<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:
------------------------------------------------------------------------
<PAGE>
[LOGO]
April 30, 1999
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 14, 1999, at
the Westin Hotel, One North Broadway, Oklahoma City, Oklahoma.
This year you will be asked to vote in favor of three proposals. The
proposals relate to the election of three directors, the approval of an
amendment to an employee stock option plan and approval of an amendment to a
non-employee director stock option 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 and
Chief Executive Officer
<PAGE>
UROCOR, INC.
840 RESEARCH PARKWAY
OKLAHOMA CITY, OKLAHOMA 73104
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 1999
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 14, 1999, at 2:00 p.m., C.D.T., at the Westin Hotel, One North Broadway,
Oklahoma City, Oklahoma for the following purposes:
1. To elect three 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, as
amended, to increase the aggregate number of shares of Common Stock
for which options may be granted under the plan from 2,000,000 to
2,300,000 shares.
3. To consider and vote on a proposal to approve an amendment to the
UroCor, Inc. 1997 Non-Employee Director Stock Option Plan to increase
the aggregate number of shares of Common Stock for which options may
be granted under the plan from 100,000 to 200,000 shares.
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 19, 1999, 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\ Bruce C. Hayden
Bruce C. Hayden
Senior Vice President, Chief Financial
Officer, Secretary and Treasurer
April 30, 1999
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 14, 1999
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"), 840
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 14, 1999, at 2:00 p.m. at the Westin Hotel, One North Broadway, 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 an amendment (the "1992 Plan Amendment") to the UroCor, Inc.
Second Amended and Restated 1992 Stock Option Plan, as amended (the "1992
Plan"), and for the proposal to approve an amendment (the "Director Plan
Amendment") to the UroCor, Inc. 1997 Non-Employee Director Stock Option Plan
(the "Director 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 April 30, 1999 to
shareholders of record on April 19, 1999 (the "Record Date").
At the close of business on the Record Date, there were outstanding and
entitled to vote 10,498,692 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 three directors are to be elected, constituting all of
the Class III directors. The Company's Restated Certificate of Incorporation,
as amended, 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 Michael W. George, William A. Hagstrom and
Michael E. Herbert expire at the meeting, and they are each proposed as
nominees for terms expiring at the 2002 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
NOMINEES FOR ELECTION FOR TERMS
EXPIRING AT THE 2002 ANNUAL
MEETING OF STOCKHOLDERS (CLASS III)
<S> <C> <C> <C>
Michael W. George 50 President, Chief Operating 1998
Officer and Director
William A. Hagstrom 41 Chairman of the Board and 1989
Chief Executive Officer
Michael E. Herbert 54 Director 1994
DIRECTORS WHOSE TERMS EXPIRE AT
THE 2000 ANNUAL MEETING OF
STOCKHOLDERS (CLASS I)
Herbert J. Conrad 66 Director 1993
Louis M. Sherwood, M.D. 62 Director 1993
DIRECTORS WHOSE TERMS EXPIRE AT
THE 2001 ANNUAL MEETING OF
STOCKHOLDERS (CLASS II)
Aaron Beam, Jr. 55 Director 1997
Thomas C. Ramey 55 Director 1997
</TABLE>
-4-
<PAGE>
BACKGROUND OF NOMINEES FOR DIRECTOR
MICHAEL W. GEORGE. Mr. George joined the Company in August 1998 as a
director, President and Chief Operating Officer. Before joining the Company,
from August 1989 to August 1998, Mr. George held several senior management
positions at DuPont Merck Pharmaceuticals Company, including President -
International and President - North America. From June 1997 through August
1998 he served as Senior Vice President, Cardiovasculars. Prior to joining
DuPont Merck, he spent four years at Bristol-Myers Squibb and twelve years at
Sandoz Pharmaceuticals in various sales and marketing management positions.
Mr. George is also a director of Avanir Pharmaceuticals.
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.
MICHAEL E. HERBERT. Mr. Herbert has been a director since July 1994. Mr.
Herbert has been the President and Chief Executive Officer of the Bridgeport
Bluefish Professional Ball Club, an independent minor league baseball team in
the Atlantic Professional Baseball League since January 1999. Mr. Herbert was
the founding Chief Executive Officer of Physicians Health Services, Inc.
("PHS"), an individual practice association health maintenance organization
("IPA/HMO"), and served in that capacity from November 1976 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 continued in
his role as Co-Chief Executive Officer until July 1998. From January 1971 to
November 1976, Mr. Herbert was Vice President of InterStudy, a national
health policy research firm. Mr. Herbert is past Chairman of the American
Association of Health Plans and is past Chairman of the American Managed Care
and Review Association.
BACKGROUND OF 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 Youth Services, Inc. and Wall
Street Deli.
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 Corporation, Gensia Sicor, and Gen-Vec.
THOMAS C. RAMEY. Mr. Ramey has been a director since December 1997. Mr.
Ramey has been Executive Vice President of Liberty Mutual Group, a
diversified financial services company, since March 1995. Additionally, he
has been President of Liberty International, responsible for the
international business of Liberty Mutual, since December 1997. Mr. Ramey
assumed his current positions with Liberty Mutual after having served as
Senior Vice President, responsible for Liberty Mutual's workers compensation
and managed healthcare products and services from July 1992. From March 1986
to June 1991, Mr. Ramey was the President and Chief Executive Officer of
American International Healthcare, a subsidiary of American International
Group, a managed healthcare company.
-5-
<PAGE>
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.
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, 1998, the Board of Directors met
thirteen times, the Audit Committee met three times and the Compensation
Committee met three times. All actions of the Nominating Committee and 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. Mr. Conrad and Mr. Beam 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. Mr. Conrad and Mr. Herbert, neither 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
1992 Plan, the Director Plan and the Company's Employee Stock Purchase Plan.
NOMINATING COMMITTEE. 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 1992 PLAN AMENDMENT
GENERAL
At the meeting, the stockholders of the Company will be asked to vote
upon a proposal to approve the 1992 Plan Amendment. Approval of the 1992 Plan
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 1992 Plan Amendment is set forth in full in
ANNEX A to this proxy statement. The 1992 Plan Amendment increases the
aggregate number of shares of Common Stock for which options may be granted
under the 1992 Plan from 2,000,000 to 2,300,000.
-6-
<PAGE>
REASONS FOR THE 1992 PLAN AMENDMENT
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 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 1992 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 1992 Plan.
To provide additional shares of Common Stock for which options may be
granted under the 1992 Plan, the Board of Directors has approved the 1992
Plan Amendment and has directed that the same be presented to the
stockholders for their approval.
CERTAIN CONSIDERATIONS
Stockholders should note that certain disadvantages may result from
approval of the 1992 Plan 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 1992 PLAN
AMENDMENT. Approval of the 1992 Plan 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 1992 Plan 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 DIRECTOR PLAN AMENDMENT
GENERAL
At the meeting, the stockholders of the Company will be asked to vote
upon a proposal to approve the Director Plan Amendment. Approval of the
Director Plan 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 Director Plan Amendment is set
forth in full in ANNEX B to this proxy statement. The Director Plan Amendment
increases the aggregate number of shares of Common Stock for which options
may be granted under the Director Plan from 100,000 to 200,000.
REASONS FOR THE DIRECTOR PLAN AMENDMENT
The Board of Directors believes that it is in the best interest of the
Company to attract and retain the services of experienced and knowledgeable
non-employee directors of the Company and to provide an incentive for such
directors to increase their proprietary interests in the Company's long-term
success and progress. The Company anticipates that the number of shares of
Common Stock available under the Director 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 directors, 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 Director Plan.
To provide additional shares of Common Stock for which options may be
granted under the Director Plan, the Board of Directors has approved the
Director Plan Amendment and has directed that the same be presented to the
stockholders for their approval.
-7-
<PAGE>
CERTAIN CONSIDERATIONS
Stockholders should note that certain disadvantages may result from
approval of the Director Plan 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 DIRECTOR
PLAN AMENDMENT. Approval of the Director Plan Amendment 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 Director Plan 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 has the same effect as
a vote against the proposal.
-8-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 15, 1999 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>
Wellington Management Company, LLP(3) 1,025,700 9.8
75 State Street
Boston, MA 02109
Heartland Advisors, Inc.(4) 603,400 5.7
790 North Milwaukee Street
Milwaukee, WI 53202
Capital Research & Management Co.(5) 600,000 5.7
333 South Hope Street
Los Angeles, CA 90071
Dimensional Fund Advisors, Inc.(6) 540,700 5.2
1299 Ocean Avenue
Santa Monica, CA 90401
Aaron Beam, Jr. 12,000 *
Director(7)
Herbert J. Conrad 29,000 *
Director(8)
Michael E. Herbert 17,500 *
Director(9)
Thomas C. Ramey 10,000 *
Director(10)
Louis M. Sherwood, M.D. 23,000 *
Director(11)
William A. Hagstrom(12) 420,522 3.9
Chairman of the Board and Chief Executive Officer
Michael W. George -- --
President and Chief Operating Officer, Director
Socrates H. Choumbakos(13) 167,106 1.6
Senior Vice President, Corporate Planning &
Development and Assistant Secretary
Mark G. Dimitroff(14) 163,409 1.5
Vice President, New Product and Business
Development
Robert W. Veltri, Ph.D.(15) 160,634 1.5
Vice President and General Manager UroSciences
Group
All executive officers, directors and nominees as a 1,069,661 9.6
group (14 persons)(16)
</TABLE>
- -----------------
* Less than 1%.
-9-
<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) Information with respect to the ownership of such beneficial owner was
obtained from its report on Amendment No. 1 to Schedule 13G dated
December 31, 1998, as received by the Company.
(4) Information with respect to the ownership of such beneficial owner was
obtained from its report on Schedule 13G dated February 4, 1999, 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 8, 1999, 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 12, 1999, 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 10,000
shares of Common Stock issuable upon the exercise of certain stock
options.
(11) The beneficial owner's shares set forth in the table include 20,000
shares of Common Stock issuable upon the exercise of certain stock
options.
(12) The beneficial owner's shares set forth in the table include 187,480
shares of Common Stock issuable upon the exercise of certain stock
options.
(13) The beneficial owner's shares set forth in the table include 129,700
shares of Common Stock issuable upon the exercise of certain stock
options.
(14) The beneficial owner's shares set forth in the table include 85,318
shares of Common Stock issuable upon the exercise of certain stock
options.
(15) The beneficial owner's shares set forth in the table include 86,800
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 611,798 shares of Common
Stock issuable upon the exercise of certain stock options and warrants.
-10-
<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 and Chief November 1989 41
Executive Officer
Michael W. George President, Chief Operating Officer August 1998 50
and Director
Bruce C. Hayden Senior Vice President, Chief Financial April 1999 38
Officer, Secretary and Treasurer
Socrates H. Choumbakos Senior Vice President, Corporate June 1992 54
Planning & Development and
Assistant Secretary
Karl K. Nigg Vice President, Sales and February 1998 41
General Manager,
UroTherapeutics Group
Robert W. Veltri, Ph. D. Vice President and General Manager, October 1990 57
UroSciences Group
Mark G. Dimitroff Vice President, New Product and April 1990 52
Business Development
Lou Rye Carmichael Vice President, Chief Compliance February 1998 42
Officer
Gerard J. O'Dowd, M.D. Medical Director August 1990 48
</TABLE>
For further information regarding Mr. Hagstrom's and Mr. George's
background, see "Background of Nominees for Director".
BRUCE C. HAYDEN. Mr. Hayden joined the Company in April 1999 as Senior
Vice President, Chief Financial Officer, Treasurer and Secretary. Before
joining the Company, Mr. Hayden was Executive Vice President, Financial
Operations of MedShares, Inc., a privately held home healthcare management
company from July 1994 to February 1996 and from August 1996 to December
1998. From February to August 1996, Mr. Hayden served as Group Chief
Financial Officer of Columbia Homecare Group, a home healthcare company. From
September 1992 to June 1994, he held the position of Chief Internal Audit
Director with First American Homecare, also a home healthcare company. Prior
to moving into the private healthcare industry, Mr. Hayden served in various
Audit Manager positions with the public accounting firms of BDO Seidman and
Adams & Akin, PC for 9 years.
-11-
<PAGE>
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.
KARL K. NIGG. Mr. Nigg joined the Company in February 1998 as Vice
President, UroTherapeutic Business Development and became Vice President,
Sales and General Manager, UroTherapeutics Group in December 1998. 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.
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.
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. In December 1998, he assumed
the position of Vice President, New Product and Business Development. 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.
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, Director, Sales and Client Relations from September
1996 to February 1998. She was promoted to Vice President, Sales and Client
Relations in February 1998. In December 1998, she assumed her current
position of Vice President, Chief Compliance Officer. Ms. Carmichael managed
the Eveready Telephone Sales Center for Ralston Purina prior to joining
UroCor.
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.
-12-
<PAGE>
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, 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. The Company also provides a 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
establish 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 position, responsibility, level of experience and
individual and Company performance. The Company also utilizes industry
surveys and benchmarking 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 was competitive with comparable companies. For
1999, as Chairman of the Board and Chief Executive Officer, Mr. Hagstrom
requested that the Committee not consider a salary adjustment for his
position given that the duties changed during the year with the hiring of a
Chief Operating Officer in August 1998, who also assumed the responsibilities
of President from Mr. Hagstrom.
ANNUAL INCENTIVE COMPENSATION. Annual incentive compensation for
executive officers is 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. Actual awards are
subject to decrease or increase based on level of attainment and are
completely at the discretion of the Committee. Since the 1998 financial goals
established by the Board of Directors in late 1997 were not achieved, the
Committee determined that no incentive compensation should be paid for 1998.
For 1999, 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, operating income and cashflow goals. As the Company's
focus is on profitable growth and stockholder returns, significant weighting
will be placed on actual operating income and cashflow performance. The
Committee made awards to the executive officers named in the Summary
Compensation Table under the incentive compensation plan in 1996 and 1997 for
1995 and 1996 financial performance.
-13-
<PAGE>
STOCK OPTION PROGRAM. Total compensation for executive officers and
management 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 management and stockholders due to the fact that an option holder
realizes gains only if the stock price increases over the fair market value
at the date of grant and the option holder exercises their option. In
determining the amount of such grants, the Stock Plan Committee of the
Company's Board of Directors evaluates the job level of the employee,
responsibilities of the employee and competitive practices in the industry.
All options are granted with an exercise price equal to fair market value of
the Common Stock on the date of grant. Options generally vest over a period
of one to five years. The long-term value realized by management through
option exercises can be directly linked to the enhancement of stockholder
value.
For the year ended December 31, 1998, 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 65,000 shares of Common
Stock at $7.00 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 1998. Because such financial goals were not attained for the
year, no such acceleration occurred.
Subsequent to December 31, 1998, the Stock Plan Committee awarded
additional stock options to purchase an aggregate of 101,500 shares of Common
Stock at $4.625 per share, the fair market value of the Common Stock on the
date of such grant, to mid-management, marketing, sales and other select
employees of the Company. These awards were intended to provide an incentive
to individuals who can drive the Company's performance through their daily
efforts. These options will be fully vested in one year.
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
Herbert J. Conrad
Michael E. Herbert
-14-
<PAGE>
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, 1998, 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, 1998 253,940 -- -- 12,500 --
Chairman of the 1997 194,979 72,905 -- 25,000 --
Board and Chief 1996 181,774 38,532 -- -- --
Executive Officer
Michael W. George, 1998 83,769 -- -- 160,000 73,336
President and Chief
Operating Officer(2)
Socrates H. Choumbakos, 1998 162,458 -- -- 7,500 3,464
Senior Vice President, 1997 146,487 24,994 -- 15,000 --
Corporate Planning & 1996 134,820 24,851 -- -- --
Development and
Assistant Secretary(3)
Mark G. Dimitroff, 1998 166,999 -- -- 7,500 1,065
Vice President, New 1997 148,480 34,627 -- 15,000 --
Product and Business 1996 144,116 23,451 -- -- --
Development(3)
Robert W. Veltri, Ph.D. 1998 164,262 -- -- 7,500 --
Vice President and 1997 144,154 30,328 -- 15,000 --
General Manager, 1996 139,258 19,324 -- -- --
UroSciences Group
</TABLE>
- -------------------
(1) Represents shares issuable pursuant to stock options granted under a stock
option plan.
(2) Employment began August 18, 1998. Other compensation represents reimbursed
relocation costs.
(3) Other compensation represents the difference between the price paid for
Common Stock and the fair market value of the Common stock on the date of
purchase due to participation in the Employee Stock Purchase Plan.
-15-
<PAGE>
OPTION GRANTS AND EXERCISES
The following table sets forth information concerning individual grants
of stock options made during the year ended December 31, 1998, to each of the
executive officers named in the Summary Compensation Table.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
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 (#) FISCAL YEAR ($/SHARE) DATE OPTION TERM
- ------------------------ ------------ ------------ --------- ----------------- ---------------------
5% ($) 10% ($)
---------- ---------
<S> <C> <C> <C> <C> <C> <C>
William A. Hagstrom(1) 12,500 2.8 7.0625 April 16, 2008 55,520 140,698
Michael W. George 150,000(2) 33.33 4.75 August 18, 2008 196,851 434,988
10,000(3) 2.22 4.875 September 15, 2008 30,659 77,695
Socrates H. Choumbakos(1) 7,500 1.7 7.0625 April 16, 2008 33,312 84,418
Mark G. Dimitroff(1) 7,500 1.7 7.0625 April 16, 2008 33,312 84,418
Robert W. Veltri, Ph.D.(1) 7,500 1.7 7.0625 April 16, 2008 33,312 84,418
</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 of April 16, 1999, April 16, 2000 and April 16, 2001.
(2) 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 of August 18, 1999, August 18, 2000 and August 18, 2001.
(3) 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 of September 15, 1999, September 15, 2000 and September 15, 2001.
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, 1998. None of such executive
officers exercised any stock options during the year ended December 31, 1998.
OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT DECEMBER 31, 1998 IN-THE-MONEY OPTIONS AT
(# SHARES) DECEMBER 31, 1998 ($)(1)
-------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- -------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
William A. Hagstrom 174,980 29,166 877,384 -
Michael W. George - 160,000 - 258,750
Socrates H. Choumbakos 122,200 17,500 656,050 -
Mark G. Dimitroff 77,818 17,500 369,601 -
Robert W. Veltri, Ph.D. 79,300 17,500 387,938 -
</TABLE>
- -------------------
(1) Based on a price of $6.375, the closing price of the Common Stock on
December 31, 1998, as reported by The Nasdaq Stock
Market-Registered Trademark-.
-16-
<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-Registered Trademark- - US Companies
("Nasdaq US Companies") and a CRSP index of The Nasdaq Stock
Market-Registered Trademark- 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 12/31/96 12/31/97 12/31/98
------- -------- -------- --------
<S> <C> <C> <C> <C>
UroCor, Inc. 100.0 86.9 56.3 58.0
Nasdaq US Companies 100.0 104.1 127.8 179.6
Nasdaq Health Services Companies 100.0 84.8 86.4 74.1
</TABLE>
Note: The indices are reweighed daily, using the market capitalization on
the previous trading day.
COMPENSATION OF DIRECTORS
Each director receives a monthly retainer of $1,000, a $500 fee for each
meeting attended in person and reimbursement for expenses related to
attendance at Board meetings. Committee members receive an additional $2,000
for each committee served.
-17-
<PAGE>
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, 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. George, Choumbakos and Dimitroff and Dr. Veltri 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 Mr. George
provides for a current base salary of $231,000, subject to annual review, a
bonus of up to 50% of his annual base salary and a severance obligation of
twelve months upon termination without cause in the first year of employment
and six months after the first year of employment.
CHANGE IN CONTROL AGREEMENTS
The Company has entered into Change in Control Agreements with various
key employees, including each of the executive officers named in the Summary
Compensation Table. These agreements are intended to assure the continued
availability of these executives in the event of certain transactions
culminating in a "change in control" of the Company. Under the agreements, in
the event the executive officer is terminated at any time after a change in
control transaction has occurred, and termination is not voluntary or the
result of death, permanent disability, retirement or certain other defined
circumstances, the executive officer would be entitled to receive (i) payment
of base salary and earned but unused vacation time through the date of
termination, (ii) a bonus equal to the aggregate annual bonus paid to the
executive officer since the effective date of the agreement, pro-rated
through the date of termination, (iii) a lump sum cash payment equal to one
and one-half times the sum of the annual base salary of the executive officer
during the year in which the termination occurred plus the amount of the
highest annual bonus received by the executive officer at any time after the
effective date of the agreement and (iv) the continuation of life, disability
and health insurance coverages for 18 months.
TRANSACTIONS
In June 1997, the Company loaned $13,500 to Lou Rye Carmichael, an
executive officer of the Company, to enable her to satisfy her federal income
tax liability incurred in connection with the exercise of stock options
granted to her pursuant to the 1992 Plan. This loan to Lou Rye Carmichael was
paid in full with interest on the due date May 29, 1998. The loan bore
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 1992 Plan Amendment and the Director Plan Amendment. For
information concerning these plans, see "Proposal 2: Approval of the 1992
Plan Amendment ", "Proposal 3: Approval of the Director Plan Amendment" and
the summaries set forth below.
-18-
<PAGE>
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 1992 PLAN
The Board of Directors adopted and the stockholders approved the 1992
Plan in June 1997 and an amendment thereto in June 1998. The 1992 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 1992 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 1992 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 1992 Plan currently authorizes: (i) options to acquire
up to an aggregate of 2,000,000 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 1992 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 eight
executive officers, each of whom may be eligible to receive grants under the
1992 Plan. Other persons with substantial responsibility for the Company's
management and growth may be eligible to receive grants under the 1992 Plan
at the discretion of a committee of the Board of Directors. The proposed 1992
Plan 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 2,000,000 to 2,300,000.
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 1992 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 and Chief Executive Officer........... (2) (3) 204,146
Michael W. George,
President and Chief Operating Officer....................... (2) (3) 160,000
Socrates H. Choumbakos,
Senior Vice President, Corporate Planning & Development..... (2) (3) 139,700
Mark G. Dimitroff,
Vice President, New Business and Product Development........ (2) (3) 95,318
Robert W. Veltri, Ph.D.
Vice President and General Manager, UroSciences Group....... (2) (3) 96,800
Executive Officers as a Group (8 persons, including
the executive officers named above)........................ (2) (3) 909,964
Non-Executive Director Group................................ (2) (3) 37,500
Non-Executive Officer Employee Group........................ (2) (3) 739,564
</TABLE>
-19-
<PAGE>
(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. George to purchase 150,000 and 10,000 shares of Common
Stock on August 18, 1998 and September 15, 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 other members of the
Executive Officer Group to purchase 4,000, 20,000, 15,000, 60,000,
15,000, 20,000, 5,000, and 75,000 shares of Common Stock on February 21,
1994, December 15, 1995, March 20, 1997, February 17, 1998, April 16,
1998, January 7, 1999, April 1, 1999 and April 12, 1999, respectively;
options granted to members of the Non-Executive Director Group to
purchase 12,500, 12,500, and 12,500 shares of Common Stock on October 1,
1993, October 29, 1993, and July 12, 1994, respectively; and options
granted to members of the Non-Executive Officer Employee Group to
purchase an aggregate of 739,564 shares of Common Stock on various dates
between June 1, 1992 and April 15, 1999.
(2) 1992 Plan Amendment and 1992 Plan, as amended by the 1992 Plan Amendment.
(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 1992 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, April 16, 1998, August 18, 1998, September 15, 1998,
January 7, 1999, April 1, 1999 and April 12, 1999 have exercise prices
of $.35, $.75, $.75, $.75, $.75, $1.00, $1.00, $1.75, $9.00, $10.00,
$9.25, $6.125, $7.0625, $4.75, $4.875, $5.875, $4.625 and $4.00 per
share, respectively. Options granted to members of the Non-Executive
Officer Employee Group under the 1992 Plan have exercise prices ranging
from $.35 to $12.625 The closing price of the Common Stock on the Record
Date was $3.625.
FEDERAL TAX CONSEQUENCES
Options granted under the 1992 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 1992 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.
-20-
<PAGE>
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 DIRECTOR PLAN
The Board of Directors adopted the Director Plan in May 1997 and the
stockholders of the Company approved the plan in June 1997. The Director Plan
provides for the automatic grant of stock options to non-employee directors.
The Company currently has five non-employee directors, each of whom is
eligible to receive grants under the Director Plan. The purposes of the
Director Plan are to attract and retain the services of experienced and
knowledgeable non-employee directors of the Company and to provide an
incentive for such directors to increase their proprietary interests in the
Company's long-term success and progress. A committee designated by the Board
of Directors (currently the Stock Plan Committee) is the administrator of the
Director Plan.
Under the Director Plan, an aggregate of 100,000 shares of Common Stock
were originally authorized and reserved for issuance to non-employee
directors. The aggregate number of shares of Common Stock for which options
may be granted under the Director Plan may be adjusted based on certain
anti-dilution provisions contained in the Director Stock Option Plan. On May
5, 1997, each existing non-employee director was granted an option to
purchase shares of Common Stock based upon their period of service as
directors at $9.25 per share, the fair market value of such stock on that
date. On such date, existing non-employees directors serving (i) since
January 1, 1989 were granted an option to purchase 10,000 shares of Common
Stock, (ii) only since January 1, 1994 were granted an option to purchase
7,500 shares of Common Stock and (iii) only since January 1, 1995 were
granted an option to purchase 5,000 shares of Common Stock. On the date of
election of any new non-employee director, such new non-employee director
will be granted an option to purchase 10,000 shares of Common Stock at the
fair market value of such stock on the date of the grant. Additionally, on
July 1 of each year, beginning July 1, 1998, each non-employee director who
is a non-employee director on such date will be granted an option to purchase
5,000 shares of Common Stock at the fair market value of such stock on the
date that the option is granted. Each stock option granted to a non-employee
director will have a ten year term and will be fully vested and exercisable
on the first anniversary of the date of the grant, assuming continued service
on the Board of Directors.
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 Director Plan.
<TABLE>
<CAPTION>
NAMES AND POSITION PLAN NAME DOLLAR NUMBER OF
------------------ --------- VALUE $ SHARES(1)
------- ---------
<S> <C> <C> <C>
Herbert J. Conrad........................................... (2) (3) 12,500
Louis M. Sherwood, MD....................................... (2) (3) 12,500
Michael E. Herbert.......................................... (2) (3) 10,000
Aaron Beam.................................................. (2) (3) 15,000
Thomas C. Ramey............................................. (2) (3) 15,000
</TABLE>
(1) Includes options granted to Mr. Conrad to purchase 7,500 and 5,000 shares
of Common Stock on May 5, 1997 and July 1, 1998, respectively; options
granted to Dr. Sherwood to purchase 7,500 and 5,000 shares of Common Stock
on May 5, 1997 and July 1, 1998, respectively; options granted to Mr.
Herbert to purchase 5,000 and 5,000 shares of Common Stock on May 5, 1997
and July 1, 1998, respectively; options granted to Mr. Beam to purchase
10,000 and 5,000 shares of Common Stock on December 16, 1997 and July 1,
1998, respectively; and options granted to Mr. Ramey to purchase 10,000 and
5,000 shares of Common Stock on December 16, 1997 and July 1, 1998,
respectively.
-21-
<PAGE>
(2) Director Plan, as amended by the Director Plan Amendment.
(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 Director Plan on May 5, 1997, December 16, 1997 and July 1, 1998
have exercise prices of $9.25, $6.50 and $7.00 per share, respectively. The
closing price of the Common Stock on the Record Date was $3.625.
FEDERAL TAX CONSEQUENCES
Options granted under the Director Plan are classifed as Non-ISO's.
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.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP served as the Company's principal independent public
accountants for the year ended December 31, 1998 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 1998, was subject to the reporting requirements of Section 16(a)
with respect to the Company failed to meet such requirements on a timely
basis. Ms. Carmichael, a Vice President of the Company filed a Form 3
February 27, 1998. Ms. Carmichael amended this original filing May 22, 1998
reporting shares with indirect beneficial ownership. Mr. Beam, a director of
the Company was required to file a Form 4 on or before September 10, 1998 to
report the acquisition of shares. Mr. Beam filed a Form 4 on September 18,
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 2000 must be
received by the Company at its principal executive offices, 840 Research
Parkway, Oklahoma City, Oklahoma 73104, no later than January 1, 2000, in
order to be included in the proxy statement and form of proxy relating to
that meeting.
According to the bylaws of the Company, at the Annual Meeting of
Stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. For business to be properly brought
before the 2000 Annual Meeting of Stockholders by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary
of the Company. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Company not
less than 120 days nor more than 180 days prior to the meeting date.
-22-
<PAGE>
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.
-23-
<PAGE>
ANNEX A
AMENDMENT
TO
UROCOR, INC.
SECOND AMENDED AND RESTATED 1992 STOCK OPTION PLAN, AS AMENDED
ADOPTED BY THE BOARD OF DIRECTORS APRIL 14, 1999
AND
BY THE STOCKHOLDERS JUNE __, 1999
1. Paragraph 3 of the UroCor, Inc. Second Amended and Restated 1992 Stock
Option Plan, as amended, 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
2,300,000 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 Amendment, the UroCor, Inc. Second
Amended and Restated 1992 Stock Option Plan, as amended, shall continue in
full force and effect in accordance with its terms.
A-1
<PAGE>
ANNEX B
AMENDMENT
TO
UROCOR, INC.
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Paragraph 3 of the UroCor, Inc. 1997 Non-Employee Director Stock Option
Plan is hereby deleted in its entirety and replaced by the following:
3. OPTION 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 per share
(or such other par value as may be designated by act of the Company's
stockholder's, the "Common Stock"). The total amount of shares of Common
Stock with respect to which Options may be granted shall not exceed
200,000 shares in the aggregate; PROVIDED, that the class and aggregate
number of shares that may be subject to the options granted hereunder
shall be subject to adjustment in accordance with the provisions of
Section 12 of this Plan. Such shares may be treasury shares or
authorized but unissued shares.
If any outstanding Option for any reason shall expire or terminate
by reason of the death of the Optionee or the fact that the optionee
ceases to be a director, the surrender of any such Option, or any other
cause, the shares of Common Stock allocable to the unexercised portion
of such Option may again be subject to an Option under this Plan.
2. Except as expressly amended by this Amendment, the UroCor, Inc. 1997
Non-Employee Director Stock Option Plan shall continue in full force and
effect in accordance with its terms.
B-1
<PAGE>
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 14, 1999
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 Westin Hotel, One North Broadway, Oklahoma City, Oklahoma at 2:00
p.m., C.D.T., Monday, June 14, 1999, or at any adjournment(s) thereof, on the
following matters more particularly described in the Proxy Statement dated
April 30, 1999.
1. ELECTION OF DIRECTORS: [ ] FOR all the nominees [ ] WITHHOLD AUTHORITY
listed (except as to vote for election
indicated to the of directors
contrary below)
NOMINEES: Michael W. George, William A. Hagstrom and Michael E. Herbert
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- -------------------------------------------------------------------------
2. Proposal to approve an amendment to the UroCor, Inc. Second Amended and
Restated 1992 Stock Option Plan, as amended, to increase the number of shares
for which options may be granted under such plan from 2,000,000 to 2,300,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve an amendment to the UroCor, Inc. 1997 Non-Employee
Director Stock Option Plan to increase the number of shares for which options
may be granted under such plan from 100,000 to 200,000.
[ ] 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, as amended, set forth in Item 2 and FOR the amendment
to the 1997 Non-Employee Director Stock Option Plan set forth in Item 3.
Dated:____________________________, 1999
________________________________________
________________________________________
(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.
