<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
BIOSITE DIAGNOSTICS INCORPORATED
- --------------------------------------------------------------------------------
(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>
Biosite Diagnostics Incorporated
11030 Roselle Street
San Diego, CA 92121
(619) 455-4808
April 28, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on June 9, 1999, at 9:00 a.m., at the Embassy Suites, 4550 La
Jolla Village Drive, San Diego, California.
The formal notice of the Annual Meeting and the Proxy Statement have
been made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return,
at an early date, the enclosed proxy in the prepaid envelope to ensure that your
shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE
AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's Annual Report to Stockholders is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
Kim D. Blickenstaff
President, Chief Executive Officer,
Secretary and Treasurer
<PAGE>
BIOSITE DIAGNOSTICS INCORPORATED
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 1999
------------
The Annual Meeting of Stockholders of Biosite Diagnostics Incorporated
(the "Company") will be held at the Embassy Suites, 4550 La Jolla Village Drive,
San Diego, California, on June 9, 1999, at 9:00 a.m., for the following
purposes:
1. To elect two Class II directors.
2. To consider and vote upon a proposal to amend and restate the
Company's 1996 Stock Incentive Plan.
3. To ratify the selection of Ernst & Young LLP as the
Company's independent auditors.
4. To transact such other business as may properly come
before the Annual Meeting and any adjournment of the
Annual Meeting.
The Board of Directors has fixed the close of business on April 12,
1999, as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof. A complete list
of stockholders entitled to vote will be available at the Secretary's office,
11030 Roselle Street, San Diego, California, for ten days before the meeting.
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE
YOU TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors.
Kim D. Blickenstaff
President, Chief Executive Officer,
Secretary and Treasurer
April 28, 1999
<PAGE>
BIOSITE DIAGNOSTICS INCORPORATED
------------
PROXY STATEMENT
------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Biosite Diagnostics Incorporated, a Delaware
corporation ("Biosite" or the "Company"), with principal executive offices at
11030 Roselle Street, San Diego, California 92121, of proxies in the
accompanying form to be used at the Annual Meeting of Stockholders to be held at
the Embassy Suites, 4550 La Jolla Village Drive, San Diego, California, on June
9, 1999, at 9:00 a.m., and any adjournment of the Annual Meeting (the "Annual
Meeting"). The shares represented by the proxies received in response to this
solicitation and not revoked will be voted at the Annual Meeting. A proxy may
be revoked at any time before it is exercised by filing with the Secretary of
the Company a written revocation or a duly executed proxy bearing a later date
or by voting in person at the Annual Meeting. On the matters coming before the
Annual Meeting for which a choice has been specified by a stockholder by means
of the ballot on the proxy, the shares will be voted accordingly. If no choice
is specified, the shares will be voted FOR the election of the two nominees for
Class II director listed in this Proxy Statement and FOR approval of proposals 2
and 3 described in the Notice of Annual Meeting and in this Proxy Statement.
Stockholders of record at the close of business on April 12, 1999 are
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on such date, the Company had 13,002,373 shares of Common Stock
outstanding and entitled to vote. Each holder of Common Stock is entitled to
one vote for each share held as of the record date.
Directors are elected by a plurality vote. The other matters submitted
for stockholder approval at the Annual Meeting will be decided by the
affirmative vote of a majority of shares present in person or represented by
proxy and entitled to vote on each such matter. Abstentions with respect to any
matter are treated as shares present or represented and entitled to vote on that
matter and thus have the same effect as negative votes. If shares are not voted
by the broker who is the record holder of the shares, or if shares are not voted
in other circumstances in which proxy authority is defective or has been
withheld with respect to any matter, these non-voted shares are not deemed to be
present or represented for purposes of determining whether stockholder approval
of that matter has been obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or telegraph. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Company's Common Stock. The
Company has retained Georgeson & Co., Inc. to assist in the solicitation of
proxies at a cost of approximately $6,000.
This Proxy Statement and the accompanying form of proxy are being mailed
to stockholders on or about April 28, 1999.
IMPORTANT
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE
URGE YOU TO MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
AT YOUR EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID
RETURN ENVELOPE. THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR
VOTE AT THE ANNUAL MEETING.
-1-
<PAGE>
ELECTION OF DIRECTORS
The Company has three classes of directors serving staggered three-year
terms. Each Class consists of two directors. Two Class II directors are to be
elected at the Annual Meeting for a term of three years expiring at the Annual
Meeting in 2002 or until each such director's successor shall have been elected
and qualified. The other directors of the Company will continue in office for
their existing terms, which expire in 2000 and 2001 for Class III and Class I
directors, respectively. Shares represented by the enclosed proxy can not be
voted for a greater number of persons than the number of nominees named.
COMPOSITION OF BOARD OF DIRECTORS
Unless authority to vote for directors is withheld, it is intended that
the shares represented by the enclosed proxy will be voted for the election of
Anthony DeMaria, M.D. and Howard E. Greene, Jr. as Class II directors. The
nominees have been nominated as Class II directors by the Company's Board of
Directors. In the event any of such nominees becomes unable or unwilling to
accept nomination or election, the shares represented by the enclosed proxy will
be voted for the election of the balance of those named and such other nominees
as the Board of Directors may select. The Board of Directors has no reason to
believe that any such nominee will be unable or unwilling to serve. There are
no family relationships among any of the directors or executive officers of the
Company.
Set forth below is information regarding the two nominees for Class II
director and the continuing directors of Class I and Class III, including
information furnished by them as to their principal occupations at present and
for the past five years, certain directorships held by each, their ages as of
March 31, 1999 and the year in which each became a director of the Company.
NAME AGE
CLASS II
Anthony DeMaria, M.D........................................................56
Dr. DeMaria joined the Board of Directors in June 1998. Dr. DeMaria is
professor of medicine and chief, division of cardiology at University of
California, San Diego, School of Medicine. Prior to joining the University of
California in 1992, Dr. DeMaria was director of the Kentucky Heart Institute.
Prior to joining the Kentucky Heart Institute, he held key management positions
at the University of Kentucky College of Medicine and the University of
California, Davis, School of Medicine. In 1988, Dr. DeMaria served as president
of the American College of Cardiology and is past president of the American
Society of Echocardiography. Dr. DeMaria received a B.S. from College of the
Holy Cross, and his M.D. from New Jersey College of Medicine.
Howard E. Greene, Jr........................................................56
Mr. Greene joined the Board of Directors in June 1989. Mr. Greene is an
entrepreneur who has founded, managed, and financed a series of medical
technology companies during the past 20 years. From September 1987 to July
1996, Mr. Greene was the founding Chief Executive Officer of Amylin
Pharmaceuticals, Inc., a biotechnology company developing drug candidates for
treating diabetes ("Amylin"). From October 1986 until July 1993, Mr. Greene was
the founding general partner of Biovest Partners, a seed venture capital firm
("Biovest"). He was Chief Executive Officer of Hybritech Incorporated
("Hybritech") from March 1979 until its acquisition by Eli Lilly & Co. in March
1986, and was co-inventor of Hybritech's patented monoclonal antibody assay
technology. Prior to joining Hybritech, he was an executive with the medical
diagnostics division of Baxter Healthcare Corporation from 1974 to 1979, and a
consultant with McKinsey & Company from 1967 to 1974. He is Chairman of the
Board of Cytel Corporation, and a director of Amylin and The International
-2-
<PAGE>
Biotechnology Trust plc, a British biotechnology investment company. Mr. Greene
received an M.B.A. from Harvard University.
CLASS I
Lonnie M. Smith.............................................................54
Mr. Smith joined the Board of Directors in October of 1997. Mr. Smith
is Chief Executive Officer of Intuitive Surgical Inc., a surgical device
company. From 1982 to February 1997, he served as Senior Executive Vice
President in charge of healthcare for Hillenbrand Industries, Inc.
("Hillenbrand"), a diversified public holding company. Mr. Smith was a director
of Hillenbrand from 1981 to February 1997. He had been employed by Hillenbrand
or its subsidiaries in various offices since 1976. Mr. Smith received a B.S. in
Electrical Engineering from Utah State University and an M.B.A. from Harvard
Business School.
Timothy J. Wollaeger........................................................55
Mr. Wollaeger has served as Chairman of the Board of Directors since the
Company's inception. He is the general partner of Kingsbury Associates, L.P., a
venture capital firm he founded in December 1993. From May 1990 until December
1993, he was Senior Vice President and a director of Columbia Hospital
Corporation (now Columbia/HCA Healthcare Corporation). From October 1986 until
July 1993, he was a general partner of the general partner of Biovest. He is a
director of Aurora Biosciences, Inc. and a founder and director of several
privately held medical products companies. Mr. Wollaeger received a B.A. in
Economics from Yale University and an M.B.A. from Stanford University.
CLASS III
Kim D. Blickenstaff.........................................................46
Mr. Blickenstaff, a founder of the Company, has been a director and
President, Chief Executive Officer, Treasurer, and Secretary since April 1988.
Mr. Blickenstaff is also a director of Micro Therapeutics Incorporated,
MediSpectra Inc. and Amira Medical. Prior to joining Biosite, he held various
positions in finance, operations, research management, sales management,
strategic planning, and marketing with Baxter Travenol, National Health
Laboratories, and Hybritech. Mr. Blickenstaff holds an M.B.A. from the Graduate
School of Business, Loyola University, Chicago.
Gunars E. Valkirs, Ph.D.....................................................47
Dr. Valkirs, a founder of Biosite and a co-inventor of certain of its
proprietary technology, has been a director and Vice President, Research and
Development and Chief Technical Officer since 1988. Prior to forming Biosite,
he was a Scientific Investigator with the Diagnostics Research & Development
Group at Hybritech, where he was the primary inventor of Hybritech's patented
ICON technology. Dr. Valkirs holds a Ph.D. in Physics from the University of
California at San Diego.
The Board of Directors held six meetings during the 1998 fiscal year.
All Directors then in office attended at least 75% of the aggregate number of
meetings of the Board and of the Committees on which such Directors served,
except for Mr. Smith, who attended four out of the six Board meetings during the
1998 fiscal year.
The Board of Directors has appointed a Compensation Committee, a
Nominating Committee, an Employee Stock Option Committee and an Audit Committee.
-3-
<PAGE>
The current members of the Compensation Committee are Lonnie M. Smith
and Timothy J. Wollaeger. The Compensation Committee held one meeting during
the 1998 fiscal year. The Compensation Committee's functions are to determine
and supervise compensation to be paid to officers and directors of the Company
and to assist in the administration of, and grant options under, the Amended and
Restated 1996 Stock Incentive Plan, to assist in the administration of the
Amended and Restated 1989 Stock Plan and the Amended and Restated Employee Stock
Purchase Plan and to assist in the implementation of, and provide
recommendations with respect to, general and specific compensation policies and
practices of the Company. See "Report to Stockholders on Executive
Compensation."
The current members of the Nominating Committee are Kim D. Blickenstaff
and Timothy J. Wollaeger. The Nominating Committee held no meetings during the
1998 fiscal year. The Nominating Committee's function is to select and nominate
individuals to fill vacancies in the Company's Board of Directors. The
Nominating Committee will not consider nominees recommended by security holders.
The sole member of the Employee Stock Option Committee is Kim D.
Blickenstaff. The Employee Stock Option Committee held twenty-four meetings
during the 1998 fiscal year. The Employee Stock Option Committee's functions
are to assist in the administration of, and grant options under, the Company's
Amended and Restated 1996 Stock Incentive Plan with respect to employees who are
not officers or directors of the Company.
The current members of the Audit Committee are Lonnie M. Smith and
Timothy J. Wollaeger. The Audit Committee held two meetings during the 1998
fiscal year. The Audit Committee's functions are to review the scope of the
annual report, monitor the independent auditor's relationship with the Company,
advise and assist the Board of Directors in evaluating the auditor's report,
supervise the Company's financial and accounting organization and financial
reporting and nominate for stockholder approval at the annual meeting, with the
approval of the Board of Directors, a firm of certified public accountants whose
duty it is to audit the financial records of the Company for the fiscal year for
which it is appointed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CLASS II DIRECTOR
NOMINEES LISTED ABOVE.
-4-
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 31, 1999,
regarding beneficial ownership of the Company's Common Stock by (i) each
director and nominee for director, (ii) each of the Company's officers named in
the Summary Compensation Table set forth herein, (iii) all directors and
executive officers of the Company as a group, and (iv) each person who is known
by the Company to beneficially own more than 5% of the Company's Common Stock.
Except as otherwise indicated and subject to applicable community property laws,
each person has sole investment and voting power with respect to the shares
shown. Ownership information is based upon information furnished by the
respective individuals or entities, as the case may be.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
OWNED OWNED
------------ ------------
<S> <C> <C>
Medicus Venture Partners (1)(2). . . . . . . . 1,589,273 12.2%
2882 Sand Hill Road
Suite 116
Menlo Park, CA 94025
Wellington Management Company, L.L.P. (3). . . 1,262,000 9.7
75 State Street
Boston, MA 02109
Euclid Partners III, L.P. (4). . . . . . . . . 1,006,293 7.7
50 Rockefeller Plaza
New York, NY 10020
Timothy J. Wollaeger (2) . . . . . . . . . . . 133,705 1.0
Howard E. Greene, Jr. (2)(5) . . . . . . . . . 300,365 2.3
Anthony DeMaria, M.D. (2). . . . . . . . . . . 2,552 *
Lonnie Smith (2) . . . . . . . . . . . . . . . 4,645 *
Kim D. Blickenstaff (2). . . . . . . . . . . . 412,416 3.2
Gunars E. Valkirs, Ph.D. (2)(6). . . . . . . . 348,448 2.7
Kenneth F. Buechler, Ph.D. (2)(7). . . . . . . 356,048 2.7
S. Nicholas Stiso, Ph.D. (2) . . . . . . . . . 118,510 *
Thomas M. Watlington (2) . . . . . . . . . . . 80,851 *
All directors and executive officers as a
group (11 persons)(2)(8) . . . . . . . . . . . 1,858,711 14.3%
</TABLE>
- ----------
* Less than 1%
(1) Based on its Schedule 13G dated February 15, 1999, and includes (i)
333,334 shares held by Medicus Venture Partners 1991, (ii) 104,167
shares held by Medicus Venture Partners 1992, (iii) approximately 1,151
shares subject to options owned by Medicus Venture Partners 1997, (iv)
approximately 385 shares subject to options owned by Medicus Venture
Partners X (collectively, the "Medicus Entities"), (v) 750,236 shares
held by Wilmington Interstate Corporation, an indirect, wholly-owned
subsidiary of The Hillman Company and (vi) 400,000 shares held directly
by the Henry L. Hillman Trust U/A dated November 18, 1985 (the "HLH
Trust"). A limited partnership affiliated with The Hillman Company and
a general partnership with general partners Frederick J. Dotzler and
John Reher are each general partners of each of the Medicus Entities,
and therefore may be deemed to be the beneficial owner of these shares
because they share the power to vote and dispose of these shares. The
Hillman Company is controlled by Henry L. Hillman, Elsie Hilliard
Hillman and C.G. Grefenstette, trustees (the "HLH Trustees") of the HLH
Trust, which three trustees share the power to vote and dispose of
shares representing a majority of the voting shares of The Hillman
Company. Does not include an aggregate
-5-
<PAGE>
of 163,852 shares held by eight irrevocable trusts for the benefit of
members of the Hillman family (the "Family Trusts"), as to which shares
the HLH Trustees (other than Mr. Grefenstette) disclaim beneficial
ownership. C.G. Grefenstette and Thomas G. Bigley are trustees of the
Family Trusts and share voting and dispositive power over the assets of
the Family Trusts.
(2) Includes shares which may be acquired pursuant to the exercise of
options within 60 days of March 31, 1999 as follows: Medicus Venture
Partners 1997, approximately 1,151 (according to its Schedule 13G dated
February 15, 1999); Medicus Venture Partners X, approximately 385
(according to its Schedule 13G dated February 15, 1999); Mr. Wollaeger,
2,046; Mr. Greene, 2,046; Dr. DeMaria, 2,552; Mr. Smith, 4,645; Mr.
Blickenstaff, 156,904; Dr. Valkirs, 111,432; Dr. Buechler, 121,332;
Dr. Stiso, 43,823; Mr. Watlington, 77,606; and all directors and
executive officers as a group (11 persons) (such number does not include
Dr. Stiso, who resigned from the Company on February 26, 1999), 603,961.
(3) Based on its Schedule 13G dated February 10, 1999, wherein Wellington
Management Company, L.L.P. ("WMC") reported the beneficial ownership of
1,262,000 shares of Company Common Stock. The Schedule 13G states that
such shares are owned by a variety of clients as to whom WMC is an
investment advisor. WMC reports that it has shared power to vote or to
direct the vote of 792,000 of such shares and shared power to dispose or
to direct the disposal of all 1,262,000 shares, and does not have sole
voting or dispositive power with respect to any such shares.
(4) Includes 424 shares held in the name of Stephen Reidy, General Partner
of the General Partner of Euclid Partners III, L.P. According to the
regulations of the partnership, Mr. Reidy has assigned his beneficial
ownership in such shares to the partnership.
(5) Includes 298,319 shares held in a trust for the benefit of Mr. Greene's
family as to which Mr. Greene has shared voting and investment power.
(6) Includes 235,834 shares held of record by the Valkirs Family Trust as to
which Dr. Valkirs has shared voting and investment power and 785 shares
held by a family member as to which Dr. Valkirs has no voting or
investment power.
(7) Includes 234,716 shares held in a trust for the benefit of Dr.
Buechler's family as to which Dr. Buechler has shared voting and
investment power.
(8) Includes shares held by entities referenced in footnotes 5, 6 and 7
which are affiliated with certain directors.
-6-
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Information is set forth below concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended December 31, 1996, 1997 and 1998 of those persons who were at December 31,
1998 (i) the Chief Executive Officer and (ii) the other four most highly
compensated executive officers of the Company whose salary and bonus exceeded
$100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------- COMPENSATION
AWARDS
------
NAME AND OTHER ANNUAL SECURITIES UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) COMPENSATION ($)(2) OPTIONS (#)
------------------ ---- ------------- --------- ------------------ ---------------------
<S> <C> <C> <C> <C> <C>
Kim D. Blickenstaff....................... 1998 $217,121 $ 68,740 $1,927 100,000
President and Chief Executive Officer 1997 205,682 112,159 1,567 25,000
1996 189,242 92,991 980 100,000(3)
Thomas M. Watlington...................... 1998 199,408 16,753 638 50,000
Senior Vice President, 1997 202,392 32,239 69,214(4) 5,000
Commercial Operations 1996 0(5) 0 0 100,000
Gunars E. Valkirs, Ph.D................... 1998 171,697 92,220 1,661 75,000
Vice President, Research and Development 1997 162,833 58,414 1,287 12,500
1996 151,545 60,450 844 50,000(3)
Kenneth F. Buechler, Ph.D................. 1998 165,970 72,220 1,528 75,000
Vice President, Research 1997 152,833 63,414 819 12,500
1996 140,466 60,450 768 50,000(3)
S. Nicholas Stiso, Ph.D................... 1998 165,697 83,147 2,354 20,000
Former Vice President, Operations (6) 1997 156,891 33,074 2,172 10,000
1996 146,033 26,042 1,980 50,000(3)
</TABLE>
- -----------------
(1) Includes amounts deferred by each individual under the Company's 401(k)
Plan.
(2) Except where noted amounts represent payments on behalf of each
individual for group term life insurance and separate term life
insurance.
(3) On September 6, 1996, one half of these options were canceled.
(4) Amount also includes $41,468 of relocation costs and $27,134 related to
income tax associated with the relocation costs.
(5) Mr. Watlington joined the Company in December 1996 and was not
compensated for his services until 1997.
(6) Dr. Stiso resigned from the Company on February 26, 1999.
-7-
<PAGE>
STOCK OPTIONS
The following tables summarize option grants and exercises during fiscal
1998 to or by the Chief Executive Officer and the Named Executive Officers, and
the value of the options held by such persons at the end of fiscal 1998. The
Company has not granted any Stock Appreciation Rights.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATE
NUMBER % OF OF STOCK PRICE
OF SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------------
NAME Granted(#)(1) FISCAL YEAR(2) ($/Sh)(3) DATE 5% ($) 10% ($)
- -------------------------------- ------------- --------------- ------------ ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Kim D. Blickenstaff............ 100,000 10.68 13.875 5/21/08 872,591 2,211,318
Thomas M. Watlington........... 50,000 5.34 13.875 5/21/08 436,296 1,105,659
Gunars E. Valkirs, Ph.D........ 75,000 8.01 13.875 5/21/08 654,443 1,658,488
Kenneth F. Buechler, Ph.D...... 75,000 8.01 13.875 5/21/08 654,443 1,658,488
S. Nicholas Stiso, Ph.D.(5).... 80,000 2.14 13.875 5/21/08 174,518 442,264
</TABLE>
- ----------------
(1) These options vest daily over a four-year period commencing on the date
of grant, except that no options are exercisable for the first six
months after the date of grant. The number of shares which have vested
under an option grant is determined by ascertaining the number of days
subsequent to the date of the option grant, multiplying that number of
days by the number of shares subject to the option grant, and in turn
multiplying that product by 0.000684931 (one divided by the product of
365 days and four years).
(2) The Company granted to employees options to acquire 936,025 shares of
the Company's Common Stock in 1998.
(3) The exercise price of each option was equal to 100% of the fair market
value of the Common Stock on the date of grant, as determined by the
Compensation Committee of the Board of Directors.
(4) The potential realizable value of each grant of options has been
calculated, pursuant to the regulations promulgated by the Securities
and Exchange Commission, assuming that the market price of the Common
Stock appreciates in value from the date of grant to the end of the
option term at the annualized rates of 5% and 10% respectively. These
values do not represent the Company's estimate or projection of future
Common Stock value. There can be no assurance that any of the value
reflected in the table will be achieved.
(5) Dr. Stiso resigned from the Company on February 26, 1999.
-8-
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND VALUE OF OPTIONS
AT END OF FISCAL 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT END OF OPTIONS AT END OF
FISCAL 1998 (#) FISCAL 1998($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kim D. Blickenstaff......... 0 0 136,444/121,756 1,021,702/163,473
Thomas M. Watlington........ 0 0 61,692/93,308 346,205/322,545
Gunars E. Valkirs........... 0 0 98,321/82,379 795,575/84,600
Kenneth F. Buechler......... 3,000 10,350 108,221/82,379 892,862/84,600
S. Nicholas Stiso (2)....... 3,562 36,629 40,898/34,102 269,204/81,733
</TABLE>
- ----------------
(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 1998 ($12.188) minus the exercise price.
(2) Dr. Stiso resigned from the Company on February 26, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during 1998 were
Frederick J. Dotzler and Mr. Wollaeger. There were no interlocks or other
relationships among the Company's executive officers and directors that are
required to be disclosed under applicable executive compensation disclosure
regulations.
COMPENSATION OF DIRECTORS
Outside directors of the Company receive $750 to $1,000 for each Board
Meeting attended and $250 to $500 for each committee meeting attended.
Directors are also reimbursed for their expenses for each meeting attended.
Directors are eligible to participate in the Amended and Restated 1996 Stock
Incentive Plan. In February 1997, the Board of Directors approved an annual
grant to each non-employee director of 2,500 non-qualified stock options under
the Stock Plan. Additionally, in May 1998, the Board of Directors approved a
grant of 10,000 non-qualified stock options under the Amended and Restated 1996
Stock Incentive Plan to Anthony DeMaria. These options vest daily over a four-
year period commencing on the date of grant, and vested options are exercisable
commencing on the date of the grant.
Under the Amended and Restated 1996 Stock Incentive Plan, directors may
elect to defer their fees until they terminate service with the Board of
Directors. The deferred fees shall be deemed invested in Company Common Stock
and will be paid in cash in a lump sum or installments as determined by the
Company. Under this arrangement, Howard E. Greene, Jr. has deferred fees
equivalent to 552.77 stock units as of the end of fiscal year 1998.
PENSION AND LONG-TERM INCENTIVE PLANS
The Company has no pension or long-term incentive plans.
REPORT TO STOCKHOLDERS ON EXECUTIVE COMPENSATION
This report on executive compensation is provided by the Compensation
Committee of the Board of Directors, which is comprised of two non-employee
directors (the "Compensation Committee" or the "Committee"), to assist
stockholders in understanding the objectives and procedures used in establishing
the compensation of the Company's executive officers and describes the basis on
which 1998 compensation determinations were made by the Committee. In making
its determinations, the Compensation Committee
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relied in part upon independent surveys and public disclosures of the
compensation of management of companies in the medical device and biotechnology
industries.
It is the Company's policy generally to qualify compensation paid to
executive officers for deductibility under section 162(m) of the Internal
Revenue Code. Section 162(m) generally prohibits the Company from deducting the
compensation of executive officers that exceeds $1,000,000 unless that
compensation is based on the satisfaction of objective performance goals. The
Company's Amended and Restated 1996 Stock Incentive Plan is structured to
qualify awards under such plans as performance-based compensation and to
maximize the tax deductibility of such awards. However, the Company reserves
the discretion to pay compensation to its executive officers that may not be
deductible.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Compensation Committee believes that compensation of the Company's
executive officers should:
- encourage creation of stockholder value and achievement of
strategic corporate objectives;
- integrate compensation with the Company's annual and long-term
corporate objectives and strategy, and focus executive behavior
on the fulfillment of those objectives;
- provide a competitive total compensation package that enables the
Company to attract and retain, on a long-term basis, high caliber
personnel;
- provide total compensation opportunity that is competitive with
companies in the biotechnology industry, taking into account
relative company size, performance and geographic location as
well as individual responsibilities and performance; and
- align the interests of management and stockholders and enhance
stockholder value by providing management with longer term
incentives through equity ownership.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
Executive officer compensation is based primarily on the Company's
achievement of certain business objectives including profit levels and increase
in stockholder value, the achievement of product development milestones, the
initiation and continuation of corporate collaborations, and the issuance of
patents relating to the Company's proprietary technology and the completion of
financings, as well as individual contribution and achievement of individual
business objectives by each of such officers. Corporate and individual
objectives are established at the beginning of each fiscal year. Performance by
the Company and executive officers is measured by reviewing and determining if
the corporate and individual objectives have been accomplished. Currently, the
Company's compensation structure for executive officers includes a combination
of base salary, cash bonuses and stock options.
BASE SALARY. Salary levels are largely determined through comparisons
with companies of similar headcount and market capitalizations or complexity in
the medical device and biotechnology industries. Actual salaries are based on
individual performance contributions within a competitive salary range for each
position that is established through job evaluation of responsibilities and
market comparisons. The Compensation Committee, on the basis of its knowledge
of executive compensation in the industry, believes that the Company's salary
levels for the executive officers are at a level that the Committee, at the time
such salary determinations were made, considered to be reasonable and necessary
given the Company's financial resources and the stage of its development. In
January of 1998, the Compensation Committee set annual salaries for 1998. The
Compensation Committee reviews salaries on an annual basis, with the annual
review for 1999 having occurred in March of 1999. At an annual review, the
Compensation Committee may increase each executive officer's salary based on the
individual's contributions and responsibilities over the prior 12 months and
expectations for the next 12 months.
BONUS. The Committee may award bonuses throughout the year based on the
Company's achievements and the individual's contributions to those achievements,
if it deems such an award to be
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appropriate. Based on the Company's achievement of a number of key objectives
in 1998 that were important for the continued growth and development of the
Company, including reaching specified sales levels, launch of Company products,
research and development milestones and corporate collaborations, the Committee
awarded cash bonuses in 1998 to certain officers and key employees.
STOCK OPTIONS. Long-term incentives are provided by means of periodic
grants of stock options. The Company's Amended and Restated 1996 Stock
Incentive Plan is administered by the Compensation Committee. The Committee
believes that by granting executive officers an opportunity to obtain and
increase their personal ownership of Company stock, the best interests of
stockholders and executives will be more closely integrated. The options have
exercise prices equal to fair market value on the date of grant, vest over a
four-year period, and expire ten years from the date of grant. Vesting ceases
should the executive leave the Company's employ. These vesting provisions of
the option plan serve to retain qualified employees, providing continuing
benefits to the Company beyond those achieved in the year of grant. Therefore,
executive officers, as well as all employees who work at least 20 hours per
week, independent contractors and advisors who perform services for the Company,
are eligible to receive stock options periodically at the discretion of the
Committee. Consideration is given to the executive officer's performance
against the accomplishment of corporate objectives, to comparisons with other
medical device and biotechnology companies at similar stages of development as
determined by independent surveys and the Committee's knowledge of industry
practice, to the number of options previously granted to each executive officer
and to the extent of vesting of options and/or restricted stock previously
awarded to each executive officer.
CHIEF EXECUTIVE OFFICER COMPENSATION
The salary paid to Kim D. Blickenstaff, the Company's President and
Chief Executive Officer, was $217,121 in 1998. In establishing Mr.
Blickenstaff's salary base, the Committee recognized Mr. Blickenstaff's efforts
in advancing the development and growth of the Company and the corporate
objectives achieved. The Committee determined that the accomplishments were
critical to the Company's future growth and enhancement of stockholder value
and, accordingly, determined to compensate Mr. Blickenstaff for his efforts on
behalf of the Company. In addition, the Compensation Committee took into
consideration salary levels of chief executive officers at companies with
similar headcount and market capitalizations or complexity in the medical device
and biotechnology industries. Mr. Blickenstaff was also eligible for, and
received, a bonus in 1998 based on sales levels and the achievement of certain
milestones, including the launch of the Triage Cardiac System, Triage C.
DIFFICILE Panel and Triage Parasite Panel.
Mr. Blickenstaff is a member of the Board of Directors, but did not
participate in matters involving the evaluation of his own performance or the
setting of his own compensation.
The foregoing report has been furnished by the Compensation Committee of
the Board of Directors and shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this report by
reference and shall not otherwise be deemed filed under such Acts.
Timothy J. Wollaeger, Chairman
Lonnie M. Smith
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STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the Center for Research in Securities Prices
("CRSP") Total Return Index for The Nasdaq Stock Market (U.S. and Foreign) (the
"Nasdaq Composite Index") and the S&P Medical Products & Supplies Index (the
"S&P Medical Products Index") since February 12, 1997 (the effective date of the
Company's initial public offering). The comparisons in the graph are required
by the Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
[CHART]
<TABLE>
<CAPTION>
02/12/97 06/30/97 12/31/97 06/30/98 12/31/98
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Biosite $ 100.00 $ 78.12 $ 73.96 $ 91.67 $101.57
Nasdaq Composite 100.00 106.40 115.97 138.99 160.33
S&P Medical Products 100.00 109.63 114.73 144.67 164.00
</TABLE>
Assumes a $100 investment on February 12, 1997 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index, and the
securities comprising the S&P Medical Products Index.
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CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
In June 1994, the Company entered into two agreements with Merck, a
collaborative development agreement and a supply and distribution agreement, in
connection with the Company's development of Triage Cardiac. During periods of
fiscal year 1998, Merck beneficially owned more than 5% of the Company's Common
Stock and distributed the Triage DOA in certain countries in Europe, Latin
America, the Middle East, Asia and Africa. In December 1997, Merck agreed to
terminate the Triage Cardiac agreements, effective January 31, 1998 in return
for the forgiveness of approximately $1,300,000 owed to the Company by Merck
related to the development of the Triage Cardiac products and a cash payment of
$2,100,000. Merck also agreed to terminate the distributorship agreement for
the Triage DOA product line effective December 31, 1998.
In April 1997, the Company loaned Mr. Blickenstaff, a director and
President, Chief Executive Officer, Secretary and Treasurer of the Company,
$150,000. The promissory note bears interest at 6.39% and is due on April 2,
2002. The note is secured by 50,000 shares of Company Common Stock owned by Mr.
Blickenstaff.
The Company believes that the foregoing transactions were in its best
interests. As a matter of policy these transactions were, and all future
transactions between the Company and its officers, directors or principal
shareholders will be, approved by a majority of the independent and
disinterested members of the Board of Directors, on terms no less favorable to
the Company than could be obtained from unaffiliated third parties and in
connection with bona fide business purposes of the Company.
PROPOSAL 2
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
BIOSITE DIAGNOSTICS INCORPORATED STOCK INCENTIVE PLAN
The 1996 Stock Incentive Plan (the "1996 Plan") was originally adopted
by the Board of Directors on December 5, 1996, to be effective December 1, 1996,
and was approved by the stockholders in December 1996. On February 27, 1998,
the Board of Directors approved an amendment and restatement of the plan to
reserve an additional 500,000 shares for issuance under the plan, and the
Company's stockholders approved such amendment and restatement on May 21, 1998.
The 1996 Plan replaced the Company's 1989 Stock Plan. Awards are currently made
under the 1996 Plan. Awards previously made under the 1989 Stock Plan, however,
continue to be administered in accordance with the 1989 Stock Plan. On March
26, 1999, the Board of Directors once again amended and restated the plan to
reserve an additional 1,000,000 shares for issuance, subject to approval by the
Company's stockholders at the Annual Meeting. In addition, on April 20, 1999,
the Board of Directors amended the plan (as amended and restated, the "Stock
Incentive Plan") to remove provisions permitting the repricing of options at
lower exercise prices.
The full text of the Stock Incentive Plan, substantially in the form in
which it will take effect if approved by the Company's stockholders, is set
forth in Exhibit A to this Proxy Statement. The following summary of the
principal features of the Stock Incentive Plan is subject to, and qualified in
its entirety by, Exhibit A.
DESCRIPTION OF THE STOCK INCENTIVE PLAN
PURPOSE
The purpose of the Stock Incentive Plan is to promote the interests of
the Company and its stockholders by encouraging key individuals to acquire stock
or to increase their proprietary interest in the Company. By providing the
opportunity to acquire stock or receive other incentives, the Company seeks to
attract and retain those key employees upon whose judgment, initiative and
leadership the success of the
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Company largely depends. The Company's Board of Directors believes that the
Stock Incentive Plan will constitute an important means of compensating key
employees.
SHARES SUBJECT TO THE STOCK INCENTIVE PLAN
The total number of restricted shares, stock units, options and SARs
available for grant under the Stock Incentive Plan is 2,400,000 (which number
includes the 1,000,000 share increase that stockholders are being asked to
approve), increased by the amount of all remaining shares available for grant
under the 1989 Stock Plan as of December 1, 1996 and subject to anti-dilution
adjustments. If any restricted shares, stock units, options or SARs are
forfeited, or if options or SARs terminate for any other reason prior to
exercise (other than the exercise of a related SAR or option, and including any
forfeiture or termination under the 1989 Stock Plan), then they again become
available for awards under the Stock Incentive Plan.
OUTSTANDING GRANTS
As of March 31, 1999, an aggregate of 552.77 stock units and 2,200,580
options were outstanding under the 1989 Stock Plan and the 1996 Plan
(collectively, the "Plan"). As of March 31, 1999, approximately 272 employees
and 5 directors were eligible to participate in the Plan. On March 31, 1999,
the closing price of the Company's Common Stock on the Nasdaq National Market
was $10.00 per share. Of the options granted, 643,092 have been exercised. As
of March 31, 1999, an aggregate of 2,304,432 shares are authorized, but unissued
under the Plan.
As of March 31, 1999, the following persons or groups had in total
received restricted stock, stock units and/or options under the Plan: (i) the
Chief Executive Officer and the other remaining officers named in the Summary
Compensation Table: Mr. Blickenstaff 328,200 shares, Mr. Watlington 155,000
shares, Dr. Valkirs 225,700 shares, Dr. Buechler 225,700 shares and Dr. Stiso
117,400 shares; (ii) all current executive officers of the Company as a group
(does not include Dr. Stiso, who is no longer an executive officer of the
Company): 1,298,800 shares; (iii) all current directors who are not executive
officers as a group: 37,500 shares; (iv) the nominees for Class II director:
Dr. DeMaria 10,000 shares and Mr. Greene 5,000 shares; (v) each associate of any
of such current directors, executive officers or nominees: Medicus Venture
Partners X, 2,500 shares and Medicus Venture Partners 1997 2,500 shares; (vi)
each person who has received five percent of options granted other than those
included above: 0; and (vii) all employees and consultants of the Company:
3,496,525 shares.
ADMINISTRATION
The Stock Incentive Plan is administered by the Board of Directors or
its delegate. The Board, or its delegate, selects the employees of the Company
who will receive awards, determines the size of any award and establishes any
vesting or other conditions. Employees, directors, consultants and advisors of
the Company (or any subsidiary of the Company) are eligible to participate in
the Stock Incentive Plan, although incentive stock options may be granted only
to employees. No individual may receive options or stock appreciation rights
("SARs") covering more than 250,000 shares in any calendar year. The
participation of the outside directors of the Company is limited to 20% of
shares available under the Stock Incentive Plan.
The Stock Incentive Plan provides for awards in the form of restricted
shares, stock units, options or SARs, or any combination thereof. No payment is
required upon receipt of an award, except that a recipient of newly issued
restricted shares must pay the par value of such restricted shares to the
Company.
RESTRICTED STOCK
Restricted shares are shares of Common Stock that are subject to
repurchase by the Company at the employee's purchase price in the event that the
applicable vesting conditions are not satisfied, and they are
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nontransferable prior to vesting (except for certain transfers to a trustee).
Restricted shares have the same voting and dividend rights as other shares of
Common Stock.
STOCK UNITS
A stock unit is an unfunded bookkeeping entry representing the
equivalent of one share of Common Stock, and is nontransferable prior to the
holder's death. A holder of a stock unit has no voting rights or other
privileges as a stockholder but may be entitled to receive dividend equivalents
equal to the amount of dividends paid on the same number of shares of Common
Stock. Dividend equivalents may be converted into additional stock units or
settled in the form of cash, Common Stock or a combination of both. Stock units,
when vested, may be settled by distributing shares of Common Stock or by a cash
payment corresponding to the fair market value of an equivalent number of shares
of Common Stock, or a combination of both. Vested stock units will be settled at
the time determined by the Compensation Committee. If the time of settlement is
deferred, interest or additional dividend equivalents may be credited on the
deferred payment.
The recipient of restricted shares or stock units may pay all projected
withholding taxes relating to the award with Common Stock rather than cash.
OPTIONS
Options may include nonstatutory stock options ("NSOs") as well as
incentive stock options ("ISOs") intended to qualify for special tax treatment.
The term of an ISO cannot exceed 10 years (five years for 10% stockholders), and
the exercise price of an ISO must be equal to or greater than the fair market
value of the Common Stock on the date of grant (or 110% of fair market value at
the date of grant for 10% stockholders). The exercise price of an NSO must be
equal to or greater than the par value of the Common Stock on the date of grant.
The exercise price of an option may be paid in any lawful form permitted
by the Compensation Committee, including (without limitation) the surrender of
shares of Common Stock or restricted shares already owned by the optionee. The
Compensation Committee may likewise permit optionees to satisfy their
withholding tax obligation upon exercise of an NSO by surrendering a portion of
their option shares to the Company. The Stock Incentive Plan also allows the
optionee to pay the exercise price of an option by giving "exercise/sale" or
"exercise/pledge" directions. If exercise/sale directions are given, a number of
option shares sufficient to pay the exercise price and any withholding taxes is
issued directly to a securities broker selected by the Company who, in turn,
sells these shares in the open market. The broker remits to the Company the
proceeds from the sale of these shares, and the optionee receives the remaining
option shares. If exercise/ pledge directions are given, the option shares are
issued directly to a securities broker or other lender selected by the Company.
The broker or other lender will hold the shares as security and will extend
credit for up to 50% of their market value. The loan proceeds will be paid to
the Company to the extent necessary to pay the exercise price and any
withholding taxes. Any excess loan proceeds may be paid to the optionee. If the
loan proceeds are insufficient to cover the exercise price and withholding
taxes, the optionee will be required to pay the deficiency to the Company at the
time of exercise.
On April 20, 1999, the Board of Directors amended the 1996 Plan to
remove provisions permitting the repricing of options at lower exercise prices.
STOCK APPRECIATION RIGHTS
Stock appreciation rights ("SARs") permit the participant to elect to
receive any appreciation in the value of the underlying stock from the Company,
either in shares of Common Stock or in cash or a combination of the two, with
the Compensation Committee having the discretion to determine the form in which
such payment will be made. The amount payable on exercise of an SAR is measured
by the difference between the market value of the underlying stock at exercise
and the exercise price. SARs may, but need not,
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be granted in conjunction with options. Upon exercise of an SAR granted in
tandem with an option, the corresponding portion of the related option must be
surrendered and cannot thereafter be exercised. Conversely, upon exercise of an
option to which an SAR is attached, the SAR may no longer be exercised to the
extent that the corresponding option has been exercised. All options and SARs
are nontransferable prior to the optionee's death.
VESTING
The Compensation Committee determines the number of restricted shares,
stock units, options or SARs to be included in the award as well as the vesting
and other conditions. The vesting conditions may be based on the employee's
service, his or her individual performance, the Company's performance or other
appropriate criteria. In general, the vesting conditions will be based on the
employee's service after the date of grant. Vesting may be accelerated in the
event of the employee's death, disability or retirement or in the event of a
change in control with respect to the Company.
OTHER PROVISIONS
For purposes of the Stock Incentive Plan, the term "change in control"
is defined as any one of the following: (i) any person is or becomes the
beneficial owner, directly or indirectly, of at least 50% of the combined voting
power of the Company's outstanding securities ordinarily having the right to
vote at elections of directors; (ii) approval by the stockholders of the Company
of a merger or consolidation of the Company with or into another corporation or
entity or any other corporate reorganization in which over 50% of the combined
voting power of the continuing or surviving entity immediately after the merger,
consolidation or reorganization is owned by persons who were not stockholders of
the Company immediately prior to the merger, consolidation or reorganization; or
(iii) a change in the composition of the Board of Directors in which fewer than
half of the incumbent Directors had been Directors 24 months prior to the change
or were elected or nominated with the affirmative votes of Directors 24 months
prior to the change.
Awards under the Stock Incentive Plan may provide that if any payment
(or transfer) by the Company to a recipient would be nondeductible by the
Company for federal income tax purposes, then the aggregate present value of all
such payments (or transfers) will be reduced to an amount which maximizes such
value without causing any such payment (or transfer) to be nondeductible.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the
Stock Incentive Plan as it relates to share awards, nonqualified stock options
and incentive stock options is intended to be a summary of applicable federal
law. State and local tax consequences may differ.
SHARE AWARDS
If a participant is awarded or purchases shares, the amount by which the
fair market value of the shares on the date of award or purchase exceeds the
amount paid for the shares will be taxed to the participant as ordinary income.
The Company will be entitled to a deduction in the same amount provided it makes
all required withholdings on the compensation element of the sale or award. The
participant's tax basis in the shares acquired is equal to the share's fair
market value on the date of acquisition. Upon a subsequent sale of any shares,
the participant will realize capital gain or loss (long-term or short-term,
depending on whether the shares were held for more than one year before the
sale) in an amount equal to the difference between his or her basis in the
shares and the sale price.
If a participant is awarded or purchases shares that are subject to a
vesting schedule, the participant is deemed to receive an amount of ordinary
income equal to the excess of the fair market value of the shares at
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the time they vest over the amount (if any) paid for such shares by the
participant. The Company is entitled to a deduction equal to the amount of the
income recognized by the participant.
Code Section 83(b) permits a participant to elect, within 30 days after
the transfer of any shares subject to a vesting schedule to him or her, to be
taxed at ordinary income rates on the excess of the fair market value of the
shares at the time of the transfer over the amount (if any) paid by the
participant for such shares. Withholding taxes apply at that time. If the
participant makes a Section 83(b) election, any later appreciation in the value
of the shares is not taxed as ordinary income, but instead is taxed as capital
gain when the shares are sold or transferred.
OPTIONS
Incentive stock options and nonqualified stock options are treated
differently for federal income tax purposes. Incentive stock options are
intended to comply with the requirements of Section 422 of the Code.
Nonqualified stock options need not comply with such requirements.
An optionee is generally not taxed on the grant or exercise of an
incentive stock option. The difference between the exercise price and the fair
market value of the shares on the exercise date will, however, be a preference
item for purposes of the alternative minimum tax. If an optionee holds the
shares acquired upon exercise of an incentive stock option for at least two
years following grant and at least one year following exercise, the optionee's
gain, if any, upon a subsequent disposition of such shares is a capital gain (or
loss). The measure of the gain is the difference between the proceeds received
on disposition and the optionee's basis in the shares (which generally equals
the exercise price). If an optionee disposes of stock acquired pursuant to
exercise of an incentive stock option before satisfying the one and two-year
holding periods described above, the optionee will recognize both ordinary
income and capital gain (or loss) in the year of disposition. The amount of the
ordinary income will be the lesser of (i) the amount realized on disposition
less the optionee's adjusted basis in the stock (usually the option price) or
(ii) the difference between the fair market value of the stock on the exercise
date and the option price. The balance of the consideration received on such a
disposition will be capital gain if the stock had been held for at least one
year following exercise of the incentive stock option. The Company is not
entitled to an income tax deduction on the grant or exercise of an incentive
stock option or on the optionee's disposition of the shares after satisfying the
holding period requirement described above. If the holding periods are not
satisfied, the Company will be entitled to a deduction in the year the optionee
disposes of the shares, in an amount equal to the ordinary income recognized by
the optionee.
An optionee is not taxed on the grant of a nonqualified stock option. On
exercise, however, the optionee recognizes ordinary income equal to the
difference between the option price and the fair market value of the shares on
the date of exercise. The Company is entitled to an income tax deduction in the
year of exercise in the amount recognized by the optionee as ordinary income.
Any gain on subsequent disposition of the shares is a capital gain if the shares
are held for at least one year following exercise. The Company does not receive
a deduction for this gain.
STOCK INCENTIVE PLAN BENEFITS
The Board is authorized, within the provisions of the Stock Incentive
Plan, to amend the terms of outstanding restricted shares or stock units, to
modify or extend outstanding options or SARs or to exchange new options for
outstanding options; provided, however, that following the amendment of the plan
at the April 20, 1999 Board of Directors' meeting, such new options must have
the same or a higher aggregate exercise price than the outstanding options.
Therefore, the benefits and amounts that will be received by each of the Named
Executive Officers as a group and all other key employees are not determinable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
AND RESTATEMENT OF THE BIOSITE DIAGNOSTICS INCORPORATED STOCK INCENTIVE PLAN.
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PROPOSAL 3
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP ("Ernst & Young") as the Company's
independent auditors for the fiscal year ended December 31, 1999, subject to
ratification by the stockholders. Representatives of Ernst & Young are expected
to be present at the Company's Annual Meeting. They will have an opportunity to
make a statement, if they desire to do so, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement for presentation
at the Annual Meeting of Stockholders to be held in 2000 a stockholder proposal
must be received at the offices of the Company not later than December 19, 1999.
If a stockholder wishes to have a proposal considered at the Annual
Meeting of Stockholders to be held in 2000, but does not seek to have the
proposal included in the Company's Proxy Statement and form of Proxy for that
meeting, and if the stockholder does not notify the Company of the proposal no
less than 50 days nor more than 75 days prior to the date of the Annual Meeting
of Stockholders to be held in 2000, then the persons appointed as proxies by
management may use their discretionary voting authority to vote on the proposal
when the proposal is considered at the Annual Meeting of Stockholders to be held
in 2000, even though there is no discussion of the proposal in the Proxy
Statement for that meeting; provided, however, that if less than 65 days' notice
or prior public disclosure of the date of the Annual Meeting is given or made to
stockholders, a stockholder will have until the 15th day following the day on
which such notice of the date of the Annual Meeting was mailed or public
disclosure of the meeting date was given to notify the Company of the proposal
before the persons appointed as proxies may use their discretionary voting
authority to vote on such proposal. It is recommended that stockholders
submitting proposal or notices of proposal direct them to the Secretary of the
Company and utilize Certified Mail-Return Receipt Requested. Stockholders'
proposals should be submitted to the Company's office at 11030 Roselle Street,
San Diego, CA 92121.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company's directors, executive officers, and
any persons holding more than 10% of the Company's Common Stock are required to
report their initial ownership of the Company's Common Stock and any subsequent
changes in that ownership to the SEC. Specific due dates for these reports have
been established and the Company is required to identify in this Proxy Statement
those persons who failed to timely file these reports.
The following individuals failed to file on a timely basis reports
required by Section 16(a) during the 1998 fiscal year:
- - Dr. Stiso, former Vice President of Operations of the Company, did not
timely file a Form 4 for an exercise of 1,562 options in July of 1998.
Such option exercise is included in an amended Form 5 that was filed
with the SEC on April 2, 1999.
- - Mr. Dotzler, a former director of the Company, reported three purchases
from July of 1998 on a Form 4 that was filed with the SEC on September
4, 1998.
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- - Dr. DeMaria, a director of the Company, did not timely file his Form 3,
which should have been filed by May 30, 1998 (within 10 days of becoming
a statutory insider of the Company), but did file such Form 3 on June
15, 1998.
The Company believes that during the 1998 fiscal year, all other filing
requirements under Section 16(a) were satisfied.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted
in accordance with the judgment of the persons voting the proxies.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Biosite Diagnostics Incorporated,
11030 Roselle Street, San Diego, California, 92121, (619) 455-4808. To provide
the Company sufficient time to arrange for reasonable assistance or
accommodation, please submit all requests by May 19, 1999.
Whether you intend to be present at the Annual Meeting or not, we urge
you to return your signed proxy promptly.
By order of the Board of Directors.
Kim D. Blickenstaff
President, Chief Executive Officer,
Secretary and Treasurer
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EXHIBIT A
BIOSITE DIAGNOSTICS INCORPORATED
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board on December 5, 1996, and was approved
by the Company's stockholders on December 6, 1996. The Plan is effective
December 1, 1996. However, Articles 7, 8 and 9 shall not apply prior to the
Company's initial public offering. On February 27, 1998, the Plan was amended
by the Board to increase the number of shares under the Plan. The Plan was
amended again on March 26, 1999, to increase the number of shares under the Plan
and on April 20, 1999, to remove provisions permitting the repricing of options
at lower exercise prices.
The purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by (a) encouraging Key Employees
to focus on critical long-range objectives, (b) encouraging the attraction and
retention of Key Employees with exceptional qualifications and (c) linking Key
Employees directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute incentive stock
options or nonstatutory stock options) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance with, the
laws of the State of California.
ARTICLE 2. ADMINISTRATION.
2.1 COMMITTEE COMPOSITION. The Plan shall be administered by the
Committee. Except as provided below, the Committee shall consist exclusively of
directors of the Company, who shall be appointed by the Board. In addition, the
composition of the Committee shall satisfy:
(a) Such requirements, if any, as the Securities and Exchange
Commission may establish for administrators acting under plans intended
to qualify for exemption under Rule 16b-3 (or its successor) under the
Exchange Act; and
(b) Such requirements as the Internal Revenue Service may
establish for outside directors acting under plans intended to qualify
for exemption under section 162(m)(4)(C) of the Code.
The Board may act on its own behalf with respect to Outside Directors and may
also appoint one or more separate committees composed of one or more officers of
the Company who need not be directors of the Company and who need not satisfy
the foregoing requirements, who may administer the Plan with respect to Key
Employees who are not "covered employees" under section 162(m)(3) of the Code
and who are not required to report pursuant to Section 16(a) of the Exchange
Act.
2.2 COMMITTEE RESPONSIBILITIES. The Committee shall (a) select the
Key Employees who are to receive Awards under the Plan, (b) determine the type,
number, vesting requirements and other features and conditions of such Awards,
(c) interpret the Plan and (d) make all other decisions relating to the
operation of the Plan. The Committee may adopt such rules or guidelines as it
deems appropriate to implement the Plan. The Committee's determinations under
the Plan shall be final and binding on all persons.
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ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 BASIC LIMITATION. Common Shares issued pursuant to the Plan may
be authorized but unissued shares or treasury shares. The aggregate number of
Common Shares available for Restricted Shares, Stock Units, Options and SARs
awarded under the Plan shall not exceed 2,400,000. Of the Common Shares
available hereunder, no more than 20% in aggregate shall be available with
respect to Outside Directors. The limitation of this Section 3.1 shall be
subject to adjustment pursuant to Article 10. The number of Common Shares
available under this Plan shall be increased by unexercised or forfeited Common
Shares under the Company's 1989 Stock Plan.
3.2 ADDITIONAL SHARES. If Stock Units, Options or SARs are forfeited
or if Options or SARs terminate for any other reason before being exercised,
then the corresponding Common Shares shall again become available for Awards
under the Plan. If Restricted Shares are forfeited before any dividends have
been paid with respect to such Shares, then such Shares shall again become
available for Awards under the Plan. If Stock Units are settled, then only the
number of Common Shares (if any) actually issued in settlement of such Stock
Units shall reduce the number available under Section 3.1 and the balance shall
again become available for Awards under the Plan. If SARs are exercised, then
only the number of Common Shares (if any) actually issued in settlement of such
SARs shall reduce the number available under Section 3.1 and the balance shall
again become available for Awards under the Plan.
3.3 DIVIDEND EQUIVALENTS. Any dividend equivalents distributed under
the Plan shall not be applied against the number of Restricted Shares, Stock
Units, Options or SARs available for Awards, whether or not such dividend
equivalents are converted into Stock Units.
ARTICLE 4. ELIGIBILITY.
4.1 GENERAL RULES. Only Key Employees (including, without
limitation, independent contractors who are not members of the Board) shall be
eligible for designation as Participants by the Committee.
4.2 OUTSIDE DIRECTORS. The Committee may provide that the NSOs that
otherwise would be granted to an Outside Director under this Plan shall instead
be granted to an affiliate of such Outside Director. Such affiliate shall then
be deemed to be an Outside Director for purposes of the Plan, provided that the
service-related vesting and termination provisions pertaining to the NSOs shall
be applied with regard to the service of the Outside Director.
4.3 INCENTIVE STOCK OPTIONS. Only Key Employees who are common-law
employees of the Company, a Parent or a Subsidiary shall be eligible for the
grant of ISOs. In addition, a Key Employee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company or any
of its Parents or Subsidiaries shall not be eligible for the grant of an ISO
unless the requirements set forth in section 422(c)(6) of the Code are
satisfied.
ARTICLE 5. OPTIONS.
5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The
Stock Option Agreement shall specify whether the Option is an ISO or an NSO.
The provisions of the various Stock Option Agreements entered into under the
Plan need not be identical. Options may be granted in consideration of a cash
payment or in consideration of a reduction in the Optionee's other compensation.
A Stock Option Agreement may provide that a new Option will be granted
automatically to the Optionee when he or she exercises a prior Option and pays
the Exercise Price in the form described in Section 6.2.
5.2 NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 10.
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Options granted to any Optionee in a single calendar year shall in no event
cover more than 250,000 Common Shares, subject to adjustment in accordance with
Article 10.
5.3 EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price; provided that the Exercise Price under an ISO shall in no event
be less than 100% of the Fair Market Value of a Common Share on the date of
grant and the Exercise Price under an NSO shall in no event be less than the par
value of the Common Shares subject to such NSO. In the case of an NSO, a Stock
Option Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the NSO is outstanding, provided that prior to the
Company's initial public offering, the NSO Exercise Price shall be at least 85%
(110% for 10% shareholders) of the Fair Market Value of a Common Share of Stock
on the date of grant.
5.4 EXERCISABILITY AND TERM. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable, provided that prior to the Company's initial public offering,
Options shall become exercisable pursuant to a schedule providing for at least
20% vesting per year over a five-year period (or, in the case of performance
options, to the extent permitted under applicable regulations of the California
Department of Corporations). The Stock Option Agreement shall also specify the
term of the Option; provided that the term of an ISO shall in no event exceed
10 years from the date of grant. A Stock Option Agreement may provide for
accelerated exercisability in the event of the Optionee's death, disability or
retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service.
Notwithstanding the foregoing, no Options may be accelerated prior to the
Company's initial public offering.
Options may be awarded in combination with SARs, and such an Award may
provide that the Options will not be exercisable unless the related SARs are
forfeited. NSOs may also be awarded in combination with Restricted Shares or
Stock Units, and such an Award may provide that the NSOs will not be exercisable
unless the related Restricted Shares or Stock Units are forfeited.
Prior to the Company's initial public offering, Options must be
exercised within 30 days of the termination of employment (six months for
termination on account of death or disability).
5.5 EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become fully
exercisable as to all Common Shares subject to such Option in the event that a
Change in Control occurs with respect to the Company.
5.6 MODIFICATION OR ASSUMPTION OF OPTIONS. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or different exercise price;
provided, however, that with respect to the shares subject to the new Option,
there shall be no decrease in the aggregate exercise price of such shares,
determined on an adjusted basis. The foregoing notwithstanding, no modification
of an Option shall, without the consent of the Optionee, alter or impair his or
her rights or obligations under such Option.
5.7 OTHER REQUIREMENTS PRIOR TO COMPANY'S INITIAL PUBLIC OFFERING.
Prior to the Company's initial public offering, Optionees shall receive Company
financial statements at least annually.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 GENERAL RULE. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash at the time when such Common
Shares are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment shall
be made only pursuant to the express provisions of the applicable Stock
Option Agreement. The Stock Option Agreement may specify that payment
may be made in any form(s) described in this Article 6.
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(b) In the case of an NSO, the Committee may at any time accept
payment in any form(s) described in this Article 6.
6.2 SURRENDER OF STOCK. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made with
Common Shares which have already been owned by the Optionee for more than six
months. Such Common Shares shall be valued at their Fair Market Value on the
date when the new Common Shares are purchased under the Plan.
6.3 EXERCISE/SALE. To the extent that this Section 6.3 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the
Company to sell Common Shares and to deliver all or part of the sales proceeds
to the Company in payment of all or part of the Exercise Price and any
withholding taxes.
6.4 EXERCISE/PLEDGE. To the extent that this Section 6.4 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Common Shares to a securities
broker or lender approved by the Company, as security for a loan, and to deliver
all or part of the loan proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
6.5 PROMISSORY NOTE. To the extent that this Section 6.5 is
applicable, payment may be made with a full-recourse promissory note; provided
that the par value of the Common Shares shall be paid in cash.
6.6 OTHER FORMS OF PAYMENT. To the extent that this Section 6.6 is
applicable, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.
ARTICLE 7. STOCK APPRECIATION RIGHTS.
7.1 SAR AGREEMENT. Each grant of an SAR under the Plan shall be
evidenced by an SAR Agreement between the Optionee and the Company. Such SAR
shall be subject to all applicable terms of the Plan and may be subject to any
other terms that are not inconsistent with the Plan. The provisions of the
various SAR Agreements entered into under the Plan need not be identical. SARs
may be granted in consideration of a reduction in the Optionee's other
compensation.
7.2 NUMBER OF SHARES. Each SAR Agreement shall specify the number of
Common Shares to which the SAR pertains and shall provide for the adjustment of
such number in accordance with Article 10. SARs granted to any Optionee in a
single calendar year shall in no event pertain to more than 250,000 Common
Shares, subject to adjustment in accordance with Article 10.
7.3 EXERCISE PRICE. Each SAR Agreement shall specify the Exercise
Price. An SAR Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the SAR is outstanding.
7.4 EXERCISABILITY AND TERM. Each SAR Agreement shall specify the
date when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. An SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, disability
or retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service. SARs may
also be awarded in combination with Options, Restricted Shares or Stock Units,
and such an Award may provide that the SARs will not be exercisable unless the
related Options, Restricted Shares or Stock Units are forfeited. An SAR may be
included in an ISO only at the time of grant but may be included in an NSO at
the time of grant or thereafter. An SAR granted under the Plan may provide that
it will be exercisable only in the event of a Change in Control.
7.5 EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting an SAR or thereafter, that such SAR shall become fully
exercisable as to all Common Shares subject to such SAR in the event that a
Change in Control occurs with respect to the Company.
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7.6 EXERCISE OF SARS. The exercise of an SAR shall be subject to the
restrictions imposed by Rule 16b-3 (or its successor) under the Exchange Act, if
applicable. If, on the date when an SAR expires, the Exercise Price under such
SAR is less than the Fair Market Value on such date but any portion of such SAR
has not been exercised or surrendered, then such SAR shall automatically be
deemed to be exercised as of such date with respect to such portion. Upon
exercise of an SAR, the Optionee (or any person having the right to exercise the
SAR after his or her death) shall receive from the Company (a) Common Shares,(b)
cash or (c) a combination of Common Shares and cash, as the Committee shall
determine. The amount of cash and/or the Fair Market Value of Common Shares
received upon exercise of SARs shall, in the aggregate, be equal to the amount
by which the Fair Market Value (on the date of surrender) of the Common Shares
subject to the SARs exceeds the Exercise Price.
7.7 MODIFICATION OR ASSUMPTION OF SARS. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding SARs or may
accept the cancellation of outstanding SARs (whether granted by the Company or
by another issuer) in return for the grant of new SARs for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an SAR shall, without the consent
of the Optionee, alter or impair his or her rights or obligations under such
SAR.
ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS.
8.1 TIME, AMOUNT AND FORM OF AWARDS. Awards under the Plan may be
granted in the form of Restricted Shares, in the form of Stock Units, or in any
combination of both. Restricted Shares or Stock Units may also be awarded in
combination with NSOs or SARs, and such an Award may provide that the Restricted
Shares or Stock Units will be forfeited in the event that the related NSOs or
SARs are exercised.
8.2 PAYMENT FOR AWARDS. To the extent that an Award is granted in
the form of newly issued Restricted Shares, the Award recipient, as a condition
to the grant of such Award, shall be required to pay the Company in cash an
amount equal to the par value of such Restricted Shares. To the extent that an
Award is granted in the form of Restricted Shares from the Company's treasury or
in the form of Stock Units, no cash consideration shall be required of the Award
recipients.
8.3 VESTING CONDITIONS. Each Award of Restricted Shares or Stock
Units shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. A Stock Award Agreement may
provide for accelerated vesting in the event of the Participant's death,
disability or retirement or other events. The Committee may determine, at the
time of making an Award or thereafter, that such Award shall become fully vested
in the event that a Change in Control occurs with respect to the Company.
8.4 FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement of vested
Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any
combination of both, as determined by the Committee. The actual number of Stock
Units eligible for settlement may be larger or smaller than the number included
in the original Award, based on predetermined performance factors. Methods of
converting Stock Units into cash may include (without limitation) a method based
on the average Fair Market Value of Common Shares over a series of trading days.
Vested Stock Units may be settled in a lump sum or in installments. The
distribution may occur or commence when all vesting conditions applicable to the
Stock Units have been satisfied or have lapsed, or it may be deferred to any
later date. The amount of a deferred distribution may be increased by an
interest factor or by dividend equivalents. Until an Award of Stock Units is
settled, the number of such Stock Units shall be subject to adjustment pursuant
to Article 10.
8.5 DEATH OF RECIPIENT. Any Stock Units Award that becomes payable
after the recipient's death shall be distributed to the recipient's beneficiary
or beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's death.
If no beneficiary was designated or if no designated beneficiary
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survives the Award recipient, then any Stock Units Award that becomes payable
after the recipient's death shall be distributed to the recipient's estate.
8.6 CREDITORS' RIGHTS. A holder of Stock Units shall have no rights
other than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Award Agreement.
ARTICLE 9. VOTING AND DIVIDEND RIGHTS.
9.1 RESTRICTED SHARES. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Stock Award Agreement, however, may require
that the holders of Restricted Shares invest any cash dividends received in
additional Restricted Shares. Such additional Restricted Shares shall be
subject to the same conditions and restrictions as the Award with respect to
which the dividends were paid. Such additional Restricted Shares shall not
reduce the number of Common Shares available under Article 3.
9.2 STOCK UNITS. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the
Plan may, at the Committee's discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Common Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units.
Settlement of dividend equivalents may be made in the form of cash, in the form
of Common Shares, or in a combination of both. Prior to distribution, any
dividend equivalents which are not paid shall be subject to the same conditions
and restrictions as the Stock Units to which they attach.
ARTICLE 10. PROTECTION AGAINST DILUTION.
10.1 ADJUSTMENTS. In the event of a subdivision of the outstanding
Common Shares, a declaration of a dividend payable in Common Shares, a
declaration of a dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, a recapitalization, a spinoff
or a similar occurrence, the Committee shall make such adjustments as it, in its
sole discretion, deems appropriate in one or more of (a) the number of Options,
SARs, Restricted Shares and Stock Units available for future Awards under
Article 3, (b) the limitations set forth in Sections 5.2 and 7.2, (c) the number
of NSOs to be granted to Outside Directors under Section 4.2, (d) the number of
Stock Units included in any prior Award which has not yet been settled, (e) the
number of Common Shares covered by each outstanding Option and SAR or (f) the
Exercise Price under each outstanding Option and SAR. Except as provided in
this Article 10, a Participant shall have no rights by reason of any issue by
the Company of stock of any class or securities convertible into stock of any
class, any subdivision or consolidation of shares of stock of any class, the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class.
10.2 REORGANIZATIONS. In the event that the Company is a party to a
merger or other reorganization, outstanding Options, SARs, Restricted Shares and
Stock Units shall be subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption of outstanding
Awards by the surviving corporation or its parent, for their continuation by the
Company (if the Company is a surviving corporation), for accelerated vesting and
accelerated expiration (provided the Company has previously had its initial
public offering), or for settlement in cash.
ARTICLE 11. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards
may be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes under the Plan like Common Shares
issued in settlement of Stock Units and shall, when issued, reduce the number of
Common Shares available under Article 3.
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ARTICLE 12. PAYMENT OF DIRECTOR'S FEES IN SECURITIES.
12.1 EFFECTIVE DATE. No provision of this Article 12 shall be
effective unless and until the Board has determined to implement such provision.
12.2 ELECTIONS TO RECEIVE NSOS, RESTRICTED SHARES OR STOCK UNITS. An
Outside Director may elect to receive his or her annual retainer payments and
meeting fees from the Company in the form of cash, NSOs, Restricted Shares,
Stock Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Article 12 shall be filed with the Company on the prescribed form.
12.3 NUMBER AND TERMS OF NSOS, RESTRICTED SHARES OR STOCK UNITS. The
number of NSOs, Restricted Shares or Stock Units to be granted to Outside
Directors in lieu of annual retainers and meeting fees that would otherwise be
paid in cash shall be calculated in a manner determined by the Board. The terms
of such NSOs, Restricted Shares or Stock Units shall also be determined by the
Board.
ARTICLE 13. LIMITATION ON RIGHTS.
13.1 RETENTION RIGHTS. Neither the Plan nor any Award granted under
the Plan shall be deemed to give any individual a right to remain an employee,
consultant or director of the Company, a Parent or a Subsidiary. The Company
and its Parents and Subsidiaries reserve the right to terminate the service of
any employee, consultant or director at any time, with or without cause, subject
to applicable laws, the Company's certificate of incorporation and by-laws and a
written employment agreement (if any).
13.2 STOCKHOLDERS' RIGHTS. A Participant shall have no dividend
rights, voting rights or other rights as a stockholder with respect to any
Common Shares covered by his or her Award prior to the issuance of a stock
certificate for such Common Shares. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date when
such certificate is issued, except as expressly provided in Articles 8, 9 and
10.
13.3 REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.
ARTICLE 14. LIMITATION ON PAYMENTS.
14.1 BASIC RULE. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer by
the Company under the Plan to or for the benefit of a Participant (a "Payment")
would be nondeductible by the Company for federal income tax purposes because of
the provisions concerning "excess parachute payments" in section 280G of the
Code, then the aggregate present value of all Payments shall be reduced (but not
below zero) to the Reduced Amount; provided that the Committee, at the time of
making an Award under this Plan or at any time thereafter, may specify in
writing that such Award shall not be so reduced and shall not be subject to this
Article 14. For purposes of this Article 14, the "Reduced Amount" shall be the
amount, expressed as a present value, which maximizes the aggregate present
value of the Payments without causing any Payment to be nondeductible by the
Company because of section 280G of the Code.
14.2 REDUCTION OF PAYMENTS. If the Auditors determine that any
Payment would be nondeductible by the Company because of section 280G of the
Code, then the Company shall promptly give the Participant notice to that effect
and a copy of the detailed calculation thereof and of the Reduced Amount, and
the
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Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Participant within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article 14, present
value shall be determined in accordance with section 280G(d)(4) of the Code.
All determinations made by the Auditors under this Article 14 shall be binding
upon the Company and the Participant and shall be made within 60 days of the
date when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
14.3 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in
the application of section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that Payments will have
been made by the Company which should not have been made (an "Overpayment") or
that additional Payments which will not have been made by the Company could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount which is subject to taxation under section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
14.4 RELATED CORPORATIONS. For purposes of this Article 14, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
ARTICLE 15. WITHHOLDING TAXES.
15.1 GENERAL. To the extent required by applicable federal, state,
local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan. The Company shall not
be required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.
15.2 SHARE WITHHOLDING. The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Common Shares that otherwise
would be issued to him or her or by surrendering all or a portion of any Common
Shares that he or she previously acquired. Such Common Shares shall be valued
at their Fair Market Value on the date when taxes otherwise would be withheld in
cash. Any payment of taxes by assigning Common Shares to the Company may be
subject to restrictions, including any restrictions required by rules of the
Securities and Exchange Commission.
ARTICLE 16. ASSIGNMENT OR TRANSFER OF AWARDS.
16.1 GENERAL. An Award granted under the Plan shall not be
anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor's process, whether voluntarily, involuntarily or by
operation of law, except as approved by the Committee. Notwithstanding the
foregoing, ISOs and, prior to the Company's initial public offering, NSOs may
not be transferable. However, this Article 16 shall not
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preclude a Participant from designating a beneficiary who will receive any
outstanding Awards in the event of the Participant's death, nor shall it
preclude a transfer of Awards by will or by the laws of descent and
distribution.
16.2 TRUSTS. Neither this Article 16 nor any other provision of the
Plan shall preclude a Participant from transferring or assigning Restricted
Shares to (a) the trustee of a trust that is revocable by such Participant
alone, both at the time of the transfer or assignment and at all times
thereafter prior to such Participant's death, or (b) the trustee of any other
trust to the extent approved in advance by the Committee in writing. A transfer
or assignment of Restricted Shares from such trustee to any person other than
such Participant shall be permitted only to the extent approved in advance by
the Committee in writing, and Restricted Shares held by such trustee shall be
subject to all of the conditions and restrictions set forth in the Plan and in
the applicable Stock Award Agreement, as if such trustee were a party to such
Agreement.
ARTICLE 17. FUTURE OF THE PLAN.
17.1 TERM OF THE PLAN. The Plan, as set forth herein, was adopted on
December 5, 1996, and became effective December 1, 1996, except that Articles 7,
8 and 9 shall not be effective prior to the date of the Company's initial public
offering. The Plan shall remain in effect until it is terminated under
Section 17.2, except that no ISOs shall be granted after November 30, 2006.
17.2 AMENDMENT OR TERMINATION. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the
Plan after the termination thereof. The termination of the Plan, or any
amendment thereof, shall not affect any Award previously granted under the Plan.
ARTICLE 18. DEFINITIONS.
18.1 "AWARD" means any award of an Option, an SAR, a Restricted Share
or a Stock Unit under the Plan.
18.2 "BOARD" means the Company's Board of Directors, as constituted
from time to time.
18.3 "CHANGE IN CONTROL" shall mean the occurrence of any of the
following events:
(a) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or
surviving entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who were not
stockholders of the Company immediately prior to such merger,
consolidation or other reorganization;
(b) A change in the composition of the Board, as a result of
which fewer than one-half of the incumbent directors are directors who
either:
(A) Had been directors of the Company 24 months prior to
such change; or
(B) Were elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the
directors who had been directors of the Company 24 months prior
to such change and who were still in office at the time of the
election or nomination; or
(c) Any "person" (as such term is used in sections 13(d) and
14(d) of the Exchange Act) by the acquisition or aggregation of
securities is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 50% or more of the combined
voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing under special circumstances)
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having the right to vote at elections of directors (the "Base Capital
Stock"); except that any change in the relative beneficial ownership of
the Company's securities by any person resulting solely from a reduction
in the aggregate number of outstanding shares of Base Capital Stock, and
any decrease thereafter in such person's ownership of securities, shall
be disregarded until such person increases in any manner, directly or
indirectly, such person's beneficial ownership of any securities of the
Company.
The term "Change in Control" shall not include the Company's initial public
offering or a transaction, the sole purpose of which is to change the state of
the Company's incorporation.
18.4 "CODE" means the Internal Revenue Code of 1986, as amended.
18.5 "COMMITTEE" means a committee of the Board, as described in
Article 2.
18.6 "COMMON SHARE" means one share of the common stock of the
Company.
18.7 "COMPANY" means Biosite Diagnostics Incorporated, a Delaware
corporation.
18.8 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
18.9 "EXERCISE PRICE," in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of an SAR, means an amount, as specified in the applicable SAR Agreement,
which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.
18.10 "FAIR MARKET VALUE" means the market price of Common Shares,
determined by the Committee as follows:
(a) If the Common Shares were traded over-the-counter on the date
in question but was not traded on the Nasdaq Stock Market or the Nasdaq
National Market, then the Fair Market Value shall be equal to the mean
between the last reported representative bid and asked prices quoted for
such date by the principal automated inter-dealer quotation system on
which the Common Shares are quoted or, if the Common Shares are not
quoted on any such system, by the "Pink Sheets" published by the
National Quotation Bureau, Inc.;
(b) If the Common Shares were traded over-the-counter on the date
in question and were traded on the Nasdaq Stock Market or the Nasdaq
National Market, then the Fair Market Value shall be equal to the last-
transaction price quoted for such date by the Nasdaq Stock Market or the
Nasdaq National Market;
(c) If the Common Shares were traded on a stock exchange on the
date in question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions report
for such date; and
(d) If none of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in the Western Edition of THE WALL STREET
JOURNAL. Such determination shall be conclusive and binding on all persons.
18.11 "ISO" means an incentive stock option described in section 422(b)
of the Code.
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18.12 "KEY EMPLOYEE" means (a) a common-law employee of the Company, a
Parent or a Subsidiary, (b) an Outside Director and (c) a consultant or adviser
who provides services to the Company, a Parent or a Subsidiary as an independent
contractor. Service as an Outside Director or as an independent contractor
shall be considered employment for all purposes of the Plan, except as provided
in Sections 4.2 and 4.3.
18.13 "NSO" means a stock option not described in sections 422 or 423
of the Code.
18.14 "OPTION" means an ISO or NSO granted under the Plan and entitling
the holder to purchase one Common Share.
18.15 "OPTIONEE" means an individual or estate who holds an Option or
SAR.
18.16 "OUTSIDE DIRECTOR" shall mean a member of the Board who is not a
common-law employee of the Company, a Parent or a Subsidiary.
18.17 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent
on a date after the adoption of the Plan shall be considered a Parent commencing
as of such date.
18.18 "PARTICIPANT" means an individual or estate who holds an Award.
18.19 "PLAN" means this 1996 Stock Incentive Plan of Biosite
Diagnostics Incorporated, as amended from time to time.
18.20 "RESTRICTED SHARE" means a Common Share awarded under the Plan.
18.21 "SAR" means a stock appreciation right granted under the Plan.
18.22 "SAR AGREEMENT" means the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.
18.23 "STOCK AWARD AGREEMENT" means the agreement between the Company
and the recipient of a Restricted Share or Stock Unit which contains the terms,
conditions and restrictions pertaining to such Restricted Share or Stock Unit.
18.24 "STOCK OPTION AGREEMENT" means the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
18.25 "STOCK UNIT" means a bookkeeping entry representing the
equivalent of one Common Share, as awarded under the Plan.
18.26 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
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ARTICLE 19. EXECUTION.
To record the adoption of the Plan by the Board, the Company has caused
its duly authorized officer to affix the corporate name and seal hereto.
BIOSITE DIAGNOSTICS INCORPORATED
By
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DETACH HERE
PROXY
BIOSITE DIAGNOSTICS INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON JUNE 9, 1999
Timothy J. Wollaeger and Kim D. Blickenstaff, or each of them, each with
the power of substitution, are hereby authorized to represent as proxies and
vote all shares of stock of Biosite Diagnostics Incorporated (the "Company").
The undersigned is entitled to vote at the Annual Meeting of Stockholders of
the Company to be held at the Embassy Suites, 4550 La Jolla Village Drive,
San Diego, California on Wednesday, June 9, 1999 at 9:00 a.m. or at any
postponement or adjournment thereof, and instructs said proxies to vote as
follows:
Shares represented by this proxy will be voted as directed by the
stockholder. IF NO SUCH DIRECTIONS ARE INDICATED, THE PROXIES WILL HAVE
AUTHORITY TO VOTE FOR THE ELECTION OF THE TWO NOMINEES FOR CLASS II DIRECTOR
AND FOR ITEMS 2 AND 3.
- --------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- --------------- ---------------
<PAGE>
DETACH HERE
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE TWO NOMINEES
FOR CLASS II DIRECTOR AND FOR ITEMS 2 AND 3.
1. ELECTION OF DIRECTORS
Nominees: Anthony DeMaria, M.D.
Howard E. Greene, Jr.
FOR WITHHELD
ALL / / / / FROM ALL
NOMINEES NOMINEES
/ /
--------------------------------------------
(INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's name
on the space provided above.)
2. To approve the amendment to the FOR AGAINST ABSTAIN
Stock Incentive Plan. / / / / / /
3. To ratify the appointment of Ernst & FOR AGAINST ABSTAIN
Young LLP as the Company's independent / / / / / /
auditors.
4. In their discretion, upon such other FOR AGAINST ABSTAIN
business as may properly come before / / / / / /
the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
Please sign exactly as your name or names appear on this proxy. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If shares are held jointly, each holder should sign.
Signature: Date: Signature: Date:
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