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
UROMED CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(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
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE>
UROMED CORPORATION
April 10, 2000
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
UroMed Corporation (the "Company"), to be held at 9:00 a.m. on Friday, May 12,
2000 at the offices of Bingham Dana LLP, 150 Federal Street, Boston,
Massachusetts (the "Meeting").
The Notice of Special Meeting and Proxy Statement that follow describe the
business to be considered and acted upon by the stockholders at the Meeting.
The Board of Directors of the Company encourages your participation in the
Company's corporate governance and, to that end, solicits your proxy. You may
give your proxy by completing, dating, and signing the enclosed proxy and
returning it promptly in the enclosed envelope. You are urged to do so even if
you plan to attend the Meeting. We hope you will be able to join us on May 12,
2000.
Sincerely,
John G. Simon
Chairman of the Board
1400 Providence Highway, Norwood, Massachusetts 02062
<PAGE>
UROMED CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On May 12, 2000
--------------------------
Notice is hereby given that a Special Meeting of Stockholders of UroMed
Corporation (the "Company") will be held at the offices of Bingham Dana LLP, 150
Federal Street, Boston, Massachusetts on Friday, May 12, 2000 at 9:00 a.m.,
local time, to consider and act upon the following matters:
1) A proposal to elect two Class III directors of the Company, each to hold
a three-year term.
2) A proposal to adopt the Company's Second Amended and Restated 1991 Stock
Option Plan.
3) A proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the current fiscal year.
4) To transact such other business as may properly come before the Meeting
or any adjournments thereof.
This Special Meeting is being held in lieu of an annual meeting of
stockholders in 2000. Stockholders of record at the close of business on March
15, 2000 will receive notice of the Meeting and be entitled to vote at the
Meeting or any adjournment thereof. All stockholders are cordially invited to
attend the Meeting. Information relating to the matters to be considered and
voted on at the Special Meeting is set forth in the proxy statement accompanying
this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
April 10, 2000
THE BOARD OF DIRECTORS IS SOLICITING THE ENCLOSED PROXY. WHETHER OR NOT YOU
EXPECT TO BE PRESENT AT THE MEETING, COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE. IF YOU
ATTEND THE MEETING, YOU MAY WITHDRAW THE ENCLOSED PROXY GIVEN BY YOU AND VOTE
YOUR SHARES IN PERSON
/s/ Donald-Bruce Abrams
___________________________
CLERK
<PAGE>
UROMED CORPORATION
1400 Providence Highway
Norwood, MA 02062
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PROXY STATEMENT
----------------
INTRODUCTION. This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of UroMed Corporation, a Massachusetts
corporation (the "Company"), of proxies for use at a Special Meeting of
Stockholders (the "Meeting") to be held at the offices of Bingham Dana LLP, 150
Federal Street, Boston, Massachusetts on Friday May 12, 2000 at 9:00 a.m., local
time, and at any adjourned session thereof. This Special Meeting is being held
in lieu of an annual meeting of stockholders in 2000. This Proxy Statement and
the enclosed Annual Report to Stockholders for the Company's fiscal year ended
December 31, 1999 are being mailed to stockholders on or about April 10, 1999.
The Annual Report does not constitute any part of this Proxy Statement.
SOLICITATION. The entire cost of preparing, assembling, and mailing this
proxy material will be borne by the Company. In addition, the Company may
reimburse brokerage firms and other persons representing certain beneficial
owners of shares for their reasonable expenses in sending proxy material to and
obtaining proxies from such beneficial owners.
REVOCATION. A proxy may be revoked by a stockholder at any time prior to
its use by giving written notice of such revocation to the Clerk of the Company,
by appearing at the Meeting and voting in person, or by returning a later dated
proxy in the form enclosed.
QUORUM AND VOTING. Stockholders of record as of the close of business on
March 15, 2000 will be entitled to vote at the Meeting. As of such record date,
there were issued and outstanding and entitled to vote 5,175,162 shares of the
common stock, no par value, of the Company (the "Common Stock"). Holders of
shares of Common Stock are entitled to one vote for each share owned at the
record date on all matters to come before the Meeting and any adjournments
thereof. The presence in person or by proxy of holders of a majority of the
shares of Common Stock entitled to vote at the Meeting constitutes a quorum for
the transaction of business.
TABULATION OF VOTES. All proxies will be voted in accordance with the
instructions contained therein. If no choice is specified for one or more
proposals in a proxy submitted by or on behalf of a stockholder, the shares
represented by such proxy will be voted in favor of such proposals and, in the
discretion of the named proxies, with respect to any other proposals that may
properly come before the Meeting. Broker non-votes (if the broker has voted on
at least one proposal) and proxies that withhold authority to vote for election
of a director or that reflect abstentions will be deemed present for the purpose
of determining the presence of a quorum for the transaction of business. A
broker non-vote will have no effect on the outcome of voting on such proposal.
An abstention with respect to a proposal will have the effect of a vote against
such proposal.
The Board of Directors does not know of any matters that will be brought
before the Meeting other than those matters specifically set forth in the Notice
of Special Meeting of Stockholders. However, if any other matter properly comes
before the Meeting, it is intended that the persons named in the enclosed form
of proxy, or their substitute acting thereunder, will vote on such matter in
accordance with their best judgment.
1
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 10, 2000 for (i) each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock (ii) each director of the Company, (iii) each of the
executive officers of the Company as named in the Summary Compensation Table,
and (iv) all of the directors and officers of the Company as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
_____________________________
<S> <C> <C>
Name and address Number Percent
- ---------------- _________ _______
John G. Simon........................................................ 562,056(2) 10.8%
c/o UroMed Corporation, Building No. 2
1400 Providence Highway, Norwood, MA 02062
Daniel Muscatello.................................................... 8,677(3) *
Richard A. Sandberg.................................................. 1,834(4) *
Thomas E. Tierney.................................................... 2,400(5) *
Elizabeth B. Connell, M.D............................................ 7,850(6) *
E. Kevin Hrusovsky(7)................................................ -- --
Domenic C. Micale.................................................... 1,110(8) *
All directors and executive officers as a group (7 persons)........ 562,090(9) 10.8%
</TABLE>
- --------------------------
* Less than 1%.
(1) Unless otherwise indicated in these footnotes, each stockholder has
sole voting and investment power with respect to the shares beneficially owned.
Includes shares issuable upon exercise of options exercisable as of March 10,
2000 or within 60 days after such date.
(2) Includes (i) 6,584 shares held by The Clarendon 1993 Irrevocable Trust,
of which Mr. Simon is a Trustee and over which Mr. Simon shares investment and
voting control, (ii) 10,694 shares issuable upon exercise of stock options, and
(iii) 21,837 shares issuable upon exercise of stock options held by directors
and officers of the Company with respect to which Mr. Simon has the right to
direct the vote pursuant to contractual relationships between the Company and
such persons.
(3) Represents 8,677 shares issuable upon exercise of stock options.
(4) Includes 1,800 shares issuable upon exercise of stock options.
(5) Represents 2,400 shares issuable upon exercise of stock options.
(6) Represents 7,850 shares issuable upon exercise of stock options.
(7) Mr. Hrusovsky was elected to the Board of Directors on March 29, 2000
and filled the vacancy created by Mr. David P. Fialkow who resigned effective as
of that date.
(8) Represents 1,110 shares issuable upon exercise of stock options.
(9) Includes 32,531 shares issuable upon exercise of stock options,
including 21,837 shares issuable upon exercise of stock options held by
directors and officers of the Company, all of the ownership of which has been
attributed soley to Mr. Simon.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with each
class having two directors each, with the members of each such class serving a
three year term. Each year the Company's stockholders have the opportunity to
elect the members of one class. At the Meeting, the terms of the members of
Class III, Mr. John G. Simon and Richard A. Sandberg, expire. Mr. Simon and Mr.
Sandberg are the only nominees for election as Class III Directors, for a term
to expire at the 2003 Annual Meeting of Stockholders.
Unless authority is withheld, it is the intention of the persons voting
under the enclosed proxy to vote such proxy in favor of the election of Mr.
Simon and Mr. Sandberg to be directors of the Company until the 2003 Annual
Meeting of Stockholders and until their successors are elected and qualified.
The affirmative vote of a plurality of the shares of Common Stock present or
represented at the Meeting by proxy is required for the election of Mr. Simon
and Mr. Sandberg as Class III directors.
2
<PAGE>
The Class I directors of the Company with terms expiring at the 2001 Annual
Meeting of Stockholders are Daniel Muscatello and Dr. Elizabeth E. Connell. The
Class II directors of the Company with terms expiring at the 2002 Annual Meeting
of Stockholders are Mr. Thomas E. Tierney and Mr. E. Kevin Hrusovsky. Mr.
Hrusovsky was elected a Director by vote of the Board of Directors on March 29,
2000 in order to fill the vacancy created by Mr. David P. Fialkow's resignation
as a Director on that date.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL STOCKHOLDERS VOTE
"FOR" EACH OF THE NOMINEES.
The following table sets forth, with respect to the members of the Board of
Directors, the name, age, length of service as a director and any service on
committees of the Board of Directors of the Company. For information regarding
the number of shares of the Company's Common Stock owned by each nominee and all
directors as of March 10, 2000, see "Stock Ownership of Principal Stockholders
and Management." The address for each person listed below is c/o the Company at
1400 Providence Highway, Norwood, MA 02062.
<TABLE>
<CAPTION>
Year First Positions and
Became offices with
Name Age Director the Company
- ----- --- ---------- -------------
<S> <C> <C> <C>
John G. Simon................................... 37 1990 Chairman of the
Board, Director
and former
President and Chief
Executive Officer
Daniel Muscatello............................... 44 1999 Director, President
and Chief Executive
Officer
Elizabeth B. Connell, M.D....................... 74 1994 Director
Richard A. Sandberg (l)......................... 57 1991 Director
Thomas E. Tierney (l)........................... 72 1991 Director
E. Kevin Hrusovsky (1)(2)....................... 38 2000 Director
</TABLE>
- --------------------------
(1) Member of the Compensation Committee and Audit Committee of the Board
of Directors.
(2) Mr. Hrusovsky was elected to the Board of Directors on March 29,
2000 to replace David P. Fialkow who resigned at that date.
BACKGROUND OF DIRECTORS
John G. Simon, Chairman of the Board of Directors, and former President and
Chief Executive Officer. Mr. Simon is the founder of the Company and served as
President and Chief Executive Officer of the Company from its inception in 1990
until December 1999, and as Chairman of the Board of Directors of the Company
since its inception in 1990.
Daniel Muscatello, Director, President and Chief Executive Officer. Mr.
Muscatello joined the Company in February 1997 as Director of Marketing and was
appointed Vice President of Marketing and Sales in 1998. He was appointed
President and Chief Executive Officer in December 1999 at which time he was also
elected a member of the Company's Board of Directors. Prior to joining the
Company, Mr. Muscatello held management positions as Healthcare Consultant,
Corporate Account Executive and Region Manager with Baxter Healthcare from 1993
to 1997. Prior to that, Mr. Muscatello was Director of Marketing for Alcon
Laboratories, Inc. Systems Division from 1991 to 1993.
Elizabeth B. Connell, M.D., Director. Dr. Connell has served as a Director
of the Company since 1994. Since 1981, she has served as a professor in the
Department of Gynecology and Obstetrics at Emory University School of Medicine
in Atlanta, Georgia and was appointed Professor Emeritus effective January 1,
1997. Dr. Connell also currently serves as a consultant to the U.S. Food and
Drug Administration's OB/GYN Devices Panel.
3
<PAGE>
Richard A. Sandberg, Director. Mr. Sandberg has served as a Director of the
Company since 1991. Mr. Sandberg is a private investor and serves as Chairman of
the Board of Directors of numerous private companies. From 1983 to 1997, he
served in a variety of positions at DIANON Systems Inc., an oncology and
gynecology marketing and database firm which he co-founded, most recently
serving as Chairman and Chief Executive Officer. Mr. Sandberg is a director of
Matritech, Inc. a manufacturer of oncology diagnostic test technologies.
Thomas E. Tierney, Director. Mr. Tierney has served as a Director of the
Company since 1991. He has served as the Chairman of T.E.T. Associates, a health
care consulting firm, since 1988 and as the Chairman of Warehouse Products
Testing Corp. from 1994 to 1996. He was formerly with Kendall Co., a health
products firm, from 1951 to 1988 where he held numerous positions including
Executive Vice President and General Manager of the Healthcare Division and
Group Executive for the Health Care Business. Mr. Tierney is also a Director of
Procyte Corporation.
E. Kevin Hrusovsky, Director. Mr. Hrusovsky was elected a Director of the
Company on March 29, 2000. He has served as the President and Chief Executive
Officer of Zymark Corporation, a provider of products, technologies and services
for laboratory applications since 1996. He was formerly with FMC Corporation, a
producer of chemicals and machinery for industry and agriculture, from 1992 to
1996, where he held management positions as International Director, Agricultural
Products Group, Division Manager, Pharmaceutical and Global Sales and Marketing
Director, Pharmaceutical.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the Company's fiscal year ended December 31, 1999, the Board of
Directors held five meetings.
Each of the Audit Committee of the Board of Directors (the "Audit
Committee") and the Compensation Committee of the Board of Directors (the
"Compensation Committee") presently are composed of three directors: Richard A.
Sandberg, Thomas E. Tierney and E. Kevin Hrusovsky. Mr. Hrusovsky was elected to
the Audit Committee and Compensation Committee on March 29, 2000 and filled the
vacancies on those committees created by Mr. David P. Fialkow who resigned
effective as of that date. Responsibilities of the Audit Committee include
engagement of independent accountants, review of audit fees, supervision of
matters relating to audit functions, review of internal policies and procedures
regarding audits, accounting and other financial controls, and reviewing related
party transactions. During 1999, the Audit Committee held two meetings.
Responsibilities of the Compensation Committee include approval of remuneration
arrangements for executive officers of the Company, review and approval of
compensation plans relating to executive officers and directors, including
grants of stock options and other benefits under the Company's Amended and
Restated 1991 Stock Option Plan (the "1991 Stock Option Plan"), and general
review of the Company's employee compensation policies. During 1999, the
Compensation Committee held two meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of three outside
directors, Richard A. Sandberg, Thomas E. Tierney and E. Kevin Hrusovsky. Mr.
Hrusovsky was elected to the Compensation Committee on March 29, 2000 and filled
the vacancy created by Mr. David P. Fialkow who resigned effective as of that
date. No member of the Compensation Committee is a former or current officer or
employee of the Company. To the Company's knowledge, there were no other
relationships involving members of the Committee or other directors of the
Company requiring disclosure in this Proxy Statement.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain compensation information for the
fiscal years ended December 31, 1999, 1998 and 1997 with respect to the
Company's Chief Executive Officer, former Chief Executive Officer and all the
other most highly compensated executive officers of the Company whose total
salary and bonuses for the fiscal year indicated exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SECURITIES ALL OTHER
UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS SATION
- --------------------------------------- ----- ---------- --------- ---------- ---------
John G. Simon
Chairman of the Board and former 1999 $225,000(1) $63,000(2) -- $ --
Chief Executive Officer & President 1998 225,000(1) 39,375(2) 12,992(3) --
1997 167,522 -- 2,900(3) --
Daniel Muscatello
President and Chief Executive Officer 1999 147,896 30,040(2) 85,989 --
1998 138,202 17,000(2) 29,400(4) --
1997 119,827 16,000(2) 3,200(4) 52,000(5)
Domenic C. Micale
Vice President Finance and Treasurer 1999 93,333 15,582(2) 3,000 --
1998 71,249 4,620(2) 18,600(6) --
1997 64,347 6,250(2) 1,080(6) --
</TABLE>
- -------------------------
(1) Includes $56,475 of deferred salary for 1998 that was paid in February
1999.
(2) Bonus amounts reflected for 1999, 1998 and 1997 relate to such years
but were paid in February 2000, 1999 and 1998, respectively.
(3) 1998 stock option grants include 12,992 stock options that were granted
in prior years and repriced in 1998. The options repriced were originally issued
as follows: 3,292 in 1993, 2,400 in 1995, 4,400 in 1996, and 2,900 in 1997.
These options were both canceled and reissued in 1998.
(4) 1998 stock option grants include 7,200 stock options, originally issued
in 1998 and repriced later in 1998. Of these repriced options in 1998, 3,200
were originally issued in 1997. These options were both canceled and reissued in
1998.
(5) 1997 amount pertains to relocation and related payments.
(6) 1998 stock option grants include 1,800 stock options, originally issued
in 1998 and repriced later in 1998. Of these repriced options in 1998, 1,080
options were originally issued in 1997. These options were both canceled and
reissued in 1998.
5
<PAGE>
Option Grants in Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
Potential Realizable Value
Number of % of Total at Assumed Annual Rate of
Securities Options Granted Stock Price Appreciation
Underlying to Employees in Exercise Expiration for Option Term
Options Granted Fiscal Year Price ($/sh) Date 5% 10%
(1)
--------------- ---------------- ------------ --------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
John G. Simon -- -- $ -- -- $ -- $ --
Daniel Muscatello 12,000 8.57% 1.38 8/11/09 10,377 26,297
73,989 52.85% 1.09 12/16/09 50,905 129,004
Domenic C. Micale 3,000 2.14% 1.38 8/11/09 2,594 6,574
</TABLE>
- -------------------------
(1) Grants under the 1991 Stock Option Plan. These options have a four-year
vesting period, with 12.5% vesting after the first six months and the remainder
monthly at a rate of 2.08% per month for the remaining forty-two months. Such
options are not transferable, other than by will or the laws of descent and
distribution.
Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Value Number of Securities Underlying In-the-Money
Shares Acquired Realized Unexercised Options at 12/31/99 Options at 12/31/99(2)
Name on Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
- ----- --------------- -------- -------------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
John G. Simon -- $ -- 9,925 3,067 $ -- $ --
Daniel Muscatello -- -- 5,543 102,646 -- --
Domenic C. Micale -- -- 4,370 15,430 -- --
</TABLE>
- ------------------------
(1) Value realized is based on the fair market value of the Common Stock as
of the date of exercise minus the exercise price.
(2) Value is based on the closing sale price of the Common Stock as of the
last business day of the year, minus the exercise price.
6
<PAGE>
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company entered into an amended employment agreement with Daniel
Muscatello as President and Chief Executive Officer on December 1, 1999. The
agreement is renewable at the option of both parties and provides for (i) an
annual base salary of $200,000 subject to annual review and increase, (ii) such
incentive bonus payments as the Company may from time to time determine, (iii)
severance payments equal to twelve months' base salary and medical insurance
costs in the event that Mr. Muscatello's employment terminates other than for
cause. Mr. Muscatello's employment agreement also provides for assignment to the
Company of his rights to inventions and proprietary information and contains
confidentiality and non-competition provisions.
The Company has entered into an "at-will" employment agreement with Domenic
C. Micale for an initial term of five years, dated as of September 30, 1996. The
agreement with Mr. Micale provides for such incentive bonus payments as the
Company may from time to time determine. The current semi-monthly salary for Mr.
Micale is $4,375. This salary is subject to annual review and adjustment.
The employment agreement between the Company and John G. Simon with respect
to Mr. Simon's position as President and Chief Executive Officer expired on
March 17, 1999. That agreement provided for an annual base salary of $225,000.
See "Director Compensation" below for a description of the new agreement with
Mr. Simon with respect to his capacity as Chairman of the Board of Directors.
DIRECTOR COMPENSATION
The Company pays the travel expenses of non-employee directors for
attendance at meetings of the Board of Directors and committees thereof. Cash
compensation of $500 per meeting and a $2,000 annual retainer per person was
paid to the Directors in 1999. In 2000, cash compensation of $1,000 per meeting
and a $5,000 annual retainer per person will be paid to the Directors.
In addition, under the terms of the 1991 Stock Option Plan, as amended,
each non-employee director of the Company receives quarterly grants of options
to purchase 500 shares of the Common Stock effective as of May 12, 2000, and
each non-employee director who is first elected to the Board after January 1,
2000 will receive options to purchase 10,000 shares of Common Stock.
The Company entered into an employment agreement with John G. Simon with
respect to his position as Chairman of the Board of Directors commencing
December 1, 1999 and continuing until March 31, 2001. The agreement may be
extended thereafter only by written agreement of the Company and Mr. Simon. The
agreement with Mr. Simon provides for an annual salary of $225,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The objectives of the Company's executive compensation program are to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and reward executive officers who contribute to
the long-term success of the Company. The Company's executive compensation
philosophy is based on the following principles:
- Competitive and Fair Compensation
The Company is committed to providing an executive compensation program
that helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Company compares its compensation practices
with those of comparable medical products and other relevant companies in a
similar stage of development. The Company also seeks to achieve a balance of the
compensation paid to a particular individual and the compensation paid to other
executives both inside the Company and at comparable companies.
7
<PAGE>
- Short-term Cash Compensation
Cash compensation consists of two components: annual salary and cash
incentive compensation. The annual salaries of the executive officers are
evaluated based upon corporate and individual performance. Corporate performance
is evaluated by reviewing the extent to which strategic and business plan goals
and milestones are met. Individual performance is evaluated by reviewing
attainment of specified individual objectives and milestones and the degree to
which teamwork and Company values are fostered. Cash incentive compensation is
based upon the achievement of functional, divisional and corporate goals as well
as individual performance.
- Long-term Incentive Compensation
Because not all short-term management accomplishments are directly related
to changes in short-term stockholder value, the Compensation Committee believes
that management should also have a long-term compensation component related to
increasing stockholder value. To assure that executive officers' goals and
accomplishments are linked with increasing stockholder value, the Compensation
Committee believes that the grant of options to purchase the Company's Common
Stock that become exercisable over an extended period of time should be an
integral part of the overall compensation philosophy.
COMPENSATION PROGRAM COMPONENTS
Annual compensation for the Company's executive officers currently consists
of three elements - salary, cash incentive compensation and equity
participation. Executive officers are also entitled to participate in the same
benefit plans available to other employees. In setting the base salaries of the
Company's executive officers, the Compensation Committee reviews the range of
compensation paid to employees in similar positions of the companies in a
similar state of development in the medical and other relevant industries. While
industry-wide practices are deemed to be important indicators of appropriate
compensations levels, the Compensation Committee believes the most important
considerations are individual and corporate performance, in setting an
executive's base salary and cash incentive compensation.
On an annual basis, goals for Company performance and individual goals and
objectives for each of the Company's executive officers (including the Chief
Executive Officer) are established by the Compensation Committee. Every six
months, all executive officers other than the Chief Executive Officer are
evaluated by the Chief Executive Officer on their performance with respect to
their individual short-term goals and objectives. At this time, revised
quarterly goals and objectives are established, if appropriate. Based upon their
performance relative to their goals and objectives, the base salary of executive
officers other than the Chief Executive Officer is generally adjusted once per
year by the Compensation Committee.
On an annual basis, the Compensation Committee evaluates the achievement of
the annual goals and objectives established for the Chief Executive Officer and
his contribution to the Company.
In February 2000, the Company paid cash bonuses aggregating $108,622 to its
Chief Executive Officer, Vice President of Finance and former Chief Executive
Officer. The Compensation Committee intended for these bonuses to represent
compensation for such officers' contributions to the development and
achievements of the Company to December 31, 1999, including reducing operating
losses, reducing debt levels and disposing of assets unrelated to the Company's
prostate cancer focus. For the Company's 2000 fiscal year, the Compensation
Committee has set additional goals and objectives for Company performance, as
well as additional individual goals and objectives, with the intention of
reviewing the appropriateness of additional incentive cash compensation for such
year. Please refer to the table entitled "Summary Compensation" elsewhere in
this Proxy Statement for information relating to the base salaries and cash
bonus payments made during the Company's last three completed fiscal years to
certain of its executive officers.
8
<PAGE>
Stock option awards are designed to promote the identity of long-term
interests between the Company's employees and its stockholders and assist in the
retention of executives. The size of option grants is generally intended by the
Compensation Committee to reflect the executive's position with the Company and
his or her actual or potential contributions to the Company in relation to his
or her overall compensation. The Compensation Committee believes that stock
options have been and remain an excellent vehicle for compensating its
employees. Because the option exercise price of the employee is generally the
fair market value of the stock on the date of grant, employees recognize a gain
only if the value of the stock increases. Thus, employees with stock options are
rewarded for their efforts to improve the long-term value of the Common Stock.
Stock options, moreover, have been used to reward substantially all employees of
the Company, not just at the executive officer level. The option program
typically uses a four-year or greater vesting period to encourage employees to
continue in the employ of the Company. Please refer to the table entitled
"Option Grants in Last Fiscal Year" elsewhere in this Proxy Statement for
information regarding option grants to certain executive officers.
1999 COMPENSATION FOR THE CHAIRMAN AND FORMER CHIEF EXECUTIVE OFFICER
The amount and means of determining Mr. Simon's base annual salary for 1999
was fixed by the terms of his employment agreement with the Company, which was
effective as of March 17, 1997. That employment agreement provided for an annual
base salary for 1999 of $225,000. On December 1, 1999, the Company entered into
a new employment agreement with Mr. Simon with respect to his position as
Chairman of the Board of Directors, which provides for the same $225,000 annual
base salary.
1999 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The amount and means of determining Mr. Muscatello's base annual salary for
1999 was fixed by the terms of his amended employment agreement with the
Company, which was effective as of December 1, 1999. This amended employment
agreement provides for an annual base salary of $200,000, subject to yearly
review and increase, and such incentive bonus payments as the Compensation
Committee may from time to time determine. Mr. Muscatello's current annual
salary is $200,000.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162 (M)
The Compensation Committee has not yet had the occasion to adopt a policy
on the 1993 amendment to the Internal Revenue Code of 1986, as amended (the
"Code"), disallowing deduction on compensation in excess of $1 million for
certain executives of public companies. The Company believes that options
granted under the 1991 Stock Option Plan are exempt from the limitation, and
other compensation expected to be paid during fiscal year 1998 is below the
compensation limitation.
Compensation Committee
Richard A. Sandberg
Thomas E. Tierney
E. Kevin Hrusovsky
9
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the NASDAQ Stock Market Total Return Index for U.S. Companies (the "NASDAQ
Stock Market-U.S. Index") and the Chase H&Q Growth Index ("Chase H&Q Growth
Index") over the period from the time of the Company's initial public offering
of Common Stock on March 16, 1994 to December 31, 1999. The graph assumes that
the value of an investment in the Company's Common Stock and each index was $100
at March 16, 1994 and that all dividends were reinvested.
TABLE OF PLOT POINTS FOR PERFORMANCE GRAPH
<TABLE>
<CAPTION>
NASDAQ STOCK
DATES UROMED CORP. CHASE H&Q GROWTH MARKET-U.S.
------ ----------- ---------------- -------------
<S> <C> <C> <C>
Dec-94 100.00 100.00 100.00
Jan-95 107.95 99.44 100.53
Feb-94 129.55 106.35 105.81
Mar-95 125.00 111.54 108.95
Apr-95 127.27 112.24 112.38
May-95 111.36 111.79 115.29
Jun-95 147.73 126.16 124.62
Jul-95 154.55 144.12 133.77
Aug-95 172.73 147.92 136.49
Sep-95 181.82 157.36 139.63
Oct-95 193.18 158.37 138.83
Nov-95 184.09 164.92 142.09
Dec-95 234.09 166.89 141.33
Jan-96 243.18 166.38 142.04
Feb-96 254.55 172.78 147.46
Mar-96 209.09 172.18 147.95
Apr-96 190.91 199.58 160.21
May-96 220.45 210.76 167.56
Jun-96 250.00 188.55 160.01
Jul-96 231.82 156.97 145.76
Aug-96 188.64 169.86 153.94
Sep-96 200.00 188.45 165.70
Oct-96 184.09 174.73 163.87
Nov-96 165.91 172.23 174.04
Dec-96 177.27 174.68 173.89
Jan-97 156.82 183.73 186.23
Feb-97 147.73 163.93 175.93
Mar-97 134.09 140.95 164.46
Apr-97 70.45 133.26 169.58
May-97 86.36 161.33 188.79
Jun-97 63.64 164.62 194.59
Jul-97 68.18 175.28 215.10
Aug-97 105.68 179.56 214.79
Sep-97 120.45 198.43 227.52
Oct-97 105.68 186.48 215.67
Nov-97 90.91 178.51 216.81
Dec-97 64.20 179.41 213.07
Jan-98 69.32 177.66 219.82
Feb-98 42.61 199.28 240.49
Mar-98 29.55 213.37 249.36
Apr-98 37.50 218.73 253.57
May-98 28.86 197.96 239.49
Jun-98 20.23 214.69 256.21
Jul-98 9.43 196.90 253.22
Aug-98 4.66 147.22 203.17
Sep-98 4.66 176.51 231.37
Oct-98 5.91 186.86 241.36
Nov-98 7.16 222.58 263.78
Dec-98 5.23 260.24 300.25
Jan-99 7.50 322.68 343.91
Feb-99 5.57 288.08 313.08
Mar-99 4.32 322.58 335.86
Apr-99 5.91 345.45 345.30
May-99 5.57 331.61 337.34
Jun-99 5.00 369.51 367.47
Jul-99 4.66 361.50 362.12
Aug-99 4.32 376.51 376.46
Sep-99 4.09 400.30 375.85
Oct-99 4.20 445.02 403.16
Nov-99 3.75 537.33 446.17
Dec-99 3.98 729.00 542.43
</TABLE>
10
<PAGE>
PROPOSAL 2
Adoption of the Company's Second Amended
and Restated 1991 Stock Option Plan
Effective August 15, 1995, the Company's Amended and Restated 1991 Stock
Option Plan (the "Amended and Restated Plan") was amended for the purpose of
providing for the grant of formula stock options ("Formula Grants") to directors
who are not officers or employees of the Company (the "Outside Directors").
Prior to the adoption of such amendments, members of the Compensation Committee
were ineligible for grants of options under the 1991 Stock Option Plan.
The Board of Directors has considered and approved certain amendments to
the Amended and Restated 1991 Stock Option Plan, resulting in the Second Amended
and Restated 1991 Stock Option Plan (the "Second Amended and Restated Plan" or
the "Plan") and is proposing the Second Amended and Restated Plan, as it amends
the existing Amended and Restated Plan, for stockholder approval.
Because as of March 10, 2000, options to purchase an aggregate of 287,394
shares of Common Stock have been granted and exercised from 1991 to date, and
options to purchase 274,377 shares of Common Stock are currently issued to
current employees, officers and directors, only 78,229 shares of Common Stock
remain available for issuance in the future. Among other things, the Second
Amended and Restated Plan increases the number of shares of Common Stock
authorized for issuance in an effort to replace those options which have been
granted and exercised since 1991.
The Second Amended and Restated Plan amends the Amended and Restated Plan
by making the following changes:
1. Increasing the number of authorized shares of Common Stock reserved for
issuance pursuant to stock options from 640,000 shares to 890,000 shares;
2. Changing the number of shares issuable pursuant to stock options granted
to Outside Directors elected after January 1, 2000 on the date of such election
from 4,000 shares to 10,000 shares ("Up-Front Formula Grants");
3. Changing the vesting period for such Up-Front Formula Grants from six
(6) equal installments over six (6) years to three (3) equal installments over
three (3) years;
4. Changing the number of shares of Common Stock issuable pursuant to
quarterly Formula Grants ("Quarterly Formula Grants") commencing on May 15, 2000
from 150 shares to 500 shares; and
5. Eliminating the restriction that no Outside Director may receive more
than 24 Quarterly Formula Grants.
As of March 10, 2000, 37 individuals were eligible to participate in the
Plan. As of March 10, 2000, 561,771 shares were issued or issuable upon exercise
of options granted according to the Plan, and options to purchase an additional
78,229 shares remained available for grant.
The Board of Directors has directed that the Second Amended and Restated
Plan be submitted to the stockholders in its entirety for approval in order to
meet the requirements of the Nasdaq Stock Market, Inc. applicable to companies
with securities listed on the Nasdaq SmallCap Market.
The Board of Directors believes that the Second Amended and Restated Plan
will enable the Company to continue its general practice of making grants of
stock options to employees, Outside Directors and consultants to the Company,
thereby encouraging stock ownership by such persons and providing additional
incentives for them to promote the success of the Company's business.
11
<PAGE>
Set forth below is a summary of certain provisions of the Second Amended
and Restated Plan and a general description of the Federal income tax rules
applicable to the grant and exercise of stock options under such Plan. This
summary does not purport to be complete and is subject to and qualified in its
entirety by reference to the complete text of the Second Amended and Restated
Plan, which is attached hereto as Appendix 1 and is incorporated herein by
reference.
Purpose of the Plan. The purpose of the Plan is to encourage ownership of
the Company's Common Stock by employees, Outside Directors and consultants to
the Company and its subsidiaries and to provide additional incentives for them
to endeavor for the success of the Company's business.
Administration. The Plan is administered by the Compensation Committee.
Subject to the provisions of the Plan, the Compensation Committee has discretion
to determine when awards are made, which employees are granted awards, the
number of shares subject to each award and all other relevant terms of the
awards. The Compensation Committee also has broad discretion to construe and
interpret the Plan and adopt rules and regulations thereunder.
Eligibility. Awards may be granted under the Plan to persons who are
employees, Outside Directors or consultants to the Company or a subsidiary.
These eligible employees include officers and directors of the Company, except
that no member of the Compensation Committee is eligible to receive options
under the Plan other than pursuant to Formula Grants.
Shares Subject to the Plan. The Plan provides that options to purchase up
to an aggregate of 890,000 shares of Common Stock may be granted. This limit is
subject to adjustment for stock dividends, stock splits or other changes in the
Company's capitalization. In addition, any option that expires or terminates for
any reason without having been exercised may be reissued under the Plan. As of
December 31, 1999, 246,696 shares had been issued upon exercise of options
granted under the Plan, 312,975 shares were issuable upon exercise of
outstanding options under the Plan and 80,329 shares were available for future
grants of options under the Plan. The last sale price of a share of Common Stock
on the Nasdaq SmallCap Market on March 10, 2000 was $6.563.
Terms of Options. The Compensation Committee in its discretion may issue
stock options which qualify as incentive stock options under the Code (to be
issued to employees only) or non-statutory stock options (which may be issued to
any eligible employee or consultant). Under the Plan, the Compensation Committee
will determine the time or times when each stock option becomes exercisable, the
period within which it remains exercisable and the applicable exercise price.
However, no incentive stock option may be exercised more than 10 years after it
is granted (5 years, in the case of any incentive stock option granted to the
owner of 10% or more of the voting power of the Common Stock (a "10% Holder")),
and the exercise price of any incentive stock option may not be less than the
fair market value of the Common Stock on the date of grant (110% of the fair
market value in the case of any 10% Holder).
Payment for shares purchased upon exercise of any option under the Plan
must be made in full when the option is exercised, with such payment to be made
by cash, check or the surrender of shares of Common Stock having a fair market
value equal to the aggregate exercise price of the options being exercised.
Except for certain permitted transfers of nonstatutory stock options to certain
immediate family members, no option may be transferred except by will or the
laws of descent and discretion and distribution and, during the optionee's
lifetime, the option may be exercised only by the optionee. If an optionee's
employment or association with the Company terminates for any reason, including
without limitation by reason of voluntary severance, involuntary severance,
death or retirement, any option exercisable on the date of termination may be
exercised by the optionee but only for the period specified in the applicable
option agreement.
Notwithstanding any other provision of the Plan, the aggregate fair market
value (determined as of the date of grant) of the shares with respect to which
incentive stock options are exercisable for the first time by any employee in
any calendar year may not exceed $100,000 (with any excess portion of such
options to be treated as non-statutory stock options).
12
<PAGE>
Formula Grants. Members of the Compensation Committee may be granted
options under the Plan only by Formula Grants thereunder. Options granted
pursuant to a Formula Grant are non-statutory stock options. Formula Grants
require no action by the Compensation Committee or the Board of Directors and
occur as follows:
1. Each individual who is elected to the Board of Directors after January
1, 2000 but during the term of the Plan and who was never before a member of the
Board and is not, immediately prior to such election, an officer or employee of
the Company, shall be granted an option to purchase 10,000 shares of Common
Stock. These Formula Grants become exercisable in three (3) equal installments
on each of the next three (3) annual meetings of the stockholders of the Company
(or special meetings in lieu of such annual meetings) provided the director is
an Outside Director on the day immediately prior to such date and has been a
director of the Company since the last annual meeting of shareholders of the
Company (or special meeting in lieu thereof). In the event that an Outside
Director was not elected at an annual meeting of stockholders of the Company or
at a special meeting in lieu thereof, the Formula Grant shall become exercisable
for the first installment of vested shares on the date of the Company's next
annual meeting of stockholders of the Company or special meeting in lieu thereof
following the first (1st) anniversary of the date of such Outside Director's
election or appointment to the Board and thereafter for additional installments
on the next two following annual meetings of the stockholders of the Company (or
special meetings in lieu thereof), provided the director is an Outside Director
on the day immediately prior to such date and has been a director of the Company
since the last annual meeting of shareholders of the Company (or special meeting
in lieu thereof). As of December 31, 1999, formula options under the Amended and
Restated 1991 Stock Option Plan (i.e., options to purchase 4,000 shares of
Common Stock under the old formula option provisions) to purchase an aggregate
of 10,800 shares of Common Stock had been granted to directors of the Company,
and no new formula options under the Second Amended and Restated 1991 Stock
Option Plan had been granted to directors of the Company.
2. Commencing on May 15, 2000, each Outside Director (including any
incumbent Outside Directors) who, on any February 15, May 15, August 15 or
November 15 of any year after the first anniversary of the date on which such
Outside Director was first elected to the Board of Directors, is a director of
the Company, shall be granted an option to purchase 500 shares of Common Stock.
Each of these options are exercisable immediately upon their grant. As of
December 31, 1999, under the old Quarterly Formula Grants (i.e., options to
purchase 150 shares of Common Stock granted quarterly), options to purchase an
aggregate of 10,800 shares had been granted to Richard A. Sandberg, Thomas E.
Tierney, David P. Fialkow and Elizabeth B. Connell under this provision of the
Plan.
Non-statutory options granted pursuant to Formula Grants have an exercise
price equal to the fair market value of the Common Stock on the date of such
Formula Grant and have a term of ten years. Options granted pursuant to Formula
Grants to outside directors who are not reelected or are removed from the Board
of Directors are exercisable thereafter only until the earlier of (i) the
expiration date specified for such options in the applicable option award
agreement or (ii) ninety days after such director's term of service expires, in
the case of non-reelection, or is terminated, in the case of removal.
Summary of Tax Consequences. The following is a brief and general
discussion of the federal income tax rules applicable to stock options granted
under the Plan. With respect to an incentive stock option, an employee will
generally not be taxed at the time of grant or exercise, although exercise of an
incentive option will give rise to an item of tax preference that may result in
an alternative minimum tax, and the Company will not be entitled to a deduction
for federal income tax purposes as a result of the grant or exercise of the
option. If an optionee holds the shares acquired upon exercise of an incentive
stock option until at least one year after issuance and two years after the
option grant, he or she will have long-term capital gain, or loss, based on the
difference between the amount realized on the sale or disposition and his or her
option price, and the Company will not be entitled to a deduction at the time
the options sells such option shares. If these holding periods are not
satisfied, then upon disposition of the shares the optionee will recognize
ordinary income equal, in general, to the excess of the fair market value of the
shares at time of exercise over the option price, plus capital gain in respect
of any additional appreciation, and the Company will generally be allowed an
income tax deduction in the same amount at the time of such disposition. With
respect to a non-statutory stock option under the Plan, an optionee will not be
taxed at the time of grant; upon exercise, he or she will generally realize
compensation income to the extent the then fair market value of the stock
exceeds the option price. The Company will generally have a tax deduction to the
extent that, and at the time that, an optionee realizes compensation income with
respect to an option.
13
<PAGE>
Termination. The Plan will terminate on March 29, 2010.
Options Granted under the Plan. As of December 31, 1999, options for the
purchase of a total of 312,975 shares of Common Stock were outstanding under the
Plan (of which 83,069 were exercisable as of such date), and options or other
awards to purchase an additional 80,329 shares remained available for grant
under the Plan. The following table sets forth information as of December 31,
1999 with respect to stock options which have been received since the Plan was
adopted by the Company by (i) each of the Company's Chief Executive Officer,
former Chief Executive Officer and the other executive officer of the Company
named in the Summary Compensation Table, (ii) all executive officers of the
Company as a group, (iii) each of the directors of the Company, (iv) all
directors of the Company, other than those who are executive officers, as a
group, and (v) all employees of the Company, excluding executive officers, as a
group.
Option Grants under 1991 Stock Option Plan
<TABLE>
<CAPTION>
<S> <C>
Option
Name (shares)(1)
- ---------------- -----------
John G. Simon............................................... 12,992
Daniel Muscatello........................................... 108,189
Richard A. Sandberg......................................... 12,576
Thomas E. Tierney........................................... 12,576
Elizabeth B. Connell, M.D................................... 7,700
E. Kevin Hrusovsky.......................................... --
Domenic C. Micale........................................... 19,800
All executive officers as a group........................... 127,989
All directors of the Company,
excluding executive officers as a group.................... 45,844
All employees of the Company
excluding executive officers as a group.................... 385,838
</TABLE>
- --------------------------
(1) Excludes options issued and subsequently terminated.
The Board of Directors believes that approval of the Company's Second
Amended and Restated 1991 Stock Option Plan is in the best interests of all
stockholders and recommends that the stockholders vote "FOR" Proposal 2. The
enclosed proxy will be so voted unless a contrary vote is indicated. The
affirmative vote of the holders of a majority of the shares of Common Stock
voted on the issue at the Meeting, in person or by proxy, is required to ratify
the adoption of the Second Amended and Restated Plan by the Board of Directors.
If the proposal to adopt the Second Amended and Restated Plan is not
approved at the Meeting, the Company's Amended and Restated 1991 Stock Option
Plan as previously adopted by the Board of Directors of the Company and approved
by the stockholders of the Company will remain in full force and effect.
14
<PAGE>
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, independent accountants, have been independent
accountants of the Company since 1991. The Board of Directors has recommended
that the stockholders ratify the reappointment of PricewaterhouseCoopers LLP as
the Company's independent accountants for the current year.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Meeting and will be afforded an opportunity to make a statement, if such
representative desires to do so, and will be available to answer any appropriate
questions.
The Board of Directors recommends that the stockholders vote "FOR" the
proposal to ratify the appointment of PricewaterhouseCoopers LLP, and the
enclosed proxy will be so voted unless a contrary vote is indicated. The
affirmative vote of the holders of a majority of the shares of Common Stock
entitled to vote on this proposal is required for ratification of the
appointment of PricewaterhouseCoopers LLP. In the event the appointment of
PricewaterhouseCoopers LLP should not be ratified by the stockholders, the Board
of Directors will make another appointment to be effective at the earliest
possible time.
STOCKHOLDER PROPOSALS
The Board will make provision for presentation of proposals by stockholders
at the 2001 Annual Meeting of Stockholders (or special meeting in lieu thereof)
provided such proposals are submitted by eligible stockholders who have complied
with the relevant regulations of the Securities and Exchange Commission. Such
proposals must be received by the Company no later than December 11, 2000 to be
considered for inclusion to the Company's proxy materials relating to that
meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive (and certain other) officers and any persons holding more than ten
percent of the Common Stock are required to report their ownership of the Common
Stock and any changes in that ownership to the Securities and Exchange
Commission. Specific due dates for these reports have been established and the
Company is required to report in this Proxy Statement any failure to file by
these dates during 1999. To the best knowledge of the Company, all of these
filing requirements were satisfied by the Company's directors, officers and ten
percent holders with the following exceptions. Messrs. Simon, Muscatello,
Micale, Sandberg, Fialkow, Tierney and Dr. Connell made late Form 5 filings. In
making these statements, the Company has relied upon the written representation
of its directors, officers and its ten percent holders and copies of the reports
that they have filed with Securities and Exchange Commission.
GENERAL
The Board of Directors of the Company knows of no matter other than the
foregoing to be brought before the Meeting. However, the enclosed proxy gives
discretionary authority in the event any additional matters should be presented.
THE COMPANY WILL PROVIDE FREE OF CHARGE TO ANY STOCKHOLDER FROM WHOM A
PROXY IS SOLICITED PURSUANT TO THIS PROXY STATEMENT, UPON WRITTEN REQUEST FROM
SUCH STOCKHOLDER, A COPY OF THE COMPANY'S ANNUAL REPORT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR THE COMPANY'S FISCAL YEAR
ENDED DECEMBER 31, 1999. REQUESTS FOR SUCH REPORT SHOULD BE DIRECTED TO THE
MANAGER OF INVESTOR RELATIONS AT UROMED CORPORATION, 1400 PROVIDENCE HIGHWAY,
BUILDING 2, NORWOOD, MASSACHUSETTS, 02062.
The Company expects to hold its next stockholder meeting on May 18, 2001
and proxy materials in connection with that meeting are expected to be mailed
approximately 30 days prior to the meeting.
John G. Simon
Chairman of the Board
15
<PAGE>
UroMed Corporation
Proxy for the Special Meeting of Stockholders to be held on May 12, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoint(s) Daniel
Muscatello and Domenic C. Micale, and each of them, with full power of
substitution, as proxies to represent and vote as designated herein, all shares
of stock of UroMed Corporation which the undersigned would be entitled to vote
if personally present at the Special Meeting of Stockholders of the Company to
be held at Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts on Friday
May 12, 2000 at 9:00 a.m., or any adjourned session thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3 OF THE BOARD OF DIRECTORS, AND IN THE
DISCRETION OF THE BOARD OF DIRECTORS ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING. Attendance of the undersigned at the meeting or at any
adjournment thereof will not be deemed to revoke this proxy unless the
undersigned shall vote in person at such meeting or revoke this proxy in writing
before it is exercised.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE
Please sign this Proxy exactly as your name(s) appear(s) on the reverse
side hereof. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, a majority must sign. If a corporation, this signature should
be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- ------------------------
16
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
1. To elect the following persons as Class III Directors (except as marked
below):
John G. Simon
Richard A. Sandberg
<TABLE>
<CAPTION>
<S> <C> <C>
FOR ALL NOMINEES WITHHOLD FOR ALL EXCEPT
[ ] [ ] [ ]
</TABLE>
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name of the nominee. Your
shares will be voted for the remaining nominee.
2) A proposal to adopt the Company's Second Amended and Restated 1991 Stock
Option Plan.
<TABLE>
<CAPTION>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
3. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the 2000 fiscal year.
<TABLE>
<CAPTION>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
4. To transact such other business as may properly come before the meeting
or at any adjourned session of the meeting.
UROMED CORPORATION
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
Date ________________
Stockholder sign here -------------------------
Co-owner sign here -------------------------
Mark box at right if an address or comment has been noted on the reverse
side of this card. [ ]
DETACH CARD DETACH CARD
UROMED CORPORATION
Dear Stockholder:
Please take note of the important information enclosed with this Proxy.
There are a number of issues related to the management and operations of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted, then sign the card, detach it and return it in the enclosed postage
paid envelope.
Your vote must be received prior to the Special Meeting of Stockholders of
the Company on Friday, May 12, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
UroMed Corporation
17
<PAGE>
Appendix 1
As Amended and Restated
as of March 29, 2000
UROMED CORPORATION
SECOND AMENDED AND RESTATED 1991 STOCK OPTION PLAN
1. Definitions. As used in this Second Amended and Restated 1991 Stock
Option Plan of UroMed Corporation, the following terms shall have the following
meanings:
1.1. Awarded Option means all Options other than Formula Options.
1.2. Board means the Company's Board of Directors.
1.3. Code means the federal Internal Revenue Code of 1986, as amended.
1.4. Committee means the Compensation Committee of the Board, or any other
committee appointed by the Board, responsible for the administration of the Plan
as provided in section 5 of the Plan.
1.5. Company means UroMed Corporation, a Massachusetts corporation.
1.6. Employment Agreement means an agreement, if any, between the Company
and an Optionee, setting forth, inter alia, conditions and restrictions upon the
transfer of shares of Stock.
1.7. Fair Market Value means on any date (i) if the Stock is traded on a
stock exchange or on the Nasdaq SmallCap Market, the closing price on the date
in question or, if no trades were reported on such date, the closing price on
the most recent trading day preceding such date on which a trade occurred, and
(ii) if the Stock is not traded on a stock exchange or on the Nasdaq National
Market, the value of a share of Stock on such date as determined by the
Committee.
1.8. First Amended and Restated Plan means the Company's Amended and
Restated 1991 Stock Option Plan effective August 15, 1995.
1.9. Formula Grant means a grant of Options pursuant to Section 8.1.
1.10. Formula Grant Date shall have the meaning specified in Section 8.1
1.11. Formula Options means Options granted pursuant to Section 8.
1.12. Grant Date means the date as of which an Option is granted, as
determined under Section 7.1.
1.13. Incentive Option means an Option which by its terms is to be treated
as an "incentive stock option" within the meaning of Section 422 of the Code.
1.14. Nonstatutory Option means any Option that is not an Incentive Option.
1.15. Option means an Awarded Option or Formula Option to purchase shares
of Stock granted under the Plan.
1.16. Option Agreement means an agreement between the Company and an
Optionee, setting forth the terms and conditions of an Option.
1.17. Option Price means the price paid by an Optionee for a share of Stock
upon exercise of an Option.
1.18. Optionee means a person eligible to receive an Option, as provided in
Section 6, to whom an Option shall have been granted under the Plan.
1.19. Outside Director shall mean a member of the Board who is not an
officer or an employee of the Company or any Subsidiary.
18
<PAGE>
1.20. Plan means this Second Amended and Restated 1991 Stock Option Plan of
the Company, as amended from time to time.
1.21. Stock means Common Stock, no par value, of the Company.
1.22. Subsidiary means any corporation which qualifies as a subsidiary of
the Company under the definition of "subsidiary corporation" in Section 424(f)
of the Code.
1.23. Ten Percent Owner means a person who owns, or is deemed within the
meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or
its parent or subsidiary corporations). Whether a person is a Ten Percent Owner
shall be determined with respect to each Option based on the facts existing
immediately prior to the Grant Date of such Option.
1.24. Termination of Service with respect to any Outside Director shall be
deemed to have occurred at the close of business on the last day on which such
Outside Director is a director of the Company.
1.25. Vested Shares, as of any date, means those shares of Stock available
at that date for purchase by exercise of a Formula Option pursuant to Section
8.4.
1.26. Vesting Year for any portion of any Incentive Option means the
calendar year in which that portion of the Option first becomes exercisable.
2. Purpose. This Plan is intended to encourage ownership of Stock by
employees and outside directors of and consultants to the Company and its
Subsidiaries and to provide additional incentives for them to promote the
success of the Company's business. The Plan is intended to be an incentive stock
option plan within the meaning of Section 422 of the Code but not all Options
granted hereunder are required to be Incentive Options.
3. Term of the Plan. Options may be granted hereunder at any time in the
period commencing on the approval of the Plan by the Board and ending not later
than ten (10) years after the earlier of adoption of the Plan by the Board or
approval of the Plan by shareholders.
4. Stock Subject to the Plan. At no time shall the number of shares of
Stock then outstanding which are attributable to the exercise of Options granted
under the Plan, plus the number of shares then issuable upon exercise of
outstanding Options granted under the Plan, exceed 890,000 shares, subject,
however, to the provisions of Section 13 of the Plan. Shares to be issued upon
the exercise of Options granted under the Plan may be either authorized but
unissued shares or shares held by the Company in its treasury. If any Option
expires or terminates for any reason without having been exercised in full, the
shares not purchased thereunder shall again be available for Options thereafter
to be granted.
5. Administration. The Plan shall be administered by the Committee. No
member of the Committee shall receive a grant of an Option other than a Formula
Option during service on the Committee and, except for Options granted prior to
December 31, 1993 and for Formula Options, no member of the Committee shall have
received a grant of an Option during the one-year period preceding such service.
Subject to the provisions of the Plan, the Committee shall have complete
authority, in its discretion, to make or to select the manner of making the
following determinations with respect to each Option, other than a Formula
Option, to be granted by the Company: (a) the employee or consultant to receive
the Option; (b) whether the Option (if granted to an employee) will be an
Incentive Option or Nonstatutory Option; (c) the time of granting the Option;
(d) the number of shares subject to the Option; (e) the Option Price; (f) the
Option period; and (g) the Option exercise date or dates. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective employees and consultants, their present and
potential contributions to the success of the Company and its Subsidiaries, and
such other factors as the Committee in its discretion shall deem relevant.
Subject to the provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective Option Agreements (which need not be identical) other than for
Formula Options, and to make all other determinations necessary or advisable for
the administration of the Plan. The Committee's determinations on the matters
referred to in this Section 5 shall be conclusive.
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6. Eligibility. An Option shall be granted only to an employee or
consultant of one or more of the Company or any Subsidiary or any Outside
Director. As provided in Section 5, no member of the Committee shall be eligible
to receive an Option other than a Formula Option.
7. Awarded Options.
7.1. Time of Granting Options. The granting of an Awarded Option shall take
place at the time specified in the Option Agreement. Only if expressly so
provided in the Option Agreement, shall the Grant Date be the date on which an
Option Agreement shall have been duly executed and delivered by the Company and
the Optionee.
7.2. Option Price. The Option Price under each Awarded Option shall be
determined by the Committee but, in the case of any Incentive Option, shall be
not less than 100% of the Fair Market Value of Stock on the Grant Date, or not
less than 110% of the Fair Market Value of Stock on the Grant Date if the
Optionee is a Ten Percent Owner. The Option Price under each Nonstatutory Option
shall not be so limited solely by reason of this Section 7.2.
7.3. Option Period. No Incentive Option may be exercised later than the
tenth (10th) anniversary of the Grant Date, but in any case not later than the
fifth (5th) anniversary of the Grant Date, if the Optionee is a Ten Percent
Owner. The Option period under each Nonstatutory Option shall not be so limited
solely by reason of this Section 7. An Awarded Option may become exercisable in
such installments, cumulative or non-cumulative, as the Committee may determine.
In the case of an Awarded Option not otherwise immediately exercisable in full,
the Committee may accelerate the exercisability of such Awarded Option in whole
or in part at any time, provided the acceleration of the exercisability of any
Incentive Option would not cause the Awarded Option to fail to comply with the
provisions of Section 422 of the Code.
7.4. Limit on Incentive Option Characterization. No Incentive Option shall
be considered an Incentive Option to the extent pursuant to its terms it would
permit the Optionee to purchase for the first time in any Vesting Year under
that Incentive Option more than the number of shares of Stock calculated by
dividing the current limit by the Option Price. The current limit for any
Optionee for any Vesting Year shall be $100,000 minus the aggregate Fair Market
Value at the date of grant of the number of shares of Stock available for
purchase for the first time in the Vesting Year under each other Incentive
Option granted to the Optionee under the Plan after December 31, 1986 and each
other incentive stock option granted to the Optionee after December 31, 1986
under any other incentive stock option plan of the Company (and any parent
corporation and Subsidiaries).
7.5. Exercise of Option. An Awarded Option may be exercised by the Optionee
giving written notice, in the manner provided in Section 17, specifying the
number of shares with respect to which the Awarded Option is then being
exercised. The notice shall be accompanied by payment in the form of cash, or
certified or bank check payable to the order of the Company in an amount equal
to the option price of the shares to be purchased plus any required withholding
tax as provided in Section 11; provided, however, that after the date that any
shares of Stock have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), for sale to the public, such payment may be
made, at the election of the Optionee or other person or persons entitled to
exercise the Awarded Option: (1) in cash or certified or bank check as provided
above; (2) in the form of Stock owned by the Optionee (based on the Fair Market
Value of the Stock on the day the Awarded Option is exercised) evidenced by
negotiable stock certificates registered in the sole name of the Optionee or the
names of the Optionee and spouse; or (3) in any combination of the consideration
referred to in (1) and (2) above. Receipt by the Company of such notice and
payment shall constitute the exercise of the Awarded Option. Within 30 days
thereafter but subject to the remaining provisions of the Plan, the Company
shall deliver or cause to be delivered to the Optionee or his agent a
certificate or certificates for the number of shares then being purchased. Such
shares shall be fully paid and nonassessable.
7.6. Termination of Association with the Company. If the Optionee's
employment or association with the Company is terminated, whether voluntarily or
otherwise, the Awarded Option, to the extent the Awarded Option is exercisable
on the date of termination, may be exercised by the Optionee but only for the
period specified in the Option Agreement. Military or sick leave shall not be
deemed a termination of employment, provided that it does not exceed the longer
of 90 days or the period during which the absent Optionee's reemployment rights,
if any, are guaranteed by statute or by contract.
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8. Formula Options.
8.1. Directors Elected For First Time. (a) Each individual who is elected
to the Board after September 1, 1995 but during the term of the First Amended
and Restated Plan, and was never before a member of the Board, and who is not,
immediately prior to his or her election to the Board, either an officer or
employee of the Company or any Subsidiary, whether elected at an annual or
special stockholders' meeting or by action of the Board, shall be granted, on
the date of such meeting or other appointment, a Nonstatutory Option to purchase
4,000 shares of Stock.
(b) Each individual who is elected to the Board of Directors after January
1, 2000 and during the term of the Plan, and was never before a member of the
Board, and who is not, immediately prior to his or her election to the Board,
either an officer or employee of the Company or any Subsidiary, whether elected
at an annual or special stockholders' meeting or by action of the Board, shall
be granted, on the date of such meeting or other appointment (as used in or with
reference to this Section 8.1 with respect to the election or appointment
referred to in paragraph (a) or (b) of this Section 8.1, a "Formula Grant
Date"), a Nonstatutory Option to purchase 10,000 shares of Stock.
8.2. Quarterly Formula Grants. Commencing with August 15, 1995 and
continuing until but not including May 15, 2000, each Outside Director
(including any incumbent Outside Directors) who, on any February 15, May 15,
August 15, or November 15 occurring after the first anniversary of the date on
which the Outside Director's was first elected to the Board (also referred to as
a "Formula Grant Date"), is a director of the Company, shall be granted a
Nonstatutory Option on such date to purchase 150 shares of Stock, all of which
shall be considered Vested Shares at the time of grant. Commencing with May 15,
2000, each such Outside Director shall be granted a Nonstatutory Option on such
date to purchase 500 shares of Stock, all of which shall be considered Vested
Shares at the time of grant.
8.3. Terms of Formula Options. Each Formula Option granted to an Optionee
under Section 8 shall have an exercise price equal to 100% of the Fair Market
Value of the Stock on the applicable Formula Grant Date. Each Formula Option
granted under Section 8.1(a) hereof shall become exercisable for Vested Shares
in six (6) equal installments, with the Formula Option becoming exercisable for
the first installment of Vested Shares on the date of the Company's next annual
meeting of stockholders of the Company or special meeting of stockholders in
lieu of an annual meeting, as the case may be, and additional installments of
Vested Shares shall become exercisable on the day of each of the Company's next
five (5) annual meetings of stockholders of the Company or special meetings in
lieu of an annual meeting, in each case if the Optionee remains an Outside
Director of the Company on the day immediately preceding the applicable date and
has been a director for the previous year. Each Formula Option granted under
Section 8.1(b) hereof shall become exercisable for Vested Shares in three (3)
equal installments, with the Formula Option becoming exercisable for the first
installment of Vested Shares on the date of the Company's next annual meeting of
stockholders of the Company or special meeting of stockholders in lieu of an
annual meeting, as the case may be, following the annual meeting of stockholders
of the Company or special meeting in lieu thereof at which the Outside Director
was elected, and additional installments of Vested Shares shall become
exercisable on the day of each of the Company's next two (2) annual meetings of
stockholders of the Company or special meetings in lieu thereof, in each case if
the Optionee remains an Outside Director of the Company on the day immediately
preceding the applicable date and was a director for the previous year. In the
event that an Outside Director was not elected at an annual meeting of
stockholders of the Company or at a special meeting in lieu thereof, the Formula
Option shall become exercisable for the first installment of Vested Shares on
the date of the Company's next annual meeting of stockholders of the Company or
special meeting in lieu thereof following the first (1st) anniversary of the
date of such Outside Director's election or appointment to the Board and
thereafter as described for additional installments in the preceding sentence.
Each Formula Option granted under Section 8.2 shall be exercisable for Vested
Shares on the applicable Formula Grant Date. No Formula Option granted pursuant
to this Section 8 is intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code. The Formula Grants shall be evidenced by
Option Agreements. The Option Agreements shall contain provisions consistent
with this Section 8, and the Option Agreements shall contain identical terms and
conditions, except (i) as otherwise required by this Section 8 and (ii) for any
restrictions imposed with respect to Formula Grants granted prior to the receipt
of any stockholders' approval required pursuant to Rule 16b-3(b) under the
Securities Exchange Act of 1934, as amended.
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8.4. Option Period. The Option Period for any Formula Option granted
pursuant to this Section 8 shall be ten years from the date of grant. No Formula
Option may be exercised at any time unless the Formula Option is valid and
outstanding as provided in this Section 8 and represent Vested Shares.
8.5. Exercisability. A Formula Option may be exercised, so long as it is
valid and outstanding, from time to time in part or as a whole for that number
of Vested Shares then subject to such Formula Option.
8.6. Method of Exercise. A Formula Option may be exercised by the Optionee
giving written notice, in the manner provided in Section 17, specifying the
number of shares with respect to which the Formula Option is then being
exercised. The notice shall be accompanied by payment in the form of cash, or
certified or bank check payable to the order of the Company, in an amount equal
to the Option Price of the shares to be purchased plus any required withholding
tax as provided in Section 11; provided, however, that after the date that any
shares of Stock have been registered under the Securities Act, for sale to the
public, such payment may be made, at the election of the Optionee or other
person or persons entitled to exercise the Formula Option: (1) in cash or
certified or bank check as provided above; (2) in the form of Stock owned by the
Optionee (based on the Fair Market Value of the Stock on the day the Formula
Option is exercised) evidenced by negotiable stock certificates registered in
the sole name of the Optionee or the names of the Optionee and spouse; or (3) in
any combination of the consideration referred to in (1) and (2) above. Receipt
by the Company of such notice and payment shall constitute the exercise of the
Formula Option. Within 30 days thereafter but subject to the remaining
provisions of the Plan, the Company shall deliver or cause to be delivered to
the Optionee or his agent a certificate or certificates for the number of shares
then being purchased. Such shares of Stock shall be fully paid and
nonassessable.
8.7. Termination of Service. After an Outside Director's Termination of
Service a Formula Option shall remain exercisable, subject to adjustment as
provided in Section 13, only with respect to the number of shares of Stock that
the Optionee could have acquired by an exercise of the Formula Option
immediately prior to the Termination of Service, but in no event shall any
Formula Option be exercisable after the earlier to occur of (i) the expiration
date of the Formula Option as specified in the applicable Option Agreement, or
(ii) ninety (90) days after the Termination of Service.
9. Restrictions on Issue of Shares.
(a) Notwithstanding any other provision of the Plan, if, at any time, in
the reasonable opinion of the Company the issuance of shares of Stock covered by
the exercise of any Option may constitute a violation of law, then the Company
may delay such issuance and the delivery of a certificate for such shares until
(i) approval shall have been obtained from such governmental agencies, other
than the Securities and Exchange Commission, as may be required under any
applicable law, rule, or regulation; and (ii) in the case where such issuance
would constitute a violation of a law administered by or a regulation of the
Securities and Exchange Commission, one of the following conditions shall have
been satisfied:
(1) the shares with respect to which such Option has been exercised are at
the time of the issue of such shares effectively registered under the Securities
Act; or
(2) a no-action letter in form and substance reasonably satisfactory to the
Company with respect to the issuance of such shares shall have been obtained by
the Company from the Securities and Exchange Commission.
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The Company shall make all reasonable efforts to bring about the occurrence
of said events.
(b) Each certificate representing shares issued upon the exercise of an
Option will bear restrictive legends which may refer to this Plan and to
applicable restrictions under the Employment Agreement.
10. Purchase for Investment; Subsequent Registration.
(a) Unless the shares to be issued upon exercise of an Option granted under
the Plan have been effectively registered under the Securities Act, the Company
shall be under no obligation to issue any shares covered by any Option unless
the person who exercises such Option, in whole or in part, shall give a written
representation to the Company which is satisfactory in form and substance to its
counsel and upon which the Company may reasonably rely, that he or she is
acquiring the shares issued pursuant to such exercise of the Option as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares.
(b) Each share of Stock issued pursuant to the exercise of an Option
granted pursuant to this Plan may bear a reference to the investment
representation made in accordance with this Section 10 and to the fact that no
registration statement has been filed with the Securities and Exchange
Commission in respect to said Stock.
(c) If the Company shall deem it necessary or desirable to register under
the Securities Act or other applicable statutes any shares of Stock with respect
to which an Option shall have been granted, or to qualify any such shares for
exemption from the Securities Act or other applicable statutes, then the Company
shall take such action at its own expense. The Company may require from each
Option holder, or each holder of shares of Stock acquired pursuant to the Plan,
such information in writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors from such holder against all losses, claims, damage and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.
11. Withholding; Notice of Disposition of Stock Prior to Expiration of
Specified Holding Period.
(a) Whenever shares are to be issued in satisfaction of an Option granted
hereunder, the Company shall have the right to require the Optionee to remit to
the Company an amount sufficient to satisfy federal, state, local or other
withholding tax requirements if and to the extent required by law (whether so
required to secure for the Company an otherwise available tax deduction or
otherwise) prior to the delivery of any certificate or certificates for such
shares.
(b) The Company may require as a condition to the issuance of shares
covered by any Incentive Option that the party exercising such Option give a
written representation to the Company which is satisfactory in form and
substance to its counsel and upon which the Company may reasonably rely, that he
or she will report to the Company any disposition of such shares prior to the
expiration of the holding periods specified by Section 422(a)(1) of the Code. If
and to the extent that the realization of income in such a disposition imposes
upon the Company federal, state, local or other withholding tax requirements, or
any such withholding is required to secure for the Company an otherwise
available tax deduction, the Company shall have the right to require that the
recipient remit to the Company an amount sufficient to satisfy those
requirements; and the Company may require as a condition to the issuance of
shares covered by an Incentive Option that the party exercising such option give
a satisfactory written representation promising to make such a remittance.
12. Transferability of Options. Options shall not be transferable,
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the Optionee only by the Optionee; provided,
however, that this Section shall not bar a transfer, assignment or sale of
Nonstatutory Options by an Optionee to, or for the benefit of, such Optionee's
parents, siblings, spouse and issue, spouses of such Optionee's issue, or any
trust for the benefit of, or the legal representative of, any of the preceding
persons (each an "Immediate Family Member"), who shall take and be entitled to
exercise such Nonstatutory Options subject to all the limitations set forth in
this Plan and the applicable Option Agreement. Such Nonstatutory Options
transferred to an Immediate Family Member during the lifetime of such an
Optionee shall be deemed to be owned and held by such Optionee rather than by
the transferee, unless prior to any such transfer, assignment or sale such
transferee shall execute an instrument of adherence to the applicable Option
Agreement, and such instrument of adherence is in form and substance
satisfactory to the Company.
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13. Adjustment of Number of Option Shares. In the event of any stock
dividend payable in Stock or any split-up or contraction in the number of shares
of Stock after the date of the Option Agreement and prior to the exercise in
full of the Option, the number of shares subject to such Option Agreement and
the price to be paid for each share subject to the Option shall be
proportionately adjusted. In the event of any reclassification or change of
outstanding shares of Stock or in case of any consolidation or merger of the
Company with or into another company or in case of any sale or conveyance to
another company or entity of the property of the Company as a whole or
substantially as a whole, shares of stock or other securities equivalent in kind
and value to those shares an Optionee would have received if he or she had held
the full number of shares of Stock subject to the Option immediately prior to
such reclassification, change, consolidation, merger, sale or conveyance and had
continued to hold those shares (together with all other shares, stock and
securities thereafter issued in respect thereof) to the time of the exercise of
the Option shall thereupon be subject to the Option. Upon dissolution or
liquidation of the Company, the Option shall terminate, but the Optionee (if at
the time in the employ or retained as a consultant of the Company or any of its
subsidiaries) shall have the right, immediately prior to such dissolution or
liquidation, to exercise the Option to the extent not theretofore exercised. No
fraction of a share shall be purchasable or deliverable upon exercise, but in
the event any adjustment hereunder of the number of shares covered by the Option
shall cause such number to include a fraction of a share, such number of shares
shall be adjusted to the nearest smaller whole number of shares. In the event of
changes in the outstanding Stock by reason of any stock dividend, split-up,
contraction, reclassification, or change of outstanding shares of Stock of the
nature contemplated by this Section 13, the number of shares of Stock available
for the purpose of the Plan as stated in Section 4 shall be correspondingly
adjusted.
14. Reservation of Stock. The Company shall at all times during the term of
the Option reserve or otherwise keep available such number of shares of Stock as
will be sufficient to satisfy the requirements of the Plan and shall pay all
fees and expenses necessarily incurred by the Company in connection therewith.
15. Limitation of Rights in Stock; No Special Employment or Other Rights.
The Optionee shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the shares of Stock covered by an Option, except
to the extent that the Option shall have been exercised with respect thereto
and, in addition, a certificate shall have been issued therefor and delivered to
the Optionee or his agent. Any Stock issued pursuant to the Option shall be
subject to all restrictions upon the transfer thereof which may be now or
hereafter imposed by the Certificate of Incorporation, the By-laws of the
Company, and the Employment Agreement, if any. Nothing contained in the Plan or
in any Option shall confer upon any Optionee any right with respect to the
continuation of his or her employment with, or retention as a consultant,
director or advisor to, the Company (or any subsidiary), or interfere in any way
with the right of the Company (or any subsidiary), subject to the terms of any
separate employment or consulting agreement or provision of law or corporate
articles or by-laws to the contrary, at any time to terminate such employment,
consulting or advisory relationship or to increase or decrease the compensation
of the Optionee from the rate in existence at the time of the grant of an
Option.
16. Termination and Amendment of the Plan. The Board may at any time
terminate the Plan or make such modifications of the Plan as it shall deem
advisable. No termination or amendment of the Plan may, without the consent of
the Optionee to whom any Option shall theretofore have been granted, adversely
affect the rights of such Optionee under such Option. In considering whether to
modify or amend the Plan, the Board shall consider whether such modification or
amendment requires the consent of the Company's stockholders to continue to be
eligible for the favorable treatment given to the Plan pursuant to Rule 16b-3
under the Securities Exchange Act of 1934, as amended, and Section 422 of the
Code. If such consent would be required for such amendment, and the Board
determines that the continuation of such treatment under Rule 16b-3 and Section
422 (or any successor provisions) is desirable for the Company, then the Board
shall seek the appropriate stockholder consent for such amendment.
Notwithstanding the foregoing, the provisions of Sections 1, 5, 6, and this
Section 16, insofar as they relate to Formula Options, and Section 8 shall not
be amended more often than once every six (6) months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder.
17. Notices and Other Communications. All notices and other communications
required or permitted under the Plan shall be effective if in writing and if
delivered or sent by certified or registered mail, return receipt requested (a)
if to the Optionee, at his or her residence address last filed with the Company,
and (b) if to the Company, at 1400 Providence Highway, Building #2, Norwood, MA
02062, Attention: President or to such other persons or addresses as the
Optionee or the Company may specify by a written notice to the other from time
to time.
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