<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
UroCor, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
May 15, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
UroCor, Inc. to be held at 2:00 p.m., C.D.T., on Monday, June 22, 1998, at The
Waterford Marriott Hotel, 6300 Waterford Boulevard, Oklahoma City, Oklahoma.
This year you will be asked to vote in favor of three proposals. The
proposals relate to the election of two directors, the approval of an amendment
to a stock option plan for management and other key employees and the approval
of an employee stock purchase plan. These matters are more fully explained in
the attached proxy statement, which you are encouraged to read.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU APPROVE THESE PROPOSALS AND
URGES THAT YOU RETURN YOUR SIGNED PROXY CARD AT YOUR EARLIEST CONVENIENCE,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
Thank you for your cooperation.
Sincerely,
/s/ William A. Hagstrom
William A. Hagstrom
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
UROCOR, INC.
800 RESEARCH PARKWAY
OKLAHOMA CITY, OKLAHOMA 73104
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of UroCor,
Inc., a Delaware corporation (the "Company"), will be held on Monday, June 22,
1998, at 2:00 p.m., C.D.T., at The Waterford Marriott Hotel, 6300 Waterford
Boulevard, Oklahoma City, Oklahoma for the following purposes:
1. To elect two persons to serve as directors of the Company for
three-year terms or until their respective successors are duly elected
and qualified.
2. To consider and vote on a proposal to approve an amendment to the
UroCor, Inc. Second Amended and Restated 1992 Stock Option Plan to
increase the aggregate number of shares of Common Stock for which
options may be granted under the plan from 1,700,000 to 2,000,000
shares.
3. To consider and vote on a proposal to approve the UroCor, Inc. 1997
Employee Stock Purchase Plan pursuant to which an aggregate of 300,000
shares of Common Stock would be available for issuance under the plan.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The holders of Common Stock of the Company of record at the close of
business on April 27, 1998, will be entitled to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if the stockholder has returned a proxy card.
By Order of the Board of Directors
/s/ Socrates H. Choumbakos
Socrates H. Choumbakos
Senior Vice President, Corporate Planning and
Development and Secretary
May 15, 1998
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
PROMPTLY. IF YOU ATTEND THE MEETING YOU CAN VOTE EITHER IN PERSON OR BY YOUR
PROXY.
<PAGE>
UROCOR, INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 1998
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being furnished to
holders of Common Stock of UroCor, Inc. ("UroCor" or the "Company"), 800
Research Parkway, Oklahoma City, Oklahoma 73104 (Tel. No. 405/290-4000), in
connection with the solicitation by the Board of Directors of the Company of
proxies to be used at the annual meeting of stockholders to be held Monday, June
22, 1998, at 2:00 p.m. at The Waterford Marriott Hotel, 6300 Waterford
Boulevard, Oklahoma City, Oklahoma, or any adjournment thereof.
Proxies in the form enclosed, properly executed by stockholders and
received in time for the meeting, will be voted as specified therein. If a
stockholder does not specify otherwise, the shares represented by his or her
proxy will be voted for the director nominees listed herein, for the proposal to
approve the First Amendment (the "Amendment") to the UroCor, Inc. Second Amended
and Restated 1992 Stock Option Plan (the "Amended and Restated Stock Option
Plan") and for the proposal to approve the UroCor, Inc. 1997 Employee Stock
Purchase Plan (the "Employee Stock Purchase Plan"). The giving of a proxy does
not preclude the right to vote in person should the person giving the proxy so
desire, and the proxy may be revoked at any time before it is exercised by
written notice delivered to the Company at or prior to the meeting. This Proxy
Statement and accompanying proxy card are being mailed on or about May 15, 1998,
to shareholders of record on April 27, 1998 (the "Record Date").
At the close of business on the Record Date, there were outstanding and
entitled to vote 10,360,682 shares of common stock, $.01 par value per share, of
the Company (the "Common Stock") and only the holders of record on the Record
Date shall be entitled to vote at the meeting.
The holders of record of Common Stock on the Record Date will be entitled
to one vote per share on each matter presented to the stockholders at the
meeting. The presence at the meeting, in person or by proxy, of the holders of
a majority of the outstanding shares of Common Stock as of the Record Date is
necessary to constitute a quorum for the transaction of business at the meeting.
-3-
<PAGE>
MATTERS TO COME BEFORE THE MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
At the meeting two directors are to be elected, constituting all of the
Class II directors. The Company's Restated Certificate of Incorporation
provides for the classification of the Board of Directors into three classes of
directors (Class I, Class II and Class III), with the term of each class
expiring at successive annual stockholders' meetings. All nominees are elected
for three-year terms. Each director will serve until the annual meeting of
stockholders at which his term expires, or until his respective successor is
duly elected and qualified or his earlier resignation or removal. The terms of
office of Aaron Beam, Jr. and Thomas C. Ramey expire at the meeting, and they
are both proposed as nominees for terms expiring at the 2001 Annual Meeting of
Stockholders. It is the intention of the persons named in the proxies for the
holders of the Common Stock to vote the proxies for the election of the nominees
named below, unless otherwise specified in any particular proxy. The management
of the Company does not contemplate that any of the nominees will become
unavailable for any reason, but if that should occur before the meeting, proxies
will be voted for another nominee, or other nominees, to be selected by the
Board of Directors. Any vacancies that may occur during the year may be filled
by an individual appointed by the Board of Directors to serve for the remainder
of the term of such director position. In accordance with the Company's by-laws
and Delaware law, a stockholder entitled to vote for the election of directors
may withhold authority to vote for certain nominees for director or may withhold
authority to vote for all nominees for director. Each director nominee
receiving a plurality of the votes cast in person or by proxy at the meeting
will be elected director. Abstentions and broker non-votes will not be treated
as a vote for or against any particular director nominee, and will not affect
the outcome of the election.
The following table sets forth certain information with respect to the
director nominees and the Company's other directors:
<TABLE>
<CAPTION>
DIRECTOR
AGE POSITION WITH THE COMPANY SINCE
<S> <C> <C> <C>
NOMINEES FOR ELECTION FOR TERMS
EXPIRING AT THE 2001 ANNUAL
MEETING OF STOCKHOLDERS
Aaron Beam, Jr. 54 Director 1997
Thomas C. Ramey 54 Director 1997
DIRECTORS WHOSE TERMS EXPIRE AT
THE 1999 ANNUAL MEETING OF
STOCKHOLDERS
Paul A. Brown, M.D. 60 Director 1988
Michael E. Herbert 53 Director 1994
William A. Hagstrom 40 Chairman of the Board, President and 1989
Chief Executive Officer
DIRECTORS WHOSE TERMS EXPIRE AT
THE 2000 ANNUAL MEETING OF
STOCKHOLDERS
Herbert J. Conrad 65 Director 1993
Louis M. Sherwood, M.D. 61 Director 1993
</TABLE>
-4-
<PAGE>
BACKGROUND OF NOMINEES FOR DIRECTOR AND DIRECTORS
AARON BEAM, JR. Mr. Beam has been a director since December 1997. From
January 1984 until his retirement in October 1997, Mr. Beam was the Executive
Vice President and Chief Financial Officer of HEALTHSOUTH Corporation, a
provider of outpatient surgery and rehabilitative healthcare services, which
he co-founded. From May 1980 to December 1983, Mr. Beam served as Controller
of the Shared Services Division of Lifemark Corporation, a healthcare
company. Mr. Beam is also a director of Ramsay Healthcare, a healthcare
company.
THOMAS C. RAMEY. Mr. Ramey has been a director since December 1997.
Since December 1997, Mr. Ramey has served as President of Liberty
International, responsible for the international businesses of Liberty Mutual
Group, a diversified financial services company. Mr. Ramey assumed his
current position with Liberty Mutual Group after having served as Executive
Vice President from March 1995 and as Senior Vice President, responsible for
Liberty Mutual's workers compensation and managed health care products and
services from July 1992. From March 1986 to June 1992, Mr. Ramey was the
President and Chief Executive Officer of American International Healthcare, a
subsidiary of American International Group, a managed healthcare company.
PAUL A. BROWN, M.D. Dr. Brown has been a director since November 1988.
He has been Chairman of the Board and Chief Executive Officer of HEARx Ltd., a
hearing care organization, for the past six years. Prior to founding HEARx,
Dr. Brown was founder and Chairman of the Board of MetPath Inc. Dr. Brown is an
emeritus member of the Board of Trustees of Tufts University, past Chairman of
the Board of Overseers of the Tufts University School of Medicine, a member of
the visiting committee of Boston University School of Medicine and a part-time
member of the Columbia University College of Physicians and Surgeons.
MICHAEL E. HERBERT. Mr. Herbert has been a director since July 1994.
Mr. Herbert was the founder of Physicians Health Services, Inc. ("PHS"), an
individual practice association health maintenance organization ("IPA/HMO"), and
served as President and Chief Executive Officer through August 1996, at which
time he became Co-Chief Executive Officer. PHS was acquired in January 1998 by
Foundation Health Systems, Inc. and Mr. Herbert continues in his role as
Co-Chief Executive Officer. Mr. Herbert has been associated with PHS since
1976, prior to which he was Vice President of InterStudy, a national health
policy research firm. Mr. Herbert is Chairman of the American Association of
Health Plans and is past Chairman of the American Managed Care and Review
Association.
WILLIAM A. HAGSTROM. Mr. Hagstrom has been a director of the Company and
served as President and Chief Executive Officer of the Company since November
1989. Mr. Hagstrom was appointed Chairman of the Board of Directors in
September 1994. Before joining the Company, Mr. Hagstrom was Vice President of
the Scientific Products Division of Baxter-Travenol, a medical products company,
where he served in various marketing, sales, product planning and general
management positions from November 1985 to November 1989. Prior to joining
Baxter-Travenol, he spent three years at American Hospital Supply Corp. until it
was acquired by Baxter-Travenol and three years at Becton Dickinson & Co. in
various management positions. Mr. Hagstrom is also a director of ZymeTx, Inc.
HERBERT J. CONRAD. Mr. Conrad has been a director since October 1993.
Until his retirement in August 1993, Mr. Conrad worked for 33 years at
Hoffmann-LaRoche, Inc., a pharmaceutical company. He held senior management
positions in marketing, business and strategic planning and public affairs. For
the last 16 years of his career at Hoffmann-LaRoche, he was President of the
United States Pharmaceuticals Division and Senior Vice President of
Hoffmann-LaRoche and a member of its Executive Committee and Board of Directors.
Mr. Conrad is also a director of several pharmaceutical and biotechnology
companies, including Dura Pharmaceuticals, Biotechnology General, Gensia
Sicor, and Gen-Vec.
LOUIS M. SHERWOOD, M.D. Dr. Sherwood has been a director since October
1993. Since 1992, Dr. Sherwood has been Senior Vice President, U.S. Medical and
Scientific Affairs, of Merck & Co., a pharmaceutical company which he joined
in 1987. His previous academic appointments include seven years as Baumritter
Professor and Chairman of the Department of Medicine at Albert Einstein College
of Medicine, Professor of Biochemistry and Physician in Chief at Montefiore
Medical Center, as well as eight years as Chairman of Medicine at the Michael
Reese Medical Center and Professor of Medicine at the University of Chicago. He
also served as Chief of Endocrinology at Beth Israel Hospital and Associate
Professor of Medicine at Harvard Medical School.
-5-
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors has established an Audit Committee, a Compensation
Committee, a Stock Plan Committee and a Nominating Committee. During the fiscal
year ended December 31, 1997, the Board of Directors met eight times, the Audit
Committee met two times, the Compensation Committee met once and the Nominating
Committee met once. All actions of the Stock Plan Committee were by unanimous
consent. No director attended less than 75% of the combined number of Board
meetings and meetings of committees of which he is a member.
AUDIT COMMITTEE. Dr. Brown and Mr. Conrad are the current members of the
Audit Committee. The Audit Committee recommends the independent public
accountants appointed by the Board of Directors to audit the financial
statements of the Company and reviews issues raised by such accountants as to
the scope of their audit and their report thereon, including any questions and
recommendations that may arise relating to such audit and report or the
Company's internal accounting and auditing procedures.
COMPENSATION COMMITTEE. Dr. Brown, Mr. Conrad and Mr. Herbert, none of
whom is an employee of the Company, are the current members of the Compensation
Committee. The Compensation Committee reviews, approves and makes
recommendations to the Board of Directors on matters regarding the compensation
of the Company's directors, executive officers and key employees.
STOCK PLAN COMMITTEE. Mr. Conrad and Mr. Herbert are the current members
of the Stock Plan Committee. The Stock Plan Committee acts as the
administrative committee for the stock plans of the Company, including the
Amended and Restated Stock Option Plan, the 1997 Non-Employee Director Stock
Option Plan and the Employee Stock Purchase Plan.
NOMINATING COMMITTEE. Dr. Brown, Mr. Conrad and Mr. Herbert are the
current members of the Nominating Committee. The Nominating Committee
recommends nominees for election as directors and persons to fill director
vacancies and newly created directorships, selects the individuals to vote
solicited proxies at stockholder meetings, reviews proxy comments received from
stockholders relating to the Board of Directors, reviews stockholders'
suggestions of nominees for director that are submitted in accordance with the
provisions of the by-laws of the Company and reviews and makes recommendations
to the Board of Directors regarding the organization and structure of the Board.
PROPOSAL 2: APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED STOCK OPTION
PLAN
GENERAL
At the meeting, the stockholders of the Company will be asked to vote upon
a proposal to approve the Amendment to the Amended and Restated Stock Option
Plan. Approval of the Amendment requires the affirmative vote of the holders of
a majority of the votes of the shares of Common Stock that are outstanding as of
the Record Date. The text of the proposed Amendment is set forth in full in
ANNEX A to this proxy statement. The Amendment increases the aggregate number
of shares of Common Stock for which options may be granted under the Amended and
Restated Stock Option Plan from 1,700,000 to 2,000,000.
REASONS FOR THE AMENDMENT TO THE AMENDED AND RESTATED STOCK OPTION PLAN
The Board of Directors believes that it is in the best interest of the
Company to encourage ownership of the Company's stock by its employees,
directors and consultants. Providing an opportunity to hold an equity interest
in the Company assists the Company in attracting and retaining key management
and consulting personnel, which is critical to the Company's long-term success.
The Company anticipates that the number of shares of Common Stock available
under the Amended and Restated Stock Option Plan will be depleted by June 1999,
and the Board of Directors of the Company has determined that, to continue to
provide performance-based incentive to the Company's management and key
employees, it is in the best interest of the Company to increase the number of
shares of Common Stock available for grant of options under the Amended and
Restated Stock Option Plan.
To provide additional shares of Common Stock for which options may be
granted under the Amended and Restated Stock Option Plan, the Board of Directors
has approved the Amendment and has directed that the same be presented to the
stockholders for their approval.
-6-
<PAGE>
CERTAIN CONSIDERATIONS
Stockholders should note that certain disadvantages may result from
approval of the Amendment, including a reduction in their interest of the
Company with respect to earnings per share, voting, liquidation value and
book and market value per share if options to acquire shares of Common Stock
are granted and subsequently exercised.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT.
Approval of the Amendment requires the affirmative vote of the holders of a
majority of the votes of the shares of Common Stock that are outstanding as of
the Record Date. If not otherwise provided, proxies will be voted "FOR"
approval of the Amendment. Abstentions and broker non-votes will be counted as
shares entitled to vote on the proposal, but will not be treated as either a
vote for or against the proposal. Therefore, an abstention or broker non-vote
will have the same effect as a vote against the proposal.
PROPOSAL 3: APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN
GENERAL
At the meeting, the stockholders of the Company will be asked to vote upon
a proposal to approve the Employee Stock Purchase Plan. Approval of the
Employee Stock Purchase Plan requires the affirmative vote of the holders of a
majority of the votes of the shares of Common Stock that are outstanding as of
the Record Date. The text of the proposed Employee Stock Purchase Plan is set
forth in full in ANNEX B to this proxy statement. The Employee Stock Purchase
Plan allows eligible employees to authorize payroll deductions for the periodic
purchase of Company Common Stock at a discount.
REASONS FOR THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors believes that it is in the best interest of the
Company to encourage ownership of the Company's stock by its employees.
Providing an opportunity to hold an equity interest in the Company assists the
Company in retaining management and key employees, which is critical to the
Company's success.
CERTAIN CONSIDERATIONS
Stockholders should note that certain disadvantages may result from the
adoption of the Employee Stock Purchase Plan, including a reduction in their
interest of the Company with respect to earnings per share, voting,
liquidation value and book and market value per share if shares of Common
Stock are acquired under the plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE EMPLOYEE
STOCK PURCHASE PLAN. Approval of the Employee Stock Purchase Plan requires the
affirmative vote of the holders of a majority of the shares of Common Stock that
are outstanding as of the Record Date. If not otherwise provided, proxies will
be voted "FOR" approval of the Employee Stock Purchase Plan. Abstentions and
broker non-votes will be counted as shares entitled to vote on the proposal, but
will not be treated as either a vote for or against the proposal. Therefore, an
abstention or broker non-vote has the same effect as a vote against the
proposal.
-7-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 16, 1998 with
respect to (i) persons known to the Company to be beneficial holders of five
percent or more of the outstanding shares of Common Stock, (ii) the executive
officers named in the Summary Compensation Table appearing elsewhere in this
Proxy Statement and the directors of the Company and (iii) all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP (2)
---------------------------------------------
BENEFICIAL OWNER(1) SHARES %
- ------------------- -------------- --------------
<S> <C> <C>
Ticonderoga Capital Inc. and related entities(3)
535 Madison Avenue
New York, NY 10022 1,129,198 10.9
Wellington Management Company, LLP(4)
75 State Street
Boston, MA 02109 1,007,300 9.7
The Capital Group Companies, Inc.(5)
333 South Hope Street
Los Angeles, CA 90071 815,000 7.9
Weiss, Peck & Greer Investments(6)
One New York Plaza
New York, NY 10004 618,200 6.0
Aaron Beam, Jr.
Director - -
Paul A. Brown, M.D.
Director(7) 10,000 *
Herbert J. Conrad
Director(8) 29,000 *
Michael E. Herbert
Director(9) 17,500 *
Thomas C. Ramey
Director - -
Louis M. Sherwood, M.D.
Director(10) 23,000 *
William A. Hagstrom(11)
Chairman of the Board, President and Chief
Executive Officer 388,022 3.7
Socrates H. Choumbakos(12)
Vice President, Corporate Development, Chief
Financial Officer and Secretary 142,160 1.4
Mark G. Dimitroff(13)
Vice President and General Manager
UroDiagnostics Group 141,528 1.4
Robert W. Veltri, Ph.D.(14)
Vice President and General Manager UroSciences
Group 143,134 1.4
Kathryn L.W. Ingerly(15)
Vice President Disease Management Information
Systems 21,000 *
All executive officers, directors and nominees as a
group (14 persons)(16) 990,210 9.1
</TABLE>
- ------------------
* Less than 1%.
-8-
<PAGE>
(l) Each beneficial owner's percentage ownership is determined by assuming
that options, warrants and other convertible securities that are held by
such person (but not those held by any other person) and that are
exercisable or convertible within 60 days have been exercised or
converted.
(2) Unless otherwise noted, the Company believes that all persons named in
the above table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.
(3) Includes 1,124,028 shares held by Concord Partners II, L.P., and 5,170
shares held by Concord Partners Japan, Limited, each of which is a
private venture capital fund managed by Ticonderoga Capital Inc.
Information with respect to such beneficial owners was obtained from
their reports on Schedule 13D dated January 12, 1998 and March 9, 1998,
as received by the Company, and from the Company's stock records.
(4) Information with respect to the ownership of such beneficial owner was
obtained from its report on Schedule 13G dated February 9, 1998, as
received by the Company.
(5) Information with respect to the ownership of such beneficial owner was
obtained from its report on Schedule 13G dated February 11, 1998, as
received by the Company.
(6) Information with respect to the ownership of such beneficial owner was
obtained from its report on Schedule 13G dated February 10, 1998, as
received by the Company.
(7) The beneficial owner's shares set forth in the table include 10,000
shares of Common Stock issuable upon the exercise of certain stock
options.
(8) The beneficial owner's shares set forth in the table include 20,000
shares of Common Stock issuable upon the exercise of certain stock
options.
(9) The beneficial owner's shares set forth in the table include 17,500
shares of Common Stock issuable upon the exercise of certain stock
options.
(10) The beneficial owner's shares set forth in the table include 20,000
shares of Common Stock issuable upon the exercise of certain stock
options.
(11) The beneficial owner's shares set forth in the table include 154,980
shares of Common Stock issuable upon the exercise of certain stock
options.
(12) The beneficial owner's shares set forth in the table include 108,160
shares of Common Stock issuable upon the exercise of certain stock
options.
(13) The beneficial owner's shares set forth in the table include 64,484
shares of Common Stock issuable upon the exercise of certain stock
options.
(14) The beneficial owner's shares set forth in the table include 69,300
shares of Common Stock issuable upon the exercise of certain stock
options.
(15) The beneficial owner's shares set forth in the table include 21,000
shares of Common Stock issuable upon the exercise of certain stock
options.
(16) See notes (7) through (15) to this table. The beneficial owners' shares
set forth in this table include an aggregate of 535,290 shares of Common
Stock issuable upon the exercise of certain stock options and warrants.
-9-
<PAGE>
EXECUTIVE OFFICERS AND COMPENSATION
The following section sets forth the names and backgrounds of the Company's
executive officers and certain key employees.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
<TABLE>
<CAPTION>
DATE OF
NAME OFFICES HELD FIRST ELECTION AGE
<S> <C> <C> <C>
William A. Hagstrom Chairman of the Board, President and November 1989 40
Chief Executive Officer
Socrates H. Choumbakos Senior Vice President, Corporate Planning June 1992 53
and Development and Secretary
Mark G. Dimitroff Vice President and General Manager April 1990 51
UroDiagnostics Group
Robert W. Veltri, Ph. D. Vice President and General Manager October 1990 56
UroSciences Group
Kathryn L.W. Ingerly Vice President Disease Management April 1996 38
Information Systems
Karl K. Nigg Vice President, UroTherapeutic February 1998 40
Business Development
Lou Rye Carmichael Vice President, Sales and Client February 1998 41
Relations
Michael N. McDonald Vice President, Chief Financial Officer, June 1992 40
Treasurer and Assistant Secretary
Gerard J. O'Dowd, M.D. Medical Director August 1990 47
</TABLE>
For further information regarding Mr. Hagstrom's background, see
"Background of Nominees for Director and Directors".
SOCRATES H. CHOUMBAKOS. Mr. Choumbakos joined the Company in June 1992 as
Vice President, Corporate Development, Chief Financial Officer and Secretary,
and became Senior Vice President, Corporate Planning and Development in May
1997. Before joining the Company, Mr. Choumbakos was President of Venture
Development Group, a corporate and business development consulting firm, from
March 1988 to June 1992. From March 1988 to December 1990, Mr. Choumbakos was
also Vice President and Chief Financial Officer of Creative Business Strategies,
Inc., a business development consulting firm. From August 1979 to March 1988,
Mr. Choumbakos was Director of Corporate Development at Becton Dickinson & Co.,
a medical products company. Prior to 1979, he was a Senior Manager with Price
Waterhouse & Co. where he worked for 13 years.
MARK G. DIMITROFF. Mr. Dimitroff joined the Company in April 1990 as Vice
President, Marketing and Sales and became Vice President and General Manager
UroDiagnostics Group in October 1994. Before joining the Company, Mr. Dimitroff
served as Vice President, Marketing and Sales for Dianon Systems, Inc., an
oncology specialty reference laboratory, from 1984 to April 1990. Prior to
1984, he held senior marketing and sales management positions with MetPath
Inc., a large general reference laboratory, and American Hospital Supply Corp.
-10-
<PAGE>
ROBERT W. VELTRI, PH.D. Dr. Veltri joined the Company in October 1990 as
Vice President, Product Planning and Technology Development and Chief Scientific
Officer, and became Vice President and General Manager UroSciences Group in
October 1994. Before joining the Company, Dr. Veltri was the Executive Vice
President and Chief Technical Officer at Theracel, Inc., a therapeutics
development company, from 1988 to October 1990. From 1984 to 1988, he was a
founder and President and Chief Executive Officer of American Biotechnology
Company, the predecessor to Theracel, Inc. Prior to 1984, Dr. Veltri held
various positions with Cooper Biomedical Inc., a diagnostic products company,
and West Virginia University Medical School.
KATHRYN L. W. INGERLY. Ms. Ingerly joined the Company in April 1996 as
Vice President Disease Management Information Systems. Before joining the
Company, Ms. Ingerly was the President and Chief Executive Officer of Ingerly
Alliance Partners, L.L.C., an information technology consulting company since
January 1995. From September 1988 through December 1994, Ms. Ingerly held
various positions with Market Investment Solutions, a software development and
services company, most recently as President and Chief Executive Officer. Prior
to 1988, Ms. Ingerly was the Financial and Systems Manager of the Cleo Wallace
Center, a regional health care provider in Denver, Colorado.
KARL K. NIGG. Mr. Nigg joined the Company in February 1998 as Vice
President, UroTherapeutic Business Development. Mr. Nigg had senior management
responsibilities for operations, marketing, sales and sourcing for Amersham
Healthcare, a pharmaceutical, medical equipment and consumer health care
products company, from June 1990 to October 1993, at which time he was promoted
to the position of Vice President, Pharmacy Operations. In January 1996, Mr.
Nigg was promoted to Vice President Sales/Pharmacy Operations covering 26
states, a position he held until August 1997.
LOU RYE CARMICHAEL. Ms. Carmichael joined the Company in April 1990 as
Manager, Telemarketing and was promoted to Marketing Manager in April 1992. Ms.
Carmichael assumed the position of Director, Human Resources from July 1995 to
September 1996. She has been Director, Sales and Client Relations since that
time and assumed her current position of Vice President, Sales and Client
Relations in February 1998. Ms. Carmichael managed the Eveready Telephone Sales
Center for Ralston Purina prior to joining UroCor.
MICHAEL N. MCDONALD. Mr. McDonald joined the Company in June 1992 as
Controller and Assistant Secretary, was promoted to Director of Finance and
Administration and Treasurer in October 1994 and assumed his current role as
Vice President and Chief Financial Officer in May 1997. Before joining the
Company, Mr. McDonald was a Manager in the Accounting and Audit Division at
Arthur Andersen LLP where he served in various capacities from December 1980 to
June 1992.
GERARD J. O'DOWD, M.D. Dr. O'Dowd joined the Company in August 1990 as
Medical Director. Before joining the Company, Dr. O'Dowd was in private practice
specializing in fine needle aspiration cytology and served as a pathologist for
a regional reference laboratory in the Washington, D.C. area from January 1988
to August 1990. From 1983 to December 1987, Dr. O'Dowd served on the staff of
George Washington Medical Center where he was Chief Pathologist for the Division
of Cytopathology and Hematopathology. He received his medical degree from
Georgetown University School of Medicine, completed a pathology residency at the
University of Utah and was a Cytopathology Fellow at the Medical College of
Virginia.
All officers of the Company hold office until the regular meeting of
directors following the annual meeting of stockholders or until their respective
successors are duly elected and qualified or their earlier resignation or
removal.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of The Board of Directors (the "Committee"),
which is composed of non-employee directors and performs the duties described on
page 6 of this Proxy Statement, has furnished the following report on executive
compensation.
OVERALL OBJECTIVES AND PHILOSOPHY OF EXECUTIVE COMPENSATION PROGRAM
The Company's basic philosophy is to align executive compensation with
increases in stockholder value through growth in sales and operating profits.
Primarily, this is accomplished through the use of stock options,
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<PAGE>
which provide compensation in direct proportion to increases in stockholder
value. In addition, the Company believes it is important to emphasize teamwork
and active participation by all employees. This is accomplished through
providing options to essentially all full-time, exempt employees, and through
cash incentives, through which both executives and employees receive cash
bonuses based on Company-wide financial goals. In August 1997, the Board of
Directors also approved the Employee Stock Purchase Plan, to further encourage
ownership of the Company's stock by all employees.
EXECUTIVE COMPENSATION PROGRAMS
The Company's compensation programs consist of three principal elements:
base salary, performance bonus and stock options. Together these elements
comprise total compensation value. The total compensation paid to the Company's
executive officers is influenced significantly by the need to attract management
employees with a high level of expertise and to motivate and retain key
executives for the long-term success of the Company and its stockholders.
BASE SALARY. The Committee establishes annual base salary levels for
executives based on competitive data, level of experience, position,
responsibility, and individual and Company performance. The Company has sought
to maintain base compensation levels comparable to its competitors and other
companies in similar stages of development.
The Committee evaluated the base salary of the Chairman of the Board, Chief
Executive Officer and President of the Company in January 1998 and recommended
that his annual compensation level be increased by 27% to $248,500. In setting
Mr. Hagstrom's 1998 salary, the Committee considered strategic results for 1997,
Mr. Hagstrom's individual performance and contributions and the approximately
18-month period since his last salary adjustment. The Committee also reviewed
multiple surveys on executive compensation levels for emerging growth companies
in various industries to ensure that such salary level is competitive with
comparable companies.
ANNUAL INCENTIVE COMPENSATION. Annual incentive compensation for executive
officers are intended to reflect the Committee's belief that a significant
portion of the annual compensation of each executive officer should be
contingent upon the performance of the Company. The Company's senior management
and executive officers are eligible to receive annual cash bonus awards which
are linked directly to the Company's revenue and operating income and
achievement of individual goals and nonfinancial corporate goals. Actual awards
are subject to decrease or increase based on level of attainment and are
completely at the discretion of the Committee. Since the 1997 financial
goals established by the Board of Directors in late 1996 were not achieved,
the Committee determined that no incentive compensation should be paid for
1997. The Committee has made awards to the executive officers named in the
Summary Compensation Table under this plan during the previous three years,
with the exception of Ms. Ingerly, who received awards for 1996 and 1997, her
first two years with the Company.
STOCK OPTION PROGRAM. Total compensation for executive officers also
includes long-term incentives in the form of stock options, which are generally
provided through initial stock option grants at the date of hire and periodic
additional stock option grants. Stock options are instrumental in promoting the
alignment of long-term interests between the Company's executive officers and
stockholders due to the fact that executives realize gains only if the stock
price increases over the fair market value at the date of grant and the
executives exercise their options. In determining the amount of such grants,
the Stock Plan Committee of the Company's Board of Directors evaluates the job
level of the executive, responsibilities of the executive, and competitive
practices in the industry. All options are granted at 100% of fair market value
at the date of grant. Options vest over a period of three years to five years
(in the case of options awarded to all employees), subject to acceleration based
on Company performance (in the case of special option grants to executives).
The long-term value realized by executives through option exercises can be
directly linked to the enhancement of stockholder value.
For the year ended December 31, 1997, the Stock Plan Committee awarded
additional stock options to the executive officers named in the Summary
Compensation Table for the purchase of a total of 85,000 shares of Common Stock
at $10.00 per share, the fair market value of the Common Stock on the date of
grant. These options were granted to vest over three years, subject to
acceleration to full vesting in one year if certain financial goals were
attained for 1997. Because such financial goals were not attained for the year,
no such acceleration occurred. Subsequent to December 31, 1997, the Stock Plan
Committee awarded additional stock options to purchase 42,500 shares of Common
Stock at $7 1/16 per share, the fair market value of the Common Stock at such
date, to the executive
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<PAGE>
officers named in the Summary Compensation Table. These options will vest over
three years, subject to acceleration to full vesting in one year if certain
financial goals are attained in 1998.
FUTURE CONSIDERATIONS AND CONCLUSION
The Committee believes that the total compensation program for executives
of the Company is competitive with the compensation programs provided by other
comparable companies. The Committee also believes that any amounts paid under
the annual incentive plan appropriately relate to corporate and individual
performance, yielding awards that are directly related to the annual financial
and operational results of the Company. Finally, the Committee believes that
the Company's stock option and stock purchase plans provide opportunities to
participants that are consistent with the returns that are generated on behalf
of the Company's stockholders.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Paul A. Brown, M.D.
Herbert J. Conrad
Michael E. Herbert
SUMMARY OF COMPENSATION
The following table summarizes compensation information concerning the
Chief Executive Officer and each of the Company's other four most highly
compensated executive officers as to whom the total annual salary and bonus for
the fiscal year ended December 31, 1997, exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($) (#) (1) ($)
- ----------------------- -------- ---------- -------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
William A. Hagstrom, 1997 194,979 72,905 -- 25,000 --
Chairman of the 1996 181,774 38,532 -- -- --
Board, President 1995 160,202 31,522 -- 60,000 --
and Chief Executive
Officer
Socrates H. Choumbakos, 1997 146,487 24,994 -- 15,000 --
Senior Vice President 1996 134,820 24,851 -- -- --
Corporate Development, 1995 129,585 15,700 -- 30,000 --
and Secretary
Mark G. Dimitroff, 1997 148,480 34,627 -- 15,000 --
Vice President and 1996 144,116 23,451 -- -- --
General Manager 1995 129,909 18,435 -- 40,000 --
UroDiagnostics Group
Robert W. Veltri, Ph.D. 1997 144,154 30,328 -- 15,000 --
Vice President and 1996 139,258 19,324 -- -- --
General Manager 1995 126,404 15,431 -- 30,000 --
UroSciences Group
Kathryn L. W. Ingerly 1997 120,000 20,925 -- 15,000 --
Vice President Disease 1996 84,923(2) -- -- 40,000 --
Management Information 1995 -- -- -- -- --
Systems
</TABLE>
(1) Represents shares issuable pursuant to stock options granted under a stock
option plan.
(2) Employment began March 31, 1996.
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<PAGE>
OPTION GRANTS AND EXERCISES
The following table sets forth information concerning individual grants of
stock options made during the year ended December 31, 1997, to each of the
executive officers named in the Summary Compensation Table.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1997
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------------------------
POTENTIAL REALIZED
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS EXERCISE ANNUAL RATES OF
UNDERLYING GRANTED TO OR BASE STOCK PRICE
OPTIONS EMPLOYEES IN PRICE EXPIRATION APPRECIATION FOR
NAME GRANTED (#) (1) FISCAL YEAR ($/SHARE) DATE OPTION TERM
----------------------- ------------------ ------------------ -------------- ------------------ ------------------------
5% ($) 10% ($)
----------- ----------
<S> <C> <C> <C> <C> <C> <C>
William A. Hagstrom 25,000 5.7 10.00 March 20, 2007 131,772 357,908
Socrates H. Choumbakos 15,000 3.4 10.00 March 20, 2007 79,063 214,745
Mark G. Dimitroff 15,000 3.4 10.00 March 20, 2007 79,063 214,745
Robert W. Veltri, Ph.D. 15,000 3.4 10.00 March 20, 2007 79,063 214,745
Kathryn L.W. Ingerly 15,000 3.4 10.00 March 20, 2007 79,063 214,745
</TABLE>
(1) Represents shares of Common Stock issuable pursuant to an incentive stock
option granted under a stock option plan. These options shall vest 33 1/3% on
each March 20, 1998, March 20, 1999 and March 20, 2000.
The following table sets forth information concerning the value of
unexercised options held by each of the executive officers named in the Summary
Compensation Table at December 31, 1997. None of such executive officers
exercised any stock options during the year ended December 31, 1997.
<TABLE>
<CAPTION>
OPTION VALUES AT DECEMBER 31, 1997
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT DECEMBER 31, 1997 IN-THE-MONEY OPTIONS AT
(# SHARES) DECEMBER 31, 1997 ($) (1)
-------------------------------------- ------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
William A. Hagstrom 146,646 45,000 757,388 88,750
Socrates H. Choumbakos 103,160 29,040 567,733 66,343
Mark G. Dimitroff 59,484 28,334 296,778 59,170
Robert W. Veltri, Ph.D. 64,300 25,000 329,631 44,375
Kathryn L.W. Ingerly 8,000 47,000 -- --
</TABLE>
(1) Based on a price of $6 3/16, the closing price of the Common Stock on
December 31, 1997, as reported by the Nasdaq Stock Market.
-14-
<PAGE>
PERFORMANCE PRESENTATION
The following performance graph compares the performance of the Common
Stock on an indexed basis to Center for Research in Security Prices ("CRSP")
Index for The Nasdaq Stock Market - US Companies ("Nasdaq US Companies") and a
CRSP index of Nasdaq Stock Market health services companies for Nasdaq companies
with SIC codes beginning with 80 ("Nasdaq Health Services Companies").
Information with respect to the Common Stock, the Nasdaq US Companies and the
Nasdaq Health Services Companies is from May 16, 1996, the effective date of the
Company's initial public offering. The graph assumes that the value of the
investment in the Common Stock and each index was $100 at May 16, 1996, and that
all dividends were reinvested. The Company will provide the names of the
companies included in the Nasdaq Health Services Companies upon written request
to the Investor Relations Department of the Company.
[GRAPH]
<TABLE>
<CAPTION>
5/16/96 6/28/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UroCor, Inc. 100.0 111.4 114.8 86.9 84.1 85.2 79.6 56.3
Nasdaq US Companies 100.0 95.9 99.3 104.2 98.6 116.6 136.3 127.9
Nasdaq Health Services Companies 100.0 96.2 95.9 84.8 79.6 88.9 96.7 86.9
</TABLE>
Note: The indices are reweighed daily, using the market capitalization on the
previous trading day.
COMPENSATION OF DIRECTORS
Each director receives reimbursement for expenses related to attendance at
Board meetings. Mr. Conrad, Mr. Herbert, Dr. Sherwood, Mr. Ramey, and Mr. Beam
also each receive $1,500 for each meeting of the Board of Directors attended.
Dr. Brown began receiving $1,500 for each meeting attended in the fourth quarter
of 1997.
EMPLOYMENT AGREEMENTS
Mr. Hagstrom entered into an employment agreement with the Company in
January 1990. Under the terms of such agreement, Mr. Hagstrom serves as
President and Chief Executive Officer. The term of the agreement is for one
year, with automatic renewals indefinitely for further successive one-year
periods unless terminated by either party. The Company may terminate the
agreement upon Mr. Hagstrom's death or disability or for cause (as that term is
defined therein). The Company may terminate the agreement at any time without
cause, provided that the Company continues to pay Mr. Hagstrom at his then
current base salary rate, on a monthly basis,
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<PAGE>
for six months following the effective date of termination. Pursuant to the
terms of the agreement, the Company may pay Mr. Hagstrom bonuses in such amounts
as the Board of Directors in its sole discretion may determine.
Messrs. Choumbakos and Dimitroff, Dr. Veltri and Ms. Ingerly each have
entered into agreements with the Company regarding the respective terms of their
employment. None of such agreements provide for fixed periods of employment.
The agreement with Mr. Choumbakos provides for a current base salary of
$157,200, subject to annual review, a bonus of up to 25% of his annual base
salary and a severance obligation of six months upon termination without cause.
The agreement with Mr. Dimitroff provides for a current base salary of $161,800,
subject to annual review, and a bonus of up to 30% of his annual base salary.
In April 1996, the Company's Board of Directors approved a severance obligation
for Mr. Dimitroff of six months upon termination of employment without cause.
The agreement with Dr. Veltri provides for a current base salary of $159,300,
subject to annual review, a bonus of up to 25% of his annual base salary and a
severance obligation of three months upon termination without cause. In April
1996, the Company's Board of Directors approved an increase in Dr. Veltri's
bonus to up to 30% of his annual base salary and an increase in his severance
obligation to six months upon termination of employment without cause. The
agreement with Ms. Ingerly provides for a current base salary of $136,800,
subject to annual review, a bonus of up to 30% of her annual base salary and a
severance obligation of three months upon termination without cause.
TRANSACTIONS
The Company paid consulting fees to Dr. Paul A. Brown, a director of the
Company, for consultation on business and scientific matters totaling $24,000
through the third quarter of 1997.
In June and December 1997, the Company loaned $13,500 to Lou Rye Carmichael
and $20,000 to Michael N. McDonald, respectively, executive officers of the
Company, to enable them to satisfy their respective federal income tax
liabilities incurred in connection with their exercise of stock options granted
to them pursuant to the Amended and Restated Stock Option Plan. The loan to Lou
Rye Carmichael is due May 29, 1998 and the loan to Michael N. McDonald is due
December 11, 1998. Both loans bear interest at an annual rate of 7.5%.
DESCRIPTION OF COMPANY STOCK PLANS
Pursuant to applicable federal securities laws, the Company is required to
furnish to its stockholders in this proxy statement certain information with
respect to the Amended and Restated Stock Option Plan and the Employee Stock
Purchase Plan. For information concerning these plans, see "Proposal 2:
Approval of the Amendment to the Amended and Restated Stock Option Plan",
"Proposal 3: Approval of the Employee Stock Purchase Plan" and the summaries set
forth below.
The following summaries do not purport to be complete summaries of the
Company's stock option plans and are qualified in their entirety by reference to
the plans.
SUMMARY OF THE AMENDED AND RESTATED STOCK OPTION PLAN
The Board of Directors adopted and the stockholders approved the Amended
and Restated Stock Option Plan in June 1997. The Amended and Restated Stock
Option Plan authorizes a committee of the Board of Directors to issue options
intended to qualify as incentive stock options ("ISOs"), as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), and stock
options that are not intended to conform to the requirements of the Code Section
("Non-ISOs"). Under the terms of the Amended and Restated Stock Option Plan,
the exercise price of each ISO cannot be less than 100% of the fair market value
of the Common Stock at the time of grant, and, in the case of a grant to a 10%
stockholder, the exercise price may not be less than 110% of the fair market
value on the date of grant. The exercise price of each Non-ISO may not be less
than the fair market value of the Common Stock on the date of grant. Options
granted under the Amended and Restated Stock Option Plan may not be exercised
after the tenth anniversary (or the fifth anniversary in the case of an option
granted to a 10% stockholder) of their grant. Payments by option holders upon
exercise of an option may be made by delivering cash. The Amended and Restated
Stock Option Plan currently authorizes: (i) options to acquire up to an
aggregate of 1,700,000 shares of Common Stock to be granted; (ii) grants of ISOs
to eligible employees and grants of Non-ISOs to any individual with substantial
responsibility for the Company's management and growth, as determined by a
committee of the Board of Directors; (iii) adjustments to the number and class
of shares outstanding pursuant to granted options and reserved under the Amended
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<PAGE>
and Restated Stock Option Plan in the event of a capital adjustment; (iv) an
opportunity for outstanding options to be exercised subsequent to a merger or
disposition of all of the Company's assets and for the optionee to receive
shares to which he would have been entitled prior to such merger or disposition;
and (v) grant of options in substitution for options held by employees of other
corporations who are about to become Company employees or whose employer is
about to become a parent or subsidiary of the Company. The Company currently
has approximately 332 full-time employees, including 8 executive officers, each
of whom may be eligible to receive grants under the Amended and Restated Stock
Option Plan. Other persons with substantial responsibility for the Company's
management and growth may be eligible to receive grants under the Amended and
Restated Stock Option Plan at the discretion of a committee of the Board of
Directors. The proposed Amendment, the text of which is set forth in full in
ANNEX A to this proxy statement, would increase the aggregate number of shares
for which options may be granted under the plan from 1,700,000 to 2,000,000.
NEW PLAN BENEFITS
The following table sets forth information concerning the determinable
benefits and amounts that have been received by or allocated to the individuals
and groups identified below under the Amended and Restated Stock Option Plan.
<TABLE>
<CAPTION>
NAMES AND POSITION PLAN NAME DOLLAR NUMBER OF
------------------ --------- VALUE $ SHARES (1)
------- ----------
<S> <C> <C> <C>
William A. Hagstrom,
Chairman of the Board, President and Chief Executive Officer . . . . . (2) (3) 204,146
Socrates H. Choumbakos,
Senior Vice President, Corporate Planning and Development . . . . . . . (2) (3) 139,700
Mark G. Dimitroff,
Vice President and General Manager
UroDiagnostics Group . . . . . . . . . . . . . . . . . . . . . . . . . (2) (3) 95,318
Robert W. Veltri, Ph.D.
Vice President and General Manager
UroSciences Group . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) (3) 96,800
Kathryn L. W. Ingerly
Vice President Disease Management
Information Systems . . . . . . . . . . . . . . . . . . . . . . . . . . (2) (3) 62,500
Executive Officers as a Group (8 persons, including
the executive officers named above) . . . . . . . . . . . . . . . . . (2) (3) 775,964
Non-Executive Director Group . . . . . . . . . . . . . . . . . . . . . (2) (3) 50,000
Non-Executive Officer Employee Group . . . . . . . . . . . . . . . . . (2) (3) 611,989
</TABLE>
- -------------
(1) Includes options granted to Mr. Hagstrom to purchase 106,646, 60,000,
25,000 and 12,500 shares of Common Stock on January 26, 1994, December 15,
1995, March 20, 1997 and April 16, 1998, respectively; options granted to
Mr. Choumbakos to purchase 67,000, 20,200, 30,000, 15,000 and 7,500 shares
of Common Stock on February 26, 1993, January 26, 1994, December 15, 1995,
March 20, 1997 and April 16, 1998, respectively; options granted to Mr.
Dimitroff to purchase 32,818, 40,000, 15,000 and 7,500 shares of Common
Stock on January 26, 1994, December 15, 1995, March 20, 1997 and April 16,
1998, respectively; options granted to Dr. Veltri to purchase 44,300,
30,000, 15,000 and 7,500 shares of Common Stock on January 26, 1994,
December 15, 1995, March 20, 1997 and April 16, 1998, respectively; options
granted to Ms. Ingerly to purchase 40,000, 15,000 and 7,500 shares of
Common Stock on May 1, 1996 and March 20, 1997 and April 16, 1998,
respectively; options granted to other members of the Executive Officer
Group to purchase 15,000, 5,000, 1,600, 23,400, 30,000, 20,000, 60,000 and
22,500 shares of Common Stock on February 26, 1993, January 26, 1994,
February 21, 1994, December 15, 1995, March 20, 1997, May 5, 1997,
February 17, 1998 and April 16, 1998, respectively; options granted to
members of the Non-Executive Director Group to purchase 12,500, 12,500,
12,500 and 12,500 shares of Common Stock on October 1, 1993, October 29,
1993, July 12, 1994 and September 30, 1994, respectively; and options
granted to members of the Non-Executive Officer Employee Group to purchase
an aggregate of 611,989 shares of Common Stock on various dates between
June 1, 1992 and April 15, 1998.
(2) Amendment and Amended and Restated Stock Option Plan, as amended by the
Amendment.
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<PAGE>
(3) The actual dollar value, if any, a person may realize will depend on the
excess of the per share price of the Common Stock over the per share
exercise price on the date the option is exercised. All options granted
under the Amended and Restated Stock Option Plan on February 26, 1993,
October 1, 1993, October 29, 1993, January 26, 1994, February 21, 1994,
July 12, 1994, September 30, 1994, December 15, 1995, May 1, 1996,
March 20, 1997, May 5, 1997, February 17, 1998 and April 16, 1998 have
exercise prices of $.35, $.75, $.75, $.75, $.75, $1.00, $1.00, $1.75,
$9.00, $10.00, $9.25, $6.125 and $7.0625 per share, respectively. Options
granted to members of the Non-Executive Officer Employee Group under the
1992 Stock Option Plan have exercise prices ranging from $.35 to $12.625
The closing price of the Common Stock on the Record Date was $7.50.
FEDERAL TAX CONSEQUENCES
Options granted under the Amended and Restated Stock Option Plan may be
either ISOs which satisfy the requirements of Section 422 of the Code or
Non-ISOs which are not intended to meet these requirements. The federal income
tax treatment for the two types of options differs as follows.
ISOS. In general, no tax consequences should result from the grant to or
exercise by an employee of an ISO under the Amended and Restated Stock Option
Plan. The optionee will, however, recognize taxable income in the year in which
the purchased shares are sold or otherwise made the subject of a disposition.
For federal tax purposes, dispositions are either qualifying or
disqualifying. An optionee makes a qualifying disposition of the purchased
shares if he sells or otherwise disposes of the shares after holding them for
more than two years after the date the option was granted and more than one year
after the exercise date. If the optionee fails to satisfy either of these two
holding periods prior to the sale or other disposition, a disqualifying
disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the exercise price paid for such shares. If there is a disqualifying
disposition of the shares, the excess of (i) the fair market value of those
shares on the date the option was exercised over (ii) the exercise price paid
for the shares generally will be taxable as ordinary income. Any additional
gain recognized upon the disposition will be a capital gain. If, however, the
disqualifying disposition is a sale or exchange with respect to which a loss (if
sustained) would be recognized, the amount of ordinary income realized by the
optionee cannot exceed the amount realized on the sale or exchange over the
exercise price paid for the shares.
If the optionee makes a disqualifying disposition of the purchased shares,
the Company will be entitled to an income tax deduction for the taxable years in
which the disposition occurs, equal to the excess of (i) the fair market value
of such shares on the date the option was exercised over (ii) the exercise price
paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
NON-ISOS. No taxable income is recognized by an optionee upon the grant of
a Non-ISO. The optionee will in general recognize ordinary income, in the year
in which the option is exercised, equal to the excess of the fair market value
of the purchased shares on the date of exercise over the exercise price paid for
the shares. The Company is entitled to a deduction in the same amount as the
income recognized by the optionee.
SUMMARY OF THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors adopted the Employee Stock Purchase Plan on August
27, 1997, subject to approval by the stockholders of the Company. The Employee
Stock Purchase Plan provides for the grant of options to all eligible employees
to purchase shares of the Company's stock. Such options may be exercised only
on the last day of the applicable offering period for which such options were
granted and only with funds accumulated through payroll deductions of between 1%
and 10% of an eligible employee's compensation. The maximum number of shares of
Common Stock for which each eligible employee may be granted an option during an
offering period will be determined by dividing the total amount of such
employee's expected payroll deductions during the applicable offering period by
85% of the fair market value of such shares on the first day of the offering
period. The price to be paid for each share of Common Stock upon exercise of an
option shall be the lesser of (i) 85% of the fair market value on the date of
grant of the option and (ii) 85% of the fair market value on the date of
exercise. Eligible employees include any employees working more than 20 hours
per week. The purposes of the Employee Stock Purchase Plan are to attract and
retain the services of experienced and knowledgeable employees and to provide an
incentive for such employees to increase their proprietary interests in the
Company's long-term success and progress. The Stock Plan Committee will
-18-
<PAGE>
be the administrator of the Employee Stock Purchase Plan. A complete copy of
the Employee Stock Purchase Plan is attached to this proxy statement as ANNEX B.
The following description of the Employee Stock Purchase Plan is qualified in
its entirety by reference to ANNEX B, which is incorporated herein by reference
as if fully set forth herein.
Under the Employee Stock Purchase Plan, an aggregate of 300,000 shares of
Common Stock have been authorized and reserved for purchase pursuant to options
granted to eligible employees. The first offering period commenced on October
1, 1997 and ends June 30, 1998. Thereafter, the offering periods shall be six
month periods commencing on July 1 and January 1. Payroll deductions are made
throughout the offering period for each participant.
NEW PLAN BENEFITS
The following table sets forth information concerning the determinable
benefits and amounts that have been received by or allocated to the individuals
and groups identified below under the Employee Stock Purchase Plan.
<TABLE>
<CAPTION>
DOLLAR NUMBER OF
NAMES AND POSITION PLAN NAME VALUE $ (2) SHARES (3)
------------------ --------- ----------- ----------
<S> <C> <C> <C>
William A. Hagstrom, - -
Chairman of the Board, President and Chief Executive Officer . . . . (1)
Socrates H. Choumbakos,
Senior Vice President, Corporate Planning and Development . . . . . . (1) 14,695 2,794
Mark G. Dimitroff,
Vice President and General Manager 846
UroDiagnostics Group . . . . . . . . . . . . . . . . . . . . . . . . (1) 4,454
Robert W. Veltri, Ph.D.
Vice President and General Manager -
UroSciences Group . . . . . . . . . . . . . . . . . . . . . . . . . . (1) -
Kathryn L. W. Ingerly
Vice President Disease Management
Information Systems . . . . . . . . . . . . . . . . . . . . . . . . . (1) 2,400 456
Executive Officers as a Group (8 persons, including
the executive officers named above) . . . . . . . . . . . . . . . . (1) 29,101 5,531
Non-Executive Officer Employee Group . . . . . . . . . . . . . . . . (1) 124,523 23,636
</TABLE>
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(1) UroCor, Inc. 1997 Employee Stock Purchase Plan
(2) Includes assumed benefits for a full year based upon base salary at
December 31, 1997.
(3) Estimate of the shares that would have been purchased at 85% of market
price at December 31, 1997 ($5.259 per share).
FEDERAL TAX CONSEQUENCES
The Employee Stock Purchase Plan and the right of participants to make
purchases thereunder are intended to qualify under the provisions of sections
421 and 423 of the Code. Under these provisions, no income will be taxable to a
participant until the shares of Common Stock purchased under the Employee Stock
Purchase Plan are sold or otherwise disposed of. Upon the sale or other
disposition of the shares, the participant will generally be subject to the tax.
The amount of the tax will depend upon how long the participant holds the Common
Stock. If the participant sells or otherwise disposes of the shares more than
two years from the first day of the Offering Period and more than one year from
the date of the transfer of the Common Stock to him, then he will recognize
ordinary income in an amount equal to the lesser of (i) the excess of the fair
market value of the shares at the time of such sale or other disposition over
the purchase price, or (ii) an amount equal to 15% of the fair market value of
the shares as of the first day of the Offering Period. Any additional gain will
be treated as long-term capital gain. If the shares are sold or otherwise
disposed of BEFORE the expiration of this holding period, the participant will
recognize ordinary income generally measured as the excess of the fair market
value of the shares on the date the shares are purchased over the purchase
price. Any additional gain or loss on such sale or disposition will be
long-term or short-term capital gain or loss, depending on the holding period.
The Company is not entitled to a deduction for amounts taxed as ordinary income
or
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<PAGE>
capital gain to a participant except to the extent ordinary income is recognized
by participants upon a sale or disposition of shares prior to the expiration of
the holding period(s) described above.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the shares purchased under
the Employee Stock Purchase Plan. Reference should be made to the applicable
provisions of the Code. In addition, the summary does not discuss the tax
consequences of a participant's death or the income tax laws of any state or
foreign country in which the participant may reside.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP served as the Company's principal independent public
accountants for the year ended December 31, 1997 and has been recommended by the
Audit Committee to so serve for the current year. Representatives of Arthur
Andersen LLP are expected to be present at the annual meeting of stockholders,
will have the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)")
requires the Company's officers, directors and persons who own more than 10% of
a registered class of the Company's equity securities to file statements on Form
3, Form 4 and Form 5 of ownership and change in ownership with the Securities
and Exchange Commission. Officers, directors and greater than 10% stockholders
are required to furnish the Company with copies of all Section 16(a) reports
which they file.
Based solely on a review of reports on Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, reports on Form 5
and amendments thereto furnished to the Company with respect to its most recent
fiscal year and written representations from reporting persons, the Company
believes that, except as set forth below, no person who, at any time during
1997, was subject to the reporting requirements of Section 16(a) with respect to
the Company failed to meet such requirements on a timely basis. Mr. Tippens, a
former director of the Company, was required to file a Form 4 on or before March
10, 1997 indicating that he was no longer subject to Section 16 reporting. The
Form 4 was filed on May 12, 1997. Mr. Thomas C. Ramey was elected to the Board
of Directors of the Company on December 16, 1997. Mr. Ramey was required to
file a Form 3 on or before December 26, 1997. Mr. Ramey filed a Form 3 on
January 6, 1998. In December 1996, William A. Hagstrom, Chairman of the Board,
President and Chief Executive Officer of the Company, gifted shares of Common
Stock owned by him. Mr. Hagstrom was required to report this transaction on a
Form 5 on or before February 14, 1997. Mr. Hagstrom reported this transaction
on a Form 5 filed on February 13, 1998.
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of holders of Common Stock intended to be presented at the
annual meeting of stockholders of the Company to be held in 1999 must be
received by the Company at its principal executive offices, 800 Research
Parkway, Oklahoma City, Oklahoma 73104, no later than January 19, 1999, in order
to be included in the proxy statement and form of proxy relating to that
meeting.
OTHER MATTERS
The management of the Company knows of no other matters that may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their best
judgment.
The cost of solicitation of proxies in the accompanying form will be paid
by the Company. In addition to solicitation by use of the mails, certain
directors, officers or employees of the Company may solicit the return of
proxies by telephone, telegram or personal interview.
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<PAGE>
ANNEX A
FIRST AMENDMENT
TO
UROCOR, INC.
SECOND AMENDED AND RESTATED 1992 STOCK OPTION PLAN
1. Paragraph 3 of the UroCor, Inc. Second Amended and Restated 1992 Stock
Option Plan is hereby deleted in its entirety and replaced by the following:
3. DEDICATED SHARES. The stock subject to the Options and other
provisions of the Plan shall be shares of the Company's Common Stock, $.01
par value (the "Stock"). The total number of shares of Stock with respect
to which Incentive Stock Options may be granted shall be 2,000,000 shares.
The maximum number of shares subject to Options which may be issued to any
Optionee under this Plan during any period of three consecutive years is
500,000 shares. The class and aggregate number of shares which may be
subject to the Options granted hereunder shall be subject to adjustment in
accordance with the provisions of Paragraph 17 hereof.
In the event that an outstanding Option expires or is surrendered for
any reason or terminates by reason of the death or other severance of
employment of the Optionee, the shares of Stock allocable to the
unexercised portion of that Option may again be subject to an Option under
the Plan.
2. Except as expressly amended by this First Amendment, the UroCor, Inc.
Second Amended and Restated 1992 Stock Option Plan shall continue in full force
and effect in accordance with its terms.
A-1
<PAGE>
ANNEX B
UROCOR, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION
<S> <C>
ARTICLE I - PURPOSE, COMMITMENT AND INTENT
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1
Share Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2
Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.3
Shareholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.4
ARTICLE II - DEFINITIONS
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.6
Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.7
Exercise Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.8
Fair Market Value or FMV. . . . . . . . . . . . . . . . . . . . . . . . . . .2.9
Grant Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11
Offering Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
Option Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.15
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17
ARTICLE III - ELIGIBILITY
General Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
Limitations Upon Participation. . . . . . . . . . . . . . . . . . . . . . . .3.2
ARTICLE IV - PARTICIPATION
Grant of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1
Payroll Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.2
Payroll Deductions Continuing . . . . . . . . . . . . . . . . . . . . . . . .4.3
Right to Decrease or Stop Payroll Deductions. . . . . . . . . . . . . . . . .4.4
Accounting for Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.5
B-1
<PAGE>
ARTICLE V - IN SERVICE WITHDRAWAL, TERMINATION OF EMPLOYMENT, RETIREMENT OR
DEATH
In Service Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.1
Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . .5.2
Retirement for Age or Disability. . . . . . . . . . . . . . . . . . . . . . .5.3
Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.4
ARTICLE VI - EXERCISE OF OPTION
Purchase of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
Accounting for Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.2
Issuance of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.3
ARTICLE VII - ADMINISTRATION
Appointment, Term of Service & Removal. . . . . . . . . . . . . . . . . . . .7.1
Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2
Quorum and Majority Action. . . . . . . . . . . . . . . . . . . . . . . . . .7.3
Standard of Judicial Review of Committee Actions. . . . . . . . . . . . . . .7.4
ARTICLE VIII - TERMINATION AND AMENDMENT OF THE PLAN
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.1
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.2
ARTICLE IX - MISCELLANEOUS
Plan Not An Employment Contract . . . . . . . . . . . . . . . . . . . . . . .9.1
All Participants' Rights are Equal. . . . . . . . . . . . . . . . . . . . . .9.2
Options Granted Are Not Transferable. . . . . . . . . . . . . . . . . . . . .9.3
Voting of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.4
No Stockholder Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.5
Governmental Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . .9.6
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.7
Indemnification of Committee. . . . . . . . . . . . . . . . . . . . . . . . .9.8
Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.9
Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
Governing Law; Parties to Legal Actions . . . . . . . . . . . . . . . . . . 9.11
</TABLE>
B-2
<PAGE>
ARTICLE I.
PURPOSE, COMMITMENT AND INTENT
I.1 PURPOSE. The purpose of this Plan is to provide Employees of the
Company with an opportunity to purchase Stock of the Company through offerings
of options at a discount and thus develop a stronger incentive to work for the
continued success of the Company.
I.2 SHARE COMMITMENT. The aggregate number of Shares authorized to be
sold pursuant to Options granted under this Plan is 300,000 Shares, subject to
adjustment as provided in this Section. Any Shares relating to Options that are
granted, but subsequently lapse, are cancelled, or are otherwise not exercised
by the final date for exercise, shall be available for future grants of Options.
In the event of any stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of Shares, or the like, as a result of
which shares shall be issued in respect of the outstanding Shares, or the Shares
shall be changed into the same or a different number of the same or another
class of stock, the total number of Shares authorized to be committed to this
Plan, the number of Shares subject to each outstanding Option and the Option
Price applicable to each Option shall be appropriately adjusted by the
Committee. Adjustments must be confirmed in writing by the auditors of the
Company to be fair and reasonable.
I.3 INTENT. It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under section 423 of the Code.
Therefore, the provisions of the Plan are to be construed to govern
participation in a manner consistent with the requirements of section 423 of the
Code.
I.4 SHAREHOLDER APPROVAL. To be effective, this Plan must be approved
by the stockholders of the Company within 12 months before or after the Plan is
adopted by the Board of Directors. The approval of stockholders must comply
with all applicable provisions of the corporate charter, bylaws and applicable
laws of the jurisdiction prescribing the method and degree of stockholder
approval required for the issuance of corporate stock or options.
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
word or phrase appears reasonably requires a broader, narrower, or different
meaning.
II.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
II.2 "BOARD OF DIRECTORS" means the board of directors of the Company.
II.3 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
B-3
<PAGE>
II.4 "COMMITTEE" means the committee appointed to administer the Plan
which shall be comprised solely of members of the Board of Directors who qualify
as non-employee directors as defined in Rule 16b-3(b)(3) of the Securities
Exchange Act of 1934, as amended.
II.5 "COMPANY" means UroCor, Inc., a Delaware corporation.
II.6 COMPENSATION" means the Employee's wages from the Company as
defined in section 3401(a) of the Code for purposes of Federal income tax
withholding at the source, reduced by all of the following items (even if
includible in gross income): reimbursements or other expense allowances, fringe
benefits (cash and non-cash), moving expenses, deferred compensation, and
welfare benefits; and modified by including elective contributions under a
cafeteria plan described in section 125 of the Code and elective contributions
to any plan qualified under section 401(k) of the Code.
II.7 "EMPLOYEE" means any person who is a common law employee of the
Company excluding only those whose customary employment with the Company is 20
hours or less per week.
II.8 "EXERCISE DATE" means the last business day of the Offering Period,
which is the day that all Options that eligible Employees have elected to
exercise are to be exercised.
II.9 "FAIR MARKET VALUE" OR "FMV" of the Stock as of any date means
(a) the average of the high and low sale prices of the Stock on that date (or if
there was no sale on a given date, the next preceding date on which there was a
sale) on the principal securities exchange on which the Stock is listed.
II.10 "GRANT DATE" means the first business day of the Offering Period,
which is the day the Committee grants all eligible Employees an Option under
this Plan.
II.11 "OFFERING PERIOD" means the period commencing on October 1, 1997,
and ending on June 30, 1998; thereafter, the Offering Periods shall be six month
periods commencing on July 1 and January 1.
II.12 "OPTION" means an option granted under this Plan to purchase shares
of Stock at the Option Price on the Exercise Date.
II.13 "OPTION PRICE" means the price to be paid for each Share upon
exercise of an Option, which shall be the lesser of (a) 85% of the FMV of a
Share on the Grant Date or (b) 85% of the FMV of a Share on the Exercise Date.
II.14 "PARTICIPANT" means a person who is eligible to be granted an
Option under this Plan and who elects to have payroll deductions withheld under
the Plan for the purpose of exercising that Option on the Exercise Date.
II.15 "PLAN" means the UroCor, Inc. 1997 Employee Stock Purchase Plan, as
set out in this document and as it may be amended from time to time.
II.16 "SHARES" means shares of stock.
II.17 "STOCK" means the Company's common stock, $.01 par value.
B-4
<PAGE>
ARTICLE III
ELIGIBILITY
III.1 GENERAL REQUIREMENTS. Each Employee is eligible to participate in
the Plan for a given Offering Period if he is an Employee on the Grant Date,
subject to the limitations imposed in Section 3.2.
III.2 LIMITATIONS UPON PARTICIPATION. Any provision of this Plan to the
contrary notwithstanding, no Employee shall be granted an Option:
(a) if, immediately after the grant, the Employee would own,
including all outstanding options which are still exercisable to purchase Stock,
five percent or more of the total combined voting power or value of all classes
of Stock of the Company or of any parent or subsidiary of the Company within the
meaning of sections 423 and 424 of the Code;
(b) which permits the Employee to purchase Stock under all
employee stock purchase plans, as defined in section 423 of the Code, of the
Company and all Affiliates at a rate which exceeds $25,000 in Fair Market Value
of the Stock (determined at the time the Option is granted) for each calendar
year in which the option granted to the Employee is outstanding at any time as
provided in sections 423 and 424 of the Code; or
(c) which permits the Employee rights to purchase Stock in
excess of the number of Shares set by the Committee if it deems such a
restriction to be appropriate.
ARTICLE IV
PARTICIPATION
IV.1 GRANT OF OPTION. Effective as of the Grant Date the Committee
shall grant an Option to each Participant which shall be exercisable only on the
Exercise Date only through funds accumulated by the Employee through payroll
deductions made during the Offering Period together with any funds remaining in
the Participant's payroll deduction account at the beginning of the Offering
Period. The maximum number of Shares each Participant may be granted during an
Offering Period shall be determined by dividing the total amount of the
Participant's expected payroll deductions during the Offering Period (determined
by multiplying the payroll deductions withheld during the first pay period by
the number of complete pay periods during the Offering Period) by 85% of the FMV
of the Shares on the Grant Date.
IV.2 PAYROLL DEDUCTION. In order for a Participant to elect to exercise
his Option granted for a given Offering Period, the Participant must complete a
payroll deduction form and file it with the Company no earlier than 60 nor later
than 5 days prior to the beginning of the Offering Period. The payroll
deduction form shall permit a Participant to elect to have withheld from his
cash compensation no less than one percent nor more than ten percent of his
Compensation (only in whole percentages), taken pro rata from the Compensation
paid to him by the Company. Each payroll deduction shall begin on the first pay
period ending after the beginning of an Offering Period and shall continue
through the last pay period ending prior to the Exercise Date. No Participant
shall be permitted to begin payroll deductions at any other time.
IV.3 PAYROLL DEDUCTIONS CONTINUING. A Participant's election to have
payroll deductions shall remain in effect for all ensuing Offering Periods until
changed by the Participant by filing an appropriate amended payroll deduction
form not earlier than 60 nor later than 5 days prior to the commencement of the
Offering Period for which it is to be effective.
IV.4 RIGHT TO DECREASE OR STOP PAYROLL DEDUCTIONS. A Participant shall
have the right to reduce, but not below one percent, or discontinue payroll
deductions beginning on the first day of any calendar
B-5
<PAGE>
quarter by filing an amended payroll deduction form at least five days prior to
the beginning of the calendar quarter with the Company.
IV.5 ACCOUNTING FOR FUNDS. As of each payroll deduction period the
Company shall cause to be credited to the Participant's payroll deduction
account in a ledger established for that purpose the funds withheld from and
attributable to the Employee's cash compensation for that period. No interest
shall be credited to the Participant's payroll deduction account at any time.
The obligation of the Company to the Participant for this account shall be a
general corporate obligation and shall not be funded through a trust nor secured
by any assets which would cause the Participant to be other than a general
creditor of the Company.
ARTICLE V
IN SERVICE WITHDRAWAL,
TERMINATION OF EMPLOYMENT,
RETIREMENT OR DEATH
V.1 IN SERVICE WITHDRAWAL. A Participant may, at any time on or before
5 days prior to the Exercise Date, or such other date as shall be elected by the
Committee from time to time, elect to withdraw all funds then credited to his
payroll deduction account by giving written notice to his Employer in accordance
with the rules established by the Committee. All funds credited to the
Participant's payroll deduction account shall be paid to him as soon as
administratively feasible. The withdrawal election terminates the Participant's
right to exercise his Option on the Exercise Date and his entitlement to elect
any further payroll deductions for the then current Offering Period. Should the
Participant wish to participate in any given future Offering Period, the
Participant must file a new payroll deduction election within the time frame
required for participation for that Offering Period.
V.2 TERMINATION OF EMPLOYMENT. If a Participant's employment is
terminated for any reason other than death, disability or retirement prior to
the Exercise Date, the Option granted to the Participant for that Option Period
shall lapse. The Participant's payroll deduction account shall be returned to
him as soon as administratively feasible.
V.3 RETIREMENT FOR AGE OR DISABILITY. If a Participant retires for age
or disability under the then established rules of the Company, his Exercise Date
shall be the last day of the month prior to his retirement for age or
disability. At that time his Option shall be exercised in accordance with the
terms of the Plan. Then any funds remaining in his payroll deduction account
shall be returned to him as soon as administratively feasible.
V.4 DEATH. If a Participant dies before the Exercise Date, the Option
granted to the Participant for that Offering Period shall lapse. The
Participant's payroll deduction account shall be returned to him as soon as
administratively feasible. If the Participant dies after the Exercise Date but
prior to the delivery of his certificate, and there is a joint tenant, with the
right or survivorship, named pursuant to the rules of the Committee, the Stock
shall be delivered to the named joint tenant. If there is no joint tenant, with
the right of survivorship, named, the Stock shall be held until the
representative of the estate has been appointed and provides such evidence as
may be required by the Committee before the certificate is delivered to the
proper beneficiary together with a check in the amount of any remaining funds in
the Participant's payroll deduction account.
B-6
<PAGE>
ARTICLE VI
EXERCISE OF OPTION
VI.1 PURCHASE OF STOCK. On the Exercise Date of each Offering Period
each Participant's payroll deduction account shall be used to purchase the
maximum number of whole shares of Stock that can be purchased at the Option
Price for that Offering Period. Any funds remaining in a Participant's payroll
deduction account after the exercise of his Option for an Offering Period shall
remain in the Participant's account to be used in the ensuing Offering Period,
together with new payroll deductions, if any, for that Offering Period to
exercise the next succeeding Option which is to be exercised. If in any
Offering Period the total number of shares of Stock to be purchased by all
Participants exceed the number of shares of Stock committed to the Plan, then
each Participant shall be entitled to purchase only his pro rata portion of the
shares of Stock remaining available under the Plan based on the balances in each
Participant's payroll deduction account as of the Exercise Date. No fractional
shares of Stock may be purchased under this Plan. After the purchase of all
shares of Stock available on Exercise Date, all Options granted for the Offering
Period to the extent not used shall terminate.
VI.2 ACCOUNTING FOR STOCK. After the Exercise Date of each Offering
Period a report shall be given to each Participant stating the amount of his
payroll deduction account, the number of shares of Stock purchased and the
applicable Option Price.
VI.3 ISSUANCE OF SHARES. As soon as administratively feasible after the
end of the Offering Period the Committee shall advise the appropriate officer of
the Company that the terms of the Plan have been complied with and that it is
appropriate for the officer to cause to be issued the shares of Stock upon which
Options have been exercised under the Plan. The Committee may determine in its
discretion the manner of delivery of the shares of Stock purchased under the
Plan, which may be by electronic account entry into new or existing accounts,
delivery of certificates or any other means as the Committee, in its discretion,
deems appropriate. The Committee may, in its discretion, hold the certificate
for any shares of Stock or cause it to be legended in order to comply with the
securities laws of the applicable jurisdiction.
ARTICLE VII
ADMINISTRATION
VII.1 APPOINTMENT, TERM OF SERVICE & REMOVAL. The Board of Directors
shall appoint a Committee to administer this Plan. The members shall serve
until their resignation, death or removal. Any member may resign at any time by
mailing a written resignation to the Board of Directors. Any member may be
removed by the Board of Directors, with or without cause. Vacancies may be
filled by the Board of Directors from time to time.
VII.2 POWERS. The Committee has the exclusive responsibility for the
general administration of the Plan, and has all powers necessary to accomplish
that purpose, including but not limited to the following rights, powers, and
authorities:
(a) to make rules for administering the Plan so long as they are
not inconsistent with the terms of the Plan;
(b) to construe all provisions of the Plan;
(c) to correct any defect, supply any omission, or reconcile any
inconsistency which may appear in the Plan;
(d) to select, employ, and compensate at any time any
consultants, accountants, attorneys, and other agents the Committee
believes necessary or advisable for the proper administration of the Plan;
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(e) to determine all questions relating to eligibility, Fair
Market Value, Option Price and all other matters relating to benefits or
Participants' entitlement to benefits;
(f) to determine all controversies relating to the
administration of the Plan, including but not limited to any differences of
opinion arising between the Company and a Participant, and any questions it
believes advisable for the proper administration of the Plan; and
(g) to delegate any clerical or recordation duties of the
Committee as the Committee believes is advisable to properly administer the
Plan.
VII.3 QUORUM AND MAJORITY ACTION. A majority of the Committee
constitutes a quorum for the transaction of business. The vote of a majority of
the members present at any meeting shall decide any question brought before that
meeting. In addition, the Committee may decide any question by a vote, taken
without a meeting, of a majority of its members via telephone, computer, fax or
any other media of communication.
VII.4 STANDARD OF JUDICIAL REVIEW OF COMMITTEE ACTIONS. The Committee
has full and absolute discretion in the exercise of each and every aspect of its
authority under the Plan. Notwithstanding any provision of law or any explicit
or implicit provision of this document or, any action taken, or ruling or
decision made, by the Committee in the exercise of any of its powers and
authorities under the Plan shall be final and conclusive as to all parties other
than the Company, including without limitation all Participants and their
beneficiaries, regardless of whether the Committee or one or more of its members
may have an actual or potential conflict of interest with respect to the subject
matter of the action, ruling, or decision. No final action, ruling, or decision
of the Committee shall be subject to de novo review in any judicial proceeding;
and no final action, ruling, or decision of the Committee may be set aside
unless it is held to have been arbitrary and capricious by a final judgment of a
court having jurisdiction with respect to the issue.
ARTICLE VIII
TERMINATION AND AMENDMENT OF THE PLAN
VIII.1 TERMINATION. The Company may, by action of the Board of Directors,
terminate the Plan at any time and for any reason. The Plan shall automatically
terminate upon the purchase by Participants of all shares of Stock committed to
the Plan, unless the number of Shares committed to the Plan are increased by the
Board of Directors and approved by the shareholders of the Company. Upon
termination of the Plan, as soon as administratively feasible there shall be
refunded to each Participant the remaining funds in his payroll deduction
account, and there shall be forwarded to the Participants certificates for all
shares of Stock held under the Plan for the account of Participants. The
termination of this Plan shall not affect the current Options already
outstanding under the Plan to the extent there are Shares committed, unless the
Participants agree.
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VIII.2 AMENDMENT. The Board of Directors reserves the right to modify,
alter or amend the Plan at any time and from time to time to any extent that it
deems advisable, including, without limiting the generality of the foregoing,
any amendment deemed necessary to ensure compliance of the Plan with Section 423
of the Code. The Board of Directors may suspend operation of the Plan for any
period as it may deem advisable. However, no amendment or suspension shall
operate to reduce any amounts previously allocated to a Participant's payroll
deduction account, to reduce a Participant's rights with respect to shares of
Stock previously purchased and held on his behalf under the Plan nor to affect
the current Option a Participant already has outstanding under the Plan without
the Participant's agreement. Any amendment changing the aggregate number of
Shares to be committed to the Plan or the class of employees eligible to receive
Options under the Plan must have stockholder approval as set forth in Section
1.4.
ARTICLE IX
MISCELLANEOUS
IX.1 PLAN NOT AN EMPLOYMENT CONTRACT. The adoption and maintenance of
this Plan is not a contract between the Company and its Employees which gives
any Employee the right to be retained in its employment. Likewise, it is not
intended to interfere with the rights of the Company to discharge any Employee
at any time or to interfere with the Employee's right to terminate his
employment at any time.
IX.2 ALL PARTICIPANTS' RIGHTS ARE EQUAL. All Participants will have the
same rights and privileges under this Plan as are required by section 423 of the
Code and section 1.423-2(f) of the regulations promulgated under that section of
the Code.
IX.3 OPTIONS GRANTED ARE NOT TRANSFERABLE. No Option granted a
Participant under this Plan is transferable by the Participant otherwise than by
will or the laws of descent and distribution, and must be exercisable, during
his lifetime, only by him. In the event any Participant attempts to violate the
terms of this Section, any Option held by the Participant shall be terminated by
the Company and upon return to the Participant of the remaining funds in his
payroll deduction account, all of his rights under the Plan will terminate.
IX.4 VOTING OF STOCK. Shares of Stock held under the Plan for the
account of each Participant shall be voted by the holder of record of those
shares in accordance with the Participant's instructions.
IX.5 NO STOCKHOLDER RIGHTS. No eligible Employee or Participant shall
by reason of participation in the Plan have any rights of a stockholder of the
Company until he acquires shares of Stock as provided in this Plan.
IX.6 GOVERNMENTAL REGULATIONS. The obligation to sell or deliver the
shares of Stock under this Plan is subject to the approval of all governmental
authorities required in connection with the authorization, purchase, issuance or
sale of that Stock.
IX.7 NOTICES. All notices and other communication in connection with
the Plan shall be in the form specified by the Committee and shall be deemed to
have been duly given when sent to the Participant at his last known address or
to his designated personal representative or beneficiary, or to the Company or
its designated representative, as the case may be.
IX.8 INDEMNIFICATION OF COMMITTEE. In addition to all other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection with the
Plan or any Option granted under the Plan, and against all amounts paid in
settlement (provided the settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
action, suit or proceeding, except in relation to matters as to which it is
adjudged in the
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action, suit or proceeding, that the Committee member is liable for gross
negligence or willful misconduct in the performance of his duties.
IX.9 GENDER AND NUMBER. If the context requires it, words of one gender
when used in this Plan shall include the other genders, and words used in the
singular or plural shall include the other.
IX.10 SEVERABILITY. Each provision of this Plan may be severed. If any
provision is determined to be invalid or unenforceable, that determination shall
not affect the validity or enforceability of any other provision.
IX.11 GOVERNING LAW; PARTIES TO LEGAL ACTIONS. The provisions of this
Plan shall be construed, administered, and governed under the laws of the State
of Delaware and, to the extent applicable, by the securities, tax, employment
and other laws of the United States which are applicable to an employee stock
purchase plan.
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PROXY
UROCOR, INC.
THIS PROXY FOR HOLDERS OF COMMON STOCK IS SOLICITED BY THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 1998
The undersigned stockholder of UroCor, Inc. (the "Company") hereby appoints
William A. Hagstrom and Socrates H. Choumbakos as Proxies, each with power to
act without the other and with full power of substitution, for the undersigned
to vote all shares of Common Stock of the Company of the undersigned at the
Annual Meeting of Stockholders of the Company to be held at the Waterford
Marriott Hotel, 6300 Waterford Boulevard, Oklahoma City, Oklahoma at 2:00 p.m.,
C.D.T., Monday, June 22, 1998, or at any adjournment(s) thereof, on the
following matters more particularly described in the Proxy Statement dated May
15, 1998.
1. ELECTION OF DIRECTORS: [ ] FOR all the nominees listed [ ] WITHHOLD AUTHORITY
(except as indicated to the to vote for
contrary below) election of
directors
NOMINEES: Aaron Beam, Jr. and Thomas C. Ramey
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
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2. Proposal to approve an amendment to the UroCor, Inc. Second Amended and
Restated 1992 Stock Option Plan to increase the number of shares for which
options may be granted under such plan from 1,700,000 to 2,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the UroCor, Inc. 1997 Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the above named proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof and upon matters incident to the conduct of the meeting.
This proxy, when properly executed, will be voted as directed. If not
otherwise specified, this proxy will be voted FOR the election of the director
nominees named in Item 1, or if any one or more of the nominees becomes
unavailable, FOR another nominee or other nominees to be selected by the Board
of Directors, FOR the Amendment to the Second Amended and Restated 1992 Stock
Option Plan set forth in Item 2 and FOR the 1997 Employee Stock Purchase Plan
set forth in Item 3.
Dated: , 1998
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(Signature of Stockholder(s))
Please sign exactly as name
appears hereon. Joint owners
should each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as it appears hereon.
PLEASE MARK, SIGN, DATE AND
RETURN IMMEDIATELY USING THE
ENCLOSED ENVELOPE.
