SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
[ ] Preliminary Proxy Statement
[ ] Confidential For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Soliciting Material Pursuant to Rule 14as-12
NOVOSTE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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[LOGO] Novoste/TM/
Novoste Corporation
3890 Steve Reynolds Boulevard
Norcross, Georgia 30093
(770) 717-0904
Dear Novoste Shareholder:
On Wednesday, June 12, 2002, Novoste Corporation will hold its 2002 Annual
Meeting of Shareholders at the Atlanta Marriott Gwinnett Place, 1775 Pleasant
Hill Road, in Duluth, Georgia. The meeting will begin at 8:30 a.m.
Only holders of common stock as of the close of business on April 22, 2002 can
vote at this meeting or any adjournments that may take place. At the meeting we
will consider:
1. Election of three (3) Class III directors to serve until the 2005 Annual
Meeting of Shareholders;
2. Approval of an amendment (the "Stock Plan Amendment") to the Novoste
Corporation 2001 Stock Plan (the "Stock Plan") to increase the number of
shares of Common Stock reserved for issuance thereunder by 500,000 shares to
1,750,000 shares;
3. Ratification of the reappointment of Ernst & Young LLP as our independent
auditors for fiscal year 2002; and
4. Any other business properly presented at the meeting.
At the meeting we will also report on Novoste's 2001 business results and other
matters of interest to shareholders.
Your Board of Directors recommends that you vote in favor of proposals 1
through 3 above as further outlined in this proxy statement. This proxy
statement also provides information relating to our Board and its committees,
discusses our compensation practices and philosophy, and describes the Audit
Committee's recommendation to the Board regarding our 2001 financial
statements. We encourage you to read these materials carefully.
Whether or not you expect to attend the meeting, we urge you to vote promptly.
The approximate date of mailing for this proxy statement and card as well as a
copy of Novoste's 2001 Annual Report, including its Annual Report on Form 10-K
for the year ended December 31, 2001, as amended, is April 30, 2002. For
further information about Novoste, please visit our web site at www.novoste.com.
By Order of the Board of Directors,
/s/ Daniel G. Hall
Daniel G. Hall
Corporate Secretary
April 26, 2002
TABLE OF CONTENTS
Questions And Answers............................................................. 1
Proposals On Which You May Vote................................................... 4
Election Of Directors.......................................................... 4
Approval Of The Stock Plan Amendment........................................... 4
Ratification Of The Reappointment Of Ernst & Young LLP As Independent Auditors
For The Fiscal Year 2001..................................................... 9
Nominees For The Board Of Directors............................................... 10
Information Relating To The Board Of Directors And Its Committees................. 12
Compensation Of Directors......................................................... 12
Security Ownership Of Management.................................................. 13
Stock Performance Graph........................................................... 14
Audit Committee Report............................................................ 15
Executive Compensation: Report Of Stock Option And Compensation Committee......... 16
Executive Compensation............................................................ 19
Summary Compensation Table..................................................... 19
Option Grants In 2001.......................................................... 20
Aggregated Option Exercises In 2001 And Option Values At December 31, 2001..... 20
Executive Termination Agreements............................................... 21
Severance Agreement With Chief Executive Officer............................... 21
Section 16 Proxy Statement Disclosure............................................. 21
QUESTIONS AND ANSWERS
1. Q: Who is entitled to vote?
A: Shareholders as of the close of business on the record date, April 22,
2002, are entitled to vote at the Annual Meeting.
2. Q: What may I vote on?
A: At the meeting we will consider the following proposals:
(1) The election of three directors;
(2) The approval of the amendment of the Novoste Corporation 2001 Stock
Plan, increasing the number of shares of Common Stock reserved for
issuance of grants under the Plan by 500,000 shares.
(3) Ratification of the reappointment of Ernst & Young LLP as Novoste's
independent auditors for fiscal year 2002.
Each of these matters is discussed in further detail in the
"Proposals On Which You May Vote" section of this proxy statement.
3. Q: How does the Board recommend I vote on the proposals?
A: The Board recommends you vote FOR each of the proposals listed in
Question 2 above.
4. Q: How do I cast my vote?
A: There are four different ways you may cast your vote this year. You may
vote by:
(1) marking, signing, dating, and mailing each proxy card or vote
instruction card and returning it in the envelope provided. If you
return your signed proxy or vote instruction card, but do not mark
the boxes showing how you wish to vote, your shares will be voted
FOR the first four proposals; or
(2) telephone, using the toll-free number listed on each vote
instruction card (if your shares are held by a bank or broker);
(3) the Internet, at the address provided on each vote instruction card
(if your shares are held by a bank or broker); or
(4) attending the meeting (if your shares are registered directly in
your name on Novoste's books and not held through a broker, bank or
other nominee).
If you are the registered shareholder (that is, if you hold a paper
certificate instead of holding shares electronically in your
brokerage account), you cannot vote by telephone or electronically
through the Internet because we have not instituted any mechanism
for telephone or electronic voting.
If your shares are held in "street name" (that is, they are held in
the name of a broker, bank or other nominee), you will receive
instructions with your materials that you must follow in order to
have your shares voted. Please check your voting instruction card to
determine whether you will be able to vote by telephone or
electronically.
5. Q: How do I revoke or change my vote?
A: To revoke or change your vote:
(1) notify Novoste's Corporate Secretary in writing at any time before
the meeting;
(2) submit a later dated proxy by mail or if your shares are held in
"street name," by mail, telephone, or via the Internet; or
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(3) vote in person at the meeting (if your shares are registered
directly in your name on Novoste's books and not held through a
broker, bank, or other nominee).
The latest dated, properly completed proxy that you submit will
count as your vote. If a vote has been recorded for your shares and
you submit a proxy card that is not properly signed or dated, the
previously recorded vote will stand.
6. Q: What shares are included on the proxy or vote instruction card(s)?
A: The shares on your proxy or vote instruction card(s) represent those
shares registered directly in your name.
7. Q: What does it mean if I get more than one proxy or vote instruction?
A: If your shares are registered differently and are in more than one
account, you will receive more than one card. Please complete and return
all of the proxy or vote instruction cards you receive (or, if you hold
your shares in street name, vote by telephone or the Internet) to ensure
that all of your shares are voted.
8. Q: How many shares can vote?
A: As of the April 22, 2002 record date, 16,315,676 shares of Novoste
Common Stock were issued and outstanding. Every shareholder of Common
Stock is entitled to one vote for each share held as of the record date.
9. Q: What is a "quorum"?
A: A "quorum" is a majority of the outstanding shares at the close of
business on the record date. The shares may be present at the meeting or
represented by proxy. There must be a quorum for the meeting to be held.
If you submit a timely, properly executed proxy or vote instruction
card, then you will be considered part of the quorum, even if you
abstain from voting. If a quorum is present, the plurality vote of the
total votes cast by the holders of Common Stock is required to elect the
three (3) Class III Directors. The approval of the amendment to the
Novoste Corporation 2001 Stock Plan, increasing the number of shares of
Common Stock available for issuance of grants under the Plan and
ratification of the reappointment of Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 2002 will
require the affirmative vote of a majority of the total votes cast on
the proposal.
Abstentions: Abstentions are not counted in the tally of votes FOR or
AGAINST a proposal. A WITHHELD vote is the same as an abstention.
Abstentions and withheld votes are counted as shares present for quorum
purposes.
Broker Non-Votes: Broker non-votes occur when shares held by a broker
are not voted with respect to a proposal because (1) the broker has not
received voting instructions from the shareholder, and (2) the broker
lacks the authority to vote the shares at his/her discretion. Broker
non-votes are counted as shares present for quorum purposes, but do not
count as votes for or against a proposal.
10. Q: How will voting on any other business be conducted?
A: Although we do not know of any business to be considered at the 2002
Annual Meeting other than the proposals described in this proxy
statement, if any other business is presented at the Annual Meeting,
your signed proxy or vote instruction card, or your authenticated
Internet or telephone proxy gives authority to Thomas D. Weldon,
Novoste's Chairman, Chief Executive Officer and President, to vote on
such matters at his discretion.
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11. Q: Does any shareholder own more than 5% of Novoste's Common Stock?
A: As of December 31, 2001, these shareholders have reported the following
ownership of Novoste's Common Stock:
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Percent of
Shareholder Name and Address Shares Outstanding Shares
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Liberty Wanger Asset Management, L.P.
227 West Monroe Street, Suite 3000
Chicago, IL 60606-5016 2,318,600 14.26%
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Lord Abbett & Co.
90 Hudson Street
Jersey City, NJ 07302 1,450,866 8.92%
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MFS Investment Management
500 Boylston Street
Boston, MA 02116-3741 1,230,050 7.56%
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JP Morgan Investment Mgmt., Inc.
522 Fifth Avenue
New York, NY 860,387 5.29%
12. Q: When are the shareholder proposals for the 2003 Annual Meeting due?
A: All shareholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to Daniel G. Hall,
Corporate Secretary, Novoste Corporation, 3890 Steve Reynolds Boulevard,
Norcross, Georgia 30093 by December 31, 2002. Any such proposal received
after this date will be considered untimely and may be excluded from the
proxy materials.
The deadline for submission of shareholder proposals to be presented at
the 2003 annual meeting, but which will not be included in the proxy
materials relating to such meeting, is March 15, 2003. Any such proposal
received after this date will be considered untimely and the persons
named in the proxy for such meeting may exercise their discretionary
voting power with respect to such proposal.
13. Q: How may this proxy be solicited and who is bearing the cost of this
proxy solicitation?
A: Proxies may be solicited on behalf of the Board by mail, telephone and
telecopy or in person and the Company will pay the solicitation costs,
which include the cost of printing and the distribution of proxy
materials and the solicitation of votes. Directors, officers and regular
employees of the Company may solicit proxies by such methods without
additional compensation. We also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy and solicitation materials to shareholders.
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PROPOSALS ON WHICH YOU MAY VOTE
1. ELECTION OF DIRECTORS
Under our Amended and Restated Articles of Incorporation, the Board of
Directors is divided into three classes of directors (Classes I, II and
III), each of which has a three-year term. The Class III Directors have a
term that expires at this Annual Meeting, the Class I Directors have a term
expiring at the 2003 Annual Meeting of the Shareholders, and the Class II
Directors have a term expiring at the 2004 Annual Meeting of Shareholders.
At each Annual Meeting of Shareholders, the successors to directors of the
class whose term then expires are elected to serve for a three-year term.
The Amended and Restated Articles of Incorporation provide that the number
of directors will be fixed from time to time exclusively by the Board of
Directors, but shall consist of not more than 12 nor less than 6 directors
with no class of directors consisting of more than 4 nor less than 2
directors. A vacancy on the Board may be filled by vote of a majority of the
Board of Directors then in office and shall serve until the next Annual
Meeting of Shareholders.
Each of Class I and Class III of Directors currently consists of three
Directors and Class II consists of two Directors.
The three nominees for election this year, Norman R. Weldon, Ph.D., Thomas
D. Weldon and Charles E. Larsen, currently serve on the Board. All three
nominees have served as Directors of the Company since the Company's
capitalization in May, 1992. Detailed information on each nominee is
provided on page 10 and additional information regarding the Board of
Directors is provided on pages 10 through 12. In the event any nominee
should become unavailable for election for any presently unforeseen reason,
it is intended that the proxies will be voted for such substitute nominee as
may be designated by the present Board of Directors.
If a quorum is present, a plurality vote of the total votes cast by the
holders of Common Stock is required to elect the three (3) Class III
Directors.
Your Board of Directors unanimously recommends a vote FOR each of these
directors.
2. APPROVAL OF AMENDMENT TO THE NOVOSTE CORPORATION 2001 STOCK PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK RESERVED UNDER THE PLAN
General
On June 12, 2001, the shareholders approved the 2001 Stock Plan (the "Stock
Plan"). The Stock Plan provides for the grant of stock options and other
stock-based awards to employees, officers, consultants, independent
contractors and Directors providing services to Novoste and its subsidiaries
as determined by the Board of Directors or by a committee of Directors
designated by the Board of Directors to administer the Stock Plan.
Currently, there are 2,945,346 options outstanding under the Amended and
Restated Stock Option Plan and Non-Employee Director Stock Option Plan and
the Stock Plan with a weighted average exercise price of $19.3742 per share.
No further grants may be made under either the Amended and Restated Stock
Option or the Non-Employee Director Stock Option since the former Plan
expired, by its terms, on May 26, 2002, and the latter expired, by its terms
on December 31, 2001. As of the record date, there were only 6,025 shares of
Common Stock reserved for future issuances under the Stock Plan.
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On February 12, 2002, the Board of Directors approved the 2002 Broad Based
Stock Plan (the "Broad Based Plan") which provided for the grant of stock
options and other stock based awards to employees, officers, consultants,
independent contractors and Directors providing services to Novoste and its
subsidiaries as determined by the Board of Directors or by a committee of
Directors designated by the Board of Directors to administer the Broad Based
Plan. The Broad Based Plan does not require shareholders approval so long as
it meets Nasdaq requirements that (1) greater than half of the employees of
the Company are eligible to participate, and (2) no more than one-half of
the shares underlying grants from the Plan may be issued to persons who are
not officers and directors. The Board of Directors when approving the Broad
Based Plan authorized the reservation of 200,000 shares of Common Stock for
grants from the Plan. Currently, 18,900 options have been granted under the
Broad Based Plan, all to persons who are not officers or directors of the
Company. Since there was no shareholder approval of the Broad Based Plan,
any awards issued under the Plan will not be considered "qualified
performance-based compensation" within the meaning of Section 162 (m) of the
Internal Revenue Code. Accordingly, the Company will not be allowed a
deduction under Section 162 (m) with respect to such awards.
The Company is implementing a stock option surrender program for eight
executive officers whereby the executive officers agreeing to participate
will surrender all of their currently outstanding stock options priced above
$20.00 per share. The options so surrendered will be irrevocably cancelled
and all executives participating in the program will acknowledge that they
will not be eligible to receive additional options from the Company for a
period of six months and one day after the effective date of the surrender
of the options. If all of the eligible executives were to participate fully
in the option surrender program, as to which we can make no assurance,
326,250 options will be surrendered and cancelled. It is anticipated that
the program will be completed by May 15, 2002.
Proposed Amendment
The amendment proposed to the Stock Plan is an increase in the number of
shares of Common Stock of the Company reserved for issuance of awards under
the Stock Plan by 500,000 shares to a total of 1,750,000 shares. A copy of
the Stock Plan is attached to this Proxy Statement as Exhibit A.
Explanation of Amendment
Presently, the Stock Plan provides for a total of 1,250,00 shares of Common
Stock to be issued as grants under the Plan. Currently grants of 1,243,975
shares have been made under the Stock Plan at an average grant price of
$8.1163. The closing sale price of Novoste's Common Stock on April 23, 2002
was $7.50 per share.
To ensure that the number of shares reserved under the Stock Plan is
adequate to attract, hire and retain executive management and other
essential and qualified personnel, the Board believes it is necessary that
additional shares of Common Stock be reserved for issuance of grants under
the Stock Plan. The Board believes that an additional 500,000 shares of
Common Stock should be sufficient for this purpose for approximately one
year.
Summary of the Stock Plan
. Purpose. The purpose of the Stock Plan is to promote the interests of
Novoste and its shareholders by aiding Novoste in attracting and
retaining employees, officers, consultants, independent contractors and
non-employee Directors capable of contributing to the future success of
Novoste, to offer such persons incentives to put forth maximum efforts
for the success of Novoste's business and to afford such persons an
opportunity to acquire a proprietary interest in Novoste.
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. Administration. The Stock Option and Compensation Committee (the
"Compensation Committee) has been designated by the Board of Directors to
administer the Stock Plan. The Compensation Committee will have full
power and authority to determine when and to whom awards will be granted
and the type, amount, form of payment and other terms and conditions of
each award, consistent with the provisions of the Stock Plan. Subject to
the provisions of the Stock Plan, the Compensation Committee may amend or
waive the terms and conditions of an outstanding award. The Compensation
Committee will have full authority to interpret the Stock Plan and
establish rules and regulations for the administration of the Stock Plan.
The Compensation Committee may delegate to one or more Directors or a
committee of Directors, or the Board of Directors may exercise, the
Compensation Committee's powers and duties under the Stock Plan.
. Eligibility. Any employee, officer, consultant, independent contractor
or Director providing services to Novoste and its subsidiaries will be
eligible to be selected by the Compensation Committee to receive awards
under the Stock Plan. As of December 31, 2001, there were approximately
315 persons who were eligible as a class to be selected by the
Compensation Committee to receive awards under the Stock Plan.
. Number of Shares. The Stock Plan currently provides for the issuance of
up to 1,250,000 shares of Common Stock, subject to adjustment in the
event of a stock dividend or other distribution, recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, issuance of warrants or other rights to
purchase shares of Common Stock or other securities of Novoste to all
holders of Common Stock pro rata whether as a dividend or otherwise or
other similar changes in the corporate structure or stock of Novoste.
Shares of Common Stock subject to awards under the Stock Plan, which are
not used or are forfeited because the terms and conditions of the awards
are not met, or because the award terminates without delivery of any
shares, may again be used for awards under the Stock Plan. Shares of
Common Stock used by a participant as full or partial payment to Novoste
of the purchase price relating to an award, or in connection with the
satisfaction of tax obligations relating to an award, will also be
available for awards under the Stock Plan. The shares of Common Stock
issued under the Stock Plan may be authorized but unissued shares or
shares acquired on the open market or otherwise.
. No participant may be granted stock options and any other award, the
value of which is based solely on an increase in the price of the Common
Stock, of more than 400,000 shares in the aggregate in any calendar year.
. Types of Awards and Certain Terms and Conditions. The types of awards
that may be granted under the Stock Plan are stock options, stock
appreciation rights, restricted stock, restricted stock units,
performance awards, other stock grants, other stock-based awards and any
combination thereof. A maximum of 10% of the shares authorized under the
Stock Plan may be available for awards other than options. The Stock Plan
provides that all awards are to be evidenced by written agreements
containing the terms and conditions of the awards. The Compensation
Committee may not amend or discontinue any outstanding award without the
consent of the holder of the award if such action would adversely affect
the rights of the holder. Except as provided by the Stock Plan, awards
will not be transferable other than through a gift or domestic relations
order or by will or by the laws of descent and distribution or in the
case of any award that is not an incentive stock option, to family
members (as defined in the Stock Option Agreement). During the lifetime
of a participant, an award may be exercised only by the participant to
whom such award is granted or a permitted assignee. Awards may be granted
for no cash consideration or for such minimal cash consideration as may
be required by law. Generally, the consideration to be received by
Novoste for the grant of awards under the Stock Plan will be the
participant's past, present or expected future contributions to Novoste.
. Stock Options. Incentive stock options meeting the requirements of
Section 422 of the Internal Revenue Code ("Incentive Stock Options") and
non-qualified options may be granted under the Stock Plan. The
Compensation Committee will determine the exercise price of any option
granted under the Stock Plan, provided however that the exercise price of
Stock Options will be the fair market value of
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the Common Shares on the date of grant. Stock options will be exercisable
at such times as the Compensation Committee determines. Stock options may
be exercised in whole or in part by payment in full of the exercise price
in cash or such other form of consideration as the Compensation Committee
may specify, including (with or limited exception) delivery of shares of
Common Stock having a fair market value on the date of exercise equal to
the exercise price. The Compensation Committee may grant reload options
when a participant pays the exercise price or tax withholding upon
exercise of an option by using shares of Common Stock. The reload option
would be for that number of shares surrendered or withheld.
. Stock Appreciation Rights. The Compensation Committee may grant stock
appreciation rights exercisable at such times and subject to such
conditions or restrictions as the Compensation Committee may determine.
Upon exercise of a stock appreciation right by a holder, the holder is
entitled to receive the excess of the fair market value of one share of
Common Stock on the date of exercise over the fair market value of one
share of Common Stock on the date of grant. The payment may be made in
cash or shares of Common Stock, or other form of payment, as determined
by the Compensation Committee.
. Restricted Stock and Restricted Stock Units. The Compensation Committee
may grant shares of restricted stock and restricted stock units subject
to such restrictions and terms and conditions as the Compensation
Committee may impose. Shares of restricted stock granted under the Stock
Plan will be evidenced by stock certificates, which will be held by
Novoste, and the Compensation Committee may, in its discretion, grant
voting and dividend rights with respect to such shares. No shares of
stock will be issued at the time of award of restricted stock units. A
restricted stock unit will have a value equal to the fair market value of
one share of Common Stock and may include, if so determined by the
Compensation Committee, the value of any dividends or other rights or
property received by shareholders after the date of grant of the
restricted stock unit. The Compensation Committee has the right to waive
any vesting requirements or to accelerate the vesting of restricted stock
or restricted stock units.
. Performance Awards. A performance award will entitle the holder to
receive payments upon the achievement of specified performance goals. The
Compensation Committee will determine the terms and conditions of a
performance award, including the performance goals to be achieved during
the performance period, the length of the performance period and the
amount and form of payment of the performance award. A performance award
may be denominated or payable in cash, shares of stock or other
securities, or other awards or property.
. Other Stock Grants. The Compensation Committee may otherwise grant
shares of Common Stock as are deemed by the Compensation Committee to be
consistent with the purpose of the Stock Plan. The Compensation Committee
will determine the terms and conditions of such other stock grant.
. Other Stock-Based Awards. The Compensation Committee may grant other
awards denominated or payable in, valued by reference to, or otherwise
based on or related to shares of Common Stock as are deemed by the
Compensation Committee to be consistent with the purpose of the Stock
Plan. The Compensation Committee will determine the terms and conditions
of such other stock-based award, including the consideration to be paid
for shares of Common Stock or other securities delivered pursuant to a
purchase right granted under such award. The value of such consideration
shall be the fair market value of such shares or other securities as of
the date such purchase right is granted.
. Duration, Termination and Amendment. Unless earlier discontinued or
terminated by the Board of Directors, no awards may be granted under the
Stock Plan after April 11, 2011. The Stock Plan permits the Compensation
Committee to amend, alter, suspend, discontinue or terminate the Stock
Plan at any time, except that prior shareholder approval will be required
for any amendment to the Stock Plan that (1) requires shareholder
approval under the rules or regulations of the Nasdaq Stock Market/sm/ or
any securities exchange that are applicable to Novoste, (2) that would
cause Novoste to be unable, under the Internal Revenue Code, to grant
Incentive Stock Options under the Stock Plan, (3) decreases the grant or
exercise price of any Option to less than the Fair Market Value on the
date of the grant or (4) increases the total number of shares of Common
Stock that may be issued under the Plan.
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Federal Tax Consequences
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Stock Plan.
. Stock Options and Stock Appreciation Rights. The grant of an option or
stock appreciation right is not expected to result in any taxable income
for the recipient. The holder of an Incentive Stock Option generally will
have no taxable income upon exercising the Incentive Stock Option (except
that a liability may arise pursuant to the alternative minimum tax or a
payroll tax), and Novoste will not be entitled to a tax deduction when an
Incentive Stock Option is exercised, but may incur a payroll tax
liability. Upon exercising a non-qualified stock option, the optionee
must recognize ordinary income equal to the excess of the fair market
value of the shares of Common Stock acquired on the date of exercise over
the exercise price, and Novoste will be entitled at that time to a tax
deduction for the same amount. Upon exercising a stock appreciation
right, the amount of any cash received and the fair market value on the
exercise date of any shares of Common Stock received are taxable to the
recipient as ordinary income and deductible by Novoste. The tax
consequence to an optionee upon a disposition of shares acquired through
the exercise of an option will depend on how long the shares have been
held and upon whether such shares were acquired by exercising an
Incentive Stock Option or by exercising a non-qualified stock option or
stock appreciation right. Generally, there will be no tax consequence to
Novoste in connection with disposition of shares acquired under an
option, except that Novoste may be entitled to a tax deduction in the
case of a disposition of shares acquired under an Incentive Stock Option
before the applicable Incentive Stock Option holding periods set forth in
the Internal Revenue Code have been satisfied.
. Other Awards. With respect to other awards granted under the Stock Plan
that are payable either in cash or shares of Common Stock that are either
transferable or not subject to substantial risk of forfeiture, the holder
of such an award must recognize ordinary income equal to the excess of
(a) the cash or the fair market value of the shares of Common Stock
received (determined as of the date of such receipt) over (b) the amount
(if any) paid for such shares of Common Stock by the holder of the award,
and Novoste will be entitled at that time to a deduction for the same
amount if and to the extent that amount satisfies general rules
concerning deductibility of compensation. With respect to an award that
is payable in shares of Common Stock that are restricted as to
transferability and subject to substantial risk of forfeiture, unless a
special election is made pursuant to the Internal Revenue Code, the
holder of the award must recognize ordinary income equal to the excess of
(i) the fair market value of the shares of Common Stock received
(determined as of the first time the shares become transferable or not
subject to substantial risk of forfeiture, whichever occurs earlier) over
(ii) the amount (if any) paid for such shares of Common Stock by the
holder, and Novoste will be entitled at that time to a tax deduction for
the same amount, if and to the extent that amount is deductible.
. Satisfaction of Tax Obligations. Under the Stock Plan, the Compensation
Committee may permit participants receiving or exercising awards, subject
to the discretion of the Compensation Committee and upon such terms and
conditions as it may impose, to surrender shares of Common Stock (either
shares received upon the receipt or exercise of the award or shares
previously owned by the participant) to Novoste to satisfy federal and
state tax obligations. In addition, the Compensation Committee may grant,
subject to its discretion, a cash bonus to a participant in order to
provide funds to pay all or a portion of federal and state taxes due as a
result of the exercise or receipt of (or lapse of restrictions relating
to) an award. The amount of any such bonus will be taxable to the
participant as ordinary income, and Novoste will have a corresponding
deduction equal to such amount (subject to the usual rules concerning
reasonable compensation).
. Section 162(m) Requirements. The Stock Plan has been designed to meet
the requirements of Section 162(m) of the Internal Revenue Code regarding
the deductibility of executive compensation.
The affirmative vote of a majority of the total votes cast on the proposal
will be required for approval of the amendment of the Stock Plan.
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Your Board of Directors unanimously recommends a vote FOR the approval of
the Amendment of the Novoste Corporation 2001 Stock Plan increasing the
number of shares of Common Stock reserved for issuance of grants under the
Stock Plan by 500,000 shares to a total of 1,750,000 shares.
3. RATIFICATION OF THE REAPPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR 2002
The Audit Committee has recommended, and the Board has approved, the
reappointment of Ernst & Young LLP as our independent auditors for the
fiscal year 2002 subject to your approval. Ernst & Young has served as our
independent auditors since 1992. They have unrestricted access to the Audit
Committee to discuss audit findings and other financial matters.
Representatives of Ernst & Young will attend the Annual Meeting to answer
appropriate questions. They also may make a statement. The work performed by
Ernst & Young during 2001 and the related fees are set forth below.
a. Audit Fees
Ernst & Young provided audit services to Novoste consisting of the annual
audit of Novoste's 2001 consolidated financial statements and reviews of the
financial statements in the 2001 Forms 10-Q. The fees paid to Ernst & Young
for these services were $249,000.
b. Financial Information System Design and Implementation Fees
Ernst & Young did not perform any financial information system design or
implementation work for Novoste during 2001.
c. All Other Fees
Ernst & Young provided various audit-related services to the Company,
including consultation on accounting and reporting matters, audits of
separate financial statements of subsidiaries and affiliates and employee
benefit plans and procedures performed in connection with certain filings
with the SEC. Ernst & Young also provided non-audit-related services,
primarily consultation on tax-related matters. Fees for these services
performed during 2001 are as follows:
Audit-Related Services $ 42,000
Non-Audit Related Services $144,000
--------
$186,000
========
The affirmative vote of a majority of the total votes cast on the proposal
will be required for the ratification and reappointment of Ernst & Young LLP
as independent auditors.
The Board of Directors unanimously recommends a vote FOR the approval of
Ernst & Young's appointment as independent auditors for the fiscal year 2002.
9
NOMINEES FOR THE BOARD OF DIRECTORS
CLASS III
DIRECTORS NOMINATED FOR TERMS EXPIRING IN 2005
Norman R. Weldon, Ph.D. Director since 1992
Norman R. Weldon, Ph.D. Dr. Weldon, age 67, co-founded the Company and was
Chairman of the Board from our capitalization in May 1992 until May 1998. Dr.
Weldon is Treasurer and Managing Director of Partisan Management Group, a
venture capital fund he co-founded in 1993. From 1986 until May 1996, Dr.
Weldon served as President and Chief Executive Officer and as a Director of
Corvita Corporation, a medical device company Dr. Weldon co-founded in 1986. In
July 1996 Pfizer Inc. consummated its acquisition of Corvita. From 1979 to
1987, Dr. Weldon served as President and Chief Executive Officer of Cordis
Corporation. From 1964 to 1979, Dr. Weldon served CTS Corporation in various
capacities, including as its President and Chief Executive Officer beginning in
1976. Dr. Weldon received, from Purdue University, a Ph.D. in Economics, an
M.S. in Industrial Management and a B.S. in Biochemistry. Dr. Weldon is the
father of Mr. Thomas D. Weldon, Chairman of the Board and Chief Executive
Officer and candidate for reelection at this shareholder meeting.
Thomas D. Weldon Director since 1992
Thomas D. Weldon. Mr. Weldon, age 46, co-founded the Company and has served
as a Director since our capitalization in May 1992. In June 1998, Mr. Weldon
became Chairman of the Company. From May 1992 through March 1999, Mr. Weldon
also served as Chief Executive Officer of the Company. In April 1999, he
co-founded The Innovation Factory, a medical device venture, where he currently
serves as Chairman. Mr. Weldon co-founded and was President, Chief Executive
Officer and a Director of Novoste Puerto Rico Inc., a manufacturer of
disposable cardiovascular medical devices, from 1987 to May 1992, prior to its
sale. Previous responsibilities included management positions at Arthur Young &
Company and Key Pharmaceuticals. Mr. Weldon received a B.S. in Industrial
Engineering from Purdue University and an M.B.A. in Operations and Systems
Management from Indiana University.
Charles E. Larsen Director since 1992
Charles E. Larsen. Mr. Larsen, age 50, co-founded the Company and has
served as a Director since our capitalization in May 1992. Currently, Mr.
Larsen is a consultant to the Company and the Chief Executive Officer and a
Director of the Innovation Factory, a medical device venture that he co-founded
in 1999. As an employee of Novoste Corporation, he served as Chief Operating
Officer from 1992 until 1997, and then as Senior Vice President and Chief
Technical Officer until 1999. Mr. Larsen co-founded and was Vice President and
Director of Novoste Puerto Rico, Inc. from 1987 to May 1992. From 1983 through
1987, Mr. Larsen was a manager of manufacturing engineering at Cordis
Corporation. Mr. Larsen received a B.S. in Mechanical Engineering from New
Jersey Institute of Technology.
CLASS I
DIRECTORS WHOSE TERMS EXPIRE IN 2003
J. Stephen Holmes Director since 1992
J. Stephen Holmes. Mr. Holmes, age 59, has served as a Director of the
Company since October 1992. He became President of Weck Closure Systems, a
medical device company, in February 1998. For two years prior thereto, Mr.
Holmes was Executive Manager of Saber Endoscopy, LLC, a medical device company
he formed in February 1996. From 1992 through 1995, Mr. Holmes was a private
investor, having founded several start-ups from 1979 through 1991, including
Adler Instrument Company, Inc., SOLOS Ophthalmology, Inc. and SOLOS Endoscopy,
Inc., which he founded in 1982, 1988 and 1990, respectively, and in which he
sold his interests in 1988, 1991 and 1991, respectively. Mr. Holmes received a
B.S. in Marketing from the University of Evansville.
10
Stephen I. Shapiro Director since 1996
Stephen I. Shapiro. Mr. Shapiro, age 57, has served as a Director of the
Company since October 1996. Mr. Shapiro previously served as a Director of the
Company from August 1995 until his resignation in March 1996. Since 1999, he
has been employed with two venture capital firms, Advanced Technology Ventures
and Galen Associates. Beginning in 1982, he was a Managing Principal of The
Wilkerson Group, now integrated into IBM's healthcare consulting group with
clients in the health care industry. From 1970 to 1982, Mr. Shapiro held a
variety of technical management and strategic planning positions with Union
Carbide Clinical Diagnostics and Becton Dickinson and Company. Mr. Shapiro
received a B.S. degree in Chemical Engineering from the Massachusetts Institute
of Technology and an M.S. degree in Chemical Engineering from the University of
California at Berkeley.
William E. Whitmer Director since 1992
William E. Whitmer. Mr. Whitmer, age 69, has served as a Director of the
Company since October 1992. He was also a Director of Interland Inc., a
Nasdaq-listed company, from March 2000 until the company's merger with Micron
Electronics, Inc. Mr. Whitmer is a Certified Public Accountant and management
consultant. From 1989 until 1992, he was a partner of Ernst & Young, having
served as the Associate Managing Director of that firm's southern United States
management consulting group. From 1968 through 1989, Mr. Whitmer was a partner
of Arthur Young & Company, having served as the Managing Partner of its East
and Southeast United States regions of the management consulting practice from
1975 through 1989. Mr. Whitmer received a B.A. in Economics from Denison
University.
CLASS II
DIRECTORS NOMINATED FOR TERMS EXPIRING IN 2004
William A. Hawkins Director since 1998
William A. Hawkins. Mr. Hawkins, age 46, was elected a Director of the
Company in May 1998, and became President in June 1998 and Chief Executive
Officer in April 1999. Mr. Hawkins resigned as President and Chief Executive
Officer of Novoste, effective January 15, 2002. In February, 2002, Mr. Hawkins
joined Medtronic, Inc. as Senior Vice President and President of its Vascular
Division. From April 1997 to May 1998, Mr. Hawkins was a Corporate Vice
President of American Home Products Corporation and President of its Sherwood
Davis & Geck division. From October 1995 until April 1997, Mr. Hawkins was
President of Ethicon Endo-Surgery, Inc., a medical device subsidiary of Johnson
& Johnson. From January 1995 to October 1995, Mr. Hawkins served as Vice
President in charge of United States operations of Guidant Corporation and
President of Devices for Vascular Intervention, a medical device company and a
subsidiary of Guidant. Prior to joining Guidant, Mr. Hawkins held several
positions with IVAC Corporation, a medical device company, most recently
serving as President and Chief Executive Officer from 1991 until 1995. Mr.
Hawkins served on the Board of Directors of PharmaNectics, a Nasdaq-based
company, Optimize, and the Innovation Factory. He is also a board member of the
Georgia Biomedical Partnership. Mr. Hawkins holds a B.S. in Engineering and
Biomedical Engineering from Duke University and an M.B.A. from the University
of Virginia.
Donald C. Harrison, M.D. Director since 1998
Donald C. Harrison, M.D. Dr. Harrison, age 66, was elected a Director of
the Company in December 1998. He has been Professor of Medicine and Cardiology,
University of Cincinnati, and Senior Vice President and Provost for Health
Affairs, University of Cincinnati Medical Center, since 1986. Dr. Harrison has
been a director of EP Technologies, Inc., InControl Inc. and SciMed Life
Systems, Inc., and is a member of The Cardiology Advisory Panel of the Procter
& Gamble Company. He is a past President of the American Heart Association and
was Chief of Cardiology at Stanford University School of Medicine. Dr. Harrison
holds an M.D. from University of Alabama School of Medicine and a B.S. in
Chemistry from Birmingham Southern College. He is a member of the board of
several start-up early stage companies including: Uterine Muscle Dysfunction
(UMD), Venturi, Inc., PI Medical, Enable, AtriAire, Medical Education and
Consultation and heart stent.
11
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
. Meetings of the Board of Directors: During 2001, there were six meetings
of the Board of Directors. No director attended fewer than 75% of the
aggregate number of meetings of the Board held during the period in 2001
in which he was a director and the total number of meetings held by all
committees of the Board during the period in 2001 in which he served on
such committees.
. Committee Structure: The full Board considers all major decisions of the
Company. At this time the Company has not yet established a policy with
respect to the consideration of stockholder nominees to the Board of
Directors. However, the Board has established the following two standing
committees, each of which is composed entirely of outside directors, so
that certain important areas can be addressed in more depth than may be
possible in a full Board meeting:
1. The Audit Committee (the "Audit Committee"), which was formed and
became effective on March 29, 1996, is currently comprised of William
E. Whitmer, Chairman, Donald C. Harrison and J. Stephen Holmes. The
Audit Committee reviews the audit and financial procedures of the
Company and recommends any changes with respect thereto to the Board
of Directors. The Audit Committee met six times during 2001.
2. The Stock Option and Compensation Committee, which was formed and
became effective on March 29, 1996, is currently comprised of Donald
C. Harrison, Chairman, and Stephen I. Shapiro. This Committee
establishes compensation policies and approves compensation for the
executive officers of the Company, as well as administers the Stock
Option Plan. This Committee met seven times during 2001, which
included one telephonic meeting. In addition, the Committee acted on
one issue by unanimous written consent in lieu of a meeting.
COMPENSATION OF DIRECTORS
Directors who are employees of Novoste do not receive additional
compensation for serving on the Board or its committees. Non-employee directors
are reimbursed their expenses and receive a fee of $2,000 per Board meeting
attended. Such directors who are members of a committee of the Board of
Directors receive a fee of $2,000 annually per committee in which such director
is a member, regardless of the number of committee meetings attended by such
director during the course of the year. In addition, as partial compensation
for director services rendered in 2001, in September, 2001, the Board granted
each of its non-employee directors a four-year incentive stock option to
purchase 5,000 shares of our common stock at an exercise price of $6.65 per
share. All of these options become exercisable one-fourth of the grant on the
first anniversary of the grant and one-fourth on each one-year anniversary
thereafter. Vesting of these options ceases on such date as the option holder
ceases to serve as a director.
During 2001, Stephen I. Shapiro received $20,000 for providing consulting
services to Company Management relating to business development activities.
12
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of the Common Stock by (i) each director
and nominee for election as director, (ii) each executive officer named in the
Summary Compensation Table under "Executive Compensation" on page 19 of this
Proxy Statement and (iii) all executive officers and directors as a group:
Total
Beneficial
Name Shares Options Ownership Percentage (1)
---- ------- --------- ---------- --------------
Thomas D. Weldon(2)(3)(4)...................................... 208,770 66,250 275,020 1.7%
Norman R. Weldon, Ph.D.(4)(5).................................. 290,571 18,750 309,321 1.9%
Charles E. Larsen.............................................. 311,161 8,750 319,911 2.0%
William A. Hawkins............................................. 32,776 635,000 667,776 3.9%
J. Stephen Holmes.............................................. -- 18,750 18,750 *
William E. Whitmer............................................. 8,500 28,750 37,250 *
Stephen I. Shapiro............................................. 2,463 18,750 21,213 *
Donald C. Harrison, M.D........................................ 1,000 26,250 27,250 *
Edwin B. Cordell, Jr........................................... 2,500 45,000 47,500 *
Robert N. Wood, Jr............................................. 1,018 51,250 52,268 *
Richard diMonda................................................ -- 51,125 51,125 *
Michel Lussier................................................. -- 60,000 60,000 *
All executive officers and directors as a group (19 persons)(6) 782,200 1,221,000 2,003,200 11.4%
_________
(*) Less than 1%.
(1) A person is deemed to be the beneficial owner of Common Stock that can be
acquired within 60 days from April 22, 2002 upon the exercise of options,
and that person's options are assumed to have been exercised (and the
underlying shares of Common Stock outstanding) in determining such person's
percentage ownership.
(2) Includes 2,500 shares held in trust for the benefit of Mr. Weldon's son and
2,500 shares held by Mr. Weldon as custodian for his nephew.
(3) Includes 49,668 shares held by Mr. Weldon's spouse.
(4) Includes 77,571 shares held by The Weldon Foundation, Inc., a Florida
not-for-profit corporation in which Thomas D. Weldon and Norman R. Weldon
are directors. Mr. Weldon and Dr. Weldon disclaim beneficial ownership of
all shares held by The Weldon Foundation, Inc.
(5) Includes 14,250 shares held by Dr. Weldon's spouse but excludes all shares
held by Dr. Weldon's adult children, none of whom reside with Dr. Weldon.
(6) See notes 1, 2, 3, 4 and 5 above. Also includes 1,012 shares of Common
Stock and 192,375 shares of Common Stock that can be acquired within 60
days from April 22, 2002, upon exercise of options held by executive
officers not named in the Summary Compensation Table.
13
STOCK PERFORMANCE GRAPH
The following graph compares the five year performance of the Company's
Common Stock, the Nasdaq Stock Market index for U.S. companies, and the JP
Morgan Hambrecht & Quist Health Care-Excluding Biotechnology Index. The graph
assumes the investment of $100 on December 31, 1996. The performance shown is
not necessarily indicative of future performance.
[CHART]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG NOVSTE CORPORATION,
THE NASDAQ STOCK MARKET (U.S.)INDEX
AND THE JP MORGAN H & Q HEALTHCARE-EXCLUDING BIOTECHNOLOGY INDEX
NOVOSTE NASDAQ STOCK JP MORGAN H & Q HEALTHCARE-
CORPORATION MARKET (U.S.) EXCLUDING BIOTECHNOLOGY
----------- ------------- ---------------------------
12/96 $100.00 $100.00 $100.00
3/97 113.21 94.57 94.99
6/97 123.58 111.90 113.72
9/97 125.47 130.82 119.19
12/97 169.81 122.48 119.17
3/98 195.75 143.34 135.51
6/98 166.51 147.28 138.06
9/98 97.17 132.89 121.87
12/98 214.15 172.68 144.80
3/99 181.13 193.65 137.96
6/99 158.49 211.83 141.57
9/99 134.67 271.11 122.29
12/99 124.53 320.89 126.51
3/00 301.89 360.25 134.25
6/00 460.38 313.24 163.05
9/00 320.75 288.25 181.11
12/00 207.55 193.01 197.91
3/01 132.55 144.08 177.68
6/01 192.45 169.81 190.38
9/01 44.75 117.81 190.74
12/01 65.96 153.15 195.23
* $100 Invested on 12/21/96 in stock or index-including reinvestment of
dividends.
Fiscal year ending December 31.
14
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is composed of the
following nonemployee directors: William E. Whitmer, the Audit Committee
Chairman, J. Stephen Holmes, and Donald C. Harrison. The Board has made a
determination that all of the members of the Audit Committee are independent
for purposes of the Nasdaq listing requirements. The Audit Committee operates
under a written charter adopted by the Board of Directors. The Audit Committee
recommends to the Board of Directors, subject to shareholder ratification, the
appointment of the Company's independent accountants.
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report on the Company's financial statements. The Audit
Committee's responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial statements with
management and the independent accountants. The Audit Committee discussed with
the independent accountants matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees).
The Company's independent accountants also provided to the Audit Committee
the written disclosure required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants the accounting firm's independence.
The Committee also considered whether non-audit services provided by the
independent accountants during the last fiscal year were compatible with
maintaining the independent accountants' independence.
Based upon the Audit Committee's discussion with management and the
independent accountants and the Audit Committee's review of the representation
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements be included in the Company's Annual
report on Form 10-K for the fiscal year ended December 31, 2001 filed with the
Securities and Exchange Commission.
Dated: April 25, 2002
Members of the Audit Committee
William E. Whitmer, Chairman
J. Stephen Holmes
Donald C. Harrison
15
EXECUTIVE COMPENSATION: REPORT OF STOCK OPTION
AND COMPENSATION COMMITTEE
The Committee, comprised of two non-employee directors, is responsible for
the administration of the Company's compensation programs. These programs
include base salary for executive officers and both annual and long-term
incentive compensation programs. The Company's compensation programs are
designed to provide a competitive level of total compensation and include
incentive and equity ownership opportunities linked to the Company's
performance and shareholder return.
Compensation Philosophy
The primary goal of the Company is to align compensation with the Company's
business objectives and performance. The Company's aim is to attract, retain
and reward executive officers and other key employees who contribute to the
long-term shareholder value. To establish the relationship between executive
compensation and the creation of shareholder value, the Committee has adopted a
total compensation package comprised of base salary, bonus, deferred
compensation and stock option awards. Key elements of the compensation
philosophy are:
. The Company pays competitively relative to leading medical device
companies with which the Company competes for talent.
. The Company maintains annual incentive opportunities sufficient to
provide motivation to achieve specific operating goals and to generate
rewards that bring total compensation to competitive levels.
. The Company makes available a deferred income plan for executives which
provides both life insurance benefits and a means, with a Company match,
of deferring and investing up to ten percent of the executives
compensation.
. The Company provides significant equity-based incentives for executives
and other key employees to ensure that individuals are motivated over the
long term to respond to the Company's business challenges and
opportunities as owners and not just as employees.
Compensation Program
The Company's executive compensation program has four major components, all
of which are intended to attract, retain and motivate executive officers
consistent with the philosophy set forth above. The Committee considers these
components of compensation individually, as well as collectively, in
determining total compensation for executive officers.
Base salary. Each year the committee establishes base salaries for
individual executive officers based upon (i) industry and peer group surveys,
(ii) responsibilities, scope and complexity of each position, and
(iii) performance judgments as to each individual's past and expected future
contributions.
The Committee reviews with the Chief Executive Officer and approves, with
appropriate modifications, an annual base salary plan for the Company's
executive officers other than the Chief Executive Officer. The Committee
reviews and fixes the base salary of the Chief Executive Officer based on
similar competitive compensation data and the Committee's assessment of his
past performance and its expectations as to his future contributions in leading
the Company.
Annual cash (short-term) incentives. The Company has a discretionary,
annual cash incentive plan to provide a direct linkage between individual pay
and accomplishing key annual corporate objectives.
16
Target annual bonus awards are established for executive officers based upon
peer group surveys and range from 25% to 50 % of salary. Each officer who
served in an executive capacity during and at the end of 2001, including the
Chief Executive Officer, received a bonus for such service up to an amount of
50% of base salary. The bonus award to the Chief Executive Officer for 2001 was
approximately 67% of his base salary. In establishing the bonus amounts for
2001, focusing particularly on achievement of revenue and earnings goals for
the year, improvement of product quality, achievement of product introduction
and site start-up goals, certain clinical trial objectives and the improvement
of team work within the management organization. The bonus plan provided for
overachievement of the goals established and as a result of superior Company
performance during 2001, each executive officer's 2001 bonus equaled 167.5% of
their potential bonus.
Deferred Income Plan. The Company is providing the availability of a
deferred income plan for executives. The Plan permits executives to contribute
up to 10% of their pretax earnings with a Novoste match of 100% of the
executive's contribution, plus an advance equal to the income taxes owed on the
contribution and the executive's match, calculated at a 40% tax rate. Upon
contribution to the Plan, the executive is issued a variable life insurance
policy, a portion of the value of which is assigned to the Company in exchange
for the Company's contributions. All of the contributions made by the executive
and the Company will be invested at the executive's direction in various
accounts available in the policy.
In the event of a termination of the executive's employment or a decision by
the executive to terminate his participation under the deferred income plan,
the executive may maintain the insurance policy by making premium payments
directly to the insurance company. Upon such a termination the Company will
recover the Company premiums it has paid from the cash value of the insurance
policy, unless the executive elects to pay the Company from other funds
personally under his control. After the Company is paid back for the
contributions made, the assignment of the value of the policy to the Company
will terminate. Thereafter, the policy, with remaining cash and investment
value and the insurance benefit becomes the sole property of the executive and
the executive may take cash distributions from the policy using cash value
withdrawals or policy loans, may leave the value in the plan to further
accumulate, or may surrender the policy. A surrender of the policy will cause
taxation of all investment gains in the policy.
Equity-based incentive compensation. The Company's primary long-term
incentive program consists of its employee stock option plan. This stock option
plan generally utilizes a four-year vesting period (although some stock options
granted to key executives contain performance-based criteria or accelerated
vesting features) to encourage key executives to continue in the employ of the
Company. Through stock option grants, executives receive significant equity
incentives to build long-term shareholder value. With respect to stock options,
the exercise price of such options granted under this stock option plan is 100%
of the fair market value of the underlying stock on the date of grant.
Employees receive value from these grants only if the Common Stock appreciates
over the long term.
In 2001 the Committee granted stock options to all executive officers. In
reaching its decisions, the Committee relied on its experience, the information
gained in the hiring process for such officers, and the value of the officers'
previously issued stock options.
The Committee also grants restricted stock awards to key executives. The
restricted stock awards often contain a four-year vesting period similar in
nature to the four-year vesting period for stock options. These stock awards
are intended to provide the same equity incentives as stock options but with
the added benefit of not requiring payment of an exercise price prior to
ownership of the underlying stock. In 2001, the Committee granted a restricted
stock award to one executive officer.
Compliance with Internal Revenue Code Section 162(m)
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code, as amended (the "Code"), adopted under the Federal
Revenue Reconciliation Act of 1993. Section 162(m) disallows a deduction for
any publicly-held corporation for individual compensation exceeding $1 million
in any taxable year for any of the named executive officers, unless
compensation is performance-based. Since the targeted cash
17
compensation of each of the named executive officers is well below the $1
million threshold and the Committee believes that any options granted under the
Company's stock option plans will meet the requirements of being
performance-based under the transitional provisions provided in the regulations
under Section 162(m), the Committee believes that Section 162(m) will not
reduce the tax deduction available to the Company. The Company's policy is to
qualify to the extent reasonable its executive officers' compensation for
deductibility under applicable tax laws.
Dated: April 25, 2002
Respectfully submitted,
The Stock Option and Compensation Committee
Donald C. Harrison, M.D., Chairman
Stephen I. Shapiro
18
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or accrued
by us during 1999, 2000 and 2001 to (1) our Chief Executive Officer and (2) the
four other most highly compensated executive officers who were serving as
executive officers at the end of 2001 and whose compensation during 2001
exceeded $100,000:
Summary Compensation Table
Annual Compensation Long-Term Compensation
--------------------------- ----------------------------------------
Common
Restricted Stock
Other Annual Stock Underlying All Other
Name And Principal Position Year Salary Bonus Compensation Awards Options (1) Compensation(3)(6)
--------------------------- ---- -------- -------- ------------ ---------- ----------- ------------------
William A. Hawkins....... 2001 $378,277 $367,625 -- -- 225,000 $46,835
President and CEO 2000 307,010 112,350 3,5000 -- 50,000
1999 287,500 72,000 $518,750(2) 25,000 2,769
Thomas D. Weldon(7)...... 2001 $ 25,000 -- -- -- 55,000 --
Chairman and CEO 2000 144,500 -- -- -- 40,000 --
1999 193,769 46,505 -- -- -- --
Robert N. Wood, Jr....... 2001 $196,830 $100,500 -- -- 65,000 $22,810
VP-Global Sales 2000 87,500 67,429 -- -- 70,000 --
1999 -- -- -- -- -- --
Edwin B. Cordell, Jr..... 2001 $184,327 $ 94,972 -- -- 55,000 $24,650
VP-Finance and CFO 2000 117,692 31,500 -- $ 61,500 65,000 1,800
1999 -- -- -- -- -- --
Michel Lussier........... 2001 $198,660 $ 99,827 -- -- -- --
VP-European 2000 134,155 33,496 25,000 0 8,607(5)
Operations 1999 139,493 43,248 31,341(4) 0 10,000 11,957(5)
Richard diMonda.......... 2001 $157,702 $ 81,124 -- -- 46,000 $20,691
VP-Scientific Affairs 2000 143,938 40,425 -- -- 18,500 2,357
and Strategic 1999 109,545 25,000 -- -- 10,000 2,024
Development
--------
(1) See "Stock Options" below for the exercise price and vesting terms of the
options granted.
(2) Consists of 25,000 restricted shares, with the value based upon the $20.75
per share closing sales price of our Common Stock on July 1, 1999. These
shares contain restrictions which lapse at the annual rate of 8,333 shares,
commencing July 1, 2000.
(3) Consists of employer contributions to the Defined Contribution 401(k) Plan.
(4) Consists of payments made to the Belgian social security system and a
private pension plan.
(5) Consists of an automobile allowance.
(6) Consists of employer contributions to the Deferred Compensation Plan in
2001.
(7) Mr. Weldon was appointed to replace Mr. Hawkins as CEO after Mr. Hawkins'
resignation in December, 2001.
19
Stock Options
The following table sets forth certain information concerning options
granted in 2001 to executive officers named in the Summary Compensation Table:
Option Grants In 2001
% of Total Potential Realizable Value at
Number of Options Assumed Annual Rates of Stock
Securities Granted to Price Appreciation for Option
Underlying Employees Exercise Term(2)
Options in Fiscal Price Per Expiration -----------------------------
Name Granted(1) Year Share Date 5% 10%
---- ---------- ---------- --------- ---------- ----------- -------------
William A. Hawkins... 25,000 1.8 $14.7095 4/12/2011 $231,268.14 $ 586,078.87
175,000 12.41 $ 6.6500 9/19/2011 $731,876.12 $1,854,717.79
25,000 1.8 $14.7095 4/12/2011 $569,691.36 $1,124,961.29
Thomas D. Weldon..... 15,000 1.06 $ 6.6500 9/19/2011 $ 62,732.24 $ 158,975.81
40,000 2.84 $ 7.6300 12/24/2011 $191,938.64 $ 486,410.20
Michel Lussier....... 0 0 $ 0.0000 $ 0.00 $ 0.00
Robert N. Wood, Jr... 20,000 1.42 $14.7095 6/14/2011 $455,753.09 $ 899,969.03
45,000 3.2 $ 6.6500 9/19/2011 $188,196.72 $ 476,927.43
Edwin B. Cordell, Jr. 10,000 0.71 $14.7095 6/14/2011 $227,876.54 $ 449,984.51
45,000 3.2 $ 6.6500 9/19/2011 $188,196.72 $ 476,927.43
Richard diMonda...... 1,000 0.07 $14.7095 6/14/2011 $ 22,787.65 $ 44,998.45
45,000 3.2 $ 6.6500 9/19/2011 $188,196.72 $ 476,927.43
--------
(1) All options become fully exercisable upon a Change of Control (as defined
in our stock option plan covering employees). Each grant consists of
ten-year options granted under the stock option plan covering employees,
exercisable cumulatively at the annual rate of one quarter of the number of
underlying shares, generally commencing one year from the date of grant.
(2) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming the specified compounded rates of appreciation of
the Common Stock over the term of the options. These numbers are calculated
based on rules promulgated by the Securities and Exchange Commission.
Actual gains, if any, in option exercises are dependent on the time of such
exercise and the future performance of the Common Stock.
Option Exercises and Holdings
The following table sets forth certain information concerning the number and
value realized of options exercised during 2001, and the number and value of
unexercised options held as at December 31, 2001, by the individuals named in
the Summary Compensation Table.
Aggregated Option Exercises in 2001 and Option
Values at December 31, 2001
Number of Unexercised Value of Unexercised In-
Shares Options at the-Money Options at
Acquired December 31, 2001 December 31, 2001 ( 1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
William A. Hawkins... 413,750 321,250 $ 77,000 $231,000
Thomas D. Weldon..... -- -- 36,250 58,750 $ 22,200 $ 35,400
Michael Lussier...... $126,580 45,000 55,000 $ 0 $ 0
Robert N. Wood, Jr... -- -- 33,750 101,250 $ 19,800 $ 59,400
Edwin B. Cordell, Jr. -- -- 30,000 90,000 $ 19,800 $ 59,400
Richard diMonda...... 40,875 64,625 $ 19,800 $ 59,400
--------
(1) Based on the closing sale price of the Common Stock as of December 31, 2001
($8.74 per share) minus the applicable exercise price.
20
Executive Termination Agreements
In 2001, the Company entered into termination agreements (the "Agreements")
with each of the Executive Officers of the Company which provided for benefits
in the event of a termination of the Executive Officer after a change in
control of the company. The Agreements were for an initial term which extended
from the date of execution of the Agreements through December 31, 2001 and
thereafter, automatically renewed for one-year terms, unless notice of
termination of the Agreement is given 12 months prior to the Agreement
termination date. Upon a change in control of the Company and the subsequent
termination of the Executive, the Executive will be paid two times his or her
annualized compensation, which is calculated as the average of the Executive's
annual compensation for the five most recent taxable years ending before the
change in control. The Agreement does not prevent the Executive's termination
for cause, either before or after a change in control.
Severance Agreement With Chief Executive Officer
William A. Hawkins, the former Chief Executive Officer of Novoste
Corporation, tendered his resignation as President and Chief Executive Officer
on December 4, 2001. In recognition of Mr. Hawkins exemplary service to the
Company and its shareholders, the Board of Directors through the Stock Option
and Compensation Committee approved certain severance arrangements with and for
Mr. Hawkins. Mr. Hawkins was paid the sum of One Hundred Thirty-Three Thousand
One Hundred Twenty-Five ($133,125.00) Dollars as an additional 2001 performance
bonus, the payment being made on the effective date of his resignation. In
addition, the Committee accelerated the vesting of certain stock options which
had been granted to Mr. Hawkins during the period of his employment as
President and Chief Executive Officer and which were not vested on the
effective date of his resignation. Additionally, the period of time in which he
had the right to exercise the options so accelerated was extended for the full
ten (10) year term of each option grant so accelerated, eliminating the
original option grant requirement for exercise of the option forty-five (45)
days after the grantee's termination of employment. Pursuant to these severance
awards, One Hundred Thirty-One Thousand Two Hundred Fifty (131,250) shares of
unvested options from a 2001 grant were accelerated, Twelve Thousand Five
Hundred (12,500) shares of a 1999 grant were accelerated and Thirty Thousand
(30,000) shares of a 1998 grant were accelerated. All of the options available,
including those previously vested and the accelerated vested shares were made
available for Mr. Hawkins' exercise for the full ten (10) year term of the
original grant.
SECTION 16 PROXY STATEMENT DISCLOSURES
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires that officers, directors and holders of more than 10% of the
common Stock (collectively, "Reporting Persons") file reports of their trading
in Company equity securities with the Securities and Exchange Commission. Based
on a review of Section 16 forms filed by the reporting persons during the last
fiscal year, the Company believes that all Reporting Persons complied with all
applicable Section 16 filing requirements for Form 4 filings during the year
except for Pieter J. Schiller who filed his June, 2001 Form 4 sixteen days
late. Mr. Schiller disclosed one transaction on the filing. All of the
Reporting Persons also complied with all applicable Section 16 filing
requirements relating to Form 3 filings, except for Robert P. Walsh, whose Form
3 filing was filed seventeen (17) days late. All of the Executive Officer and
Director Form 5's for 2001 were filed twelve (12) days late with William E.
Whitmer, Norman R. Weldon, Susan P. Smith, Stephen I. Shapiro, Douglas B.
Schumer, Charles E. Larsen, Cheryl R. Johnson, J. Stephen Holmes and Donald
Harrison each disclosing one (1) transaction; and Robert N. Wood, Thomas D.
Weldon, Donald J. Webber, Robert P. Walsh, Adam G. Lowe, Daniel G. Hall,
Richard J. diMonda and Edwin B. Cordell, Jr., each disclosing two (2)
transactions; David C. Field disclosing three (3) transactions; and William A.
Hawkins disclosing four (4) transactions.
21
EXHIBIT A
NOVOSTE CORPORATION
2001 STOCK PLAN,
AS AMENDED
Section 1. Purpose.
The purpose of the Plan is to promote the interests of the Company and its
shareholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors and non-employee directors
capable of contributing to the future success of the Company, to offer such
persons incentives to put forth maximum efforts for the success of the
Company's business and to afford such persons an opportunity to acquire a
proprietary interest in the Company.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any person or entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any person or entity in which the Company has a significant equity
interest, in each case as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Other Stock Grant or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.
(f) "Committee" shall mean a committee of Directors designated by the Board
to administer the Plan. The Committee shall be comprised of not less than such
number of Directors as shall be required to permit Awards granted under the
Plan to qualify under Rule 16b-3, and each member of the Committee shall be a
"Non- Employee Director" within the meaning of Rule 16b-3 and an "outside
director" within the meaning of Section 162(m) of the Code. The Company expects
to have the Plan administered in accordance with the requirements for the award
of "qualified performance-based compensation" within the meaning of Section
162(m) of the Code.
(g) "Company" shall mean Novoste Corporation, a Florida corporation, and any
successor corporation.
(h) "Director" shall mean a member of the Board.
(i) "Eligible Person" shall mean any employee, officer, consultant,
independent contractor or Director providing services to the Company or any
Affiliate whom the Committee determines to be an Eligible Person.
(j) "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any Shares or other securities), the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee. Notwithstanding the foregoing, unless
otherwise determined by the Committee, the Fair Market Value of Shares as of a
given date shall be, if the Shares are then quoted on the
A-1
Nasdaq Stock Market/sm/, the closing sales price on the immediately preceding
trading date as reported on the Nasdaq Stock Market/sm/; provided, however,
that if no closing sale price shall have been made within ten business days
preceding such relevant date, or if deemed appropriate by the Committee for any
reason, the Fair Market Value of such Shares shall be determined by the
Committee. In no event shall the Fair Market Value of any Share be less than
its par value.
(k) "Incentive Stock Option" shall mean an option granted under Section 6(a)
of the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision.
(l) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option.
(m) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option, and shall include Reload Options.
(n) "Other Stock Grant" shall mean any right granted under Section 6(e) of
the Plan.
(o) "Other Stock-Based Award" shall mean any right granted under Section(f)
of the Plan.
(p) "Participant" shall mean an Eligible Person designated to be granted an
Award under the Plan.
(q) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
(r) "Person" shall mean any individual, corporation, partnership,
association or trust.
(s) "Plan" shall mean the Novoste Corporation 2001 Stock Plan, as amended
from time to time, the provisions of which are set forth herein.
(t) "Reload Option" shall mean any Option granted under Section 6(a)(iv) of
the Plan.
(u) "Restricted Stock" shall mean any Shares granted under Section 6(c) of
the Plan.
(v) "Restricted Stock Unit" shall mean any unit granted under Section 6(c)
of the Plan evidencing the right to receive a Share (or a cash payment equal to
the Fair Market Value of a Share) at some future date.
(w) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation.
(x) "Shares" shall mean shares of Common Stock, $.01 par value per share, of
the Company or such other securities or property as may become subject to
Awards pursuant to an adjustment made under Section 4(c) of the Plan.
(y) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
Section 3. Administration.
(a) Power and Authority of the Committee. The Plan shall be administered by
the Committee. Subject to the express provisions of the Plan and to applicable
law, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or with respect to which payments, rights or other matters are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock, Restricted Stock
A-2
Units or other Awards; (vi) determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vii) determine
whether, to what extent and under what circumstances cash, Shares, promissory
notes, other securities, other Awards, other property and other amounts payable
with respect to an Award under the Plan shall be deferred either automatically
or at the election of the holder thereof or the Committee; (viii) interpret and
administer the Plan and any instrument or agreement, including an Award
Agreement, relating to the Plan; (ix) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion of
the Committee, may be made at any time and shall be final, conclusive and
binding upon any Participant, any holder or beneficiary of any Award and any
employee of the Company or any Affiliate.
(b) Delegation. The Committee may delegate its powers and duties under the
Plan to one or more Directors or a committee of Directors, subject to such
terms, conditions and limitations as the Committee may establish in its sole
discretion.
(c) Power and Authority of the Board of Directors. Notwithstanding anything
to the contrary contained herein, the Board may, at any time and from time to
time, without any further action of the Committee, exercise the powers and
duties of the Committee under the Plan.
Section 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c) of
the Plan, the aggregate number of Shares that may be issued under all Awards
under the Plan shall be 1,750,000* and shall be subject to adjustment as
provided herein and subject to the provisions of Section 422 or 424 of the Code
or any successor provision. A maximum of 10% of the total number of Shares
authorized shall be available for Awards other than options. Shares to be
issued under the Plan may be either authorized but unissued Shares or Shares
acquired in the open market or otherwise. Any Shares that are used by a
Participant as full or partial payment to the Company of the purchase price
relating to an Award, or in connection with the satisfaction of tax obligations
relating to an Award, shall again be available for granting Awards (other than
Incentive Stock Options) under the Plan. In addition, if any Shares covered by
an Award or to which an Award relates are not purchased or are forfeited, or if
an Award otherwise terminates without delivery of any Shares, then the number
of Shares counted against the aggregate number of Shares available under the
Plan with respect to such Award, to the extent of any such forfeiture or
termination, shall again be available for granting Awards under the Plan.
(b) Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.
(c) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
issuance of warrants or other rights to purchase Shares or other securities of
the Company to all holders of common stock pro rata whether as a dividend or
otherwise or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type
of Shares (or other securities or other property) that thereafter may be made
the subject of Awards, (ii) the number and type of Shares (or other securities
or other
--------
* The aggregate of 1,750,000 shares is contingent upon shareholder approval of
the proposed amendment of the Stock Plan.
A-3
property) subject to outstanding Awards and (iii) the purchase or exercise
price with respect to any Award; provided, however, that the number of Shares
covered by any Award or to which such Award relates shall always be a whole
number.
(d) Award Limitations Under the Plan. No Eligible Person may be granted any
Award or Awards under the Plan, the value of which Award or Awards is based
solely on an increase in the value of the Shares after the date of grant of
such Award or Awards, for more than 400,000 Shares (subject to adjustment as
provided for in Section 4(c) of the Plan), in the aggregate in any calendar
year. The foregoing annual limitation specifically includes the grant of any
Award or Awards representing "qualified performance-based compensation" within
them meaning of Section 162(m) of the Code.
Section 5. Eligibility.
Any Eligible Person shall be eligible to be designated a Participant. In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions
to the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full or part-time employees (which term as
used herein includes, without limitation, officers and Directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee
of an Affiliate unless such Affiliate is also a "subsidiary corporation" of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.
Section 6. Awards.
(a) Options. The Committee is hereby authorized to grant Options to
participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee, in its discretion; provided,
however, that such purchase price shall be the Fair Market Value of a Share
on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee.
(iii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, promissory notes, other securities, other Awards
or other property, or any combination thereof, having a Fair Market Value on
the exercise date equal to the relevant exercise price) in which, payment of
the exercise price with respect thereto may be made or deemed to have been
made; provided however, no Shares may be surrendered in payment of the
exercise price if originally issued to the Participant upon exercise of an
option within six months of the date of the current exercise.
(iv) Reload Options. The Committee may grant Reload Options, separately
or together with another Option, pursuant to which, subject to the terms and
conditions established by the Committee, the Participant would be granted a
new Option when the payment of the exercise price of a previously granted
option is made by the delivery of Shares owned by the Participant pursuant
to Section 6(a)(iii) of the Plan or the relevant provisions of another plan
of the Company, and/or when Shares are tendered or withheld as payment of
the amount to be withheld under applicable income tax laws in connection
with the exercise of an Option, which new Option would be an Option to
purchase the number of Shares not exceeding the sum of (A) the number of
Shares so provided as consideration upon the exercise of the previously
granted option to which such Reload Option relates and (B) the number of
Shares, if any, tendered or withheld as payment of the amount to be withheld
under applicable tax laws in connection with the exercise of the option to
which such Reload Option relates pursuant to the relevant provisions of the
plan or agreement relating to such option. Reload Options may be granted
with respect to Options previously granted under the Plan or any other stock
option plan of the Company or may be granted in connection with any Option
granted under
A-4
the Plan or any other stock option plan of the Company at the time of such
grant. Such Reload Options shall have a per share exercise price as
determined by the Committee in the grant of such Option. Any Reload Option
shall be subject to availability of sufficient Shares for grant under the
Plan.
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant
Stock Appreciation Rights to Participants subject to the terms of the Plan and
any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise
thereof the excess of (i) the Fair Market Value of one Share on the date of
exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, in the
grant of the Stock Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the grant price, term, methods of exercise, dates
of exercise, methods of settlement and any other terms and conditions of any
Stock Appreciation Right shall be as determined by the Committee. The Committee
may impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Restricted Stock and Restricted Stock Units to Participants
with the following terms and conditions and with such additional terms and
conditions not inconsistent with the provisions of the Plan as the Committee
shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock Units
shall be subject to such restrictions as the Committee may impose
(including, without limitation, a waiver by the Participant of the right to
vote or to receive any dividend or other right or property with respect
thereto), which restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise as the Committee may deem
appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under the Plan
shall be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock. In the case of Restricted Stock Units,
no Shares shall be issued at the time such Awards are granted.
(iii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment (as determined under criteria established by the
Committee) during the applicable restriction period, all Shares of
Restricted Stock and all Restricted Stock Units at such time subject to
restriction shall be forfeited and reacquired by the Company; provided,
however, that the Committee may, when it finds that a waiver would be in the
best interest of the Company, waive in whole or in part any or all remaining
restrictions with respect to Shares of Restricted Stock or Restricted Stock
Units. Upon the lapse or waiver of restrictions and the restricted period
relating to Restricted Stock Units evidencing the right to receive Shares,
such Shares shall be issued and delivered to the holders of the Restricted
Stock Units.
(d) Performance Awards. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock and Restricted Stock Units), other securities, other Awards or
other property and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to
the terms of the Plan and any applicable Award Agreement, the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award granted, the amount of any payment
or transfer to be made pursuant to any Performance Award and any other terms
and conditions of any Performance Award shall be determined by the Committee.
(e) Other Stock Grants. The Committee is hereby authorized, subject to the
terms of the Plan and any applicable Award Agreement, to grant to Participants
Shares without restrictions thereon as are deemed by the Committee to be
consistent with the purpose of the Plan.
A-5
(f) Other Stock-Based Awards. The Committee is hereby authorized to grant
to Participants subject to the terms of the Plan and any applicable Award
Agreement, such other Awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan. Shares
or other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including, without
limitation, cash, Shares, promissory notes, other securities, other Awards or
other property or any combination thereof), as the Committee shall determine in
connection with such Award.
(g) General.
(i) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be required
by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(iii) Forms of Payment under Awards. Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise or payment of an Award
may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), and
may be made in a single pay mentor transfer, in installments or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of reasonable interest
on installment or deferred payments or the grant or crediting of dividend
equivalents with respect to installment or deferred payments.
(iv) Limits on Transfer of Awards. No Award (other than Other Stock
Grants) and no right under any such Award shall be transferable by a
Participant otherwise than by will or by the laws of descent and
distribution; provided, however, that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, (a) transfer
Awards (other than Incentive Stock Options) to family members by gift, (b)
transfer any Award by domestic order to a family member or (c) designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any property distributable with respect to any Award upon the death
of the Participant. Each Award or right under any Award shall be exercisable
during the Participant's lifetime only by the Participant or, if permissible
under applicable law, by the Participant's guardian or legal representative.
No Award or right under any such Award may be pledged, alienated, attached
or otherwise encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the Company or
any Affiliate.
(v) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
(vi) Restrictions; Securities Exchange Listing. All Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such restrictions as the Committee may deem
advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may cause appropriate entries to
be made or legends to be affixed to reflect such restrictions. If any
securities of the Company are traded on a securities exchange, the Company
shall not be required to deliver any Shares or other securities covered by
an Award unless and until such Shares or other securities have been admitted
for trading on such securities exchange.
A-6
Section 7. Amendment and Termination; Adjustments.
(a) Amendments to the Plan. The Committee may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:
(i) would violate the rules or regulations of the Nasdaq Stock Market/sm/
or any securities exchange that are applicable to the Company; or
(ii) would cause the Company to be unable, under the Code, to grant
Incentive Stock Options under the Plan.
(iii) decrease the grant or exercise price of any Option to less than
Fair Market Value on the date of the grant; or
(iv) increase the total number of shares of Common Stock that may be
issued under the Plan.
(b) Amendments to Awards. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided herein or in the Award Agreement,
the Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof.
(c) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
Section 8. Income Tax Withholding; Tax Bonuses.
(a) Withholding. In order to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Award, the Committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares otherwise to be delivered
upon exercise or receipt of (or the lapse of restrictions relating to) such
Award with a Fair Market Value equal to the amount of such taxes or (ii)
delivering to the Company Shares other than Shares issuable upon exercise or
receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.
(b) Tax Bonuses. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes
due as a result of such exercise or receipt (or the lapse of such
restrictions). The Committee shall have full authority in its discretion to
determine the amount of any such tax bonus.
Section 9. General Provisions.
(a) No Rights to Awards. No Eligible Person, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
A-7
(b) Award Agreements. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company and, if requested by the Company, signed
by the Participant.
(c) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements may
be either generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan or any
Award, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(e) Governing Law. The validity, construction and effect of the Plan or any
Award, and any rules and regulations relating to the Plan or any Award, shall
be determined in accordance with the laws of the State of Florida.
(f) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent
of the Plan or the Award, such provision shall be stricken as to such
jurisdictionor Award, and the remainder of the Plan or any such Award shall
remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
Section 10. Effective Date of the Plan.
The Plan shall be effective as of April 12, 2001, subject to approval by the
shareholders of the Company within one year thereafter.
Section 11. Term of the Plan.
No Award shall be granted under the Plan after April 12, 2011 or any earlier
date of discontinuation or termination established pursuant to Section 7(a) of
the Plan. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award theretofore granted may extend beyond
such date.
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Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
NOVOSTE CORPORATION
June 12, 2002
"Please Detach and Mail
"Please mark your votes"
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1), (2), (3) and (4)
LISTED BELOW, TO COME BEFORE THE ANNUAL MEETING.
FOR WITHHELD FOR AGAINST ABSTAIN
(1) Election of three (3) (2) To approve an amendment (the "Stock
Class III Directors Plan Amendment") to the Novoste
To serve until the Corporation 2001 Stock Plan (the
2005 Annual Meeting "Stock Plan") to increase the number
of Shareholders of shares of Common Stock reserved
for issuance thereunder by 500,000
Nominees: Class III shares to 1,750,000 shares.
Norman R. Weldon, Ph.D.
Thomas D. Weldon
Charles E. Larsen (3) Ratification of the reappointment of
Ernst & Young L.L.P. as our
independent auditors for fiscal year
2002.
(4) Upon any and all such other business
as may properly come before the
Annual Meeting or any adjournment or
postponement thereof.
This Proxy, which is solicited on behalf of the Board of Directors, will be
voted FOR the matters described in paragraphs (1), (2), (3) and (4) above
unless the shareholder specifies otherwise, in which case it will be voted
as specified.
SIGNATURE(S):_________________________________________ _________________________________________ DATE:____________________, 2002
NOTE: Executors, Administrators, Trustees, etc. should give full title
PROXY
NOVOSTE CORPORATION
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas D. Weldon, proxy, with the power of
substitution, to vote the shares of the undersigned at the Annual Meeting of
Shareholders of Novoste Corporation on June 12, 2002, and any adjournments and
postponements thereof, upon all matters as may properly come before the Annual
Meeting. Without otherwise limiting the foregoing general authorization, the
proxy is instructed to vote as indicated herein.
Please complete, date and sign on the reverse side
and mail in the enclosed envelope.