<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(4) Date Filed:
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<PAGE>
EPIX MEDICAL, INC.
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
(617) 250-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 2000
Notice is hereby given that the 2000 Annual Meeting of Stockholders of EPIX
Medical, Inc., a Delaware corporation, will be held on May 1, 2000, 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 our Restated Certificate of Incorporation to
increase the number of authorized shares of common stock from 15,000,000
shares to 40,000,000 shares.
3. To approve an amendment to our Amended and Restated 1992 Equity Incentive
Plan to increase the number of shares of our common stock as to which awards
may be granted under such plan by 2,000,000 shares.
4. 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 March 14, 2000 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 3, 2000
<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. for use at our 2000
Annual Meeting of Stockholders to be held on Monday, May 1, 2000 at 10:00 a.m.
at the offices of EPIX Medical, Inc., 161 First Street, Cambridge,
Massachusetts, and at any adjournments thereof.
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 our Secretary 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 of our stockholders entitled to notice of and to vote
at the Meeting on or about April 3, 2000.
VOTING SECURITIES AND VOTES REQUIRED
Holders of our common stock, $0.01 par value per share, of record on our
books at the close of business on March 14, 2000, the record date, are entitled
to notice of and to vote at the Meeting. On the record date, there were
11,729,913 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 our
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 our
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 entitled to vote at the Meeting is required to approve an amendment to the
Restated Certificate of Incorporation to increase the number of authorized
shares of common stock. With respect to the tabulation of votes on the proposal
to amend our Restated Certificate of Incorporation to increase the number of
authorized shares of common stock, abstentions and broker non-votes will have
the same effect as votes against the proposal.
<PAGE>
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
to approve the proposed amendment to our Amended and Restated 1992 Equity
Incentive Plan (the "Equity Plan"). Broker non-votes will have the same effect
as a vote against the proposal.
SHARE OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of February 29, 2000 by (i) each person known
by us to own beneficially 5% or more of the common stock, (ii) each Named
Executive Officer (as defined in "Executive Compensation" below), (iii) each of
our directors and (iv) all of our current directors and executive officers 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 1,596,999 13.62%
persons (2)...............................................
Bessemer Venture Partners
1400 Old Country Road
Suite 407
Westbury, NY 11590
T. Rowe Price Associates, Inc. (3).......................... 747,000 6.37%
100 E. Pratt Street
Baltimore, MD 21202
Accel IV L.P. and certain related persons (4)............... 645,886 5.51%
428 University Avenue
Palo Alto, CA 94301
Randall B.Lauffer, Ph.D. (5)................................ 941,464 8.03%
Michael D. Webb (6)......................................... 344,466 2.91%
James E. Smith, Ph.D. (7)................................... 123,332 1.04%
E. Kent Yucel, M.D. (8)..................................... 109,732 *
Stephen C. Knight, M.D. (9)................................. 101,427 *
Christopher F.O. Gabrieli (10).............................. 1,711,126 14.57%
Luke B. Evnin, Ph.D. (11)................................... 680,918 5.80%
Stanley T. Crooke, M.D., Ph.D. (12)......................... 31,025 *
All current executive officers and directors as a group
(10 persons) (13)......................................... 4,111,925 33.83%
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) In accordance with SEC rules, beneficial ownership includes any shares as to
which a person or entity has sole or shared voting power and any shares as
to which the person or entity has the right to acquire beneficial ownership
within 60 days after February 29, 2000 through the exercise of any stock
option or warrant. Except as noted below, we believe that the persons named
in the table have sole voting and investment power with respect to the
shares of common stock set forth opposite their names. Percentage of
beneficial ownership is based on 11,727,214 shares of common stock
outstanding as of February 29, 2000.
2
<PAGE>
(2) This information is obtained from a Schedule 13G, dated February 14, 2000,
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
respect to such shares. Does not include 168,693 shares held by members of
Deer III & Co. LLC and persons associated with such members of Deer III &
Co. LLC.
(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 5.97% of the shares outstanding),
which Price Associates serves as an investment advisor 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 14, 2000,
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 441,253 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) 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 119,346 shares held by a trust
for the benefit of Dr. Lauffer as to which shares Dr. Lauffer has voting and
investment control.
(6) Includes 50,000 shares held by Mr. Webb's wife as to which Mr. Webb
disclaims beneficial ownership and 94,300 shares subject to options
exercisable within the 60-day period following February 29, 2000.
(7) Includes 85,697 shares subject to options exercisable within the 60-day
period following February 29, 2000.
(8) Includes 105,533 shares subject to options exercisable within the 60-day
period following February 29, 2000.
(9) Includes 44,445 shares subject to options exercisable within the 60-day
period following February 29, 2000.
(10) 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 February 29, 2000.
3
<PAGE>
(11) 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 8,666 shares subject to options
exercisable within the 60-day period following February 29, 2000.
(12) Consists of 31,025 shares subject to options exercisable within the 60 day
period following February 29, 2000.
(13) See footnotes (2), (3) and (6)-(13) above. Includes 428,832 shares subject
to options exercisable within the 60-day period following February 29, 2000.
4
<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 I directors will be elected to hold office
for three years until his respective successor is duly elected and qualified.
The Board has nominated Luke B. Evnin, Ph.D. and Randall B. Lauffer, Ph.D. for
election to terms of office expiring in 2003. Each nominee is currently a
director 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 I DIRECTORS
Luke B. Evnin, Ph.D.*# Dr. Evnin is currently a Managing Director 1994 2000
(age 36) of MPM 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, our Chief Scientific Officer, 1988 2000
(age 42) founded the Company in November 1988 and
served as our Chief Executive Officer 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>
5
<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 1996 2001
(age 54) Executive Officer of Isis Pharmaceuticals
Inc., a pharmaceuticals company, since
January 1989. Dr. Crooke serves on the
boards of directors of Valentis, Inc., Axon
Instruments, Synsorb Biotech and IDUN
Pharmaceuticals, Inc.
CLASS III DIRECTORS
Christopher F.O. Gabrieli*# Mr. Gabrieli is our Chairman of the Board. 1994 2002
(age 40) 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 our Chief Executive 1994 2002
(age 41) Officer since December 1994, and our
Secretary 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>
- ------------------------
* Member of the Compensation Committee.
# Member of the Audit Committee.
6
<PAGE>
During the year ended December 31, 1999, the Board held five meetings and
all of the directors attended each meeting. All of the directors attended each
meeting of the committee 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 our 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 our financial reporting. The Audit Committee met once in 1999.
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 our
executive officers and certain other key employees and consultants and to
administer our equity incentive, stock option and stock purchase plans. The
Compensation Committee met once in 1999.
We have 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 our executive
officers.
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 our compensation program for the our
executive officers, including the Chief Executive Officer and the other
executive officers named in the summary compensation table below. Our
compensation programs are designed to provide a competitive level of total
compensation which, at our present stage of development, is heavily weighted
toward equity incentive compensation linked to our performance. This program
includes base salary and both annual and long-term incentive compensation.
7
<PAGE>
COMPENSATION PHILOSOPHY
The design and implementation of our executive compensation programs are
based on a series of guiding principles derived from our 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 us 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 corporate performance;
- align the financial interests of the management team with our financial
interests and those of our stockholders; and
- emphasize reward for performance at the individual, team and corporate
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 our
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 to our leadership. For
1999, the Chief Executive Officer's base salary was increased to $236,800 from
$225,000. For 2000, the Committee has approved an 11% base salary increase to
$263,100 for the Chief Executive Officer.
ANNUAL BONUS
Beginning in 1998, we started a formal short-term incentive plan. Our
executive officers are eligible for an annual cash bonus, which is based
primarily on corporate achievements 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 our overall performance.
We achieved several milestones in 1999, including: the commencement of a
Phase III efficacy trial for AngioMARK to detect aortoiliac occlusions or
stenoses; the negotiation of a collaboration agreement with Siemens Medical
Systems, one of the largest MRI equipment manufacturers in the world; the
announcement of preliminary results of a study with Pfizer Inc. using
AngioMARK-enhanced MRI to measure changes in blood volume during sexual arousal
in healthy women; and the development of a new imaging
8
<PAGE>
agent that provides, for the first time, detailed MR images of blood clots. In
recognition of the Chief Executive Officer's leadership in the achievement of
these corporate milestones and his contributions to us, the Chief Executive
Officer was awarded a bonus in the amount of $71,040, 30% of his 1999 annual
salary.
EQUITY-BASED LONG-TERM INCENTIVE COMPENSATION
Long-term incentives for our employees are provided through stock option
grants under the Equity Plan, which generally are 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 our long-term
performance and to align the financial interests of the management team with our
financial interests and those of our 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 our
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 (as
defined below), are subject to different vesting schedules, including schedules
that are based on the achievement of certain milestone events as determined by
the Committee.
In 1999, the Chief Executive Officer received an option to purchase 50,000
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 our 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.
Our policy is to qualify our 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
9
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The following graph shows the cumulative stockholder return of our common
stock from January 30, 1997 (the first trading day for our common stock) through
December 31, 1999 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 our common stock and each of the comparison groups on January 30, 1997 and
assumes the reinvestment of dividends. We have never declared a dividend on our
common stock. 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>
1/30/1997 $100.00 $100.00 $100.00
1997 $185.71 $115.28 $96.00
1998 $133.04 $162.42 $122.26
1999 $142.86 $295.24 $227.54
</TABLE>
<TABLE>
<CAPTION>
1/30/97 1997 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
EPIX Medical, Inc........................................... $100.00 $185.71 $133.04 $142.86
Nasdaq Stock Market (U.S.).................................. $100.00 $115.28 $162.42 $295.24
Nasdaq Pharm. Stocks........................................ $100.00 $ 96.00 $122.26 $227.54
</TABLE>
10
<PAGE>
The following table sets forth certain compensation information for our
Chief Executive Officer and our four other most highly compensated executive
officers whose salary and bonus for the year ended December 31, 1999 exceeded
$100,000 (together, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
-------------------------------- SECURITIES ALL OTHER
BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($)(1) OPTIONS (#) ($)
- --------------------------- -------- ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Michael D. Webb........................... 1999 236,800 71,040 50,000 5,650(2)
Chief Executive Officer and Secretary 1998 225,000 77,600 -- 850(3)
1997 175,000 65,625 83,000 850(3)
Stephen C. Knight, M.D.................... 1999 235,000 58,700 240,000 4,800(4)
President and Chief Operating Officer 1998 189,600 43,700 -- --
1997 160,000 40,000 27,000 --
James E. Smith, Ph.D...................... 1999 211,200 63,800 -- 71,996(5)
Executive Vice President, Research and 1998 200,700 52,500 -- 66,005(6)
Development 1997 185,000 46,250 28,000 62,477(6)
E. Kent Yucel, M.D........................ 1999 201,300 28,200 71,000 --
Senior Vice President and Chief Medical 1998 189,900 47,500 -- 35,000(7)
Officer 1997 175,000 -- 27,000 35,000(7)
Randall B. Lauffer, Ph.D.................. 1999 189,500 45,500 20,000 6,020(8)
Chief Scientific Officer 1998 180,000 36,000 -- 1,220(9)
1997 160,000 32,000 28,000 1,180(9)
</TABLE>
- ------------------------
(1) Bonuses were earned in the year indicated and generally are paid in the
subsequent year.
(2) Consists of matching 401(k) contributions ($4,800) and life insurance
premiums paid by us on behalf of Mr. Webb on a policy for the benefit of
Mr. Webb ($850).
(3) Consists of life insurance premiums paid by us on behalf of Mr. Webb on a
policy for the benefit of Mr. Webb.
(4) Consists of matching 401(k) contributions.
(5) Consists of housing expenses reimbursed to Dr. Smith in connection with his
maintaining a residence within close proximity to our offices ($67,196) and
matching 401(k) contributions ($4,800).
(6) Consists of housing expenses reimbursed to Dr. Smith in connection with his
maintaining a residence within close proximity to our offices.
(7) Consists of compensation paid by us in lieu of lost clinical practice
revenue.
(8) Consists of life insurance premiums paid by us on behalf of Dr. Lauffer on a
policy for the benefit of Dr. Lauffer ($1,220) and matching 401(k)
contributions ($4,800).
(9) Consists of life insurance premiums paid by us on behalf of Dr. Lauffer on a
policy for the benefit of Dr. Lauffer.
11
<PAGE>
The following table sets forth grants of stock options pursuant to the
Company's Equity Plan granted during the fiscal year ended December 31, 1999 to
the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------
NAME GRANTED FISCAL YEAR (%) ($/SHARE) DATE 5% ($) 10% ($)
- ---- ---------- --------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Webb......... 50,000(3) 5.68% 5.50 6/30/09 172,946 438,279
Stephen C. Knight,
Ph.D.................. 20,000(3) 2.27% 5.50 6/30/09 69,178 175,312
220,000(4) 24.99% 5.13 9/15/09 709,079 1,796,945
James E. Smith, Ph.D.... -- -- -- -- -- --
E. Kent Yucel, M.D...... 21,000(3) 2.39% 5.50 6/30/99 72,637 184,077
50,000(4) 5.68% 5.13 9/15/09 161,154 408,397
Randall B. Lauffer,
Ph.D.................. 20,000(3) 2.27% 5.50 6/30/99 69,178 175,312
</TABLE>
- ------------------------
(1) Stock options were granted under the Company's Equity Plan at an exercise
price equal to the fair market value of the Company's common stock at the
date of grant.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast future appreciation, if any, in the
price of the underlying common stock. No gain to the optionee is possible
without an increase in price of the underlying common stock, which will
benefit all stockholders proportionately.
(3) The option vests in five equal annual installments beginning on June 30,
2000.
(4) The option vests in five equal annual installments beginning on
September 15, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL YEAR- THE-MONEY OPTIONS AT
SHARES END (#) FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Michael D. Webb.............. 50,000 244,805 94,300/202,334 833,057/658,087
Stephen C. Knight, M.D....... 55,554 131,941 44,445/300,334 244,448/1,379,587
James E. Smith, Ph.D......... 5,000 50,250 69,697/60,667 565,723/260,968
E. Kent Yucel, M.D........... -- -- 105,533/133,466 611,787/574,905
Randall B. Lauffer Ph.D...... -- -- 0/48,000 0/125,000
</TABLE>
- ------------------------
(1) Based on the difference between the fair market value of the underlying
shares of common stock on December 31, 1999 at $10.00 a share and the option
exercise price.
12
<PAGE>
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 one of our principal stockholders. 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., one of our
principal stockholders and a principal shareholder of Accel V L.P. Mr. Gabrieli
is a General Partner of Deer III & Co., the General Partner of Bessemer Venture
Partners III L.P., one of our principal stockholders. See "Share Ownership" and
"Certain Transactions."
CERTAIN TRANSACTIONS
In June 1999, in connection with the exercise of stock options by
Dr. Knight, we made a loan to Dr. Knight in the principal amount of $249,993 and
bearing interest at the rate of 5.25% per annum (the applicable Federal Funds
rate for long term loans announced for such month). The loan is secured by a
pledge of 55,554 shares of our common stock held by Dr. Knight. As of
February 29, 2000, the outstanding principal balance on this promissory note
plus accrued interest was $259,702. This loan is subject to acceleration upon
the termination of Dr. Knight's employment.
In June 1995 and April 1996, we 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 our
common stock held by Dr. Lauffer. As of February 29, 2000, the outstanding
principal amounts on these loans plus accrued interest were $68,576 and $63,222,
respectively. In May 1996, we 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 our common stock held by Dr. Lauffer. As of February 29,
2000, the outstanding principal amount on this loan plus accrued interest was
$227,739. Each of these loans is subject to acceleration upon the voluntary
termination of Dr. Lauffer's employment, among other events.
PROPOSAL 2:
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO INCREASE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
GENERAL
Our Restated Certificate of Incorporation authorize the issuance of
15,000,000 shares of common stock, $.01 par value, and 1,000,000 shares of
Preferred Stock, $.01 par value. As of March 13, 2000, our Board of Directors
unanimously approved an amendment to the Restated Certificate of Incorporation
to increase the number of authorized shares of common stock from 15,000,000 to
40,000,000 and to submit the proposed amendment to our stockholders.
PURPOSE AND EFFECT OF THE AMENDMENT
The general purpose and effect of the proposed amendment to our Restated
Certificate of Incorporation will be to authorize 25,000,000 additional shares
of common stock to create a sufficient reserve of shares of common stock for our
future needs. The Board of Directors believes that it is prudent to have the
additional shares of common stock for general corporate purposes, including
acquisitions, establishing
13
<PAGE>
strategic relationships with other companies, equity financings, grants of stock
options, payment of stock dividends, stock splits or other recapitalizations.
We currently have 15,000,000 authorized shares of common stock. As of
March 14, 2000, we had 11,729,913 shares issued and outstanding and of the
remaining 3,270,087 authorized but unissued shares, we have reserved
approximately 26,665 shares in connection with the possible exercise of
outstanding warrants and 1,981,450 shares pursuant to the Equity Plan.
If the Board of Directors deems it to be in our best interest and that of
our stockholders to issue additional shares of common stock in the future, the
Board of Directors generally will not seek further authorization by vote of the
stockholders, unless such authorization is otherwise required by law or
regulations. The proposed amendment would give the Board of Directors the
flexibility to act promptly when it determines that issuance of additional
shares is in our best interest.
The increase in the number of authorized shares of common stock may have a
dilutive effect on shares held by existing stockholders and also could have an
anti-takeover effect. If our Board of Directors desired to issue additional
shares in the future, such issuance could dilute the voting power of a person
seeking control of us, thereby deterring or rendering more difficult a merger,
tender offer, proxy contest or an extraordinary corporate transaction opposed by
us.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of common stock
entitled to vote at the Meeting is required to approve an amendment to our
Restated Certificate of Incorporation increasing the number of authorized shares
of common stock from 15,000,000 to 40,000,000.
BOARD RECOMMENDATION
Our Board of Directors believes the amendment to our Restated Certificate of
Incorporation to increase the number of authorized shares of common stock from
15,000,000 to 40,000,000, and is in the best interest of the Company and that of
our stockholders and recommends a vote FOR the proposal to amend the Restated
Certificate of Incorporation.
PROPOSAL 3:
AMENDMENT TO AMENDED AND RESTATED 1992 EQUITY INCENTIVE PLAN
GENERAL
We originally adopted the Equity Plan 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 2,599,901 shares (including
shares subject to options already granted and shares issued pursuant to options
already exercised). The Equity Plan is designed to provide us 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 our key
employees and consultants and to enable them to participate in our long-term
growth.
AMENDMENT
In September 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
14
<PAGE>
additional 550,000 shares and on March 13, 2000 voted, subject to shareholder
approval, to further amend the Equity Plan to increase the aggegate number of
shares of common stock available thereunder by an additional 1,450,000 shares
resulting in an aggregate increase of 2,000,000 shares to 4,599,901 shares
available thereunder, subject to adjustment for stock-splits and similar capital
changes. We believe that this increase is necessary and appropriate to enable us
to attract and retain the quality of employees and consultants whose services
are considered essential to our future progress, to encourage such employees'
and consultants' ownership of us and to provide them with an incentive to remain
as our employees or consultants.
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 of our new employees, 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 of our executive officers 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 2000 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. Our
standard vesting schedule provides that a portion of the shares subject to each
option vest and 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 March 10, 2000, approximately 85 employees were eligible to
participate in the Equity Plan. The closing price of our common stock, as
reported on the Nasdaq National Market on March 10, 2000, was $21.75.
EQUITY PLAN ACTIVITY
As of March 10, 2000, options to purchase an aggregate of 3,507,226 shares
of common stock had been granted under the Equity Plan, of which options to
purchase 196,650 shares had been canceled and
15
<PAGE>
options to purchase 800,000 shares have been granted subject to shareholder
approval of the increase of shares under the Equity Plan, which is being
requested pursuant to this Proposal 3. Options to purchase 742,450 shares had
been exercised as of such date and 89,325 shares remain available for the
granting of awards under the Equity Plan. 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 us 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) we are
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 us.
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) we receive 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 to us.
VOTE 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
Our Board of Directors believes that the amendment to the Equity Plan is in
the best interest of the Company and that of our stockholders and recommends a
vote FOR the proposal to approve the amendment to the Equity Plan.
16
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our 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 us.
Based solely on a review of the copies of reports furnished to us and
written representations that no other reports were required, we believe that
during 1999 our executive officers and directors complied with all applicable
Section 16(a) filing requirements, with the following exceptions: Dr. Crooke,
one of our Directors, filed a late Form 4 reporting the exercise and sale of
options for an aggregate of 18,600 shares of common stock for which a Form 4 was
due on September 10, 1999; Ms. Flint, one of our executive officers, filed a
late Form 4 reporting the exercise of an option to purchase 19,333 shares of
common stock for which a Form 4 was due on August 10, 1999; Mr. Webb, an
executive officer and director of our company, filed a late Form 4 reporting the
exercise of an option to purchase 10,000 shares of common stock for which a
Form 4 was due on July 10, 1999; Ms. Carey, one of our executive officers, filed
a late Form 3 reporting the initial statement of beneficial ownership for which
a Form 3 was due on December 10, 1999; and Dr. Smith, one of our executive
officers, filed a Form 5 reporting the exercise of an option to purchase
5,000 shares of common stock for which a Form 4 was due on January 10, 2000.
INFORMATION CONCERNING AUDITORS
The firm of Ernst & Young LLP, independent auditors, audited our financial
statements for the year ended December 31, 1999. The Board of Directors has
appointed Ernst & Young LLP to serve as our independent auditors for the fiscal
year ending December 31, 2000. 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 2001 ANNUAL MEETING
In order to be considered for inclusion in our proxy materials for the 2001
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 us no later than December 4, 2000. Proposals should be sent to
the attention of the Secretary at our offices at 71 Rogers Street, Cambridge,
Massachusetts 02142.
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 our Secretary 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.
17
<PAGE>
EXPENSES OF SOLICITATION
We will bear the cost of soliciting proxies, including expenses in
connection with preparing and mailing this Proxy Statement. Proxies may be
solicited by our directors, officers or regular employees by mail, by telephone,
in person or otherwise. No such person will receive additional compensation for
such solicitation. In addition, we 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. We 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 that are not known to the directors at the date of printing hereof
and that 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 our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 as filed with the Securities and Exchange Commission are
available to stockholders upon written request addressed to the Chief Executive
Officer at our 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.
18
<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.
19
<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 2,099,901 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.
20
<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.
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
21
<PAGE>
(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 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.
22
<PAGE>
(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 or advisable
to achieve the purposes of the Plan or comply with applicable tax and
regulatory laws and accounting principles.
23
<PAGE>
(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.
(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
24
<PAGE>
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.
25
<PAGE>
EPX10 5 DETACH HERE
PROXY
EPIX MEDICAL
71 Rogers Street, Cambridge, Massachusetts 02142
PROXY FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
May 1, 2000
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, 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 DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3. IN THEIR DISCRETION, THE PROXIES ARE ALSO
AUTHORIZED TO VOTE UPON SUCH MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
<PAGE>
EPX10 4 DETACH HERE
/X/ Please mark
votes as in
this example
1. Proposal to elect directors
Nominees: Luke B. Evnin, Ph.D.
FOR WITHHELD
MARK HERE
/ / / / FOR ADDRESS / /
CHANGE AND
NOTE BELOW
Randall B. Lauffer, Ph.D.
FOR WITHHELD
/ / / /
2. Proposal to amend our Restated Certificate of Incorporation to increase
the number of authorized shares of FOR AGAINST ABSTAIN
common stock from 15,000,000 shares / / / / / /
to 40,000,000 shares.
3. Proposal to amend the Company's Amended and Restated 1992 Equity Incentive
Plan to increase the aggregate FOR AGAINST ABSTAIN
number of shares of the Company's / / / / / /
common stock as to which awards
may be granted under such plan
by 2,000,000 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:
----------------------------- ------------------------
