which was jointly
filed with the Securities and Exchange Commission by Tudor Investment
Corporation ("TIC"), Paul Tudor Jones, II ("Jones"), The Raptor Global
Fund Ltd. ("Raptor Ltd."), The Raptor Global Fund L.P. ("Raptor L.P."),
Tudor Arbitrage Partners L.P. ("TAP"), Tudor Global Trading LLC
("TGT"), Tudor BVI Futures, Ltd. ("Tudor BVI"), The Upper Mill Capital
Appreciation Fund Ltd. ("Upper Mill"), and Tudor Proprietary Trading,
L.L.C. ("TPT"). The address of each of TIC, Jones, Raptor L.P., TAP and
TGT is c/o Tudor Investment Corporation, 600 Steamboat Road, Greenwich,
CT 06830. The business address of each of Raptor Ltd., Tudor BVI and
Upper Mill is c/o Curacao International Trust Company N.V., Kaya
Flamboyan 9, Curacao, Netherlands Antilles. The business address of TPT
is The Upper Mill, Kingston Road, Ewell, Surrey KT17 2AF, England.
Jones disclaims beneficial ownership of the shares beneficially owned
by Raptor Ltd. (161,900 shares), Raptor L.P. (58,300 shares), TAP
(34,500 shares), Tudor BVl (206,468 shares), Upper Mill (113,908
shares), TPT (59,624 shares) and TGT as sole general partner of TAP
(34,500 shares).
(10) Includes 494,043 shares held by Advanced Technology Ventures IV, L.P.
("ATV"), for which Mr. Schiller serves as a general partner. Mr.
Schiller disclaims beneficial ownership of such shares, except to the
extent of his proportionate interest in ATV.
5
<PAGE>
(11) Includes 14,250 shares held by Dr. Weldon's spouse but excludes all
shares held by Dr. Weldon's adult children, none of whom reside with
Dr. Weldon.
(12) Does not include shares held by the HLH Trust, the Hillman Family
Trusts and Venhill Limited Partnership (collectively, the "Hillman
Related Shareholders"), as to which Mr. Johnston disclaims beneficial
ownership. Mr. Johnston is Vice President -- Investments and a Director
of The Hillman Company, a private firm engaged in diversified
investments and operations which is controlled by the HLH Trust. Also
does not include 15,000 shares subject to options, which were granted
to Mr. Johnston but to which he disclaims beneficial ownership.
Pursuant to an agreement with The Hillman Company, if Mr. Johnston
exercises these options, he does so on behalf of The Hillman Company or
a wholly owned subsidiary thereof. See note 6 above.
(13) See notes 1, 2, 3 and 11 above. Does not include 494,043 shares
held by ATV described in note 10 above. Does not include options to
purchase 15,000 shares described in note 12 above. Includes 200 shares
and options to purchase 118,200 shares held by an executive officer not
named in the Summary Compensation Table under "Executive Compensation"
on page 10 of this Proxy Statement.
ELECTION OF DIRECTORS
On May 28, 1996, the Company filed Restated Articles of Incorporation with
the Florida Department of State, which provide for the Board of Directors to be
divided into three classes of directors (Classes I, II and III), with the
initial term of (i) Class I Directors to expire at the 1997 Annual Meeting of
Shareholders (the "1997 Annual Meeting"), (ii) Class II Directors to expire at
this Meeting and (iii) Class III Directors to expire at the 1999 Annual Meeting
of Shareholders. At each Annual Meeting of Shareholders, the successors to
directors of a class whose term shall then expire shall be elected to serve from
the time of election and qualification until the third Annual Meeting following
election and until a successor has been duly elected and qualified. Directors
whose terms expire are eligible for renomination. At the 1997 Annual Meeting,
the Class I Directors were reelected to serve until the 2000 Annual Meeting of
Shareholders.
The Restated Articles of Incorporation also provides that the number of
directors will be fixed from time to time exclusively by the Board of Directors,
but shall consist of not more than 12 nor less than 6 directors with no class of
directors consisting of more than 4 nor less than 2 directors. A vacancy on the
Board may be filled by vote of a majority of the Board of Directors then in
office.
On February 27, 1998, the Board of Directors reduced the number of Class II
Directors to two (2) effective with this Meeting. The two (2) Class II Directors
to be elected will hold office until the 2001 Annual Meeting of Shareholders and
until their successors are duly elected and qualified. One of the nominees,
Pieter J. Schiller, is currently a Class II Director. The other nominee, William
A. Hawkins, has never been a director of the Company. Jack R. Kelly, Jr., who
was serving as a Class II Director, resigned effective February 28, 1998.
Richard M. Johnston, who is currently serving as a Class II Director, is not
standing for re-election.
Unless otherwise specifically directed by shareholders executing proxies,
it is intended that all proxies in the accompanying form received in time for
the Annual Meeting will be voted at the Annual Meeting FOR the election of the
two (2) nominees named below, one of whom is currently a director of the
Company. In the event any nominee should become unavailable for election for any
presently unforeseen reason, it is intended that the proxies will be voted for
such substitute nominee as may be designated by the present Board of Directors.
If a quorum is present, a plurality vote of the total votes cast by the holders
of Common Stock is required to elect the two (2) Class II Directors.
6
<PAGE>
Each nominee's name, age, the year first elected as a director, office with
the Company, and certain biographical information are set forth below:
Year First
Name Age Served as a Director Position
---- --- -------------------- --------
Pieter J. Schiller 59 1996 Director
William A. Hawkins 44 __ Director
CLASS II
DIRECTORS NOMINATED FOR TERMS EXPIRING IN 2001
PIETER J. SCHILLER. Mr. Schiller has served as a Director of the Company
since March 1996. Mr. Schiller has served as a Director of CollaGenex
Pharmaceuticals, Inc. since September 1995. Since 1987, Mr. Schiller has been a
general partner of a principal shareholder of the Company, ATV, a venture
capital firm located in Waltham, Massachusetts, where he specializes in health
care investing. Mr. Schiller served Allied Signal and its predecessor companies
from 1961 through 1986 in various capacities, including Treasurer and
Vice-President, Planning and Development. From 1983 to 1986, he served as
Executive Vice-President of Allied Health and Scientific Products Company, a
multi-national manufacturer of biomedical and analytical instruments and
supplies. Mr. Schiller received his M.B.A. from New York University and a B.A.
in Economics from Middlebury College.
WILLIAM A. HAWKINS. Mr. Hawkins has been a Corporate Vice President of
American Home Products Corporation and President of its Sherwood Davis & Geck
division since April 1997. He is currently a Board member of the Health Industry
Manufacturers Association (HIMA), and he is also a director of Cardiovascular
Diagnostics, a Nasdaq-listed company, since January 1995. From October 1995
until April 1997, Mr. Hawkins was President of Ethicon Endo-Surgery, Inc., a
medical device subsidiary of Johnson & Johnson. From January 1995 to October
1995, Mr. Hawkins served as Vice President in charge of U.S. operations of
Guidant Corporation and President of Devices for Vascular Intervention, a
medical device company and a subsidiary of Guidant. Prior to joining Guidant,
Mr. Hawkins held several positions with IVAC Corporation, most recently serving
as President and Chief Executive Officer from 1991 until 1995. Mr. Hawkins holds
a B.S. in Engineering and Biomedical Engineering from Duke University and a
M.B.A. from the University of Virginia.
CLASS III
DIRECTORS WHOSE TERMS EXPIRE IN 1999
NORMAN R. WELDON, PH.D. Dr. Weldon, age 63, co-founded the Company and has
been Chairman of the Board since its capitalization in May 1992. Dr. Weldon is
Treasurer and Managing Director of Partisan Management Group, a venture capital
fund he co-founded in 1993. From 1986 until May 1996, Dr. Weldon served as
President and Chief Executive Officer and as a Director of Corvita Corporation,
a medical device company Dr. Weldon co-founded in 1986. In July 1996 Pfizer Inc.
consummated its acquisition of Corvita. From 1979 to 1987, Dr. Weldon served as
President and Chief Executive Officer of Cordis Corporation. From 1964 to 1979,
Dr. Weldon served CTS Corporation in various capacities, including as its
President and Chief Executive Officer beginning in 1976. Dr. Weldon received,
from Purdue University, a Ph.D. in Economics, a M.S. in Industrial Management
and a B.S. in Biochemistry.
THOMAS D. WELDON. Mr. Weldon, age 42, co-founded the Company and has served
as its President and Chief Executive Officer and as a Director since its
capitalization in May 1992. Mr. Weldon co-founded and
7
<PAGE>
was President, Chief Executive Officer and a Director of Novoste Puerto Rico
Inc. ("Novoste Puerto Rico"), a manufacturer of disposable cardiovascular
medical devices, from 1987 to May 1992, prior to its sale. Previous
responsibilities included management positions at Arthur Young & Company and Key
Pharmaceuticals. Mr. Weldon received a B.S. in Industrial Engineering from
Purdue University and an M.B.A. in Operations and Systems Management from
Indiana University.
CHARLES E. LARSEN. Mr. Larsen, age 46, co-founded the Company and has
served as its Senior Vice President and as a Director since its capitalization
in May 1992. Since February 28, 1997, Mr. Larsen has been Chief Technical
Officer of the Company, having served from May 1992 through February 1997 as its
Chief Operating Officer. Mr. Larsen co-founded and was Vice President and
Director of Novoste Puerto Rico from 1987 to May 1992. From 1983 through 1987,
Mr. Larsen was a manager of manufacturing engineering at Cordis Corporation. Mr.
Larsen received a B.S. in Mechanical Engineering from New Jersey Institute of
Technology.
CLASS I
DIRECTORS WHOSE TERMS EXPIRE IN 2000
J. STEPHEN HOLMES. Mr. Holmes, age 54, has served as a Director of the
Company since October 1992. He recently became President of Weck Closure Systems
in February, 1998. Previously, Mr. Holmes was Executive Manager of Saber
Endoscopy, LLC, a medical device company he formed in February 1996. From 1992
through 1995, Mr. Holmes was a private investor, having founded several
start-ups from 1979 through 1991, including Adler Instrument Company, Inc.,
SOLOS Ophthalmology, Inc. and SOLOS Endoscopy, Inc., which he founded in 1982,
1988 and 1990, respectively, and in which he sold his interests in 1988, 1991
and 1991, respectively. From 1970 through 1979, Mr. Holmes served in various
marketing and sales positions with Baxter/American Hospital Supply. Mr. Holmes
received a B.S. in Marketing from the University of Evansville.
WILLIAM E. WHITMER. Mr. Whitmer, age 65, has served as a Director of the
Company since October 1992. Mr. Whitmer is a certified public accountant and
management consultant. From 1989 until his retirement in 1992, he was a partner
of Ernst & Young, having served as the Associate Managing Director of that
firm's southern U.S. management consulting group. From 1968 through 1989, Mr.
Whitmer was a partner of Arthur Young & Company, having served as the Managing
Partner of its East and Southeast U.S. regions of the management consulting
practice from 1975 through 1989. Mr. Whitmer received a B.A. in Economics from
Denison University.
STEPHEN I. SHAPIRO. Mr. Shapiro, age 53, has served as a Director of the
Company since October 1996. Mr. Shapiro previously served as a Director of the
Company from August 1995 until his resignation in March 1996. Since 1982, he has
been a Managing Principal of The Wilkerson Group (International Business
Machines Corporation), a management consulting group with clients in the health
care industry. From 1970 to 1982, Mr. Shapiro held a variety of technical
management and strategic planning positions with Union Carbide Clinical
Diagnostics and Becton Dickinson and Company. Mr. Shapiro received a B.S. degree
in Chemical Engineering from the Massachusetts Institute of Technology and a
M.S. degree in Chemical Engineering from the University of California at
Berkeley.
-----------------
8
<PAGE>
Dr. Norman R. Weldon is the father of Mr. Thomas D. Weldon. Because of
their managerial positions and stock ownership in the Company, and their
activities relating to the organization of the Company, Dr. Weldon and Messrs.
Weldon and Larsen may be deemed "promoters" as that term is defined in the
Securities Act of 1933, as amended (the "Securities Act").
MEETINGS AND COMMITTEES
During 1997 there were seven meetings of the Board of Directors. No
director attended fewer than 75% of the aggregate number of meetings of the
Board held during the period in 1997 in which he was a director and the total
number of meetings held by all committees of the Board in which he served in
1997 during the period he served on such committees. The Board did not take any
actions in 1997 by unanimous written consent without a meeting.
The Audit Committee (the "Audit Committee"), which was formed and became
effective on March 29, 1996, during 1997 consisted of William E. Whitmer,
Chairman, Richard M. Johnston and Pieter J. Schiller (Pieter J. Schiller is
standing for re-election at this Annual Meeting as a director, and Richard M.
Johnston is not standing for re-election). The Audit Committee reviews the audit
and financial procedures of the Company and recommends any changes with respect
thereto to the Board of Directors. The Audit Committee met three times during
1997. The Audit Committee did not take any actions in 1997 by unanimous written
consent without a meeting.
The Stock Option and Compensation Committee (the "Committee"), which was
formed and became effective on March 29, 1996, during 1997 consisted of Richard
M. Johnston, Chairman, J. Stephen Holmes and Jack R. Kelly, Jr. (Jack R. Kelly,
Jr. is no longer a director and Richard M. Johnston is not standing for
re-election as a director at this Annual Meeting). The Committee establishes
compensation policies and determines compensation for the executive officers of
the Company, as well as administers the Plan. The Committee met six times during
1997. The Committee did not take any actions in 1997 by unanimous written
consent without a meeting.
The Company does not have a standing nominating committee.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or
accrued by the Company during 1995, 1996 and 1997 to (i) the Company's Chief
Executive Officer and (ii) the four other most highly compensated executive
officers who were serving as executive officers at the end of 1997 and whose
compensation during 1997 exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ------------
COMMON STOCK
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Weldon.......1997 $182,500 $19,600 - - $1,460 (1)
President and CEO 1996 $142,500 $13,600 - - -
1995 $102,813 - - - -
Charles E. Larsen......1997 $163,750 $19,600 - - $2,100 (1)
Chief Technical 1996 $130,000 $13,600 - - -
Officer 1995 $96,823 - - - -
David N. Gill..........1997 $160,000 $28,200 - 35,000 (2) $2,250 (1)
Chief Operating 1996 $67,464 $13,600 $25,000 (4) 65,000 -
Officer and Chief 1995 - - - - -
Financial Officer
Thomas K. Brooks.......1997 $135,000 $16,300 - - $1,980 (1)
VP-Sales and Marketing 1996 $115,000 $13,600 - - -
1995 $65,708 $80,000(3) $15,000 (4) 120,000 -
Joan M. Macdonald......1997 $117,500 $13,800 - - $1,600 (1)
VP-Regulatory and 1996 $92,500 $12,224 - 30,000 -
Clinical Affairs 1995 $67,100 - - 22,100 -
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of employer contributions to the Defined Contribution 401(k)
Plan.
(2) See Option Grant Table below for the exercise price and vesting terms of
Mr. Gill's option.
(3) $60,000 of which consists of the issuance of 16,000 shares of Common
Stock on March 24, 1995 and 2,750 shares of Common Stock on February 12,
1996, based on the $3.20 per share fair market value of the Common Stock
on March 24, 1995, the date of grant of the sign-on bonus.
(4) Consists of reimbursement of moving expenses.
10
<PAGE>
OPTION GRANT TABLE
The following table sets forth certain information concerning options
granted in 1997 to David N. Gill, the only individual named in the Summary
Compensation Table who was granted options in 1997:
<TABLE>
<CAPTION>
OPTION GRANT IN 1997
- -----------------------------------------------------------------------------------------------------------------------
NAME POTENTIAL REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR OPTION
SECURITIES GRANTED TO TERM (1)
UNDERLYING EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------------
OPTIONS GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David N. Gill........... 35,000 (2) 24.0% (3) $16.625 6/20/2007 $365,938 $927,359
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming the specified compounded rates of appreciation of
the Common Stock over the term of the options. These numbers are calculated
based on rules promulgated by the Securities and Exchange Commission.
Actual gains, if any, in option exercises are dependent on the time of such
exercise and the future performance of the Common Stock.
(2) Consists of ten-year option to purchase 35,000 shares granted under the
Plan, exercisable cumulatively at the annual rate of one quarter of the
number of underlying shares, commencing one year from the date of grant.
(3) Option Grant Table does not include options to purchase 30,000 shares,
25,000 shares and 25,000 shares, which options were granted by the
Committee on February 27, 1998 to David N. Gill, Thomas K. Brooks and Joan
M. Macdonald, respectively.
OPTION EXERCISES AND VALUE TABLE
The following table sets forth certain information concerning the number
of options exercised during 1997, and the number of unexercised options held as
at December 31, 1997, by the individuals named in the Summary Compensation
Table.
AGGREGATED OPTION EXERCISES IN 1997 AND OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER OF UNEXERCISED OPTIONS VALUE OF
AT DECEMBER 31, 1997 UNEXERCISED
----------------------------- IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1997 (1)
SHARES ------------------------
ACQUIRED ON
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Weldon..... 1,000 $25,000 388,375 -- $8,641,344 --
Charles E. Larsen.... -- -- 391,875 -- $8,719,219 --
David N. Gill........ -- -- 16,250 83,750 $207,188 $827,188
Thomas K. Brooks..... -- -- 5,000 10,000 $96,500 $193,000
Joan M. Macdonald.... 5,000 $74,625 53,550 33,550 $952,515 $404,515
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the closing sale price of the Common Stock as of December 31,
1997 ($22.50 per share) minus the applicable exercise price.
--------------------
11
<PAGE>
Each of the individuals named in the Summary Compensation Table is
employed at will, but is subject to an agreement containing certain
non-competition and confidentiality provisions.
COMPENSATION OF DIRECTORS
Directors who are not full-time employees of the Company are reimbursed
their expenses and receive a fee of $1,000 per Board meeting attended. Directors
who are not full-time employees also receive an annual retainer of $5,000 paid
quarterly (except Norman R. Weldon who, as Chairman of the Board of Directors,
receives $20,000 per year as Chairman).
On August 20, 1996, the Committee granted to the Class I, II and III
members of the Board of Directors of the Company who are Non-Employee Directors
(J. Stephen Holmes, William E. Whitmer, Richard M. Johnston, Pieter J. Schiller,
Jack R. Kelly, Jr. and Norman R. Weldon) options under the Company's
Non-Employee Director Stock Option Plan (the "Director Plan") to purchase 7,500
shares at an exercise price of $8.00 per share (the fair market value of Common
Stock on the date of grant), which options are for a term of five years from the
date of grant and exercisable as follows: (a) options to purchase 2,500 shares
on the earlier of (i) the date of the 1997 Annual Meeting or (ii) March 31,
1997, (b) options to purchase an additional 2,500 shares on the earlier of (i)
the date of this Meeting or (ii) March 31, 1998 and (c) options to purchase the
remaining 2,500 shares on the earlier of (i) the date of the 1999 Annual Meeting
or (ii) March 31, 1999; provided, however, that no options to purchase shares
shall become exercisable by any of the foregoing directors after the date of (a)
his death or (b) the voluntary or involuntary termination of his directorship,
including without limitation, due to his failure to be reelected as a director
at an Annual Meeting. On October 25, 1996, following his election to the Board,
Stephen I. Shapiro was granted an option under the Director Plan to purchase
7,500 shares with the same terms as the options granted to the other
Non-Employee Directors, except the exercise price, which is $12.25 per share
(the fair market value of Common Stock on the date of grant).
12
<PAGE>
REPORT OF STOCK OPTION AND COMPENSATION COMMITTEE OF
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
THE FOLLOWING IS PROVIDED TO SHAREHOLDERS BY THE MEMBERS OF THE STOCK
OPTION AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
The Committee, comprised of three Non-Employee Directors, is responsible
for the administration of the Company's compensation programs. These programs
include base salary for executive officers and both annual and long-term
incentive compensation programs. The Company's compensation programs are
designed to provide a competitive level of total compensation and include
incentive and equity ownership opportunities linked to the Company's performance
and shareholder return.
COMPENSATION PHILOSOPHY
The primary goal of the Company is to align compensation with the
Company's business objectives and performance. The Company's aim is to attract,
retain and reward executive officers and other key employees who contribute to
the long-term shareholder value. To establish the relationship between executive
compensation and the creation of shareholder value, the Committee has adopted a
total compensation package comprised of base salary, bonus and stock option
awards. Key elements of the compensation package are:
-- The Company pays competitively relative to leading medical device
companies with which the Company competes for talent.
-- The Company maintains annual incentive opportunities sufficient 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 individuals are
motivated over the long term to respond to the Company's business
challenges and opportunities as owners and not just as employees.
COMPENSATION PROGRAM
The Company's executive compensation program has three major components,
all of which are intended to attract, retain and motivate executive officers
consistent with the philosophy set forth above. The Committee considers these
components of compensation individually, as well as collectively, in determining
total compensation for executive officers.
1. Base salary. Each year the committee establishes base salaries for
individual executive officers based upon (i) industry and peer group surveys,
(ii) responsibilities, scope and complexity of each position, and (iii)
performance judgments as to each individual's past and expected future
contributions. The Committee reviews with the Chief Executive Officer and
approves, with appropriate modifications, an annual base salary plan for the
Company's executive officers other than the Chief Executive Officer. The
Committee reviews and fixes the base salary of the Chief Executive Officer based
on similar competitive compensation data and the Committee's assessment of his
past performance and its expectations as to his future contributions in leading
the Company.
13
<PAGE>
2. Annual cash (short-term) incentives. The Company has a discretionary,
annual cash incentive plan to provide a direct linkage between individual pay
and accomplishing key annual corporate objectives. Target annual bonus awards
are established for executive officers and other management employees based upon
peer group surveys and range from 11% to 22% of base salary. Each officer who
served in an executive capacity during and at the end of 1997, including the
Chief Executive Officer, received a bonus for such service ranging in amount
from approximately 11% to approximately 18% of base salary. In establishing the
bonus amounts for 1997, the Committee considered the attainment of certain key
overall corporate goals and objectives, focusing particularly on the Company's
product development and clinical trial progress during the year. The Committee
also considered the performance of each officer in his or her respective areas
of accountability and each officer's respective contribution to the success of
the Company. Each officer establishes operating objectives for his or her
functional area of responsibility at the beginning of the year. At the end of
the year each officer is rated on the attainment of those objectives. A major
portion of each officer's annual performance bonus is based on attainment of the
overall corporate goals and objectives, which are also determined at the
beginning of the year. Each officer may receive a portion or the full amount of
their targeted annual performance-based bonus. The bonus award to the Chief
Executive Officer for 1997 was approximately 11% of his base salary.
3. Equity-based incentive compensation. The Company's primary long-term
incentive program consists of its stock option plan. The stock option plan
utilizes a four-year vesting period to encourage key executives to continue in
the employ of the Company. Through option grants executives receive significant
equity incentives to build long-term shareholder value. The exercise price of
options granted under the stock option plan is 100% of the fair market value of
the underlying stock on the date of grant. Employees receive value from these
grants only if the Common Stock appreciates over the long term.
In 1997 the Committee granted stock options to one of the Company's
executive officers. The grant of options was made in connection with his
promotion. The Committee elected not to grant options to the Chief Executive
Officer and to the other four executive officers during 1997 because of the
number of stock options previously issued to such officers and their related
vesting schedules, and the value of the founders' stock issued to certain
executive officers. In reaching its decisions the Committee relied on its
experience, the information gained in the hiring process for such officers, and
the value of the officers' previously issued stock options.
14
<PAGE>
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code, as amended (the "Code") adopted under the Federal Revenue
Reconciliation Act of 1993. Section 162(m) disallows a deduction for any
publicly-held corporation for individual compensation exceeding $1 million in
any taxable year for any of the named executive officers, unless compensation is
performance-based. Since the targeted cash compensation of each of the named
executive officers is well below the $1 million threshold and the Committee
believes that any options granted under the Company's stock option plan will
meet the requirements of being performance-based under the transitional
provisions provided in the regulations under Section 162(m), the Committee
believes that Section 162(m) will not reduce the tax deduction available to the
Company. The Company's policy is to qualify to the extent reasonable its
executive officers' compensation for deductibility under applicable tax laws.
Dated: February 26, 1998
Respectfully submitted,
The Stock Option and Compensation Committee
Richard M. Johnston, Chairman
J. Stephen Holmes
Jack R. Kelly, Jr.
THE FOREGOING REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE SHALL
NOT BE DEEMED TO BE "SOLICITING MATERIAL" OR TO BE "FILED" WITH THE SECURITIES
AND EXCHANGE COMMISSION, NOR SHALL SUCH INFORMATION BE INCORPORATED BY REFERENCE
INTO ANY FUTURE FILING UNDER THE SECURITIES ACT OR THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES
IT BY REFERENCE INTO SUCH FILING.
15
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
returns for the Company's Common Stock, the Nasdaq Stock Market index for U.S.
companies, and the Hambrecht & Quist Health Care-Excluding Biotechnology Index.
The graph assumes the investment of $100 on May 23, 1996, the date of the
Company's initial public offering. The performance shown is not necessarily
indicative of future performance.
COMPARISON OF 19 MONTH CUMULATIVE TOTAL RETURN
AMONG NOVOSTE CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX AND
THE HAMBRECHT & QUIST HEALTHCARE EXCLUDING BIOTECHNOLOGY INDEX
[GRAPH]
16
<PAGE>
SECTION 16 PROXY STATEMENT DISCLOSURE
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that officers, directors and holders of more than 10%
of the Common Stock (collectively, "Reporting Persons") file reports of their
trading in Company equity securities with the Securities and Exchange
Commission. Based on a review of Section 16 forms filed by the Reporting Persons
during the last fiscal year, the Company believes that the Reporting Persons
complied with all applicable Section 16 filing requirements.
APPROVAL OF AMENDMENTS TO AMENDED AND RESTATED STOCK OPTION PLAN
GENERAL
In June 1997, the Company amended and restated its Plan under which an
aggregate of 2,700,000 shares of Common Stock were reserved for issuance upon
exercise of options granted thereunder. On February 27, 1998, the Committee
adopted, subject to shareholder approval, the Plan Amendments.
The purpose of the Plan is to provide incentives for selected employees,
officers, consultants and independent contractors of the Company to promote the
financial success and progress of the Company by granting such persons options
to purchase shares of Common Stock of the Company.
As of the Record Date, and without giving effect to the Plan Amendment
described below to increase the number of shares reserved for issuance under the
Plan by 700,000 shares, options to purchase an aggregate of 1,772,138 shares of
Common Stock had been granted and are currently outstanding under the Plan. Of
the outstanding options to purchase 1,772,138 shares, currently outstanding
options to purchase 911,950 of such shares were granted prior to January 1, 1993
in connection with the Company's organization. As of the Record Date, and
without giving effect to the Plan Amendment described below to increase by
700,000 shares the number of reserved shares, a balance of 53,100 shares are
reserved for issuance under the Plan for options subsequently granted
thereunder.
As of March 30, 1998, the most recent practical date prior to the printing
of this Proxy Statement, the closing sale price of the Common Stock, as reported
by The Nasdaq National Market, was $26.00 per share.
PROPOSED AMENDMENTS
The Plan Amendments provide for the following:
a. the increase in the number of shares of Common Stock reserved for issuance
thereunder by 700,000 shares to 3,400,000 shares;
b. the increase in the maximum number of shares from 100,000 to 350,000
with respect to options that may be granted to any person or entity
eligible within any one calendar year; and
c. the Committee's determination as of the date of grant of the acceleration,
if any, of the exercisability of performance-based options upon a "Change
of Control" (as defined by the Plan) of the Company.
17
<PAGE>
EXPLANATION OF AMENDMENTS
a. Increase in the Number of Shares of Common Stock Reserved
for Issuance Thereunder by 700,000 Shares to 3,400,000 Shares.
--------------------------------------------------------------
Presently, the Plan provides for a total of 2,700,000 shares of Common
Stock to be issued upon the exercise of incentive stock options (each an "ISO")
and stock options not so qualified (each a "NQSO") that may be granted from time
to time to persons eligible to receive such options pursuant to the Plan. As
noted above, as of the Record Date, only an aggregate of 53,100 shares remain
reserved for issuance under the Plan for ISOs and NQSOs subsequently granted
thereunder.
To ensure that the number of shares reserved under the Plan is adequate to
attract and retain qualified personnel, the Board believes it is necessary that
further shares of Common Stock be reserved for issuance under the Plan. The
Board believes that an additional 700,000 shares of Common Stock should be
sufficient for this purpose for approximately 24 months.
b. Increase in the Maximum Number of Shares from 100,000 to 350,000 with
Respect to Options that may be Granted to any Person or Entity Eligible
within any one Calendar Year.
---------------------------------------------------------------------------
Presently, the Plan provides that the maximum aggregate number of shares of
Common Stock with respect to which options, whether ISOs or NQSOs, that may be
granted to any person or entity eligible under the Plan within any one calendar
year is 100,000 Shares.
Under the proposed Plan Amendment, the maximum aggregate number of shares
of Common Stock with respect to which options, whether ISOs or NQSOs, that may
be granted to any person or entity eligible under the Plan within any one
calendar year is increased to 350,000 shares.
The Board believes that such increase in the amount of options that can be
granted to any person within any calendar year will provide the Company with
greater flexibility in attracting and retaining qualified senior management.
c. Committee's Determination as of the Date of Grant of the Acceleration, if
any, of the Exercisability of Performance-Based Options upon a "Change of
Control" (as defined by the Plan) of the Company.
---------------------------------------------------------------------------
Presently, in the event of a "Change of Control" of the Company, all
outstanding options shall accelerate and become immediately fully exercisable.
For purposes of the Plan, a "Change of Control" means (i) the sale or other
disposition to a person, entity or group (as such term is defined in Rule 13d-5
under the Exchange Act) of 50% or more of the Company's consolidated assets,
(ii) the acquisition of 50% or more of the outstanding shares by a person or
group (as such term is defined in Rule 13d-5) or (iii) if the majority of the
Company's Board of Directors consists of persons other than "Continuing
Directors." The term "Continuing Director" means any member of the Company's
Board of Directors on the effective date of the Plan and any other member of the
Board of Directors who shall be recommended or elected to succeed or become a
Continuing Director by a majority of the Continuing Directors who are then
members of the Board of Directors.
Under the proposed Plan Amendment, the Committee shall have discretion to
determine as of the date of grant the extent, if at all, that options with
performance milestones relating to their exercisability shall accelerate and
become exercisable upon a Change of Control of the Company.
18
<PAGE>
THE SHAREHOLDERS OF THE COMPANY ARE BEING REQUESTED TO CONSIDER AND VOTE
FOR APPROVAL OF THE ABOVE-DESCRIBED AMENDMENTS TO THE PLAN.
SUMMARY OF THE PLAN
The essential features of the Plan are outlined below.
ADMINISTRATION OF THE PLAN
The Committee, which may be composed only of two or more "Non-Employee
Directors" as defined by Regulation 240.16b-3 under the Exchange Act,
administers the Plan.
ELIGIBILITY
ISOs may be granted to employees (including officers) of the Company or any
Parent or Subsidiary thereof and NQSOs may be granted to employees, officers,
consultants and independent contractors of the Company or any Parent, Subsidiary
or Affiliate thereof as the Committee determines will assist the Company's
endeavors.
GRANT OF OPTIONS
The Committee selects persons to be granted options (collectively, the
"Optionees" or individually, an "Optionee") and determines (i) whether the
respective option is to be an ISO or a NQSO, (ii) the number of shares of Common
Stock purchasable under the option, (iii) the time or times when the option
becomes exercisable, (iv) the exercise price, which for NQSOs cannot be less
than eighty-five percent (85%) of the fair market value of the Common Stock on
the date of grant (100% of such fair market value for ISOs), and (v) the
duration of the option, which cannot exceed ten years (five years for ISOs
granted to a person who owns or is considered as owning stock possessing more
than 10% of the total voting power of all classes of stock of the Company or any
subsidiary thereof (a "Ten Percent Shareholder").
The exercise price of an option shall be not less than the fair market
value in the case of an ISO, or 85% of the fair market value in the case of a
NQSO, of the shares at the time that the option is granted. For purposes of the
Plan, the "fair market value" of the shares shall be deemed to be, if the shares
are traded on The Nasdaq Stock Market, National Market or on a national
securities exchange, the closing sales price of the shares on The Nasdaq Stock
Market, National Market or such national securities exchange on the business day
immediately preceding the day as of which the determination is being made or on
the next preceding day on which the shares were traded if no shares were traded
on such day.
The aggregate fair market value (determined as of the time an option is
granted) of stock with respect to which ISOs are exercisable for the first time
by an Optionee during any calendar year (under the Plan or under any other
incentive stock option plan of the Company or any Parent or Subsidiary of the
Company) shall not exceed $100,000.
Each option granted under the Plan shall be evidenced by a written stock
option grant (the "Grant") in such form (which need not be the same for each
Optionee) as the Committee shall from time to time approve, which Grant shall
comply with and be subject to the terms and conditions of the Plan. The date of
grant of an option shall be the date on which the Committee makes the
determination to grant such option unless otherwise specified by the Committee.
The Grant representing the option shall be delivered to the Optionee within a
reasonable time after the granting of the option.
19
<PAGE>
At the discretion of the Committee, the Company may reserve to itself or
its assignee(s) in the Grant (a) a right of first refusal to purchase any shares
that an Optionee (or a subsequent transferee) may propose to transfer to a third
party and (b) a right to repurchase any or all shares held by an Optionee upon
the Optionee's termination of employment or service with the Company or a
Parent, Subsidiary or Affiliate of the Company for any reason within a specified
time as determined by the Committee at the time of grant at (i) the Optionee's
original purchase price, (ii) the fair market value of such shares as determined
by the Committee in good faith or (iii) a price determined by a formula or other
provision set forth in the Grant.
EXERCISE OF OPTIONS
Options shall be exercisable within the times or upon the events determined
by the Committee as set forth in the Grant.
Payment for the shares may be made (i) in cash, (ii) by surrender of shares
of Common Stock of the Company having a fair market value equal to the exercise
price of the option, or (iii) by any combination of the foregoing where approved
by the Committee in its sole discretion; provided, however, in the event of
payment of shares of Common Stock by method (ii) above, the shares so
surrendered, if originally issued to the Optionee upon exercise of an Option(s)
granted by the Company, shall have been held by the Optionee for more than six
months.
Notwithstanding the exercise periods set forth in the Grant, exercise of an
option shall always be subject to the following limitations: (i) an option shall
not be exercisable unless such exercise is in compliance with the Securities Act
and all applicable state securities laws, as they are in effect on the date of
exercise and (ii) the Committee may specify a reasonable minimum number of
shares that may be purchased on any exercise of an option, provided that such
minimum number will not prevent the Optionee from exercising the option for the
full number of shares as to which the option is then exercisable.
Prior to the issuance of shares upon the exercise of an option, the
Optionee is required to pay or make adequate provision for payment of any
federal, state or local withholding tax obligations of the Company, in the
manner determined in the sole discretion of the Committee. No Optionee shall
have any of the rights of a shareholder of the Company with respect to any
shares subject to an option until the option has been validly exercised.
ABILITY TO EXERCISE AN INCENTIVE STOCK OPTIONS
During the lifetime of the Optionee, an ISO shall be exercisable only by
the Optionee.
TERMINATION OR LAPSE OF OPTIONS
An option shall lapse immediately following the Optionee's termination of
employment or association with the Company for any reason, except that should an
Optionee die, the time during which the option may be exercised shall be
extended three months for an Optionee that held an ISO and six months for an
Optionee that held a NQSO. Options exercisable following termination of
employment or association with the Company may be exercised only to the extent
the option was exercisable as at the date of termination, but in no event
subsequent to the option's expiration date.
Except for an Optionee's death discussed above, in a particular Grant to an
Optionee the Committee may, in its sole discretion, extend the time during which
an ISO may be exercised for up to three months after the Optionee's termination
and, as to a NQSO, for up to six months after the Optionee's termination.
20
<PAGE>
OPTION ADJUSTMENTS
The Plan contains a customary anti-dilution provision that provides that in
the event of any change in number of the Company's outstanding Common Stock by
reason of a stock dividend, stock split, reverse stock split, combination,
reclassification or similar change in the capital structure of the Company
without consideration, the number of shares of the Common Stock available under
the Plan and the number of shares subject to outstanding options and exercise
price per share of such options shall be proportionately adjusted, subject to
any required action by the Board or shareholders of the Company and compliance
with applicable securities laws. No certificate or scrip representing fractional
shares shall be issued upon the exercise of any option and any resulting
fractions of a share shall be ignored.
AMENDMENTS TO THE PLAN
The Committee may at any time terminate or amend the Plan in any respect
(including, but not limited to, any form of grant, agreement or instrument to be
executed pursuant to the Plan); provided, however, that shareholder approval
shall be required to be obtained by the Company if required to comply with the
listed company requirements of The Nasdaq National Market or of a national
securities exchange on which the shares of Common Stock are traded, or other
applicable provisions of state or federal law or self-regulatory agencies;
provided, further, that no amendment of the Plan may adversely affect any then
outstanding options or any unexercised portions thereof without the written
consent of the Optionee.
TRANSFERABILITY OF OPTIONS
No ISO may be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order.
A NQSO may be sold, pledged, assigned, hypothecated, transferred or
disposed of as determined by the Committee and as set forth in a grant with an
Optionee.
ISSUANCE OF SHARES
The shares of Common Stock, when issued and paid for pursuant to options
granted under the Plan, shall be issued as fully paid and non-assessable shares.
TERMINATION OF THE PLAN
No options may be granted under the Plan subsequent to May 26, 2002, but
options theretofore granted may extend beyond that date and the terms of the
Plan shall continue to apply to such options and to any shares acquired upon
exercise thereof. The Plan may be sooner terminated at the discretion of the
Committee.
21
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS BASED UPON FEDERAL TAX LAWS AND REGULATIONS AS PRESENTLY
IN EFFECT AND DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF THE FEDERAL
INCOME TAX ASPECTS OF THE PLAN. ALSO, THE SPECIFIC STATE TAX CONSEQUENCES TO
EACH PARTICIPANT UNDER THE PLAN MAY VARY, DEPENDING UPON THE LAWS OF THE VARIOUS
STATES AND THE INDIVIDUAL CIRCUMSTANCES OF EACH PARTICIPANT.
INCENTIVE STOCK OPTIONS
No taxable income is recognized by the Optionee upon the grant of an ISO
under the Plan. Further, no taxable income will be recognized by the Optionee
upon exercise of an ISO granted under the Plan and no business expense deduction
will be available to the Company. Generally, if the Optionee holds shares
acquired upon the exercise of ISOs for at least two (2) years from the date of
grant of the option and for at least one (1) year from the date of exercise, any
gain on a subsequent sale of such shares will be considered as long-term capital
gain. The gain recognized upon the sale of the shares is equal to the excess of
the selling price of the shares over the exercise price. Therefore, the net
federal income tax effect on the holders of ISOs is to defer, until the shares
are sold, taxation of any increase in the value of the shares from the date of
grant and to treat such gain, at the time of sale, as capital gain rather than
ordinary income.
However, in general, if the Optionee sells the shares prior to expiration
of either the two-year or one-year period, referred to as a "disqualifying
disposition," the Optionee will recognize taxable income at ordinary tax rates
in an amount equal to the lesser of (i) the value of the shares on the date of
exercise, less the exercise price; or (ii) the amount realized on the date of
sale, less the exercise price, and the Company will receive a corresponding
business expense deduction. The balance of the gain recognized on the
disqualifying disposition will be long-term or short-term capital gain depending
upon the holding period of the optioned shares. The two-year and one-year
holding period rules do not apply to optioned shares which are disposed of by
the Optionee's estate or a person who acquired such shares by reason of the
death of the Optionee.
Under Section 162(m) of the Code, certain compensation payments in excess
of $1 million are subject to a limitation on deductibility for the Company. The
limitation on deductibility applies with respect to that portion of a
compensation payment for a taxable year in excess of $1 million to either the
Company's Chief Executive Officer or any one of the Company's other four (4)
most highly compensated executive officers. Certain performance-based
compensation is not subject to the limitation on deductibility. Options can
qualify for this performance-based exception, but only if they are granted at
fair market value, the total number of shares that can be granted to an
executive for a specified period is stated in the Plan, and shareholder and
Board approval of the Plan is obtained. The Plan has been drafted to allow
compliance with those performance-based criteria that relate to ISOs.
If shares of Common Stock are used in payment of the exercise price of an
ISO, the following rules apply:
(i) If the exercise price under an ISO is paid by delivery of shares
of Common Stock previously acquired upon exercise of an earlier granted
ISO, if such delivery constitutes a "disqualifying disposition" of the
delivered shares because such shares of Common Stock had not been held long
enough to satisfy the requisite two-year and one-year holding periods
applicable to ISOs, such disqualifying disposition will render the Optionee
subject to ordinary taxation as discussed above on the delivered shares. To
the extent the number of newly acquired shares equals the number of
delivered shares as to which there was a disqualifying disposition, the
basis for such newly acquired shares will
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<PAGE>
be equal to the fair market value of the delivered shares at the time they
were delivered, and the holding period for these newly acquired shares
will, except for disqualifying disposition purposes, include the period for
which the delivered shares were held; and to the extent the number of newly
acquired shares exceeds the number of delivered shares, such additional
shares will have a zero basis and a holding period measured from the date
of exercise of the option; and
(ii) If an ISO is exercised with (i) shares of Common Stock acquired
upon exercise of an ISO and held for the requisite holding period prior to
delivery, (ii) shares of Common Stock acquired under a NQSO, or (iii)
shares of Common Stock acquired through open-market purchases, then the
Optionee will not recognize any taxable income (other than relating to
alternative minimum tax) with respect to the shares of Common Stock so
delivered. To the extent the purchased shares equal in number the shares of
Common Stock delivered in payment of the exercise price, the newly acquired
shares will have the same basis and holding period as the delivered shares.
The balance of the purchased shares will have a zero basis for tax
purposes, and their holding period will commence on the date these
additional shares are acquired upon exercise by the Optionee.
At the date of this Proxy Statement, long-term capital gain is taxed to
individuals at a maximum preferential rate of 20%, capital gain for shares held
more than one year but less than 18 months is taxable to individuals at a
maximum rate of 28%, and items of ordinary income are currently taxed to
individuals at a maximum rate of 39.6%. There are proposals to increase such
rates.
An employee may be subject to an alternative minimum tax upon exercise of
an ISO since the excess of the fair market value of the optioned stock at the
date of exercise over the exercise price must be included in alternative minimum
taxable income, unless the acquired shares are disposed of in the same year that
the option was exercised.
NON-QUALIFIED STOCK OPTIONS
As in the case of ISOs, the grant of NQSOs will not result in any taxable
income to the Optionee. However, unlike ISOs, generally the Optionee will
recognize ordinary income in the year in which the option is exercised in the
amount by which the fair market value of the purchased shares on the date of
exercise exceeds the exercise price.
The fair market value of the shares on the date income is required to be
recognized will constitute the tax basis thereof for computing gain or loss on
any subsequent sale. Any gain or loss recognized by the Optionee upon the
subsequent disposition of the shares will be treated as capital gain or loss and
will qualify as long-term capital gain or loss if the shares are held for more
than twelve months prior to disposition.
Generally, the Company will be entitled to a business expense deduction
equal to the amount of ordinary income recognized by the Optionee at the date of
exercise. The income recognized by the Optionee will be treated as compensation
income and will be subject to income tax withholding by the Company.
Under Section 162(m) of the Code, certain compensation payments in excess
of $1 million are subject to a limitation on deductibility for the Company. The
limitation on deductibility applies with respect to that portion of a
compensation payment for a taxable year in excess of $1 million to either the
Company's Chief Executive Officer or any one of the Company's other four (4)
most highly compensated executive officers. Certain performance-based
compensation is not subject to the limitation on deductibility. Options can
qualify for this performance-based exception, but only if they are granted at
fair market value, the total number of shares that can be granted to an
executive for a specified period is stated in the Plan, and shareholder and
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<PAGE>
Board approval of the Plan is obtained. The Plan has been drafted to allow
compliance with those performance-based criteria that relate to NQSOs, except
that NQSOs granted with an exercise price less than the fair market value of the
Common Stock on the date of the grant will not meet such performance-based
criteria and, accordingly, the compensation attributable to such options will be
subject to the deductibility limitations contained in Section 162(m) of the
Code.
At the date of this Proxy Statement, long-term capital gain is taxed to
individuals at a maximum preferential rate of 20%, capital gain for shares held
more than one year but less than 18 months is taxable to individuals at a
maximum rate of 28%, and items of ordinary income are currently taxed to
individuals at a maximum rate of 39.6%. There are proposals to increase such
rates.
ACCOUNTING TREATMENT
Under current accounting rules, neither the grant nor the exercise of
options will result in any charge to the Company's earnings, provided the
exercise price of the option is not less than the fair market value of the
Common Stock on the date the option was granted. However, if an option were
granted at an exercise price less than the fair market value of the Common Stock
on the date of grant, then the Company will have a charge to earnings
(compensation expense) at the date of such grant equal to the difference between
the fair market value of the Common Stock on the date of such grant and the
exercise price. In addition, the number of options outstanding may have a
dilutive effect in determining earnings per share.
REQUIRED VOTE
Approval of the amendments to the Plan will require the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote. In
instances of broker non-votes, those shares will not be included in the vote
totals, and therefore will have no effect on the vote for the approval of the
Plan Amendments. Unless marked to the contrary, proxies received will be voted
FOR approval of the Plan Amendments.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL
OF THE PLAN AMENDMENTS.
RATIFICATION OF REAPPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors for the year ending
December 31, 1998.
The ratification of the reappointment of Ernst & Young LLP will require the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy at the Annual Meeting and entitled to vote. In instances
of broker non-votes, those shares will not be included in the vote totals and
therefore will have no effect on the ratification of the reappointment of the
independent auditors.
It is anticipated that a representative of Ernst & Young LLP will be
present at the Annual Meeting to answer appropriate questions within such firm's
field of expertise. Such representative will have the opportunity to make a
statement if he/she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
REAPPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 1998.
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OTHER BUSINESS
Management does not know of any matter to be brought before the Annual
Meeting other than as described above. In the event any other matter properly
comes before the Annual Meeting, the persons named in the accompanying form of
proxy have discretionary authority to vote on such matters.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered for inclusion in the Company's
proxy soliciting material for the next Annual Meeting of Shareholders must be
received by the Company at its principal office by December 31, 1998.
Dated: March 31, 1998
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APPENDIX
1. Copy of Company's Amended and Restated Stock Option Plan, as amended and
restated as of February 27, 1998 (subject to approval by Company's
shareholders of Plan Amendments), with form of Incentive Stock Option
Award.
<PAGE>
NOVOSTE CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
As Amended and Restated as of February 27, 1998
1. PURPOSE. This Stock Option Plan ("Plan") is established to provide
incentives for selected persons to promote the financial success and progress of
Novoste Corporation ("Company") by granting such persons options to purchase
shares of common stock of the Company.
2. DEFINITION OF "NON-EMPLOYEE DIRECTOR". As defined by Regulation
240.16b-3 under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), a "Non-Employee Director" is a person not currently an officer of the
Company or a parent or subsidiary, who does not receive compensation either
directly or indirectly as a consultant of the Company (except for an amount not
required to be disclosed under Item 404(a) of Regulation S-K, e.g., not more
than $60,000), does not have an interest in a transaction requiring disclosure
under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship which would require disclosure under Item 404(b) of Regulation S-K
(e.g., where the director has a ten percent or more equity interest in an entity
which makes or receives payments in excess of five percent of the Company's or
that entity's consolidated gross revenues).
3. ADOPTION OF PLAN; STOCK OPTION AND COMPENSATION COMMITTEE. This Plan
shall be effective on the date that it is adopted by the Stock Option and
Compensation Committee ("Committee") of the Board of Directors of the Company.
The Committee shall at all times be composed only of two or more Non-Employee
Directors. The Committee shall have and may exercise any and all of the powers
relating to the administration of this Plan and the grant of options hereunder
as are set forth herein.
4. ADMINISTRATION.
(a) This Plan shall be administered by the Committee.
(b) The Committee shall have the authority to (i)
exercise all of the powers granted to it under this
Plan, (ii) construe, interpret and implement this
Plan and any Grants (as defined below) executed
pursuant to Section 8 hereof, (iii) prescribe, amend
and rescind rules and regulations relating to this
Plan, (iv) make all determinations necessary or
advisable in administering this Plan and (v) correct
any defect, supply any omission and reconcile any
inconsistency in this Plan.
<PAGE>
(c) The determination of the Committee on all matters
relating to this Plan or any Grant shall be final,
binding and conclusive.
(d) No member of the Committee shall be liable for any
action or determination made in good faith with
respect to this Plan or any award thereunder.
5. TYPES OF OPTIONS AND SHARES. Options granted under this Plan
("Options") may be either (a) incentive stock options ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), or (b) nonqualified stock options ("NQSOs"), as designated at the time
of grant. The shares of stock that may be purchased upon exercise of Options
granted under this Plan ("Shares") are shares of the common stock of the
Company.
6. NUMBER OF SHARES. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan is 3,400,000 Shares. Such number of
Shares shall be subject to adjustment as provided in this Plan. If any Option is
terminated in whole or in part for any reason without being exercised in whole
or in part, the Shares thereby released from such Option shall be available for
purchase under other Options subsequently granted under this Plan. At all times
during the term of this Plan, the Company shall reserve and keep available such
number of Shares as shall be required to satisfy the requirements of outstanding
Options under this Plan.
7. ELIGIBILITY. Options may be granted only to such employees,
officers, consultants and independent contractors of the Company or any Parent,
Subsidiary or Affiliate of the Company (as defined below) as the Committee shall
select from time to time in its sole discretion ("Optionees"), provided that
only employees of the Company or a Parent or Subsidiary of the Company shall be
eligible to receive ISOs. An Optionee may be granted more than one Option under
this Plan. As used in this Plan, the following terms shall have the following
meanings:
(a) "Parent" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if at the time of the
granting of the Option, each of such corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(b) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting
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<PAGE>
power of all classes of stock in one of the other corporations in such chain.
(c) "Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with another corporation, where "control" (including the
terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
8. TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine
whether each Option is to be an ISO or a NQSO, the number of Shares for which
the Option shall be granted, the exercise price of the Option, the periods
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following terms and conditions:
(a) FORM OF OPTION GRANT. Each Option granted under this Plan
shall be evidenced by a written Stock Option Grant ("Grant") in such form (which
need not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
(b) EXERCISE PRICE. The exercise price of an Option shall be
not less than the Fair Market Value (as defined herein) in the case of an ISO,
or 85% of the Fair Market Value in the case of a NQSO, of the Shares at the time
that the Option is granted. The term "Fair Market Value" means the closing sale
price for a Share on the immediately preceding trading date as reported on The
Nasdaq National Market or, if no closing sale price shall have been made on such
relevant date, on the next preceding day on which there was a closing sale
price; provided, however, that if no closing sale price shall have been made
within the ten business days preceding such relevant date, or if deemed
appropriate by the Committee for any other reason, the Fair Market Value of such
Shares shall be as determined by the Committee. In no event shall the Fair
Market Value of any Share be less than its par value.
(c) EXERCISE PERIOD. Options shall be exercisable within the
times or upon the events determined by the Committee as set forth in the Grant;
provided, however, that no Option shall be exercisable after the expiration of
ten years from the date the Option is granted and is subject to earlier
termination in the event of the death or the voluntary or involuntary
termination of the Optionee as set forth herein; provided, further, that no ISO
granted to a Ten Percent Shareholder (as defined by Section 422 of the Code)
shall be exercisable after the expiration of five years from the date the ISO is
granted.
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<PAGE>
(d) LIMITATIONS ON ISOs. The aggregate Fair Market Value
(determined as of the time an Option is granted) of stock with respect to which
ISOs are exercisable for the first time by an Optionee during any calendar year
(under this Plan or under any other incentive stock option plan of the Company
or any Parent or Subsidiary of the Company) shall not exceed $100,000.
(e) LIMITATIONS ON ISOs AND NQSOs. Notwithstanding anything
herein, the maximum aggregate number of Shares with respect to which Options,
whether ISOs or NQSOs, may be granted to any person or entity eligible therefor
under this Plan within any one calendar year is 350,000 Shares.
(f) DATE OF GRANT. The date of grant of an Option shall be the
date on which the Committee makes the determination to grant such Option unless
otherwise specified by the Committee. The Grant representing the Option shall be
delivered to the Optionee within a reasonable time after the granting of the
Option.
9. EXERCISE OF OPTIONS.
(a) NOTICE. Options may be exercised only by delivery to the
Company of a written notice and exercise agreement in a form approved by the
Committee, stating the number of Shares being purchased, the restrictions
imposed on the Shares and such representations and agreements regarding the
Optionee's investment intent and access to information as may be required by the
Company to comply with applicable securities laws, together with payment in full
of the exercise price for the number of Shares being purchased.
(b) PAYMENT. Payment for the Shares may be made (i) in cash,
(ii) by surrender of Shares having a Fair Market Value equal to the exercise
price of the Option or (iii) by any combination of the foregoing where approved
by the Committee in its sole discretion; provided, however, in the event of
payment for the Shares by method (ii) above, the Shares so surrendered, if
originally issued to the Optionee upon exercise of an Option(s) granted by the
Company, shall have been held by the Optionee for more than six months.
(c) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal, state or local withholding obligations of the Company, if applicable.
4
<PAGE>
(d) LIMITATIONS ON EXERCISE. Notwithstanding the exercise
periods set forth in the Grant, exercise of an Option shall always be subject to
the following limitations:
(i) An Option shall not be exercisable unless such
exercise is in compliance with the Securities Act of 1933, as amended
("Securities Act"), and all applicable state securities laws, as they
are in effect on the date of exercise.
(ii) The Committee may specify a reasonable minimum
number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent the Optionee from
exercising the Option for the full number of Shares as to which the
Option is then exercisable.
10. DEATH OR VOLUNTARY OR INVOLUNTARY TERMINATION. Should an Optionee
die, become disabled, retire or cease to be employed by or associated with the
Company for any other reason, all Options held by the Optionee shall lapse
immediately following the last day that the Optionee is employed by or
associated with the Company except that should an Optionee die the time during
which the Option may be exercised shall be extended three months for an Optionee
that held ISOs and six months for an Optionee that held NQSOs. In all other
cases the Committee, in its discretion, may extend the time during which the
Option may be exercised; provided, however, the maximum period of an extension
that may be allowed shall be three months for an Optionee that held ISOs and six
months for an Optionee that held NQSOs. During any such extension of the
expiration date by the Committee, the Option may be exercised only for the
number of Shares for which it could have been exercised on such termination
date, subject to any adjustment under Section 12 herein.
11. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a shareholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
of exercise, except as provided in this Plan.
12. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding Shares is changed by a stock dividend, stock split, reverse stock
split, combination, reclassification or similar change in the capital structure
of the Company without consideration, the number of Shares available under this
Plan and the number of Shares subject to outstanding Options and the exercise
price per share of such Options shall be proportionately adjusted, subject to
any required action by the Committee, Board
5
<PAGE>
of Directors or shareholders of the Company and compliance with applicable
securities laws; provided, however, that no certificate or scrip representing
fractional shares shall be issued upon exercise of any Option and any resulting
fractions of a Share shall be ignored.
13. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Option granted
under this Plan shall confer on any Optionee any right to continue in the employ
of the Company or any Parent, Subsidiary or Affiliate of the Company or limit in
any way the right of the Company or any Parent, Subsidiary or Affiliate of the
Company to terminate the Optionee's employment at any time, with or without
cause.
14. COMPLIANCE WITH LAWS. The grant of Options and the issuance of
Shares upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without limitation
compliance with the Securities Act, compliance with all applicable state
securities laws and compliance with the requirements of any stock exchange on
which the Shares may be listed. The Company shall be under no obligation to
register the Shares with the Securities and Exchange Commission or to effect
compliance with the Securities Act or with the registration or qualification
requirement of any state securities laws or stock exchange.
15. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself or its assignee(s) in the Grant (a) a right of
first refusal to purchase any Shares that an Optionee (or a subsequent
transferee) may propose to transfer to a third party and (b) a right to
repurchase any or all Shares held by an Optionee upon the Optionee's termination
of employment or service with the Company or a Parent, Subsidiary or Affiliate
of the Company for any reason within a specified time as determined by the
Committee at the time of grant at (i) the Optionee's original purchase price,
(ii) the Fair Market Value of such Shares as determined by the Committee in good
faith or (iii) a price determined by a provision set forth in the Grant.
16. CHANGE OF CONTROL. In the event of a Change of Control (as defined
herein), all outstanding Options shall accelerate and become immediately fully
exercisable; provided, however, that with respect to any Grant which includes
performance milestones relating to the exercisability of the Options included
therein, the Committee shall have discretion to determine in such Grant the
extent, if at all, that such Options granted therein shall accelerate and become
exercisable upon a Change of Control. For purposes of this Plan, a "Change of
Control" shall mean (i) the sale or other disposition to a person, entity or
group (as such term is defined in Rule 13d-5 under the Exchange Act) of 50% or
more of the Company's consolidated assets, (ii) the acquisition of
6
<PAGE>
50% or more of the outstanding Shares by a person or group (as such term is
defined in Rule 13d-5) or (iii) if the majority of the Company's Board of
Directors consists of persons other than Continuing Directors (as defined
herein). The term "Continuing Director" shall mean any member of the Company's
Board of Directors on the effective date of this Plan and any other member of
the Board of Directors who shall be recommended or elected to succeed or become
a Continuing Director by a majority of the Continuing Directors who are then
members of the Board of Directors. The aggregate Fair Market Value (determined
at the time an Option is granted) of ISOs which first become exercisable in the
year of such dissolution, liquidation, merger, sale of stock or sale of assets
cannot exceed $100,000. Any remaining accelerated Options shall be NQSOs.
17. AMENDMENT OR TERMINATION OF PLAN. The Committee may at any time
terminate or amend this Plan in any respect (including, but not limited to, any
form of Grant, agreement or instrument to be executed pursuant to this Plan);
provided, however, that shareholder approval shall be required to be obtained by
the Company if required to comply with the provisions of Section 162(m) of the
Code, or the listed company requirements of The Nasdaq National Market or of a
national securities exchange on which the Shares are traded, or other applicable
provisions of state or federal law or self-regulatory agencies; provided,
further, that no amendment of this Plan may adversely affect any then
outstanding Options or any unexercised portions thereof without the written
consent of the Optionee.
18. TERM OF PLAN. No Option shall be granted pursuant to this Plan on
or after May 26, 2002, but Options theretofore granted may extend beyond that
date and the terms of this Plan shall continue to apply to such Options and to
any Shares acquired upon exercise thereof.
19. APPLICABLE LAW. The validity, interpretation and enforcement of
this Plan shall be governed in all respects by the laws of the State of Florida
and the United States of America.
20. ISSUANCE OF SHARES. The Shares, when issued and paid for pursuant
to the Options granted hereunder, shall be issued as fully paid and
non-assessable Shares.
21. NON-TRANSFERABILITY OF ISOs. No ISO granted pursuant to the Plan
shall be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner otherwise than by will or by the laws of descent or distribution and
an ISO may be exercised during the lifetime of the Optionee only by such
Optionee.
7
<PAGE>
22. TRANSFERABILITY OF NQSOs. A NQSO may be sold, pledged, assigned,
hypothecated, transferred or disposed of as determined by the Committee and as
set forth in a Grant with an Optionee.
8
<PAGE>
[TO BE TYPED ON LETTERHEAD
OF NOVOSTE CORPORATION]
INCENTIVE STOCK OPTION AWARD
Date of Grant |DATE|
Recipient |NAME|
Number of Shares |NUMBER|
Purchase Price
per Share |PRICE|
Total Purchase
Price |NUMBER| x |PRICE|
Dear |NAME|:
We are pleased to inform you that, as a key employee of Novoste Corporation, you
are hereby granted an option to purchase shares of Novoste Common Stock, par
value $.01 per share, in the amount and at the price per share stated above.
This option is granted pursuant to the Novoste Corporation Amended and Restated
Stock Option Plan, a copy of which is attached. This option is exercisable for a
period of ten years from the date of the grant as stated above.
The right to exercise your option will vest per the following schedule:
From the date of the grant for one year No part of the option grant shall vest
More than one but less than two years 25% of the option grant shall vest
after the date of the grant
More than two but less than three years 50% of the option grant shall vest
after the date of the grant
<PAGE>
More than three but less than four years 75% of the option grant shall vest
after the date of the grant
More than four years after the date of 100% of the option grant shall vest
the grant
You may purchase all shares that are vested at any time prior to the expiration
of the option by delivering full payment to the Corporate Secretary. You may
purchase all or part of the shares which are vested; however, you may not make
partial purchases in increments of less than 100 shares.
This option cannot be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution. Only you may exercise this option during your lifetime.
Sincerely,
Thomas D. Weldon
President and CEO
<PAGE>
PROXY
NOVOSTE CORPORATION
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints NORMAN R. WELDON, PH.D., and THOMAS D. WELDON,
and each of them, proxies, each with the power of substitution, to vote the
shares of the undersigned at the Annual Meeting of Shareholders of Novoste
Corporation on May 1, 1998, and any adjournments and postponements thereof, upon
all matters as may properly come before the Annual Meeting. Without otherwise
limiting the foregoing general authorization, the proxies are instructed to vote
as indicated herein.
PLEASE COMPLETE, DATE AND SIGN ON THE REVERSE
SIDE AND MAIL IN THE ENCLOSED ENVELOPE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1), (2) and (3) LISTED
BELOW, TO COME BEFORE THE ANNUAL MEETING:
(1) Election of two (2) Class II Directors to serve until the 2001
Nominees: Pieter J. Schiller
William A. Hawkins
Annual Meeting of Shareholders:
[ ] FOR [ ] WITHHELD
For, except withheld from the following nominees:
-------------------------------------------------
(2) To approve amendments (the "Plan Amendments") to the Company's Amended and
Restated Stock Option Plan (the "Plan"), which Plan Amendments (a) increase
the number of shares of Common Stock reserved for issuance thereunder by
700,000 shares to 3,400,000 shares, (b) increase the maximum number of
shares from 100,000 shares to 350,000 shares with respect to options that
may be granted to any person or entity eligible within any one calendar year
and (c) allow the Stock Option and Compensation Committee to determine as of
the date of grant the acceleration, if any, of the exercisability of a
performance-based option upon a "Change of Control" (as defined by the Plan)
of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To ratify the reappointment of Ernst & Young LLP as independent auditors of
the Company for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Upon any and all other business that may come before the Annual Meeting.
THIS PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WILL BE
VOTED FOR THE MATTERS DESCRIBED IN PARAGRAPHS (1), (2) AND (3) UNLESS THE
SHAREHOLDER SPECIFIES OTHERWISE, IN WHICH CASE IT WILL BE VOTED AS SPECIFIED.
SIGNATURE(S): DATE:
------------------------------- ---------------------
Note: Executors, Administrators, Trustees, Etc. should give full title.