<PAGE>
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EPIX MEDICAL, INC.
---------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box): [X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of Securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials. [ ] Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
EPIX MEDICAL, INC.
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
(617) 250-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 1999
Notice is hereby given that the 1999 Annual Meeting of Stockholders of EPIX
Medical, Inc., a Delaware corporation (the "Company"), will be held on June 2,
1999, at 10:00 a.m. at the offices of EPIX Medical, Inc., 161 First Street,
Cambridge, Massachusetts, to consider and act upon the following matters:
1. To elect two (2) members of the Board of Directors.
2. To approve an amendment to the Company's Amended and Restated 1992
Equity Incentive Plan to increase the number of shares of the Company's
common stock as to which awards may be granted under such plan by 250,000
shares.
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on April 23, 1999 will
be entitled to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY
WILL NOT BE USED.
By order of the Board of Directors,
MICHAEL D. WEBB
SECRETARY
Cambridge, Massachusetts
April 30, 1999
<PAGE>
EPIX MEDICAL, INC.
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
(617) 250-6000
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
This Proxy Statement, with the enclosed proxy card, is being furnished on
behalf of the Board of Directors of EPIX Medical, Inc. (the "Company") for use
at the Company's 1999 Annual Meeting of Stockholders to be held on Wednesday,
June 2, 1999 at 10:00 a.m. at the offices of EPIX Medical, Inc., 161 First
Street, Cambridge, Massachusetts, and at any adjournments thereof (the
"Meeting").
When the proxy card of a stockholder is duly executed and returned, the
shares represented thereby will be voted in accordance with the voting
instructions given on the proxy by the stockholder. If no such voting
instructions are given on a proxy card with respect to one or more proposals,
the shares represented by that proxy card will be voted, with respect to the
election of directors, for the nominees named herein, and with respect to other
proposals, in accordance with the recommendations of the Board. Stockholders may
revoke their proxies at any time prior to any vote at the Meeting by written
notice of revocation to the Secretary of the Company at or before the Meeting,
by submission of a duly executed proxy card bearing a later date or by voting in
person by ballot at the Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed or
otherwise furnished to all stockholders of the Company entitled to notice of and
to vote at the Meeting on or about April 30, 1999.
VOTING SECURITIES AND VOTES REQUIRED
Holders of the Company's common stock, $0.01 par value per share ("Common
Stock"), of record on the books of the Company at the close of business on April
23, 1999 (the "Record Date") are entitled to notice of and to vote at the
Meeting. On the Record Date, there were 11,478,447 shares of Common Stock issued
and outstanding, each of which entitles the holder to one vote on each matter
submitted to a vote at the Meeting.
The presence, in person or by proxy, of the holders of a majority of the
Company's Common Stock entitled to vote at the Meeting is necessary to
constitute a quorum at the Meeting. Pursuant to the Delaware General Corporation
Law and the Company's Restated Certificate of Incorporation and Amended and
Restated By-laws (the "By-laws"), the directors are elected by a plurality of
the votes properly cast at the Meeting. Abstentions, votes withheld and broker
non-votes will not be treated as votes cast for this purpose and will not affect
the outcome of the election. A "broker non-vote" occurs when a registered broker
holding a customer's shares in the name of the broker has not received voting
instructions on a matter from the customer and is barred by applicable rules
from exercising discretionary authority to vote on the matter and so indicates
on the proxy.
The affirmative vote of the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote is required to approve the
proposed amendment to the Company's Amended and Restated 1992 Equity Incentive
Plan (the "Equity Plan"). Broker non-votes will not be counted as present, or
represented, and entitled to vote for these purposes and, therefore, will not
affect the outcome of the vote.
<PAGE>
SHARE OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1999 by (i) each person
known by the Company to own beneficially 5% or more of the Common Stock, (ii)
each Named Executive Officer (as defined in "Executive Compensation" below),
(iii) each director of the Company and (iv) all current directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
----------------------
SHARES PERCENT
--------- -----------
<S> <C> <C>
Bessemer Venture Partners III L.P. and certain related persons (2)... 1,596,999 13.93%
Bessemer Venture Partners
1400 Old Country Road
Suite 407
Westbury, NY 11590
T. Rowe Price Associates, Inc. (3)................................... 782,793 6.83%
100 E. Pratt Street
Baltimore, MD 21202
Accel IV L.P. and certain related persons (4)........................ 645,886 5.63%
428 University Avenue
Palo Alto, CA 94301
Daiichi Radioisotope Laboratories, Ltd. (5).......................... 578,885 5.05%
17-10, Kyobashi 1-chome Chuo-ku
Tokyo, 104 Japan
Randall B. Lauffer, Ph.D. (6)........................................ 946,664 8.25%
Michael D. Webb (7).................................................. 291,592 2.52%
James E. Smith, Ph.D. (8)............................................ 107,332 *
E. Kent Yucel, M.D. (9).............................................. 79,821 *
Stephen C. Knight, M.D. (10)......................................... 68,092 *
Christopher F.O. Gabrieli (11)....................................... 1,711,126 14.90%
Luke B. Evnin, Ph.D. (12)............................................ 677,252 5.90%
Stanley T. Crooke, M.D., Ph.D. (13).................................. 47,083 *
All current executive officers and directors as a group
(9 persons) (14)................................................... 3,976,884 33.44%
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) The persons and entities named in the table have sole voting and investment
power with respect to the shares beneficially owned by them, except as noted
below. Share numbers include shares of Common Stock issuable pursuant to the
outstanding options and warrants that may be exercised within the 60-day
period following March 31, 1999.
(2) This information is obtained from a Schedule 13G, dated February 12, 1999,
filed with the Securities and Exchange Commission (the "Commission") by
Bessemer Venture Partners III L.P., its general partner, Deer III & Co. LLC
and the members of Deer III & Co. LLC. The shares beneficially held by
Bessemer Venture Partners III L.P. include holdings of Bessemer Securities
Corporation ("BSC"), which holds a total of 58,146 shares of Common Stock
under the special situations investment plan of BSC which provides that
Bessemer Venture Partners III L.P. has voting and investment control with
2
<PAGE>
respect to such shares. Does not include 168,693 shares held by members of
Deer III & Co. and persons associated with such members of Deer III & Co.
(3) This information was provided to the Company by T. Rowe Price Associates,
Inc. (Price Associates). These securities are owned by various individual
and institutional investors including T. Rowe Price New Horizons Fund, Inc.
(which owns 700,000 shares, representing 6.10% of the shares outstanding),
which Price Associates serves as investment adviser with power to direct
investments and/or sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
(4) This information is obtained from a Schedule 13G, dated February 16, 1999,
filed with the Commission by Accel IV L.P., Accel Keiretsu L.P. ("AKTSU"),
Accel Investors '93 L.P. ("AI93"), Accel IV Associates L.P. ("AIV
Associates"), Accel Partners & Co. Inc. ("AP & Co."), Swartz Family
Partnership L.P. ("SFP"), Elmore C. Patterson Partners ("ECPP"), James W.
Breyer ("Breyer"), Luke B. Evnin ("Evnin"), Eugene D. Hill III ("Hill"),
Paul H. Klingenstein ("Klingenstein"), Arthur C. Patterson ("Patterson"), G.
Carter Sednaoui ("Sednaoui") and James P. Swartz ("Swartz"). AIV Associates,
the general partner of Accel IV L.P. and Breyer, Evnin, Hill, Klingenstein,
Patterson, Sednaoui, Swartz and SFP, the general partners of AIV Associates,
may be deemed to share dispositive power with respect to the shares held by
Accel IV L.P. Does not include 384,914 shares of Common Stock held by AKTSU,
AI93, SFP, AP & Co., Breyer, Evnin, Hill, Klingenstein, Patterson, ECPP,
Sednaoui, Swartz, and the Swartz Foundation Trust, of which Swartz is a
trustee.
(5) Junzo Okuda, President and Chief Executive Officer of Daiichi Radioisotope
Laboratories, Ltd., has voting and investment control over these shares.
(6) Includes 46,666 shares held by Dr. Lauffer's wife and 16,000 shares held in
a trust for the benefit of Dr. Lauffer's children as to which Dr. Lauffer
disclaims beneficial ownership. Also includes 465,047 shares held by a trust
for the benefit of Dr. Lauffer as to which shares Dr. Lauffer has voting and
investment control.
(7) Includes 50,000 shares held by Mr. Webb's wife as to which Mr. Webb
disclaims beneficial ownership and 91,426 shares subject to options
exercisable within the 60-day period following March 31, 1999.
(8) Includes 74,697 shares subject to options exercisable within the 60-day
period following March 31, 1999.
(9) Includes 75,622 shares subject to options exercisable within the 60-day
period following March 31, 1999.
(10) Includes 66,664 shares subject to options exercisable within the 60-day
period following March 31, 1999.
(11) See footnote (2) above. Mr. Gabrieli, a general partner of Deer III & Co.
LLC, disclaims beneficial ownership of these shares except to the extent of
his proportionate pecuniary interest therein or with respect to shares held
in his name. Includes 15,000 shares subject to options exercisable within
the 60-day period following March 31, 1999.
(12) See footnote (4) above. Dr. Evnin disclaims beneficial ownership of these
shares except to the extent of his proportionate pecuniary interest in
shares held by Accel IV L.P., AKTSU, AI93, and AP & Co. or with respect to
shares held in his name. Includes 5,000 shares subject to options
exercisable within the 60-day period following March 31, 1999.
(13) Consists of 47,083 shares subject to options exercisable within the 60-day
period following March 31, 1999.
(14) See footnotes (2), (4) and (6)-(13) above. Includes 422,492 shares subject
to options exercisable within the 60-day period following March 31, 1999.
3
<PAGE>
PROPOSAL 1:
ELECTION OF DIRECTORS
In accordance with Section 2 of Article II of the By-laws, the Board has
fixed the number of directors to constitute the full Board for the ensuing year
at five. At the Meeting, two Class III directors will be elected to hold office
for three years until his respective successor is duly elected and qualified.
The Board has nominated Christopher F.O. Gabrieli and Michael D. Webb for
election to terms of office expiring in 2002. Each nominee is currently a
director of the Company and has consented to be nominated and to serve if
elected. In the event a nominee shall be unable to serve as a director, the
shares represented by the proxy will be voted for the person, if any, who is
designated by the Board to replace the nominee. In the event that a vacancy
occurs during the year, such vacancy may be filled by the Board for the
remainder of the full term.
The following table contains certain information about the nominees for
election to the Board of Directors and each other person whose term of office as
a director will continue after the Meeting.
<TABLE>
<CAPTION>
PRESENT
DIRECTOR TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE EXPIRES
- --------------------------------------- ----------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
NOMINEES FOR DIRECTORS:
CLASS III DIRECTORS
Christopher F.O. Gabrieli*# Mr. Gabrieli is Chairman of the Board of the Company. 1994 1999
(age 39) Since September 1986, Mr. Gabrieli has been a General
Partner at Deer II & Co. LLC, Deer III & Co. LLC and
Deer IV & Co. LLC, the General Partners of Bessemer
Venture Partners II L.P., Bessemer Venture Partners
III L.P. and Bessemer Venture Partners IV L.P.,
affiliated venture capital partnerships, where he is
responsible for the firm's venture capital investment
activities in healthcare and the life sciences. He is
a director of Isis Pharmaceuticals, Inc., where he
was a co-founder, and several privately held health
care companies.
Michael D. Webb Mr. Webb has served as President and Chief Executive 1994 1999
(age 40) Officer of the Company since December 1994 and as
Secretary of the Company since November 1996. Mr.
Webb worked for Ciba-Corning Diagnostics, Inc., a
medical instrumentation and diagnostic products
company, from April 1989 to December 1994, most
recently as Senior Vice President, Worldwide
Marketing and Strategic Planning. From 1984 to 1989,
Mr. Webb was a senior consultant specializing in
healthcare and life sciences at Booz, Allen &
Hamilton, Inc., a consulting firm.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRESENT
DIRECTOR TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE EXPIRES
- --------------------------------------- ----------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
CONTINUING DIRECTORS:
CLASS II DIRECTOR
Stanley T. Crooke, M.D., Ph.D.* Dr. Crooke has served as Chairman and Chief Executive 1996 2001
(age 54) Officer of Isis Pharmaceuticals, Inc., a
pharmaceuticals company, since January 1989. Dr.
Crooke serves on the boards of directors of Valentif,
Inc., Sibia Neuroscience, Inc. and IDUN
Pharmaceuticals, Inc.
CLASS I DIRECTORS
Luke B. Evnin, Ph.D.*# Dr. Evnin is currently a Managing Director of MPM 1994 2000
(age 35) Asset Management LLC, an investment firm specializing
in biomedical companies. Previously, Dr. Evnin was a
General Partner at Accel Partners, a venture capital
firm, where he was involved in the firm's biomedical
investing activities since September 1990. He remains
a General Partner of Accel IV L.P. and Accel V L.P.
He currently serves on the boards of directors of
several private companies.
Randall B. Lauffer, Ph.D. Dr. Lauffer, the Chief Scientific Officer of the 1988 2000
(age 41) Company, founded the Company in November 1988 and
served as Chief Executive Officer of the Company
until December 1994, as Chairman of the Board until
October 1996 and as Secretary until November 1996.
From November 1983 to March 1992, Dr. Lauffer was a
member of the faculty of Harvard Medical School,
serving most recently as Assistant Professor of
Radiology from 1987 to 1992. During this time he was
also Director of the NMR Contrast Media Laboratory at
Massachusetts General Hospital as well as an NIH
Postdoctoral Fellow and an NIH New Investigator.
</TABLE>
- ------------------------
* Member of the Compensation Committee.
# Member of the Audit Committee.
5
<PAGE>
During the year ended December 31, 1998, the Board held five meetings. At
three of the Board meetings all of the directors attended and at two of the
Board meetings there was a majority of the directors in attendance. All of the
directors attended meetings of committees of the Board of which he was a member.
In addition, from time to time, the members of the Board of Directors and its
committees acted by unanimous written consent pursuant to Delaware law in lieu
of a meeting.
The Audit Committee, which currently consists of Dr. Evnin and Mr. Gabrieli,
reviews with the Company's independent accountants the scope of the annual
audit, discusses the adequacy of internal accounting controls and procedures,
and performs general oversight with respect to the accounting principles applied
in the financial reporting of the Company. The Audit Committee met once in 1998.
The Compensation Committee currently consists of Drs. Crooke and Evnin and
Mr. Gabrieli. The Compensation Committee's functions are to recommend to the
full Board the amount, nature and method of payment of compensation of all
executive officers and certain other key employees and consultants of the
Company and to administer the Company's equity incentive, stock option and stock
purchase plans. The Compensation Committee met once in 1998.
The Company has no Nominating Committee.
DIRECTOR COMPENSATION
Directors currently receive no compensation for their service on the Board
of Directors, except pursuant to the 1996 Director Stock Option Plan (the
"Director Plan"). All of the directors who are not employees of the Company (the
"Eligible Directors") are currently eligible to participate in the Director
Plan. There are 100,000 shares of Common Stock reserved for issuance under the
Director Plan. Upon the election or reelection of an Eligible Director, such
director is automatically granted an option to purchase 15,000 shares of Common
Stock. Options become exercisable with respect to 5,000 shares on each
anniversary date of grant for a period of three years, provided that the
optionee is still a director of the Company at the opening of business on such
date. Each option has a term of ten years. The exercise price for each option is
equal to the last sale price for the Common Stock on the business day
immediately preceding the date of grant, as reported on the Nasdaq National
Market. The exercise price may be paid in cash, shares of Common Stock or a
combination of both.
EXECUTIVE COMPENSATION
The Compensation Committee Report on Executive Compensation and the tables
set forth below provide information about the compensation of executive officers
of the Company.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee"), which currently consists of
Mr. Christopher F.O. Gabrieli and Drs. Luke B. Evnin and Stanley T. Crooke, is
responsible for the administration of the Company's compensation program for the
executive officers of the Company, including the Chief Executive Officer and the
other executive officers named in the summary compensation table below. The
Company's compensation programs are designed to provide a competitive level of
total compensation which, at the Company's present stage of development, is
heavily weighted toward equity incentive compensation linked to the Company's
performance. This program includes base salary and both annual and long-term
incentive compensation.
6
<PAGE>
COMPENSATION PHILOSOPHY
The design and implementation of the Company's executive compensation
programs are based on a series of guiding principles derived from the Company's
values, business strategy and management requirements. These principles may be
summarized as follows:
- attract, motivate and retain high caliber individuals who are responsible
for leading the Company in achieving or exceeding corporation goals and to
increase total return to stockholders;
- provide a total compensation program where a significant portion of
compensation is linked to the achievement of individual performance
objectives as well as both short-term and long-term Company performance;
- align the financial interests of the management team with those of the
Company and its stockholders; and
- emphasize reward for performance at the individual, team and Company
levels.
BASE SALARY
Each fiscal year, the Committee establishes base salaries for individual
executive officers based upon (i) industry and peer group surveys prepared by
independent consultants, (ii) the responsibilities, scope and complexity of each
position, (iii) the individual's tenure in the position and (iv) performance
judgments as to each individual's past and expected future contributions. The
performance of the companies surveyed is not considered by the Committee. The
Chief Executive Officer recommends the base salary amount for each officer other
than himself. The Committee then 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.
In general, the Committee reviews and fixes the base salary of the Chief
Executive Officer based on comparable competitive compensation data as well as
the Committee's assessment of such officer's past performance and its
expectations as to such officer's future contributions in leading the Company.
For 1998, the Chief Executive Officer's base salary was increased to $225,000
from $175,000 which was his base salary for the three previous years. For 1999,
the Committee has approved a 5.25% base salary increase to $236,813 for the
Chief Executive Officer.
ANNUAL BONUS
Beginning in 1998, the Company started a formal short-term incentive plan.
The Company's executive officers are eligible for an annual cash bonus, which is
based primarily on achievement of Company and individual performance objectives
that are established at the beginning of each year. The targeted bonus level for
the Chief Executive Officer is 30% of annual salary. After the completion of the
year, the Committee reviews the attainment of corporate and individual
objectives and awards bonuses in the first quarter of the subsequent year, based
on the extent to which corporate objectives were met or exceeded and individual
contributions to overall Company performance.
The Company achieved several milestones in 1998, including: the successful
completion of a pivotal Phase II clinical trial for AngioMARK; the negotiation
of an agreement to expand its collaboration with its worldwide marketing
partner, Mallinckrodt Inc., to include the development of additional clinical
applications for AngioMARK; the formation of strategic alliances with General
Electric Medical Systems and
7
<PAGE>
Philips Medical Systems to advance the development of contrast-based
cardiovascular MRI technologies; the negotiation of an agreement with Magnetic
Resonance Innovations to help fund and create the first-ever IN VIVO map of the
human vascular system; and a collaboration with Neogenesis Pharmaceuticals, Inc.
for the identification of novel compounds for potential use in diagnostic
imaging. In recognition of the Chief Executive Officer's leadership in the
achievement of these corporate milestones and his contributions to the Company,
the Chief Executive Officer was awarded a bonus in the amount of $77,600, 34.5%
of his 1998 salary.
EQUITY-BASED LONG-TERM INCENTIVE COMPENSATION
Long-term incentives for the Company's employees are provided through stock
option grants under the Equity Plan which are generally provided through initial
stock option grants at the date of hire and periodic additional grants. The
option grants are intended to motivate the executive officers to improve
long-term Company performance and to align the financial interests of the
management team with those of the Company and its stockholders. Awards take into
account each officer's scope of responsibility and specific assignments,
strategic and operational goals applicable to the officer, anticipated
performance and contributions of the officer and competitive market data for
similar positions. Options are granted with an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant. The standard
vesting schedule provides that a portion of the shares subject to each option
vest and become exercisable annually over a five-year period. Certain options
granted under the Equity Plan, including some of the options granted to the
Named Executive Officers, are subject to different vesting schedules, including
schedules that are based on the achievement of certain milestone events as
determined by the Committee.
In 1998, the Chief Executive Officer received no options to purchase shares
of Common Stock.
COMPENSATION DEDUCTIBILITY
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") on the Company's
compensation programs. Section 162(m) of the Code limits a publicly held
company's tax deduction for compensation paid to the chief executive officer and
the other four most highly paid officers. Generally, amounts paid in excess of
$1 million to a covered executive in any year cannot be deducted. Certain
performance based compensation that has been approved by stockholders is not
subject to the limit. The Company's policy is to qualify its executive officers'
compensation for deductibility under applicable tax laws to the extent
reasonable. The Committee will continue to assess the impact of Section 162(m)
of the Code on its compensation practices and determine what further action, if
any, is appropriate.
By the EPIX Medical, Inc.
Compensation Committee,
STANLEY T. CROOKE
LUKE B. EVNIN
CHRISTOPHER F.O. GABRIELI
8
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The following graph shows the cumulative stockholder return of the Company's
Common Stock from January 30, 1997 (the first trading day for the Company's
Common Stock) through December 31, 1998 as compared with that of the Nasdaq
(U.S. Companies) Index and the Nasdaq Pharmaceutical Stocks Index. The graph
assumes the investment of $100 in the Company's Common Stock and each of the
comparison groups on January 30, 1997 and assumes the reinvestment of dividends.
The Company has never declared a dividend on the Common Stock of the Company.
The stock price performance depicted in the graph below is not necessarily
indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG EPIX MEDICAL, INC.,
NASDAQ (U.S. COMPANIES) INDEX AND NASDAQ PHARMACEUTICAL STOCKS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EPIX MEDICAL, INC. NASDAQ STOCK MARKET (U.S.) NASDAQ PHARM. STOCKS
<S> <C> <C> <C>
1/30/97 $100.00 $100.00 $100.00
3/31/97 $94.64 $88.97 $88.29
6/30/97 $114.29 $105.32 $95.32
9/30/97 $171.43 $123.16 $106.92
12/31/97 $185.71 $115.38 $96.00
3/31/98 $188.40 $135.02 $105.53
6/30/98 $146.43 $138.70 $97.66
9/30/98 $136.61 $125.30 $92.13
12/31/98 $133.04 $162.58 $122.12
</TABLE>
<TABLE>
<CAPTION>
1/30/97 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98
--------- ----------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
EPIX Medical, Inc......................... $ 100.00 $ 94.64 $ 114.29 $ 171.43 $ 185.71 $ 188.40 $ 146.43
Nasdaq Stock Market (U.S.)................ $ 100.00 $ 88.97 $ 105.32 $ 123.16 $ 115.38 $ 135.02 $ 138.70
Nasdaq Pharm. Stocks...................... $ 100.00 $ 88.29 $ 95.32 $ 106.92 $ 96.00 $ 105.53 $ 97.66
<CAPTION>
9/30/98 12/31/98
--------- -----------
<S> <C> <C>
EPIX Medical, Inc......................... $ 136.61 $ 133.04
Nasdaq Stock Market (U.S.)................ $ 125.30 $ 162.58
Nasdaq Pharm. Stocks...................... $ 92.13 $ 122.12
</TABLE>
The following table sets forth certain compensation information for the
Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company whose salary and bonus for the
year ended December 31, 1998 exceeded $100,000 (together, the "Named Executive
Officers").
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
------------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS (#) COMPENSATION $
- -------------------------------------- --------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Michael D. Webb....................... 1998 225,000 77,600 -- 850(2)
President and Chief 1997 175,000 65,625 83,000 850(2)
Executive Officer 1996 175,000 65,000 83,333 --
James E. Smith, Ph.D.................. 1998 200,700 52,500 -- 66,005(3)
Executive Vice President, 1997 185,000 46,250 28,000 62,477(3)
Research and Development (4) 1996 192,615(5) 63,000 139,999 --
E. Kent Yucel, M.D.................... 1998 189,900 47,500 -- 35,000(7)
Senior Vice President and 1997 175,000 -- 27,000 35,000(7)
Chief Medical Officer (6) 1996 132,637(8) 8,750 133,333 --
Randall B. Lauffer, Ph.D.............. 1998 180,000 36,000 -- 1,220(9)
Chief Scientific Officer 1997 160,000 32,000 28,000 1,180(9)
1996 160,000 -- -- 1,100(9)
Stephen C. Knight, M.D................ 1998 189,600 43,700 -- --
Chief Financial Officer and 1997 160,000 40,000 27,000 --
Senior Vice President, 1996 80,000 -- 133,333 30,000(11)
Business Development (10)
</TABLE>
- ------------------------
(1) Bonuses were earned in the year indicated and are generally paid in the
subsequent year.
(2) Consists of life insurance premiums paid by the Company on behalf of Mr.
Webb on a policy for the benefit of Mr. Webb.
(3) Consists of housing expenses reimbursed to Dr. Smith in connection with his
maintaining a residence within close proximity of the Company.
(4) Dr. Smith became an employee of the Company in February 1996. Prior thereto,
he was engaged as a consultant to the Company.
(5) Includes compensation in the amount of $37,200 paid by the Company for
consulting services.
(6) Dr. Yucel became an employee of the Company in June 1996. Prior thereto, he
was engaged as a consultant to the Company.
(7) Consists of compensation paid by the Company in lieu of lost clinical
practice revenue.
(8) Includes compensation in the amount of $59,720 paid by the Company for
consulting services.
(9) Consists of life insurance premiums paid by the Company on behalf of Dr.
Lauffer on a policy for the benefit of Dr. Lauffer.
(10) Dr. Knight became an employee of the Company in July 1996.
(11) Consists of payment made in connection with the commencement of employment
with the Company.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
None of the Company's Named Executive Officers were granted options during
the fiscal year ended December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT AT FISCAL YEAR-END
SHARES VALUE FISCAL YEAR-END (#) ($)(1)
ACQUIRED ON REALIZED ----------------------- -----------------------
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------ ------------ ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Michael D. Webb..................... 126,000 1,126,989 77,427/219,207 685,895/853,617
James E. Smith, Ph.D................ 23,635 226,784 42,031/93,333 356,738/422,765
E. Kent Yucel, M.D.................. -- -- 70,067/97,932 360,714/372,229
Randall B. Lauffer Ph.D............. -- -- 0/28,000 0/15,750
Stephen C. Knight, M.D.............. -- -- 66,664/93,669 320,821/336,032
</TABLE>
- ------------------------
(1) Based on the difference between the fair market value of the underlying
shares of Common Stock on December 31, 1998 at $9.3125 a share and the
option exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Drs. Crooke and Evnin and
Mr. Gabrieli. Dr. Evnin was a General Partner of Accel Partners, a venture
capital firm and a principal stockholder of the Company. Dr. Evnin resigned from
such position in 1997 and assumed the position of Managing Director of MPM Asset
Management LLC. Dr. Evnin remains a General Partner of Accel IV L.P., a
principal stockholder of the Company and Accel V L.P. Mr. Gabrieli is a General
Partner of Deer III & Co. LLC, the General Partner of Bessemer Venture Partners
III L.P., a principal stockholder of the Company. See "Share Ownership" and
"Certain Transactions."
CERTAIN TRANSACTIONS
In June 1995 and April 1996, the Company made two loans to Dr. Lauffer each
in the principal amount of $50,000 and bearing interest at the rate of 7.31% and
6.51% per annum, respectively (the Applicable Federal Rate for long term loans
announced for such month) and each secured by a pledge of 14,814 shares of the
Company's Common Stock held by Dr. Lauffer. As of March 31, 1999, the
outstanding principal amounts on these loans plus accrued interest were $64,845
and $60,094, respectively. In May 1996, the Company made a loan to Dr. Lauffer
in the principal amount of $180,000 bearing interest at the rate of 6.83% per
annum (the Applicable Federal Rate for long term loans announced for May 1996)
and secured by a pledge of 44,444 shares of the Company's Common Stock held by
Dr. Lauffer. As of March 31, 1999, the outstanding principal amount on this loan
plus accrued interest was $216,016. Each of these loans is subject to
acceleration upon the voluntary termination of Dr. Lauffer's employment, among
other events.
11
<PAGE>
PROPOSAL 2:
AMENDMENT TO AMENDED AND RESTATED 1992 EQUITY INCENTIVE PLAN
GENERAL
The Equity Plan was originally adopted by the Company in July 1992. The
Equity Plan was subsequently amended and restated, and the aggregate number of
shares of Common Stock reserved for issuance thereunder is currently 2,349,901
shares (including shares subject to options already granted and shares issued
pursuant to options already exercised). The Equity Plan is designed to provide
the Company flexibility in awarding equity incentives by providing for multiple
types of incentives that may be awarded. The purpose of the Equity Plan is to
attract and retain key employees of and consultants to the Company and to enable
them to participate in the long-term growth of the Company.
AMENDMENT
In April 1999, the Board of Directors voted, subject to stockholder
approval, to amend the Equity Plan to increase the aggregate number of shares of
Common Stock available thereunder by an additional 250,000 shares to an
aggregate of 2,599,901 shares, subject to adjustment for stock-splits and
similar capital changes. The Company believes that this increase is necessary
and appropriate to enable the Company to attract and retain the quality of
employees and consultants whose services are considered essential to the
Company's future progress, to encourage such employees' and consultants'
ownership in the Company and to provide them with an incentive to remain as
employees or consultants of the Company.
ADMINISTRATION AND ELIGIBILITY
The Equity Plan provides for the grant of stock options (incentive and
nonstatutory), stock appreciation rights, performance shares, restricted stock
or stock units for the purchase of shares of Common Stock. Awards under the
Equity Plan can be granted to officers, employees and other individuals as
determined by the Compensation Committee, each of whose members is a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Committee administers the Equity Plan, except as described below in which the
entire Board administers the Equity Plan, and selects the participants and
establishes the terms and conditions of each option or other equity right
granted under the Equity Plan, including the exercise price, the number of
shares subject to options or other equity rights and the time at which such
options become exercisable. The Compensation Committee has adopted guidelines
for the number of options awarded to each new employee of the Company, other
than executive officers. The guidelines may be changed by the Compensation
Committee at any time. Subject to certain limitations the Compensation Committee
may delegate to one or more executive officers of the Company the power to make
awards to participants who are not subject to Section 16 of the Exchange Act.
The Compensation Committee has authorized the Chief Executive Officer to grant
options to purchase up to 20,000 shares of Common Stock each to such
participants. In order to comply with the requirements of Rule 16b-3 under the
Exchange Act, grants of awards made in 1999 under the Equity Plan to
participants who are subject to Section 16 of the Exchange Act are made by the
entire Board of Directors.
The exercise price of all "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Code granted under the Equity Plan must be at
least equal to the fair market value of the option shares on the date of grant.
The term of any ISO granted under the Equity Plan may not exceed ten years. The
Company's standard vesting schedule provides that a portion of the shares
subject to each option vest and
12
<PAGE>
become exercisable yearly over a five-year period. Certain options granted under
the Equity Plan, including some of the options granted to the Named Executive
Officers, are subject to different vesting schedules, including schedules that
are based on the achievement of certain milestone events. See "Executive
Compensation--Compensation Committee Report on Executive Compensation--Equity-
Based Long-Term Incentive Compensation."
As of April 20, 1999, approximately 74 employees were eligible to
participate in the Equity Plan. The closing price of the Company's Common Stock
as reported on the Nasdaq National Market on April 20, 1999 was $8.00.
EQUITY PLAN ACTIVITY
As of April 20, 1999, options to purchase an aggregate of 2,407,985 shares
of Common Stock had been granted under the Equity Plan, of which options to
purchase 124,060 shares had been canceled. Options to purchase 513,807 shares
had been exercised as of such date. As of such date, 315,976 shares remained
available for the granting of awards under the Equity Plan, including the
250,000 shares added by the amendment for which stockholder approval is being
requested. No stock appreciation rights or awards other than option grants have
been granted under the Equity Plan to date.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO STOCK OPTIONS
INCENTIVE STOCK OPTIONS. An optionee does not realize taxable income upon
the grant or exercise of an ISO under the Equity Plan. If no disposition of
shares issued to an optionee pursuant to the exercise of an ISO is made by the
optionee within two years from the date of grant or within one year from the
date of exercise, then (a) upon sale of such shares, any amount realized in
excess of the option price (the amount paid for the shares) is taxed to the
optionee as long-term capital gain and any loss sustained will be long-term
capital loss and (b) no deduction is allowed to the Company for Federal income
tax purposes. The exercise of ISOs gives rise to an adjustment in computing
alternative minimum taxable income that may result in alternative minimum tax
liability for the optionee.
If shares of Common Stock acquired upon the exercise of an ISO are disposed
of prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition") then (a) the optionee realizes
ordinary income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares at exercise (or, if less, the amount
realized on a sale of such shares) over the option price thereof and (b) the
Company is entitled to deduct such amount. Any further gain realized is taxed as
a short-term or long-term capital gain and does not result in any deduction to
the Company. A disqualifying disposition in the year of exercise will generally
avoid the alternative minimum tax consequences of the exercise of an ISO.
NONSTATUTORY STOCK OPTIONS. No income is realized by the optionee at the
time a nonstatutory option is granted. Upon exercise, (a) ordinary income is
realized by the optionee in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise and (b)
the Company receives a tax deduction for the same amount. Upon disposition of
the shares, appreciation or depreciation after the date of exercise is treated
as a short-term or long-term capital gain or loss and will not result in any
deduction by the Company.
13
<PAGE>
VOTES REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote at the Meeting is required
for the approval of the proposed amendment to the Equity Plan.
BOARD RECOMMENDATION
The Board of Directors of the Company believes that the amendment to the
Equity Plan is in the best interest of the Company and its stockholders and
recommends a vote FOR the proposal to approve the amendment to the Equity Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers and directors are required under Section
16(a) of the Exchange Act to file reports of ownership of Company securities and
changes in ownership with the Securities and Exchange Commission. Copies of
those reports must also be furnished to the Company.
Based solely on a review of the copies of reports furnished to the Company
and written representations that no other reports were required, the Company
believes that during 1998 the executive officers and directors of the Company
complied with all applicable Section 16(a) filing requirements, except that Mr.
Webb, an executive officer and director of the Company, filed three late Forms 4
reporting the exercise of options for an aggregate of 75,000 shares of Common
Stock and a late Form 5 reporting the exercise of an option to purchase 26,000
shares of Common Stock for which a Form 4 was due on February 10, 1998; Dr.
Lauffer, an executive officer and director of the Company, filed three late
Forms 4 reporting the sale of an aggregate of 112,600 shares of Common Stock;
Jeffrey Lentz, a former executive officer of the Company, filed one late Form 4
reporting the exercise of an option to purchase 17,402 shares of Common Stock;
and Dr. Smith, an executive officer of the Company, filed a Form 5 reporting the
exercise of an option to purchase 6,666 shares of Common Stock for which a Form
4 was due on August 10, 1998.
INFORMATION CONCERNING AUDITORS
The firm of Ernst & Young LLP, independent auditors, audited the Company's
financial statements for the year ended December 31, 1998. The Board of
Directors has appointed Ernst & Young LLP to serve as the Company's independent
auditors for the fiscal year ending December 31, 1999. Representatives of Ernst
& Young LLP are expected to be present at the Meeting to respond to appropriate
questions and will be given the opportunity to make a statement should they
desire to do so.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials for
the 2000 Annual Meeting of Stockholders, stockholder nominations of persons for
election to the Board and proposals of business to be considered by the
stockholders must be received by the Company no later than December 31, 1999.
Proposals should be sent to the attention of the Secretary at the Company's
offices at 71 Rogers Street, Cambridge, Massachusetts 02142.
14
<PAGE>
ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
The By-laws provide that in order for a stockholder to bring business before
or propose director nominations at an annual meeting, the stockholder must give
written notice to the Secretary of the Company not less than 50 days nor more
than 75 days prior to the meeting. The notice must contain specified information
about the proposed business or each nominee and the stockholder making the
proposal or nomination. If less than 65 days notice or prior public disclosure
of the date of the annual meeting is given or made to stockholders, the notice
given by the stockholder must be received not later than the 15th day following
the day on which the notice of such annual meeting date was mailed or public
disclosure made, whichever first occurs.
EXPENSES OF SOLICITATION
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company.
Proxies may be solicited by directors, officers or regular employees of the
Company by mail, by telephone, in person or otherwise. No such person will
receive additional compensation for such solicitation. In addition, the Company
will request banks, brokers and other custodians, nominees and fiduciaries to
forward proxy material to the beneficial owners of Common Stock and to obtain
voting instructions from such beneficial owners. The Company will reimburse such
firms for their reasonable expenses in forwarding proxy materials and obtaining
voting instructions.
OTHER MATTERS
The Meeting is called for the purposes set forth in the notice. The Board of
Directors does not know of any matter for action by the stockholders at the
Meeting other than the matters described in the notice. However, the enclosed
proxy confers discretionary authority on the persons named therein with respect
to matters which are not known to the directors at the date of printing hereof
and which may properly come before the Meeting. It is the intention of the
persons named in the proxy to vote in accordance with their best judgment on any
such matter.
Copies of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 as filed with the Securities and Exchange Commission are
available to stockholders upon written request addressed to the President at the
Company's offices at 71 Rogers Street, Cambridge, Massachusetts 02142.
Whether or not you intend to be present at the Meeting, you are urged to
fill out, sign, date and return the enclosed proxy at your earliest convenience.
15
<PAGE>
EPIX MEDICAL, INC.
AMENDED AND RESTATED 1992 INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the EPIX Medical, Inc. Amended and Restated 1992 Incentive
Plan (the "Plan") is to attract and retain key employees and consultants to
provide an incentive for them to assist the Company to achieve long-range
performance goals and to enable them to participate in the long-term growth of
the Company.
SECTION 2. DEFINITIONS
"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock or Stock Unit awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means one or more committees each comprised of not less than two
members of the Board appointed by the Board to administer the Plan or a
specified portion thereof. If a Committee is authorized to grant Options to a
Reporting Person or a "covered employee" within the meaning of Section 162(m) of
the Code, each member shall be a "Non-Employee Director" or the equivalent
within the meaning of Rule 16b-3 under the Exchange Act or an "outside director"
or the equivalent within the meaning of Section 162(m) of the Code,
respectively.
"Common Stock" or "Stock" means the Common Stock, $.01 par value per share,
of the Company.
"Company" means EPIX Medical, Inc.
"Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Committee, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to be an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
"Participant" means a person selected by the Committee to receive an Award
under the Plan.
16
<PAGE>
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"Performance Shares" mean shares of Common Stock which may be earned by the
achievement of performance goals awarded to a Participant under Section 8.
"Restricted Period" means the period of time selected by the Committee
during which an award of Restricted Stock may be forfeited to the Company.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.
"Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee, provided that the Board may
in any instance perform any of the functions of the Committee. The Committee
shall have authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, and to interpret the provisions of the Plan.
The Committee's decisions shall be final and binding. To the extent permitted by
applicable law, the Committee may delegate to one or more executive officers of
the Company the power to grant Awards to Participants who are not Reporting
Persons or covered employees and all determinations under the Plan with respect
thereto, provided that the Committee shall fix the maximum amount of such Awards
for all such Participants and a maximum for any one Participant.
SECTION 4. ELIGIBILITY
All employees (including part-time employees), and in the case of Awards
other than Incentive Stock Options, directors and consultants of the Company or
any Affiliate capable of contributing significantly to the successful
performance of the Company, other than a person who has irrevocably elected not
to be eligible, are eligible to be Participants in the Plan.
SECTION 5. STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (b) below, Awards may be made
under the Plan for up to 2,349,901 shares of Common Stock. If any Award
expires or is terminated unexercised or is forfeited without the
Participant having had the benefits of ownership (other than voting
rights), the shares subject to such Award, to the extent of such
expiration, termination or forfeiture, shall again be available for award
under the Plan. Common Stock issued through the assumption or
substitution of outstanding grants from an acquired company shall not
reduce the shares available for Awards under the Plan. Shares issued
under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.
17
<PAGE>
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value,
or other similar transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under the Plan, then the
Committee, subject, in the case of Incentive Stock Options, to any
limitation required under the Code, shall equitably adjust any or all of
(i) the number and kind of shares in respect of which Awards may be made
under the Plan, (ii) the number and kind of shares subject to outstanding
Awards, and (iii) the award, exercise or conversion price with respect to
any of the foregoing, and if considered appropriate, the Committee may
make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a
whole number.
(c) Subject to adjustment under subsection (b), no Participant may receive
an Award which would result in such Participant having received, during
the fiscal year of the Company in which the Award is made, Awards for
more than an aggregate of 300,000 shares of Common Stock.
SECTION 6. STOCK OPTIONS
(a) General.
(i) Subject to the provisions of the Plan, the Committee may award Incentive
Stock Options and Nonstatutory Stock Options and determine the number of
shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The
terms and conditions of Incentive Stock Options shall be subject to and
comply with Section 422 of the Code, or any successor provision, and any
regulations thereunder. See subsection (b) below.
(ii) The Committee shall establish the option price at the time each Option
is awarded. In the case of Incentive Stock Options, such price shall
not be less than 100% of the Fair Market Value of the Common Stock on
the date of award.
(iii) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable
Award or thereafter. The Committee may impose such conditions with
respect to the exercise of Options, including conditions relating to
applicable federal or state securities laws, as it considers necessary
or advisable.
(iv) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the
Company. Such payment may be made in whole or in part in cash or, to
the extent permitted by the Committee at or after the award of the
Option, by delivery of a note or shares of Common Stock owned by the
optionee, or by retaining shares otherwise issuable under the Plan,
valued at their Fair Market Value on the date of delivery, or such
other lawful consideration as the Committee may determine.
(b) Incentive Stock Options.
18
<PAGE>
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(i) All Incentive Stock Options granted under the Plan shall, at the time of
grant, be specifically designated as such in the option agreement
covering such Incentive Stock Options. The Option exercise period shall
not exceed ten years from the date of grant.
(ii) If any employee to whom an Incentive Stock Option is to be granted
under the Plan is, at the time of the grant of such option, the owner
of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code),
then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:
(x) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the Fair Market
Value of one share of Common Stock at the time of grant; and
(y) The option exercise period shall not exceed five years from the date
of grant.
(iii) For so long as the Code shall so provide, options granted to any
employee under the Plan (and any other incentive stock option plans of
the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any
one calendar year for shares of Common Stock with an aggregate Fair
Market Value (determined as of the respective date or dates of grant)
of more than $100,000.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to
the extent that the related Option is exercised, and the related Option
shall terminate to the extent that the tandem SARs are exercised. SARs
granted in tandem with Options shall have an exercise price of not less
than the exercise price of the related Option.
(b) An SAR related to an Option which can only be exercised during limited
periods following a change in control of the Company may entitle the
Participant to receive an amount based upon the highest price paid or
offered for Common Stock in any transaction relating to the change in
control or paid during the thirty-day period immediately preceding the
occurrence of the change in control in any transaction reported in any
stock market in which the Common Stock is usually traded.
SECTION 8. PERFORMANCE SHARES
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each
Performance Cycle and the duration of each Performance Cycle. There may
be more than one Performance Cycle in existence at any one time, and the
duration of Performance Cycles may differ from each other. The payment
value of Performance Shares shall be equal to the Fair Market Value of
the Common Stock on the date
19
<PAGE>
the Performance Shares are earned or, in the discretion of the Committee,
on the date the Committee determines that the Performance Shares have
been earned.
(b) The Committee shall establish performance goals for each Cycle, for the
purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish
such objectives as the Committee may from time to time select. During any
Cycle, the Committee may adjust the performance goals for such Cycle as
it deems equitable in recognition of unusual or non-recurring events
affecting the Company, changes in applicable tax laws or accounting
principles, or such other factors as the Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have
been earned on the basis of performance in relation to the established
performance goals. The payment values of earned Performance Shares shall
be distributed to the Participant or, if the Participant has died, to the
Participant's Designated Beneficiary, as soon as practicable thereafter.
The Committee shall determine, at or after the time of award, whether
payment values will be settled in whole or in part in cash or other
property, including Common Stock or Awards.
SECTION 9. RESTRICTED STOCK
(a) Subject to the provisions of the Plan, the Committee may award shares of
Restricted Stock and determine the duration of the Restricted Period
during which, and the conditions under which, the shares may be forfeited
to the Company and the other terms and conditions of such Awards. Shares
of Restricted Stock shall be issued for no cash consideration or such
minimum consideration as may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee,
during the Restricted Period. Shares of Restricted Stock shall be
evidenced in such manner as the Committee may determine. Any certificates
issued in respect of shares of Restricted Stock shall be registered in
the name of the Participant and unless otherwise determined by the
Committee, deposited by the Participant, together with a stock power
endorsed in blank, with the Company. At the expiration of the Restricted
Period, the Company shall deliver such certificates to the Participant or
if the Participant has died, to the Participant's Designated Beneficiary.
SECTION 10. STOCK UNITS
(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance
criteria, vesting requirements and payment rules as the Committee shall
determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration
as may be required by applicable law.
SECTION 11. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Documentation. Each Award under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary
20
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or advisable to achieve the purposes of the Plan or comply with
applicable tax and regulatory laws and accounting principles.
(b) Committee Discretion. Each type of Award may be made alone, in addition
to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Committee need not treat
Participants uniformly. Except as otherwise provided by the Plan or a
particular Award, any determination with respect to an Award may be made
by the Committee at the time of award or at any time thereafter.
(c) Settlement. The Committee shall determine whether Awards are settled in
whole or in part in cash, Common Stock, other securities of the Company,
Awards or other property. The Committee may permit a Participant to defer
all or any portion of a payment under the Plan, including the crediting
of interest on deferred amounts denominated in cash and dividend
equivalents on amounts denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Committee, any Award
under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and
(ii) cash payments in lieu of or in addition to an Award.
(e) Termination of Employment. The Committee shall determine the effect on
an Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period
during which, the Participant's legal representative, guardian or
Designated Beneficiary may receive payment of an Award or exercise rights
thereunder.
(f) Change in Control. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company (as defined by
the Committee), the Committee in its discretion may, at the time an Award
is made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating to
the exercise or realization of the Award, (ii) provide for the purchase
of the Award upon the Participant's request for an amount of cash or
other property that could have been received upon the exercise or
realization of the Award had the Award been currently exercisable or
payable, (iii) adjust the terms of the Award in a manner determined by
the Committee to reflect the change in control, (iv) cause the Award to
be assumed, or new rights substituted therefor, by another entity, or (v)
make such other provision as the Committee may consider equitable and in
the best interests of the Company.
(g) Withholding Taxes. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes
required by law to be withheld in respect of Awards under the Plan no
later than the date of the event creating the tax liability. The Company
and its Affiliates may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the
Participant. In the Committee's discretion, the Participant may pay any
taxes due with respect to an Award in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of retention or
delivery.
(h) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or
comply with applicable laws.
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(i) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the
same or a different type, changing the date of exercise or realization
and converting an Incentive Stock Option to a Nonstatutory Stock Option,
provided that the Participant's consent to such action shall be required
unless the Committee determines that the action, taking into account any
related action, would not materially and adversely affect the
Participant.
SECTION 12. MISCELLANEOUS
(a) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Company
expressly reserves the right at any time to dismiss a Participant free
from any liability or claim under the Plan, except as expressly provided
in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as
a shareholder with respect to any shares of Common Stock to be
distributed under the Plan until he or she becomes the holder thereof. A
Participant to whom Common Stock is awarded shall be considered the
holder of the Stock at the time of the Award except as otherwise provided
in the applicable Award.
(c) Effective Date. The 1992 Equity Incentive Plan became effective on July
10, 1992. Subject to the approval of the stockholders of the Company,
this Amended and Restated 1992 Equity Incentive Plan will be effective on
November , 1996. Prior to such approval, Awards may be made under the
Plan expressly subject to such approval.
(d) Amendment of Plan. The Committee may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to any shareholder
approval that the Committee determines to be necessary or advisable.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts.
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EPX10 5 DETACH HERE
PROXY
EPIX MEDICAL, INC.
71 Rogers Street, Cambridge, Massachusetts 02142
PROXY FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
June 2, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint Michael D. Webb, Stephen C. Knight, and
William T. Whelan, and each of them acting singly, the attorneys and proxies
of the undersigned, with full power of substitution, with all the powers
which the undersigned would possess if personally present, to vote all of the
shares of capital stock of EPIX Medical, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the offices of EPIX Medical, Inc., 161 First Street,
Cambridge, Massachusetts on Wednesday, June 2, 1999, at 10:00 a.m., and at
any and all adjournments thereof, hereby acknowledging receipt of the Proxy
Statement for such meeting and revoking any proxy heretofore given with
respect to such shares.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2. IN THEIR DISCRETION, THE PROXIES ARE ALSO
AUTHORIZED TO VOTE UPON SUCH MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
| SEE REVERSE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE |
| SIDE | | SIDE |
<PAGE>
EPX10 4 DETACH HERE
[X] Please mark ---
votes as in |
this example. |
1. Proposal to elect directors.
Nominees: Christopher F.O. Gabrieli, Michael D. Webb
FOR WITHHELD
MARK HERE
[ ] [ ] FOR ADDRESS [ ]
CHANGE AND
NOTE BELOW
[ ]
--------------------------------------
for all nominees except as noted above
2. Proposal to amend the Company's Amended and Restated 1992 Equity
Incentive Plan to increase the FOR AGAINST ABSTAIN
aggregate number of shares of the [ ] [ ] [ ]
Company's common stock as to which
awards may be granted under such
plan by 250,000 shares.
PLEASE SIGN, DATE AND MAIL THIS PROXY TODAY.
Please sign exactly as name appears on stock certificate. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Signature: DATE:
Signature: DATE:
