-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oz1d8geshkDCEd3yPZw40F4OsftOrMFUMXYLmcAUusYORBOeTXp1XakcBWW12c2k z03gbsfwDpFJEpVcMZjfmA== 0001005477-98-002386.txt : 19980812 0001005477-98-002386.hdr.sgml : 19980812 ACCESSION NUMBER: 0001005477-98-002386 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOVOSTE CORP /FL/ CENTRAL INDEX KEY: 0001012131 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 592787476 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20727 FILM NUMBER: 98681910 BUSINESS ADDRESS: STREET 1: 4350-C INTERNATIONAL BLVD CITY: NORCROSS STATE: GA ZIP: 30093 BUSINESS PHONE: 7707170904 MAIL ADDRESS: STREET 1: 4350 C INTERNATIONAL BLVD CITY: NORCROSS STATE: GA ZIP: 30093 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities ---- Exchange Act of 1934. For the quarterly period ended June 30, 1998. Transition period pursuant to Section 13 or 15(d) of the Securities ---- Exchange Act of 1934. For the transition period from _____________ to ______________. 0-20727 ------- (Commission File Number) Novoste Corporation ------------------- (Exact Name of Registrant as Specified in Its Charter) Florida 59-2787476 ------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 4350-C International Blvd., Norcross, GA 30093 ---------------------------------------- ----- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone, including area code: (770) 717-0904 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. (Item 1) Yes X No --------------- --------------- (Item 2) Yes X No --------------- --------------- As of July 31, 1998, there were 10,569,312 shares of the Registrant's Common Stock outstanding. Exhibit Index on page: 17 Total number of pages: 1 NOVOSTE CORPORATION FORM 10-Q INDEX PART I. FINANCIAL INFORMATION PAGE NO. -------- Item 1. Condensed Financial Statements Condensed Balance Sheets as of June 30, 1998 (unaudited) and December 31, 1997 3 Condensed Statements of Operations (unaudited) for the three and six months ended June 30, 1998 and 1997 and the period from inception (May 22, 1992) through June 30, 1998 4 Condensed Statements of Cash Flows (unaudited) for the six months ended June 30, 1998 and 1997 and the period from inception (May 22, 1992) through June 30, 1998 5 Notes to Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-14 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Matters 15 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES 16 EXHIBIT INDEX 17 EXHIBIT 27 - FINANCIAL DATA SCHEDULE 53 2 NOVOSTE CORPORATION (A Development Stage Company) CONDENSED BALANCE SHEETS
June 30, December 31, 1998 1997 ------------ ------------ (unaudited) Assets Current assets: Cash and cash equivalents $ 32,842,206 $ 35,993,933 Short-term investments 7,247,546 12,408,785 Prepaid expenses 246,409 88,099 ------------ ------------ Total current assets 40,336,161 48,490,817 Property and equipment, net 1,804,807 1,061,526 License agreements, net 132,940 139,758 Other assets 299,188 103,855 ------------ ------------ $ 42,573,096 $ 49,795,956 ============ ============ Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 21,686 $ 523,678 Accrued expenses and taxes withheld 2,420,945 1,903,276 ------------ ------------ Total current liabilities 2,442,631 2,426,954 ------------ ------------ Shareholders' equity: Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued and outstanding -- -- Common stock, $.01 par value, 25,000,000 shares authorized; 10,571,617 and 10,332,042 shares issued, respectively 105,716 103,320 Additional paid-in capital 76,644,528 74,908,631 Deficit accumulated during the development stage (36,242,950) (27,619,109) ------------ ------------ 40,507,295 47,392,842 Less treasury stock, 5,780 shares of common stock at cost (23,840) (23,840) Unearned compensation (352,990) -- ------------ ------------ Total shareholders' equity 40,483,455 47,369,002 ------------ ------------ $ 42,926,086 $ 49,795,956 ============ ============
See accompanying notes. 3 NOVOSTE CORPORATION (A Development Stage Company) UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
From inception Three months ended Six months ended (May 22, 1992) June 30, June 30, through June 30, 1998 1997 1998 1997 1998 ------------------------ ------------------------- ---------------- Miscellaneous revenues $ -- $ 29,313 $ -- $ 29,313 $ 320,200 Costs and expenses: Research and development 3,984,103 3,157,439 7,912,637 5,481,277 29,672,536 General and administrative 541,548 443,023 1,052,866 960,121 6,876,741 Marketing 505,468 152,137 871,426 290,667 3,425,527 ---------- ----------- ----------- ----------- ------------ 5,031,119 3,752,599 9,836,929 6,732,065 39,974,804 ---------- ----------- ----------- ----------- ------------ Loss from operations (5,031,119) (3,723,286) (9,836,929) (6,702,752) $(39,654,604) ---------- ----------- ----------- ----------- ------------ Interest income 585,209 317,964 1,213,088 655,024 3,593,413 Interest expense -- -- -- (181,759) ---------- ----------- ----------- ----------- ------------ Net loss (4,445,910) ($3,405,322) ($8,623,841) ($6,047,728) $(36,242,950) ========== =========== =========== =========== ============ Net loss per share, basic and diluted ($0.43) ($0.40) ($0.83) ($0.72) ========== =========== =========== =========== Weighted average shares outstanding 10,464,573 8,453,621 10,424,013 8,393,106 ========== =========== =========== ===========
See accompanying notes. 4 NOVOSTE CORPORATION (A Development Stage Company) UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
From inception For the six months (May 22, 1992) ended June 30, through June 30, 1998 1997 1998 ----------- ----------- ------------ Cash flows from operating activities Net loss $(8,623,841) $(6,047,728) $(36,242,950) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 219,343 199,717 1,520,081 Issuance of stock for services or compensation 593,060 135,000 1,810,378 Changes in assets and liabilities: Prepaid expenses (158,310) (58,738) (253,868) Accounts payable (501,992) (132,091) 21,686 Accrued expenses and taxes withheld 517,669 34,844 2,815,452 Other (188,515) 130,719 (323,833) ----------- ----------- ------------ Net cash used by operations (8,142,586) (5,738,277) (30,653,054) ----------- ----------- ------------ Cash flows from investing activities Maturity (purchase) of short-term investments 5,161,239 2,036,335 (7,247,546) Purchase of property and equipment, net (962,624) (53,365) (2,988,077) ----------- ----------- ------------ Net cash provided (used) by investing activities 4,198,615 1,982,970 (10,235,623) ----------- ----------- ------------ Cash flows from financing activities Proceeds from issuance of notes payable -- -- 4,770,150 Repayment of notes payable -- -- (2,970,150) Proceeds from issuance of common stock 792,244 230,794 71,930,883 ----------- ----------- ------------ Net cash provided by financing activities 792,244 230,794 73,730,883 ----------- ----------- ------------ Net increase (decrease) in cash and cash equivalents (3,151,727) (3,524,513) 32,842,206 Cash and cash equivalents at beginning of period 35,993,933 19,954,827 -- ----------- ----------- ------------ Cash and cash equivalents at end of period $32,842,206 $16,430,314 $ 32,842,206 =========== =========== ============ Supplemental disclosures of cash flow information Cash paid for interest -- -- $ 165,137 =========== =========== ============
See accompanying notes. 5 NOVOSTE CORPORATION (A Development Stage Company) NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS June 30, 1998 Note 1. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with instructions to Article 10 of Regulation S-X. Accordingly, such financial statements do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The operating results of the interim periods presented are not necessarily indicative of the results to be achieved for the year ending December 31, 1998. The accompanying financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 1997 and for the cumulative period from May 22, 1992 (inception) through December 31, 1997, included in the Company's 1997 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"). Note 2. Net Loss Per Share The basic and diluted loss per share is computed based on the weighted average number of common shares outstanding. Common equivalent shares are not included in the per share calculations where the effect of their inclusion would be antidilutive. Note 3. Cash Equivalents and Investments Cash equivalents are comprised of certain highly liquid investments with maturities of less than three months at the time of their acquisition. In addition to cash equivalents, the Company has investments in commercial paper that are classified as short-term (mature in more than 90 days but less than one year). Such investments are classified as held-to-maturity, as the Company has the ability and intent to hold them until maturity. Investments held-to-maturity are carried at amortized cost, adjusted for the amortization or accretion of premiums or discounts without recognition of gains or losses that are deemed to be temporary. Premiums and discounts are amortized or accreted over the life of the related instrument as an adjustment to yield using the straight-line method, which approximates the effective interest method. Interest income is recognized when earned. Fair value approximates carrying value for all cash equivalents and investments. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Information The statements contained in this Form 10-Q that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the expectations, beliefs, intentions or strategies regarding the future. The Company intends that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's views as of the date they are made with respect to future events and financial performance, but are subject to many uncertainties and risks which could cause the actual results of the Company to differ materially from any future results expressed or implied by such forward-looking statements. Some of these risks are discussed below in the section "Certain Factors That May Impact Future Operations." Additional risk factors are discussed in "Item 1 - Business" of the Company's Form 10-K and other reports filed by the Company from time to time on Forms 10-Q and 8-K. The Company does not undertake any obligation to update or revise any forward-looking statement, made by it or on its behalf, whether as a result of new information, future events, or otherwise. Overview Novoste commenced operations as a medical device company in May 1992. Commencing in 1994 the Company has devoted substantially all of its efforts to developing the Beta-Cath(TM) System, an intraluminal beta radiation catheter delivery system designed to reduce the frequency of restenosis subsequent to percutaneous transluminal coronary angioplasty ("PTCA"). For the period since its capitalization through June 30, 1998 the Company has earned minimal non-recurring revenues and experienced significant losses in each period. At June 30, 1998 the Company had an accumulated deficit of approximately $36.2 million. Novoste expects to incur significant operating losses through at least 2000 as the Company continues research and development projects, conducts its clinical trials in the United States, Canada and Europe, seeks regulatory approval or clearance for its products, expands its sales and marketing efforts in contemplation of product introduction and market development, and increases its administrative activities to support growth of the Company. The development, manufacture, sale and distribution of medical devices such as the Company's Beta-Cath(TM) System are subject to numerous regulations imposed by governmental authorities, principally the FDA and corresponding state and foreign agencies. The regulatory process is lengthy, expensive and uncertain. FDA approval of a Pre Market Approval ("PMA") application and approval from the Nuclear Regulatory Commission (NRC) are required before the Beta-Cath(TM) System can be marketed in the United States. Securing FDA approval will require submission to the FDA of extensive clinical data and technical information. The Company expects to receive approval of the Beta-Cath(TM) System for sale in Europe during the third quarter of 1998. However, the Company does not expect regulatory approval of the Beta-Cath(TM) System for sale in the United States prior to 2000 and there can be no assurance when or if such approvals will be obtained. In 1996 and 1997 the Company conducted a feasibility clinical trial at four hospitals under an Investigational Device Exemption ("IDE") granted by the FDA to determine the clinical safety of the Beta-Cath(TM) System for use in coronary arteries and a total of 85 patients were enrolled. As of March 31, 1998, 64 of the 85 patients had received angiographic follow-up analyzed in a core lab. Of the 64 patients 7 14% were reported restenotic. This data suggests a 67% reduction in the rate of restenosis in patients who received treatment with the Beta-Cath(TM) System when compared to a historical control group (from the Lovastatin Restenosis Trial) which received PTCA only and had been selected based upon inclusion and exclusion criteria similar to those utilized by the Company. Arteries treated with the Beta-Cath(TM) System on average maintained 100% of the enlargement achieved with PTCA (a "late loss index" of 0%). The following table compares the Company's data on the 64 patients to the historical control group: Novoste Lovastatin Feasibility Placebo Studies Group ------- ----- No. of Treated Patients... 64 161 Restenosis Rate........... 14% 42% Late Loss Index........... 0% 43% On July 30, 1997 the Company initiated a randomized, triple-masked, placebo- controlled, multicenter human clinical trial under an IDE granted by the FDA to determine the clinical safety and efficacy of the Beta-Cath(TM) System for use in coronary arteries. The Company expects to enroll approximately 1,100 patients in the trial at up to 45 medical sites located in the United States as well as additional sites located in Europe and Canada. The patients will be divided into two approximately equal subgroups, one for PTCA alone and one with coronary stenting. Each subgroup of the trial will be randomized to either intracoronary radiation therapy or a placebo control. In both subgroups patients who receive the beta radiation will receive dosages of 14Gy for vessels ranging from at least 2.7 to 3.35 millimeters and 18Gy for vessels ranging from 3.35 to 4.0 millimeters. A follow-up review of patients 30 days after treatment and a follow-up angiogram eight months after the initial treatment will be performed to observe the treated artery. The angiograms will be analyzed to determine whether there has been an incidence of restenosis and to measure the late loss index (the extent of the loss in the enlargement of lumen achieved with PTCA). As of July 28, 1998 a total of 467 patients had been enrolled at 30 medical centers. On July 9, 1998 the Company received approval from the FDA for an Investigational Device Exemption (IDE) supplement to begin the "STents And Radiation Therapy" (START) Trial, designed to determine the safety and efficacy of ICRT in treating "in-stent restenosis." Novoste expects to enroll 386 patients in this trial starting in September 1998. There can be no assurance that the Company's research and development efforts will be successfully completed. There can be no assurance that clinical trials will be completed in a timely fashion or demonstrate the safety and efficacy of the Beta-Cath(TM) System. Additionally, there can be no assurance that the Beta-Cath(TM) System will be approved by the FDA, the NRC, any foreign governmental agency, or that the Beta-Cath(TM) System or any other product developed by Novoste will be successfully introduced or attain any significant level of market acceptance. There can be no assurance that the Company will ever achieve either significant revenues from sales of its Beta-Cath(TM) System or ever achieve or sustain profitability. Results of Operations Net loss for the three months ended June 30, 1998 was $4,446,000, or ($0.43) per share, as compared to $3,405,000, or ($0.40) per share, for the three months ended June 30, 1997. Net loss for the six months ended June 30, 1998 was $8,624,000, or ($0.83) per share, as compared to $6,048,000 or ($0.72) per share for the year earlier period. The increase in net loss for the three and six months ended June 30, 1998 8 compared to the year earlier period is primarily due to increased spending for research and development as well as increased marketing related to the Company's development of its Beta-Cath(TM) System, offset by increased interest income earned from the investment of the net proceeds from the secondary public offering in November 1997. Revenues. No revenues were earned in the three and six months ended June 30, 1998. Miscellaneous revenues were $29,000 for the three and six months ended June 30, 1997, due to the sale of a product line. Research and Development Expenses. Research and development expenses increased 26% to $3,984,000 for the three months ended June 30, 1998 from $3,157,000 for the three months ended June 30, 1997. For the six months ended June 30, 1998, research and development expenses increased 44% to $7,913,000 from $5,481,000 for the same period in 1997. These increases were primarily a result of (a) patient enrollment and follow-up costs in the Company's clinical trials, (b) services provided by outside consultants in the development of the Beta-Cath(TM) System and manufacture of its components, (c) cost overruns related to a new production line at its supplier of radioactive sources (see Liquidity and Capital Resources), and (d) the increased size of the Company's research and development staff. The Company expects research and development expenses to further increase in the immediate future as the Company continues clinical trials of its Beta-Cath(TM) System in both the U.S. and selected foreign countries. General and Administrative Expenses. General and administrative expenses increased 22% to $542,000 for the three months ended June 30, 1998 from $443,000 for the three months ended June 30, 1997. For the six months ended June 30, 1998 general and administrative expenses increased 10% to $1,053,000 from $960,000, for the same period in 1997. This increase for the three month period was primarily a result of additional personnel and higher salaries. The Company expects general and administrative expenses to increase in the future in support of a higher level of operations. Marketing Expenses. Marketing expenses increased 232% to $505,000 for the three months ended June 30, 1998 from $152,000 for the three months ended June 30, 1997. For the six months ended June 30, 1998, marketing expenses increased 199% to $871,000 from $291,000 for the same period in 1997. These increases primarily relate to preparation for the European commercial launch of the Beta-Cath(TM) System and arise from increased trade show costs, consulting fees and higher staff and salaries. The Company expects sales and marketing expenses to significantly increase in the future, if and when the Beta-Cath(TM) System is approved in the U.S. and other countries. Interest Income. Net interest income increased 84% to $585,000 for the three months ended June 30, 1998 from $318,000 for the three months ended June 30, 1997. For the six months ended June 30, 1998 interest income increased 85% to $1,213,000 from $655,000 for the same period in 1998. The increase in interest income was primarily due to larger cash equivalents and short-term investment balances after the Company's secondary public offering in November 1997. Liquidity and Capital Resources The Company has financed its activities since inception up to May 23, 1996, the date of the Company's initial public offering, through private placements of its Common Stock, Class B Common Stock and promissory notes. Since inception through June 30, 1998 the Company obtained funds aggregating approximately $71.9 million in net proceeds from the issuance of Common Stock and Class B Common Stock (including approximately $30.6 million in net proceeds from its initial public offering which closed in May 1996 and approximately $32.2 million in net proceeds from its secondary public offering which closed in November 1997), and approximately $1.8 million in net proceeds from the issuance of convertible promissory notes. 9 During the six months ended June 30, 1998 and 1997 the Company used cash to fund operations of $8.1 million and $5.7 million, respectively. Cash used to fund operations since inception was approximately $30.6 million. The increase in cash used in operations was due primarily to increased research and development activities and initiation of marketing activities related to the Beta-Cath(TM) System. The Company's expenditures for equipment and improvements have aggregated $3.0 million since inception. Future cash needs for operating activities are anticipated to be higher than historical levels because of the development, manufacturing scale-up and commercialization of the Beta-Cath(TM) System, subject to the factors discussed below. The Company's principal source of liquidity at June 30, 1998 consisted of cash, cash equivalents and short-term investments of $40.1 million. The Company did not have any credit lines available or outstanding borrowings at June 30, 1998. The Company has obtained all of its requirements of radioactive sources to date pursuant to an agreement with a single supplier, Bebig Isotopentechnik and Umweltdiagnostik GmbH, (the "Supplier"), a German corporation. On July 23, 1998 the Company executed an amendment to its framework agreement with the Supplier, whereby it agreed to reimburse DM 1 Million ($560,000) in cost overruns for a new production line. This amount was accrued at March 31, 1998 and charged to research and development expense. The Company received a lien on all tangible and intangible assets used by the Supplier in the design and manufacture of the Strontium 90 radioactive sources. In addition, the agreement provides for the Company's exercise of an option to purchase the tangible assets, and obtain a fully-paid license to all intellectual property used in the manufacture of the radioactive sources, for $4,019,400. This amount will be paid in the form of a license fee on certain production quantities prior to August 31, 2002. The Company anticipates that its operating losses will continue through at least 2000 because it plans to expend substantial resources in funding clinical trials in support of regulatory approvals, and continues to expand research and development and marketing activities. Novoste believes that current cash balances and short-term investments, together with interest thereon, will be sufficient to meet the Company's operating and capital requirements through 1999. However, the Company's future liquidity and capital requirements will depend upon numerous factors, including the progress of the Company's clinical research and product development programs; the receipt of and the time required to obtain regulatory clearances and approvals; the resources required to gain approvals; the resources the Company devotes to the development, manufacture and marketing of its products; the resources required to hire and develop a direct sales force in the United States, develop distributors internationally, and to expand manufacturing capacity; market acceptance and demand for its products; and other factors. Novoste may in the future seek to raise additional funds through bank facilities, debt or equity offerings or other sources of capital. There can be no assurance that additional financing, if required, will be available on satisfactory terms, or at all. Impact of Year 2000 In July 1998 the Company installed and implemented a complete manufacturing software package that includes integrated financial modules that replaced the Company's then existing financial software program. The vendor of the new software package has warranted that it is compliant with year 2000 requirements. The Company believes that any year 2000 problems encountered by suppliers are not likely to have a material adverse effect on the Company's operations. There can be no assurance, however, that such problems will not arise. 10 Additional Risk Factors Limited Operating History. The Company has a limited history of operations. Since its inception in May 1992 the Company has been primarily engaged in research and development of its Beta-Cath(TM) System. The Company has generated only limited revenue and does not have experience in manufacturing, marketing or selling its products in quantities necessary for achieving profitability. There can be no assurance that the Company's products will be commercialized or that the Company will achieve significant revenues from either international or United States sales. In addition, there can be no assurance that the Company will achieve or sustain profitability in the future. History of Losses and Expectation of Future Losses. The Company has experienced significant operating losses since inception and as of June 30, 1998 had an accumulated deficit of $36.2 million. The development and further commercialization of the Company's current products and other new products, if any, will require substantial development, clinical, regulatory, manufacturing and other expenditures. The Company expects its operating losses to continue through at least the year 2000 as the Company continues to expand its product development, clinical trials, and marketing efforts. Risk of Inadequate Funding. The Company anticipates that its operating losses will continue through at least 2000 because it plans to expend substantial resources in funding clinical trials in support of regulatory approvals and continues to expand research and development and marketing activities. Novoste believes that current cash balances and short-term investments, together with interest thereon, will be sufficient to meet the Company's operating and capital requirements through 1999. However, the Company's future liquidity and capital requirements will depend upon numerous factors, including the progress of the Company's clinical research and product development programs; the receipt of and the time required to obtain regulatory clearances and approvals; the resources required to gain approvals; the resources the Company devotes to the development, manufacture, and marketing of its products; the resources required to hire and develop a direct sales force in Europe and the United States; the rate of sales in Europe, expansion of manufacturing capacity and other facilities requirements; market acceptance and demand for its products; and other factors. Novoste may in the future seek to raise additional funds through bank facilities, debt or equity offerings or other sources of capital. There can be no assurance that additional financing, if required, will be available on satisfactory terms, or at all. Dependence on Beta-Cath(TM) System; Market Acceptance. The Company anticipates that for the foreseeable future it will be solely dependent on the successful development and commercialization of the Beta-Cath(TM) System. The Beta-Cath(TM) System will require further development, as well as regulatory clearance or approval, before it can be marketed in the United States or internationally. There can be no assurance that the Company's development efforts will be successful or that the Beta-Cath(TM) System will be shown to be safe or effective, cleared or approved by regulatory authorities, capable of being manufactured in commercial quantities at acceptable costs, approved by payors for reimbursement or successfully marketed. In addition, there can be no assurance that demand for the Beta-Cath(TM) System will be sufficient to allow profitable operations. Failure of the Beta-Cath(TM) System to be successfully commercialized would have a material adverse effect on the Company's business, financial condition and results of operations. Early Stages of Clinical Trials; No Assurance of Safety and Efficacy. The Beta-Cath(TM) System is in an early stage of clinical testing, and there can be no assurance as to when, if ever, its safety and efficacy in reducing the frequency of restenosis will be demonstrated. The Company has commenced a randomized, 11 triple-masked, placebo-controlled, multicenter, human clinical trial under an Investigational Device Exemption ("IDE") granted by the U.S. Food and Drug Administration ("FDA") to determine the clinical safety and efficacy of the Beta-Cath(TM) System for use in coronary arteries. The Company anticipates completing enrollment in this pivotal clinical trial by March 31, 1999. Various factors, including difficulties in enrolling patients or scheduling physicians, could delay completion for an indeterminate amount of time. The multicenter trial will require the treatment of a statistically significant number of patients, and clinical follow-ups of such patients after eight months. It is only after completion of these trials that the Company would apply to the FDA for the regulatory approval required to commence marketing of the Beta-Cath(TM) System in the U.S. Subsequent experience may uncover unforeseen problems with the therapy which could require removal of the product from the market or additional testing. There can be no assurance that the Beta-Cath(TM) System or any of the Company's other products will prove to be safe and effective in clinical trials or ultimately will be approved for marketing by the United States or foreign regulatory authorities. The Company does not expect to submit an application for pre-market approval ("PMA") for its Beta-Cath(TM) System until the first quarter of 2000, and there can be no assurance that the Company will ever submit a PMA or that, if submitted, such PMA will be approved by the FDA. If the Beta-Cath(TM) System does not prove to be safe and effective in clinical trials, the Company's business, financial condition and results of operations will be materially adversely affected and could result in cessation of the Company's business. In addition, the clinical trials may identify significant technical or other obstacles to be overcome prior to obtaining necessary regulatory approvals. Even if such obstacles are identified and overcome, commercialization of the Beta-Cath(TM) System may be delayed. Limited Sales, Marketing and Distribution Experience. At present the Company has no sales and a limited marketing capability. The Company intends to sell its products both inside the United States and in the key European markets directly. There can be no assurance that the Company will be able to recruit and train adequate sales and marketing personnel to successfully commercialize the Beta-Cath(TM) System in the key markets of Europe and the United States. The Company intends to select one or more established market leaders in the radioisotope business to inventory and deliver the radiation sources and provide related training, testing and support services to hospitals in both the United States and international markets. The inability to recruit or retain one or more such entities for this purpose could have a material adverse effect on the Company's business, financial condition and results of operations. Dependence on a Key Supplier. The Company currently purchases all radiation source materials from a single supplier. The Company believes that because of the technical expertise and capital investment required to manufacture the radiation source materials, it could be extremely difficult and expensive to find an alternate source of supply. Any failure or disruption in the ability of the supplier to provide the radiation source materials could have a material adverse effect on the business, financial condition and results of operations of the Company. Fluctuations in Operating Results. The Company's results of operations may fluctuate significantly from quarter to quarter and will depend upon numerous factors, including product development efforts, actions relating to regulatory and reimbursement matters, progress of clinical trials, the extent to which the Company's products gain market acceptance, and competition. 12 Possible Volatility of Stock Price. The stock market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of the Company's Common Stock. In addition, the market price of the shares of Common Stock is likely to be highly volatile. Factors such as fluctuations in the Company's operating results, announcements of technological innovations or new products by the Company or its competitors, FDA and international regulatory actions, actions with respect to reimbursement matters, developments with respect to patents or proprietary rights, public concern as to the safety of products developed by the Company or others, changes in health care policy in the United States and internationally, changes in stock market analyst recommendations regarding the Company, other medical device companies or the medical device industry generally, and general market conditions may have a significant effect on the market price of the Common Stock. Product Development. The focus of the Company's current development efforts is to design future generation components of the Beta-Cath(TM) System. The medical device industry is characterized by rapid and significant technological change. Therefore, the Company's future success will depend in a large part on the Company's ability to continue to respond to such changes, as well as expand the applications for which its products are used, through the timely development and successful introduction of enhanced and new versions of its Beta-Cath(TM) System. Product research and development will require substantial expenditures and will be subject to inherent risks, and there can be no assurance that any new product introduced will receive regulatory approval or will be commercially successful. Highly Competitive Market; Risk of Alternative Therapies. Competition in the medical device industry, and specifically the market for cardiovascular devices, is intense. Many companies are developing devices and therapies to improve the outcome of coronary revascularization procedures and to reduce the frequency of restenosis, such as coronary stents. Other companies have various radiation therapy products under development to reduce restenosis. In addition, drugs, gene therapy and other minimally invasive catheter-based procedures are currently being developed. Many of the Company's competitors and potential competitors have substantially greater financial resources than the Company and also have greater resources and expertise in the areas of research and development, obtaining regulatory approvals, manufacturing and marketing. There can be no assurance that the Company's competitors will not succeed in developing, marketing and distributing technologies and products that are more effective than those developed and marketed by the Company or that would render the Company's technology and products obsolete or noncompetitive. Additionally, there is no assurance that the Company will be able to compete effectively against such competitors in terms of manufacturing, marketing and sales. Patents and Proprietary Technology. The medical device industry has been characterized by extensive litigation regarding patents and other intellectual property rights and companies in the medical device industry have employed intellectual property litigation to gain a competitive advantage. There can be no assurance that the Company will not become subject to patent infringement claims or litigation or interference proceedings declared by the USPTO to determine the priority of inventions. The defense and prosecution of intellectual property suits, USPTO interference proceedings and related legal and administrative proceedings are both costly and time consuming. Litigation may be necessary to enforce patents issued to the Company, to protect trade secrets or know-how owned by the Company or to determine the enforceability, scope and validity of the proprietary rights of others. Any litigation or interference proceedings will result in substantial expense to the Company and significant diversion of effort by the Company's technical and management personnel. An adverse determination in litigation or interference proceedings to which the Company may become a party could subject the Company to significant liabilities to third parties or require the Company to seek licenses from third parties or require 13 the Company to redesign its products or processes to avoid infringement or prevent the Company from selling its products in certain markets, if at all. Although patent and intellectual property disputes regarding medical devices have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and could include ongoing royalties. Furthermore, there can be no assurance that the necessary licenses would be available to the Company on satisfactory terms, if at all, or that the Company could redesign its products or processes to avoid infringement. Any adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent the Company from manufacturing and selling its products, which would have a material adverse effect on the Company's business, financial condition and results of operations. Government Regulation. Clinical testing, manufacture, promotion and sale of the Company's products are subject to extensive regulation by numerous governmental authorities in the United States, principally the FDA, and corresponding foreign regulatory agencies. The Federal Food, Drug, and Cosmetic Act ("FDC Act"), and other federal and state statutes and regulations govern or influence the testing, manufacture, labeling, advertising, distribution and promotion of drugs and devices. Noncompliance with applicable requirements can result in fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, failure of the government to grant premarket clearance or premarket approval for devices, refusal to authorize the marketing of products or to allow the Company to enter into government supply contracts, and criminal prosecution. The Company's Beta-Cath(TM) System is regulated as a Class III medical device for which FDA approval of a PMA application must be obtained prior to U.S. commercial sales. Failure to receive or delays in receipt of FDA clearances or approvals could have a material adverse effect on the Company's business, financial condition and results of operations. Sales of medical devices outside of the United States are subject to international regulatory requirements that vary from country to country. The time required to obtain approval for sale internationally may be longer or shorter than that required for FDA approval, and the requirements may differ. The European Union ("EU") has promulgated rules which require that medical products receive by June 12, 1998 the right to affix the CE mark, an international symbol of adherence to quality assurance standards and compliance with applicable European medical device directives. While the Company intends to satisfy the requisite policies and procedures that will permit it to receive the CE mark certification for the Beta-Cath(TM) System, there can be no assurance that the Company will be successful in meeting the European certification requirements and failure to receive the right to affix the CE mark will prohibit the Company from selling the product in member countries of the European Union. 14 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The Company held its annual meeting of stockholders on May 1, 1998 and solicited votes by proxy in connection with such meeting. (b) The following matters were approved by the shareholders: (i) The approval of the following nominees to the Board of Directors: 8,939,494 in favor, 0 against, and 2,595 broker non-votes for both Pieter J. Schiller and William A. Hawkins. (ii) The ratification of amendments to the Company's Amended and Restated Stock Option Plan (the "Plan Amendments"), which Plan Amendments (a) increase the number of shares of Common Stock reserved for issuance thereunder by 700,000 shares to 3,400,000 shares, (b) increase the maximum number of shares from 100,000 to 350,000 with respect to options that may be granted to any person or entity eligible within one calendar year, (c) allow the Stock Option and Compensation Committee to determine as of the date of grant the acceleration, if any, of the exercisability of a performance-based option upon a Change in Control (as defined) of the Company. Shareholders approved Plan Amendments by votes as follows: 4,447,997 in favor, 1,639,615 against, 3,521 abstained, and 2,850,956 broker non-votes. (iii) The ratification of the appointment of Ernst & Young LLP as independent auditors of the Company for the year ending December 31, 1998. The proposal received 8,939,389 votes in favor, 0 against, 2,700 abstained, and 0 broker non-votes. Item 5. Other Matters William A. Hawkins was elected to the office of President of the Company effective June 1, 1998. Thomas D. Weldon, previous President & CEO, remains the Company's CEO and was elected to the additional post of Chairman on May 1, 1998. Dr. Norman Weldon retired as Chairman effective May 1, 1998 but remains a director of the Company. Dr. Raoul Bonan was elected Medical Director and Vice President of Clinical Affairs effective June 1, 1998. Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are included herein: (10) Material Contracts (27) Financial data schedule (b) The Company did not file any reports on Form 8-K during the three months ended June 30, 1998. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NOVOSTE CORPORATION August 7, 1998 /s/ Thomas D. Weldon - --------------------- ------------------------------- Date Thomas D. Weldon Chairman & Chief Executive Officer August 7, 1998 /s/ David N. Gill - --------------------- ------------------------------- Date David N. Gill Vice President - Finance, Chief Operating Officer and Chief Financial Officer (Principal Financial & Accounting Officer) 16 EXHIBIT INDEX Exhibit Page Number Exhibit Description Number - ------ -------------------------------- ------ 10.14 Employment Agreement with William A. Hawkins III 10.15 Employment Agreement with Dr. Raoul Bonan 10.16 Restricted Stock Award Agreement with William A. Hawkins III 10.17 Non-Incentive Stock Option Agreement with William A. Hawkins III *10.18 Amendment to Framework Agreement and Security Agreement with Bebig GmbH 27 Financial data schedule 53 - -------------------------------------------------------------------------------- * Portions have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. 17 EX-10.14 2 EMPLOYMENT AGREEMENT EXHIBIT 10.14 EXECUTION COPY NOVOSTE CORPORATION 4350-C International Boulevard Norcross, Georgia 30093 April 23, 1998 William A. Hawkins III 7 Gleneagles Drive New Vernon Basking Ridge, New Jersey 07920 Dear Bill: We are delighted to welcome you to join Novoste Corporation ("Novoste") as its new President. This letter sets forth the agreement between you and Novoste as to the terms and conditions of your employment by Novoste. 1. Duties and Responsibilities. In your capacity as President of Novoste, you will report to Novoste's Chairman and Chief Executive Officer and perform such duties and responsibilities as are from time to time directed by Novoste's Chairman and Chief Executive Officer consistent with your position as President. Subject to your continued employment, Novoste will cause you to be elected or designated Chief Executive Officer of Novoste on or prior to June 1, 1999, and upon any such election or designation pursuant to this Paragraph 1, you further agree to serve in such additional capacity with the understanding that at such time you shall report directly to the Novoste's Board of Directors (the "Board") and shall perform such duties and responsibilities as are from time to time directed by the Board consistent with the position of Chief Executive Officer. 2. Related Agreements. Simultaneously herewith, you are entering into the Confidentiality Agreement and Arbitration Agreement, Business Conduct Agreement, Conflict of Interest Agreement, Patent Agreement and Unfair Competition Agreement, in the forms of Exhibits A, B, C, D and E hereto, respectively, all of which agreements are incorporated herein by reference thereto and made a part hereof. Your employment is also subject to successful completion of a pre-employment drug screening. 3. Term. The term of your employment will commence on June 1, 1998, and continue until terminated under the provisions of Paragraph 7 below. By accepting this Agreement, you accept such employment as a full-time employee of Novoste and agree to devote all of your William A. Hawkins III April 23, 1998 business and professional time, energy and skills to the affairs of Novoste and to serve faithfully and to the best of your ability. 4. Compensation. As compensation for the services to be rendered by you hereunder, following the commencement of your employment, Novoste will: (a) pay you a base salary of $275,000 per annum, payable in installments in accordance with Novoste's regular payroll practices. Your performance will be reviewed annually by Novoste's Compensation Committee of the Board, in conjunction with which goals and possible increases in your base salary for the future will be discussed, it being understood that any such increases shall be within the discretion of the Compensation Committee (or other similar committee duly appointed by the Board or, in the absence of any such committee, the Board). (b) subject to shareholder approval of the amendments (the "Amendments") to Novoste's 1992 Stock Option Plan (the "Stock Option Plan") described in Novoste's Proxy Statement dated March 31, 1998, receipt of a copy of which you acknowledge, grant you promptly following the commencement of your employment with Novoste a ten-year non-incentive stock option to purchase an aggregate of 240,000 shares of Novoste's Common Stock under the Stock Option Plan, at an exercise price equal to $24.00 per share, upon the terms and conditions summarized below and as more fully set forth in, and subject to the provisions of, the stock option agreement to be executed by you (the "Paragraph 4(b) Stock Option Agreement") and the Stock Option Plan. Such options shall become exercisable at the annual rate of 60,000 shares commencing June 1, 1999 and shall become exercisable in full upon a Change of Control (as defined in the Stock Option Plan), upon a termination of your employment by you for Good Reason (as defined in Paragraph 7(f) below) or upon a termination of your employment by Novoste without Cause. If Novoste terminates your employment for Unsatisfactory Performance (as defined in Paragraph 7(b) below), in addition to the options then currently exercisable in accordance with the annual rate described above, options to purchase an additional 60,000 shares shall also become exercisable as of the date of termination (though in no event shall more than 240,000 options be exercisable under such grant). These options may be exercisable while you are employed and for a period of six months following termination of employment to the extent such options were exercisable at the date of such termination, but in no event subsequent to the option's expiration date. (c) subject to shareholder approval of the Amendments, grant you promptly following the commencement of your employment with Novoste a ten-year non-incentive stock option to purchase an aggregate of 100,000 shares of Novoste's Common Stock under the Stock Option Plan, at an exercise price equal to $24.00 per share, upon the terms and conditions summarized below and as more fully set forth in, and subject to the provisions of, the stock option agreement to be executed by you (the "Paragraph 4(c) Stock Option Agreement" and together with the Paragraph 4(b) Stock Option Agreement, the "Stock Option Plan") and the Stock Option Plan. Such options shall become exercisable in full on June 1, 2003, or upon the earlier of (i) the date (the "Trigger Date") on which the average closing sale prices of Novoste's Common Stock for twenty (20) consecutive trading days shall be equal to or greater than $48.00 per share, other than by reason William A. Hawkins III April 23, 1998 of the announcement of a Change of Control on or before June 1, 1999, provided the Trigger Date occurs prior to June 1, 2001, and (ii) the date of termination of your employment by you for Good Reason. Such options may be exercisable while you are employed and for a period of six months following termination of employment to the extent such options were exercisable at the date of such termination, but in no event subsequent to the option's expiration date. (d) grant you promptly following the commencement of your employment with Novoste Fourteen Thousand (14,000) shares of Novoste Common Stock upon the terms and conditions summarized below and as more fully set forth in, and subject to the provisions of, the restricted stock award agreement to be executed by you (the "Restricted Stock Award Agreement"). The shares shall contain a restriction on transfer, which restriction shall lapse at the annual rate of 3,500 shares, commencing June 1, 1999. Such shares (to the extent the restrictions on transfer have lapsed) will be eligible for resale under Rule 144 commencing one year from the date of issuance, or on June 1, 1999. In the event of your termination of employment by Novoste for Unsatisfactory Performance, in addition to those shares subject to the Restricted Stock Award Agreement which are then no longer subject to the transfer restrictions, an additional 3,500 shares shall also no longer be subject to such restrictions unless all such restrictions shall have previously lapsed. In the event of a Change of Control (as that term is defined in the Stock Option Plan) or termination of your employment by you for Good Reason or termination of your employment by Novoste without Cause, all restrictions on transfer set forth in the Restricted Stock Award Agreement shall lapse. (e) entitle you to participate in Novoste's discretionary annual incentive cash plan for executive officers, established to reward participating individuals for their contribution to the accomplishment of key annual corporate objectives. For calendar year 1998, subject to your continued employment for the remainder of 1998, you shall be entitled to a cash bonus of 20% of your annual base salary, or $54,000. The amount of any bonus in subsequent years shall be at the discretion of the Compensation Committee of the Board. (f) entitle you to participate in Novoste's medical, dental, life and long-term disability insurance and other benefit programs from time to time generally in effect for Novoste's senior executives, including any 401(k) or other retirement plans, your participation in any such plans to be being subject to their respective terms and conditions. 5. Vacation. You will be entitled to take up to an aggregate of four weeks of vacation each calendar year as business conditions permit, it being understood that unused vacation may not accumulate from year to year, and any vacation time not used by the end of any year shall not require any additional payment to you. 6. Reimbursement of Expenses. Novoste will reimburse you for all reasonable and documented business expenses incurred by you on behalf of Novoste during the term of your employment hereunder consistent with Novoste's expense reporting policy (as the same may be modified from time to time). William A. Hawkins III April 23, 1998 7. Events of Termination. (a) By Novoste for Cause. Your employment hereunder may be terminated at any time by Novoste for "Cause." "Cause" shall mean termination due to any or more of the following: (i) if you are indicted for committing a felony or a decision or determination is rendered by any court or governmental authority that you have committed any act involving fraud, dishonesty, breach of trust or moral turpitude or if you enter a plea of guilty or nolo contendere to any of the foregoing; (ii) if you willfully breach your duty of loyalty to, or commit an act of fraud or dishonesty upon, Novoste; (iii) if you demonstrate gross negligence or willful misconduct; (iv) if, in the reasonable, good faith opinion of a majority of Novoste's whole Board of Directors (excluding yourself if you shall then be a director of Novoste), you engage in personal misconduct of such a material nature as to render your presence as President and/or Chief Executive Officer detrimental to Novoste or its reputation and you fail to cure the same (if curable) within five days after written notice thereof from Novoste; or (v) if you commit a material breach of or a default under any of the terms or conditions of this Agreement (including the agreements incorporated herein by reference thereto) and you fail to cure such breach or default (if curable) within ten days' after written notice thereof from Novoste; provided, however, your unsatisfactory performance, as determined in accordance with paragraph 7(b), shall not be deemed "Cause." (b) By Novoste for Unsatisfactory Performance. Your employment may be terminated at any time by Novoste if a majority of Novoste's whole Board of Directors (excluding yourself if you shall then be a director of Novoste) shall have given you a vote of no confidence based upon your unsatisfactory performance of your duties hereunder ("Unsatisfactory Performance"). Without limiting the foregoing, Unsatisfactory Performance shall include: (i) as of the end of any fiscal quarter, the unaudited interim consolidated financial statements of Novoste for such quarterly period or the audited consolidated financial statements for the fiscal year then ended, as the case may be, indicate that during the prior twelve-month period (or such shorter period from the date of commencement of your employment), Novoste has (A) incurred net losses on a consolidated basis (determined in accordance with the same accounting principles utilized in preparing the audited financial statements of Novoste) which substantially exceed those projected for such twelve-month (or shorter) period contemplated in the budget of Novoste for such twelve month (or shorter) period theretofore approved by the Novoste Board of Directors, or (B) achieved net income (after taxes) (or net loss) on a consolidated basis (determined in accordance with the same accounting principles utilized in preparing the audited financial statements of Novoste) which are substantially worse than the net income (after taxes) for such twelve-month (or shorter) period contemplated in the budget of Novoste for such twelve-month (or shorter) period theretofore approved by the Novoste Board of Directors; William A. Hawkins III April 23, 1998 (ii) a substantial delay in the completion of the multi-center clinical trial currently being conducted by Novoste from the date that Novoste currently projects for completion, (iii) substantial delay in the commencement of sales of the Beta-Cath System in Europe or in the United States from the perspective dates currently contemplated by Novoste, or (iv) if the Common Stock substantially underperforms to other publicly-traded stocks or indexes based on the "peer group" chosen in any Novoste Proxy Statement. (c) By Novoste without Cause or Unsatisfactory Performance. Your employment hereunder may be terminated at any time by Novoste, upon 30 days' prior written notice to you, without "Cause" or "Unsatisfactory Performance." (d) Upon Death or Permanent Disability. Your employment hereunder shall additionally terminate immediately upon your death or "Permanent Disability." "Permanent Disability" shall have the meaning set forth in the long-term disability insurance policy or policies then maintained by Novoste for the benefit of its employees, or if no such policy shall then be in effect, or if more than one such policy shall then be in effect in which the term "Permanent Disability" shall be assigned different definitions, then the term "permanent disability" shall be defined for purposes hereof to mean any physical or mental disability or incapacity which renders you incapable of fully performing the services required of you in accordance with your obligations hereunder for a period of 120 consecutive days or for shorter periods aggregating 120 days during any twelve-month period. (e) By You without Good Reason. Your employment hereunder may be terminated at any time by you, upon 90 days' prior written notice to Novoste, without Good Reason. (f) By You for Good Reason. Your employment hereunder may be terminated at any time by you for "Good Reason." "Good Reason" shall mean one or more of the following events: (i) a material breach of or default under this Agreement by Novoste (including but not limited to its failure to designate you as the Chief Executive Officer on or about June 1, 1999), which is not cured by Novoste within thirty (30) days after its receipt of prior written notice thereof from you; (ii) a material reduction in your duties or a material interference with the exercise of your authority by Novoste's Board of Directors (not arising from any disabling physical or mental disability you may sustain) which would be inconsistent with your position as President and/or Chief Executive Officer (as the case may be) of Novoste and the same shall not have been remedied by Novoste's Board of Directors within thirty (30) days after its receipt of prior written notice thereof from you; or (iii) a relocation of Novoste's principal executive offices to a location whose distance is more than twenty-five (25) miles from its current location, provided that you shall not have approved the decision to effect such relocation. A termination by you of your employment pursuant to this Paragraph 7(f) shall not be deemed for purposes hereof to constitute a termination of your employment by you for Good Reason if, at the time of such termination by you, Novoste shall William A. Hawkins III April 23, 1998 be entitled to terminate this Agreement by reason of your Permanent Disability (subject to the passage of any remaining time necessary to render any disability you may sustain a Permanent Disability under Paragraph 7(d) above), or for Cause (subject to the passage of any applicable cure period) and Novoste shall have sent, or shall send, you within 10 days of Novoste's receipt of your notice of termination, a notice of termination by Novoste specifying the Cause or notice by Novoste of such pending Permanent Disability. 8. Consequences of Termination. (a) By Novoste for Cause. If your employment is terminated for Cause, this Agreement shall terminate immediately upon the date fixed for the cessation of your employment and you shall be entitled to be paid any accrued but unpaid salary earned by you through the date of such termination. (b) By Novoste for Unsatisfactory Performance. In the event your employment is terminated by Novoste for Unsatisfactory Performance, this Agreement shall terminate immediately n the date fixed for the cessation of your employment and you shall be entitled to receive: (i) all accrued but unpaid salary earned by you through the date of such termination; and (ii) a lump sum, cash severance payment within 60 days of the date of termination of employment equal to the product of (x) an amount equal to 120% of your annual base salary in effect on the date of termination of employment multiplied by (y) two (2). (c) By Novoste without Cause or Unsatisfactory Performance. In the event your employment is terminated by Novoste without Cause or Unsatisfactory Performance (other than by reason of your death or Permanent Disability), this Agreement shall terminate immediately on the date fixed for cessation of your employment and you shall be entitled to receive: (i) all accrued but unpaid salary earned by you through the date of such termination; and (ii) a lump sum, cash severance payment within 60 days of the date of termination of employment equal to the product of (x) an amount equal to 120% of your annual base salary in effect on the date of termination of employment multiplied by (y) three (3). (d) Upon your Death or Permanent Disability. In the event your employment terminates by reason of your death or Permanent Disability, this Agreement shall terminate immediately upon such occurrence and you, your estate or your personal representative, as the case may be, shall be entitled to be paid any accrued but unpaid salary earned by you through the date of such termination. (e) By You without Good Reason. If your employment is terminated by you without Good Reason, this Agreement shall terminate immediately upon the date of your resignation, consistent with the notice requirements set forth in Paragraph 7(e) and you shall be entitled to be paid any accrued but unpaid salary earned by you through the date of such termination (f) By You for Good Reason. In the event your employment is terminated by you for Good Reason, this Agreement shall terminate immediately on the date set forth in your notice of termination consistent with Paragraph 7(f) and you shall be entitled to receive: (i) all accrued but William A. Hawkins III April 23, 1998 unpaid salary earned by you through the date of such termination; and (ii) a lump sum, cash severance payment within 60 days of the date of termination of employment equal to the product of (x) an amount equal to 120% of your annual base salary in effect on the date of termination of employment multiplied by (y) three (3). (g) Effect on Stock Options and Restricted Stock. In the event of the termination of your employment, the options granted under the Stock Option Agreements shall be then exercisable to the extent provided therein, as summarized in Paragraphs 4(b) and (c) above, and the restrictions on transfer on the shares of Common Stock issued under the Restricted Stock Award Agreement shall be those provided therein as summarized in Paragraph 4(d) above. 9. Key Man Life Insurance. You agree that Novoste may, in its discretion, apply for and take out in its name and at its own expense, and solely for its benefit, key man life insurance on you in any amount deemed necessary or advisable by Novoste to protect its interests, and you agree that you shall have no right, title or interest therein and further agree to submit to any medical or other examination and to execute and deliver any application or other instruments or information reasonably necessary to effectuate such insurance. 10. Your Representations and Warranties. You represent and warrant that you are not under any obligation, restriction or limitation, contractual or otherwise, to any other individual or entity which would prohibit or impede you from performing your duties and responsibilities hereunder, and that you are free to enter into and perform the terms and provisions of this Agreement, such representation and warranty to survive the execution, delivery and termination hereof. 11. Notices. Any notice required hereunder shall be delivered by hand, sent by telecopy, or sent registered or certified mail, addressed to the other party hereto at its address set forth above or at such other address as notice thereof shall have been given in accordance with the provisions of this Paragraph 11. Any such notice shall become effective (a) when mailed, three days after having been deposited in the mail, postage prepaid, and (b) in the case of delivery by hand or telecopy, upon delivery. 12. Entire Agreement. This Agreement, together with the Confidentiality Agreement and Arbitration Agreement, Business Conduct Agreement, Conflict of Interest Agreement, Patent Agreement, Unfair Competition Agreement, the Stock Option Agreements and the Restricted Stock Award Agreement, contains the entire agreement and understanding between the parties hereto relating to the subject matter hereof and thereof and supersedes any and all prior understandings, agreements and representations, written or oral, expressed or implied, with respect thereto. 13. Amendments. This Agreement may not be amended, modified, altered or terminated except by an instrument in writing signed by the parties. 14. Successors and Assigns. This Agreement is personal in nature and neither this Agreement nor any rights or obligations hereunder may be assigned or transferred by you. This Agreement may not be assigned or transferred by Novoste without your prior written consent; provided, however, Novoste may assign and/or delegate any or all of its rights and obligations William A. Hawkins III April 23, 1998 hereunder to (i) any person or entity which shall acquire (whether by sale of assets, merger or otherwise) all or substantially all of its assets (excluding cash and cash equivalents) or (ii) any person or entity controlling, controlled by or under common control with Novoste. Subject to the foregoing, this Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and Novoste's successors and permitted assigns and your executors, administrators, personal representatives, heirs and distributees. 15. Severability. In case any one or more of the provisions of this Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected thereby. 16. Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely therein (without giving effect to the conflicts of law rules thereof). 17. Effectiveness. Of course, notwithstanding anything herein to the contrary, the effectiveness of this Agreement and your employment pursuant hereto is contingent upon the mutual execution and delivery of this Agreement by you and Novoste. William A. Hawkins III April 23, 1998 We would appreciate it if you would kindly indicate your agreement with the foregoing by countersigning the enclosed duplicate copy of this letter agreement and returning it to me on behalf of Novoste. On behalf of Novoste, we look forward to a long and mutually rewarding relationship. Sincerely, NOVOSTE CORPORATION By: ----------------------------- Thomas D. Weldon Chief Executive Officer ACCEPTED AND AGREED TO THIS ____ DAY OF APRIL, 1998: - ----------------------------------- William A. Hawkins III EX-10.15 3 EMPLOYMENT AGREEMENT EXHIBIT 10.15 EMPLOYMENT AGREEMENT Agreement, dated as of April 17, 1998, by and between Novoste Corporation, a Florida corporation with offices at 4350-C International Boulevard, Norcross, GA 30093 (the "Company"), and Dr. Raoul Bonan, an individual currently residing at 9451 Cote St. Louis, Mirabel, Quebec, Canada G0N 1S0 (hereinafter referred to as the "Employee"). W I T N E S S E T H: WHEREAS, the Company and the Employee mutually desire to enter into an Employment Agreement with respect to the Employee's employment by the Company; NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable consideration the receipt of which is hereby acknowledged, the Company and the Employee hereby agree as follows: 1. Term and Position. Subject to Employee's receipt of any required work authorization from the Immigration and Naturalization Service, the Company agrees to employ the Employee as its Vice President and Medical Officer for the period (the "Employment Period") commencing on June 1, 1998 and continuing until terminated by either party in accordance with the terms of this Agreement. The Employee accepts such employment, agrees to perform the functions and duties incident to such position, and further agrees to perform such other services as shall from time to time be assigned to him by, or pursuant to authorization of, the Board of Directors of the Company and agrees to devote substantially all of his business time, skill and attention to such services. Employee shall report directly to the President of the Company. Notwithstanding the foregoing and any other agreement with the Company, the Company acknowledges and agrees that Employee has the following existing obligations, the performance of which by Employee (and the receipt by Employee of compensation therefor) shall not be deemed a breach of this Agreement: a. One day per week of research activities at Emory University. b. Consulting services for: i) Electromed International (cath lab) ii) AngioTrax Incorporated (TMR) iii) C.R. Bard Inc. (TMS) iv) InterVentional Technologies Incorporated v) Percu Surge Incorporated vi) Boston Scientific Corporation (Scimed) 2. Compensation and Benefits. a. The Company shall pay to the Employee, and the Employee shall accept from the Company, for the Employee's services hereunder during the Employment Period, base compensation at the initial rate of $200,000 per annum, payable in accordance with the customary payroll policy of the Company and subject to such payroll deductions as are required by law. Such salary shall be subject to annual review by the Company's Board of Directors. b. The Company agrees to reimburse the Employee for all reasonable business expenses incurred by him during the Employment Period in connection with the performance of his services hereunder, including expenses incurred in connection with activities associated with promoting the business of the Company that are authorized from time to time by the Board of Directors, upon presentation by Employee of an accounting of such expenses in such detail as may be required by then-applicable tax laws. c. The Employee will be entitled to four (4) weeks paid annual vacation and shall participate at the Company's expense on the same basis, subject to the same qualifications, as other executive officers of the Company in any pension, savings, bonus (not pro-rated for partial years), hospitalization, long-term disability, and other fringe benefit plans (the "Fringe Benefits") generally available from time to time to executive officers of the Company. d. The Employee will be granted (i) 6,000 shares of the Company's common stock upon reporting for work which shares shall be registered for resale by the Employee at the next available opportunity other than an underwritten offering for the sole account of the Company and (ii) non-statutory options to purchase 100,000 shares of the Company's common stock under the Company's Amended and Restated Stock Option Plan (the "Plan"). The vesting schedule for such options shall be as follows: Options To Purchase Vesting Date ------------------- ------------ 25,000 Shares June 1, 1999 25,000 Shares June 1, 2000 25,000 Shares June 1, 2001 25,000 shares June 1, 2002 The Employee must be employed by the Company on each Vesting Date in order for the applicable options to vest. The options, when vested, will be exercisable at a price per share equal to $24.00. All other terms shall be as specified in the Plan. e. The Company shall reimburse Employee up to $2,000 per month (grossed up for any required tax withholdings) in respect of rental accommodations until such time as Employee has purchased housing in the Norcross area, but in no event to exceed a period of twelve months. Except to the extent provided herein, the relocation policy of the Company, a copy of which has been provided to Employee, shall apply. 3. Termination. a. For Cause. The employment of Employee hereunder may be terminated by the Company in the event of the occurrence of any of the following conditions or events: (i) the death of Employee or the failure of Employee to substantially perform his duties hereunder as a result of physical or mental incapacity, for either one continuous period of two (2) months or a total of three (3) out of any four (4) consecutive months ("Total Disability"); (ii) the entering by Employee of a plea of guilty or nolo contendere to, or the commission by Employee of, a felony or any other criminal act involving moral turpitude, dishonesty or theft; (iii) the failure or refusal of Employee to perform his duties hereunder (other than as a result of death, illness or other objective incapacity, including Total Disability); (iv) the commission by Employee of misconduct or insubordination in connection with his employment; (v) the commission by Employee of any willful or intentional act having the effect of injuring the reputation, business or business relationships of the Company; or (vi) any other material breach of this Agreement (or any of the other agreements referred to in Section 9) by Employee. b. Without Cause. This Agreement may be terminated by the Company at any time without cause, upon at least forty-five (45) days' prior written notice to Employee, subject to the payments set forth in subsection 3.c below. c. Compensation Upon Termination. In the event that Employee is terminated for cause (other than death, in which case the Company will pay to Employee's estate three months' base compensation, based on the Employee's base compensation rate in effect as of the date of death), as set forth in Section 3.a above, then the obligation of the Company to compensate Employee shall cease with the payment of all amounts accrued (including reimbursement of expenses properly incurred by Employee prior to termination) as of such date. In the event that Employee is terminated without cause on or after May 31, 1999, as set forth in Section 3.b above, then the Company shall be obligated to pay Employee as his sole compensation upon termination the sum of One Hundred Thousand Dollars ($100,000), in regular salary payments without setoff for new employment by Employee. If Employee is terminated without cause prior to May 31, 1999, then no severance shall be payable to Employee, unless the Company shall then have in place a written severance policy which is applicable to the Company's employees generally, in which case such general policy, if any, shall also be applicable to Employee. d. Termination by Employee. In the event that Employee chooses to terminate his services hereunder, Employee agrees to endeavor in good faith to provide the Company with not less than ninety (90) days' notice of such decision. Employee shall be entitled to his base pay and benefits through such date of termination. 4. Exclusion from Patent Assignment. Notwithstanding the provisions of the Patent Agreement attached hereto and executed simultaneously herewith, Employee shall not be required to, and shall not be deemed to have assigned to the Company any patent or other intellectual property rights developed by Employee during the term of this Agreement except if and to the extent that such rights relate to the medical field of intravascular radiation therapy. Employee does, however, hereby grant the Company a right of first refusal to acquire any patent or other intellectual property rights developed by Employee during the term of this Agreement within the scope of his employment, such right to be exercised or waived by the Company within sixty (60) days of the Company's receipt of a written proposal therefor from Employee. 5. Immigration Status. The Company shall provide Employee with all reasonable legal assistance to secure Employee's lawful work and residence status and any renewals thereof during the term of this Agreement at the Company's sole cost and expense. 6. Successors and Assigns. This Employment Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, administrators, executors, successors and assigns; provided, however, that this Employment Agreement may not be assigned by either party hereto. A non-surviving merger by the Company or a sale of substantially all of the Company's assets to a single buyer in a single transaction shall not be deemed an assignment of this Agreement by the Company for this purpose. 7. Governing Law. This Employment Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia. 8. Notice. Any notice required hereunder shall be delivered by hand, sent by telecopy, or sent by registered or certified mail, addressed to the other party hereto at its address set forth above or at such other address as notice thereof shall have been given in accordance with the provisions of this Section 8. Any such notice shall become effective (a) when mailed, three days after having been deposited in the mail, postage prepaid, and (b) in the case of delivery by hand or telecopy, upon delivery. 9. Agreement; Amendment. This Agreement, together with the Confidentiality Agreement and Arbitration Agreement, Business Conduct Agreement, Conflict of Interest Agreement, Patent Agreement and Unfair Competition Agreement, each executed simultaneously herewith, and which together constitute one agreement, supersedes any prior agreements or understandings, oral or written, between the parties hereto and represents their entire understanding and agreement with respect to the subject matter hereof and thereof, and this Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement which is signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought. 10. Severability. In the event of the invalidity or unenforceability of any one or more provisions of this Agreement, such illegality or unenforceability shall not affect the validity or enforceability of the other provisions hereof and such other provisions shall be deemed to remain in full force and effect. IN WITNESS WHEREOF, each of the parties hereto has executed this Employment Agreement the day and year first above written. NOVOSTE CORORATION By: --------------------------- Thomas D. Weldon, President and C.E.O. EMPLOYEE: ------------------------------- Dr. Raoul Bonan EX-10.16 4 STOCK AWARD AGREEMENT EXHIBIT 10.16 NOVOSTE CORPORATION RESTRICTED STOCK AWARD AGREEMENT To: William A. Hawkins III We are pleased to notify you that, by the determination of the Stock Option and Compensation Committee of Novoste Corporation (the "Company"), 14,000 shares of common stock, $.01 par value per share (the "Restricted Stock"), of the Company have this 27th day of February 1998 been awarded to you, subject to the commencement of your employment with the Company by June 1, 1998, and subject to the terms and conditions set forth below. Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Employment Agreement, dated April 23, 1998, between the Company and you (the "Employment Agreement"). In consideration of the Company's accepting this Restricted Stock Award Agreement (this "Agreement") and awarding to you the shares of Restricted Stock provided for herein, the you hereby agrees with the Company as follows: 1. Restricted Stock. During the period of time that any of the shares of Restricted Stock are unvested as set forth below, the shares of Restricted Stock awarded to you pursuant to this Agreement that shall not have vested shall not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, or as provided in this Agreement. Shares of Restricted Stock shall vest as follows: (i) 25% of the total number of shares of Restricted Stock subject to this Agreement on June 1, 1999; (ii) 25% of the total number of shares of Restricted Stock subject to this Agreement on June 1, 2000; (iii) 25% of the total number of shares of Restricted Stock subject to the Agreement on June 1, 2001; and (iv) 25% of the total number of shares of Restricted Stock subject to the Agreement on June 1, 2002; provided, however, that on any such date, you are then employed by the Company under the Employment Agreement. Notwithstanding the foregoing, upon the occurrence of (i) a Change in Control (as such term is defined in the Company's Amended and Restated Stock Option Plan) of the Company so long as you are then employed by the Company under the Employment Agreement or (ii) the termination of your employment with the Company (x) by the Company without Cause or without Unsatisfactory Performance or (y) by you for Good Reason, all restrictions on shares of Restricted Stock set forth in this Section shall immediately lapse. 2. Termination of Employment for Unsatisfactory Performance. If the Company terminates your employment for Unsatisfactory Performance, in addition to those shares of Restricted Stock that are vested and unrestricted in accordance with Section 1 hereof, an additional 3,500 shares of Restricted Stock shall also become vested and unrestricted unless all such restrictions shall have previously lapsed. 3. Death, Disability and Certain Types of Termination of Employment. If you cease to be an employee of the Company due to (i) your death, (ii) your disability (as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), (iii) the termination of your employment by the Company for Cause or (iv) the termination of your employment by you without Good Reason, you (or in the event of your death, your legatee or legatees under your Last Will, or your personal representatives or distributees) shall only retain ownership of those shares of Restricted Stock that are vested and unrestricted in accordance with Sections 1 and 2 hereof; all remaining unvested and restricted shares of Restricted Stock shall be forfeited. 4. Stock Certificates. You hereby acknowledge that any certificates evidencing shares of Restricted Stock of the Company issued pursuant to this Agreement shall bear the following restrictive legends: THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT FOR THESE SHARES OR AN OPINION OF THE CORPORATION'S COUNSEL THAT REGISTRATION IS NOT REQUIRED. THE SHARES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO RESTRICTIONS ON TRANSFER AND POTENTIAL FORFEITURE PURSUANT TO THE PROVISIONS OF THE RESTRICTED STOCK AWARD AGREEMENT, DATED JUNE 1, 1998, BETWEEN THE COMPANY AND WILLIAM A. HAWKINS III, WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICES OF NOVOSTE CORPORATION. 5. Rights with Respect to Shares. The undersigned shall have, after issuance of certificates for the number of shares of Restricted Stock awarded, ownership of all such shares, including the right to vote the same and to receive dividends or other distributions made or paid with respect to such Restricted Stock, subject, however, to the restrictions imposed thereon pursuant to this Agreement. 6. Governing Law. This Agreement shall be construed in accordance with, and any dispute arising in connection herewith shall be governed by, the internal laws of the State of Florida. 7. Amendments. This Agreement may not be amended, modified or terminated except by a writing signed by the Company and you. Sincerely yours, NOVOSTE CORPORATION By: ------------------------------ Thomas D. Weldon Chief Executive Officer Agreed to, acknowledged and accepted this 1st day of June, 1998. - ------------------------------- William A. Hawkins III EX-10.17 5 STOCK OPTION AGREEMENT EXHIBIT 10.17 NOVOSTE CORPORATION NON-INCENTIVE STOCK OPTION AGREEMENT To: William A. Hawkins III We are pleased to notify you that, by the determination of the Stock Option and Compensation Committee (the "Committee") of Novoste Corporation (the "Company"), a non-incentive stock option to purchase 100,000 shares of the common stock, $.01 par value per share ("Common Stock"), of the Company at a price of $24.00 per share has this 10th day of April 1998 been granted to you under the Company's Amended and Restated Stock Option Plan (the "Plan"), subject to the commencement of your employment with the Company by June 1, 1998. This option may be exercised only upon the terms and conditions set forth below. Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Plan. 1. Purpose of Option. The purpose of the Plan under which this option has been granted is to provide incentives for selected employees, officers, consultants and independent contractors to contribute materially to the success of the Company (or any Parent, Subsidiary or Affiliate of the Company) by obtaining a proprietary interest in the Company through the ownership of stock, thereby providing such persons with an added incentive to promote the long-term financial success and progress of the Company, including the growth in value of the Company's equity and enhancement of long-term shareholder return. The Plan is further intended to afford the Company and any Parent, Subsidiary or Affiliate of the Company a means of attracting to its service persons of outstanding ability. 2. Acceptance of Option Agreement. Your execution of this non-incentive stock option agreement will indicate your acceptance of and your willingness to be bound by its terms; it imposes no obligation upon you to purchase any of the shares subject to this option. Your obligation to purchase shares can arise only upon your exercise of this option in the manner set forth in Section 4 hereof. 3. When Option May Be Exercised. This option shall be exercisable in full upon the first to occur of the following: (i) the date (the "Trigger Date") on which the average closing sale price of the Common Stock for 20 consecutive trading days (on the principal market on which the shares of Common Stock are listed or admitted to trading) shall be equal to or greater than $48.00 per share, other than by reason of the announcement of a Change of Control of the Company on or before June 1, 1999, provided the Trigger Date occurs prior to June 1, 2001; (ii) the date of your termination of employment with the Company for Good Reason (as defined in the Employment Agreement, dated April 23, 1998, between the Company and you (the "Employment Agreement")); or (iii) June 1, 2003. This option may not be exercised for less than 100 shares at any one time (or the remaining shares then purchasable if lower) and expires at the end of 10 years from the date of grant whether or not it has been duly exercised, unless sooner terminated as provided in Section 6 hereof. 4. How Option May Be Exercised. This option is exercisable by a written notice signed by you and delivered to the Company at its executive offices, signifying your election to exercise this option. The notice must state the number of shares of Common Stock as to which your option is being exercised, and contain a statement by you (in a form acceptable to the Company) that such shares are being acquired by you for investment and not with a view to their distribution or resale (unless a registration statement covering the shares purchasable has been declared effective by the Securities and Exchange Commission) and must be accompanied by payment pursuant to Section 5 hereof for the full purchase price of the shares being purchased. If notice of the exercise of this option is given by a person or persons other than you, the Company may require, as a condition to the exercise of this option, the submission to the Company of appropriate proof of the right of such person or persons to exercise this option. Certificates for shares of the Common Stock so purchased will be issued as soon as practicable. The Company, however, shall not be required to issue or deliver a certificate for any shares until it has complied with all requirements of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, any stock exchange on which the Company's Common Stock may then be listed and all applicable state laws in connection with the issuance or sale of such shares or the listing of such shares on said exchange. The Company may cause each certificate evidencing the purchased Common stock to be endorsed with one or more legends setting forth the restrictions on transfer of such Common Stock. Until the issuance of the certificate for such shares, you or such other person as may be entitled to exercise this option, shall have none of the rights of a shareholder with respect to shares subject to this option. 5. Payment of Options. The exercise price shall be payable in cash or by tendering shares of Common Stock (by either actual delivery of shares or by attestation, with such shares valued at Fair Market Value as of the day of exercise), or in any combination thereof, as determined by the Committee; provided, however, any such tendering shares, if purchased upon exercise of a stock option, shall have been held for more than 6 months. 6. Death, Disability or Termination of Employment. If your employment with the Company is terminated for any reason, including without limitation by reason of your death or disability (as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), you (or in the event of your death, your legatee or legatees under your Last Will, or your personal representatives or distributees) may exercise, within 6 months from the date of such termination (but in no event later than the date of expiration of this option), that portion of this option which was exercisable by you at the date of such termination (including, if applicable, that portion of your option exercisable upon the occurrence of the events described in Section 3 hereof). 7. Transferability of Options. Except to your Family Group (as defined below), this option is not transferable otherwise than by will or the laws of descent or distribution, and is exercisable, during your lifetime, only by you. For purposes of this non-incentive stock option agreement, your "Family Group" shall mean your descendants (whether natural or adopted) together with your spouse, parents, siblings and their respective descendants (whether natural or adopted) and any trust solely for the benefit of you and/or such other persons and any partnership or limited liability company, the partners or member of which include one or more individuals within the Family Group. 8. Withholding Taxes. Prior to the issuance to you of any certificates for shares of Common Stock upon your valid exercise of this option, you shall be required to pay or make adequate provision for any federal, state or local withholding obligations of the Company. 9. Subject to Terms of the Plan. This non-incentive stock option agreement shall be subject in all respects to the terms and conditions of the Plan and in the event of any question or controversy relating to the terms of the Plan, the decision of the Committee shall be conclusive. 10. Tax Status. This option does not qualify as an "incentive stock option" under the provisions of Section 422 of the Code, and the income tax implications of your receipt of a non-incentive stock option and your exercise of such an option should be discussed with your tax counsel. Sincerely yours, NOVOSTE CORPORATION By: ------------------------------ Thomas D. Weldon Chief Executive Officer Agreed to, acknowledged and accepted this _____ day of __________, 1998. - ------------------------------- William A. Hawkins III EX-10.18 6 AMENDMENTS TO FRAMEWORK & SECURITY AGREEMENTS EXHIBIT 10.18 AMENDMENT TO FRAMEWORK AGREEMENT AND SECURITY AGREEMENT between Novoste Corporation 4350 / C International Boulevard Norcross, GA 30093/3027 represented by its Chief Operating Officer David N. Gill - hereinafter referred to as "NOVOSTE" - and BEBIG Isotopentechnik und Umweltdiagnostik GmbH Robert-Rossle-Stra(beta)e 10, 13125 Berlin represented by its managing director Dr. Andreas Eckert - hereinafter referred to as "BEBIG" - Preamble 1. NOVOSTE produces medical devices and has developed a catheter for the inhibition and prevention of restenosis of a blood vessel after interventional therapy (hereinafter referred to as "Restenosis Device"). 2. BEBIG manufactures radioactive sealed Strontium-90 sources (BEBIG Product Code SrO.SO 3) in units called seed-trains usable in the Restenosis device (hereinafter referred to as "Seed-Trains"). 3. On November 24th, 1994 the parties hereto concluded an agreement under the term "RESTENOSIS THERAPY PROJECT DEVELOPMENT AND SUPPLY AGREEMENT", amended by the "FRAME AGREEMENT CONTAINING PURCHASE ORDER PROVISION AND INVESTMENT GRANT" dated November 15, 1996 (hereinafter referred to as the "Framework-Agreement"), dealing et. al. with the supply of Seed-Trains to NOVOSTE. Additionally, BEBIG granted NOVOSTE an option to purchase all of BEBIG's tangible and intangible assets required for the production of Seed-Trains under an agreement called the "OPTION TO PURCHASE ASSETS AGREEMENT" dated September 1st, 1995 (hereinafter referred to as the "Purchase Option Agreement"). 4.a) In August 1997, BEBIG started building a new automated seed production line. It turned out that the line was more expensive than expected. Also, BEBIG decommissioned the earlier (contaminated) Strontium-90 prototype line and had to absorb substantial cost. b) At the same time both parties realized that there are desirable changes in the design of the Seed Trains that may increase their technical life time and improve their quality. c) Furthermore, both parties see a need to address the issue of recycling and disposal of used radioactive trains. 5. The parties hereto mutually agree that (i) the Framework Agreement shall be adapted for recent developments, (ii) the Purchase Option Agreement shall be altered by a special security agreement leaving the contractual framework of the Purchase Option Agreement in other respects unchanged. A. Amendment of the Framework Agreement I. Para. 1 of the Framework Agreement shall be revised as follows: "ss. 1 Payment Liability 1. The customer now pays an additional investment grant to the supplier amounting to an aggregate of DM 1,000,000.00 (in words: German Marks one million) in the following installments: - DM 700,000.00 within one week after the initial delivery of "active" Seed-Trains (XXXXX); - DM 300,000.00 within one week after delivery of the XXXXX active Seed-Train (XXXXX). 2. The aforementioned installments are to be paid free of charge to the account no. 0000424648 at the Commerzbank Berlin, code number (Bankleitzahl) 120 400 00." ss. 2 Changing in the Pricing Formula a) BEBIG and NOVOSTE agree to a new pricing formula that will take into account the time Seed Trains are used. For any trains that are delivered after the execution of this agreement, NOVOSTE will pay to BEBIG US$ XXXXX for any XXXXX period a train is in use. The US$ XXXXX price is exclusive of freight and packaging. - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this page of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as "XXXXX". The portions omitted have been filed separately with the Securities and Exchange Commission pursuant to such request for confidential treatment. b) For the first XXXXX trains delivered to NOVOSTE after the execution of this Agreement, the XXXXX period shall commence with the day of the first clinical use of the train. At the end of the XXXXX period NOVOSTE has one month time to test each train and either (1) return it to BEBIG for recycling or (2) XXXXX. Novoste will provide Bebig with true and accurate information about the date of first clinical use. c) For any Seed-Trains delivered thereafter, the XXXXX period shall commence with the date of manufacture, as evidenced by the manufacturer's certificate, provided that: (1) BEBIG has delivered XXXXX Seed-Trains, which pass NOVOSTE's specifications on P.O. 970381 to NOVOSTE prior to XXXXX or over any consecutive XXXXX period once deliveries commence. (2) No more than 10 days transpire between date of manufacture and receipt by NOVOSTE (just in time delivery), (3) The date of manufacture cannot predate the desired delivery date in NOVOSTE's purchase order by 30 days (should BEBIG decide to build on a speculative basis prior to a NOVOSTE purchase order). II. Any other provisions under the Framework remain unchanged as far as they are not (i) amended, or replaced by the aforementioned clauses or (ii) settled otherwise (e. g. expiry of time, performance). - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this page of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as "XXXXX". The portions omitted have been filed separately with the Securities and Exchange Commission pursuant to such request for confidential treatment. ss. 3 Recycling of radioactive Seed Trains/Decommissioning a) BEBIG will accept free of charge, for the period until August 22, 2002, returned radioactive Seed-Trains from NOVOSTE, as long as the following conditions are met: (1) The number of returned trains in any given year that are unfit for recycling ("Disposal Trains") does not exceed 20 % of the total number of returned trains in that year. (2) The sum of returned trains for any given year is not larger than the sum of new trains shipped out during that period. b) Both parties will work together in good faith to find an economic solution for trains that do not meet these conditions. B. Chattel Mortgage and Assignment for Security Agreement (Sicherungsubereignungs- und -abtretungsvertrag) ss. 1 Security Object 1.1 Under the Framework Agreement NOVOSTE committed itself to pay to BEBIG monthly investment grants of DM 100,000.00 each for a period of 15 months, starting in November 1996. This investment obligation has been increased by an additional amount of DM 1,000,000.00 by the foregoing Agreement under A. With a view to these investment grants BEBIG committed itself to a series of obligations in favor of NOVOSTE. For further reference see Para. 2 through 6 of the Framework Agreement. Furthermore, BEBIG promised an annual delivery of XXXXX Seed-Trains under Para. 8 through 10 of the Framework Agreement. 1.2 For the purpose of safeguarding all claims of NOVOSTE deriving from the Framework Agreement and this Agreement BEBIG transfers to NOVOSTE all assets required for the production of Seed-Trains according to the following provisions. ss. 2 Security Collaterals 2.1 The following items shall serve as security collateral: a) all assets situated in room 27 of BEBIG's premises, Robert-Rossle-Stra(beta)e 10, 13125 Berlin, which are used in the production of Strontium 90 Seed-Trains for NOVOSTE and which are listed and attached as Exhibit 2.1 a to this Agreement (hereinafter referred to as the "Premises") at the date hereof or at any later point of time during the duration of the Framework Agreement (hereinafter referred to as the "Security Collateral A"). At a minimum these assets include the full production line used to produce the Strontium 90 Seed Trains and do not include assets which are also used in the production of other isotopes. b) all intangible assets which are required for the production of Seed-Trains and (i) are listed in Exhibit 2.1 b to this contract or (ii) will be acquired by BEBIG during the duration of the Framework Agreement (hereinafter referred to as the "Security Collateral B"). - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this page of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as "XXXXX". The portions omitted have been filed separately with the Securities and Exchange Commission pursuant to such request for confidential treatment. 2.2 Security Collateral A 2.2.1 As far as BEBIG is the owner or the co-owner of the Security Collateral A, BEBIG transfers to NOVOSTE the ownership or the co-ownership. As far as BEBIG holds an expectant right (Anwartschaftsrecht) in the Security Collateral A, this is also transferred to NOVOSTE. Expectant right, ownership and co-ownership in the Security Collateral A are transferred at the date hereof; expectant right, ownership and co-ownership in those parts of the Security Collateral A being brought into the Premises later on are transferred at the time of the actual deposit. A further explicit act of transfer is redundant. As far as an expectant right is transferred, NOVOSTE becomes the owner of the respective asset at that point of time the supplier's reservation of title (Eigentumsvorbehalt) expires. 2.2.2 BEBIG guarantees that it holds the ownership, the co-ownership or an expectant right in the Security Collateral A, has not mortgaged them or assigned them and that it is entitled to dispose of these rights. BEBIG also guarantees that it will pay all supplier invoices related to the strontium 90 production line so that suppliers' liens to the assets will expire quickly. 2.2.3 The handing over of the Security Collateral A is replaced by BEBIG's commitment to keep the Security Collateral A in safe custody for NOVOSTE free of any charges, provided that BEBIG either receives (a) an annual revenue from seed manufacturing of more than US$ XXXXX or b) a flat storage charge of US-$ 120,000 per year 2.2.4 BEBIG's right to make use of the Security Collateral A in the ordinary course of its business remains unaffected subject to the regulation under Para. 5 hereunder. - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this page of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as "XXXXX". The portions omitted have been filed separately with the Securities and Exchange Commission pursuant to such request for confidential treatment. 2.3 Security Collateral B BEBIG herewith assigns all of its rights in the Security Collateral B to NOVOSTE. As far as an assignment is impossible due to legal or actual reasons, BEBIG transfers to NOVOSTE the right of every possible use, including the use of trademark, patents, licensing rights BEBIG has as regards the Security Collateral B. BEBIG's right to make use of the Security Collateral B in the ordinary course of its business remains unaffected subject to the regulation under Para. 5 hereunder. BEBIG guarantees that it is unrestrictedly entitled to dispose of the Security Collateral B to the aforementioned extent. ss. 3 Duties of BEBIG 3.1 BEBIG shall refrain from any disposal of the Security Collateral A and B except with (i) NOVOSTE's explicit prior consent not unreasonably withheld and (ii) limited to disposals due to normal wear, repair and replacement. BEBIG warrants that it will maintain its premises and the assets in such a state to ensure compliance with all regulatory and licensing requirements as long as doing so costs less than DM 50,000. The parties will discuss how to handle issues on any capital investments mandated by regulatory authorities which exceeding DM 50,000. 3.2 BEBIG will inform NOVOSTE without undue delay about any damage, pledge, German regulatory body actions or other enforcement measures which might be detrimental to NOVOSTE's legal position according to Para. 2 hereunder. As far as pledges occur, BEBIG has to submit to NOVOSTE all documents and information necessary for an intervention. BEBIG shall furthermore inform all of its bank creditors of NOVOSTE's rights under this Agreement. 3.3 NOVOSTE shall have the right to inspect the Security Collateral A and B at any time after giving BEBIG one week's notice. BEBIG shall give all necessary information to NOVOSTE and shall grant to NOVOSTE the right of inspection of all relevant documents through appointment by NOVOSTE of a certified public accountant or lawyer together with an engineer subjected to the same rules as to confidentiality as applicable to a certified public accountant or lawyer. ss. 4 Retransfer of Title 4.1 Except for (i) NOVOSTE's rights under Para. 5 hereunder or (ii) an extension of this Agreement by the parties hereto NOVOSTE shall retransfer the title in Security Collateral A and B to BEBIG on September 1st, 2002 unless it exercises its option to acquire said assets according to Para. 4.2. 4.2 Except for the provision under Para. 4.1 hereunder, NOVOSTE shall retransfer title in the Security Collateral A and B upon BEBIG's written request if NOVOSTE is in default with the payment of the two subsequent investment grants per Paragraph 1 of this Agreement for more than one month. Option to Acquire Unrestricted Title 5.1 The Security Object agreed upon in Para. 1 hereunder and BEBIG's claim for retransfer of title according to Para. 4.1 hereunder are subject to the condition subsequent that NOVOSTE submits a written notice to BEBIG that all rights in the Security Collateral A and B shall finally be forfeited in favor of NOVOSTE (hereinafter referred to as the "Notice"). NOVOSTE's right to acquire unrestricted title in the Security Collateral A and B by submitting the Notice to BEBIG shall be hereinafter referred to as the "Option". The Option may be exercised at any time until September 1st, 2002 subject to an extension of the term of the Option by a mutual written agreement of the parties hereto (hereinafter referred to as the "Option Period") for the amount of US-$ 4,019,400 Million (four million nineteen thousand four hundred US-dollars) (see Para. 8). 5.2 In the Notice NOVOSTE shall specify a date for closing the acquisition (hereinafter referred to as the "Closing Date") which shall occur at least ninety (90) days but no more than two hundred seventy (270) days subsequent to the date of the Notice. ss. 6 Non-Assumption of Liabilities NOVOSTE shall not assume, discharge or be liable for any debts, liabilities or obligations of BEBIG including, without limitation, any (a) liabilities or obligations of BEBIG to its creditors or equity owners; (b) liabilities or obligations of BEBIG with respect to any transactions; (c) taxes or other liabilities or obligations of BEBIG incurred in connection with the grant of the Option pursuant to this Agreement; or (d) contingent liabilities or obligations of BEBIG. If NOVOSTE is subjected to any claims that arise from BEBIG's operations to its mere possession of security ownership, BEBIG promises to hold NOVOSTE harmless from any such claims. However, if (1) NOVOSTE exercises the Option and wishes to move the assets to another location, or (2) NOVOSTE does less than US$ XXXXX in seed business with BEBIG from August 1, 1998 to August 31, 2002, then NOVOSTE agrees to pay BEBIG the costs to decontaminate the strontium 90 line assets, up to a maximum of DM 500,000. - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this page of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as "XXXXX". The portions omitted have been filed separately with the Securities and Exchange Commission pursuant to such request for confidential treatment. ss. 7 Facilitation Appurtenant to the transfer of the Security Collateral A and B in connection with the exercise of the Option and covered by the Purchase Price, BEBIG shall assign at its expense such personnel bearing the necessary technical and operational expertise to spend up to three (3) months at NOVOSTE (or its assignee or successor) facilitating the transfer of the Security Collateral A and B and training personnel as to the operation of the Security Collateral A and B as a Seed-Train producing business. BEBIG shall also assign at its expense for up to three (3) months such personnel bearing essential administrative and regulatory expertise to guide NOVOSTE (or its assignee or successor) in licensing and approval processes with which BEBIG has relevant experience. ss. 8 Purchase Price 8.1 The purchase price (hereinafter referred to as the "Purchase Price") for the Security Collateral A and B to be acquired upon exercise of the Option shall be 4,019,400 Million dollars (four million nineteen thousand four hundred US dollars). 8.2 The option agreement will be exercised in the following manner. 1. Novoste will pay Bebig an additional US$ XXXXX per train to Novoste in the form of a license fee for the use of all tangible an intangible assets used in the design and manufacture of the Strontium 90 seed trains. 2. This license fee will be paid only on the first XXXXX trains delivered to Novoste under this agreement; thereafter no license fee will be charged. - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this page of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as "XXXXX". The portions omitted have been filed separately with the Securities and Exchange Commission pursuant to such request for confidential treatment. 3. As the US$ XXXXX license fee is paid, Novoste's lien on the line's hard assets will grow on a proportionate basis (Deutsche Mark for Deutsche Mark at the then current exchange rates). 4. Once Novoste has paid Bebig an aggregate of $ 4,019,400 towards the option purchase price, either in the form of license fees or an accelerated cash payment, then the title to all tangible assets used on the line will automatically be transferred to Novoste at that time, and Novoste will receive a fully-paid license to all intangible assets and intellectual property used in the design and manufacture of the seed trains. 5. Novoste does not guarantee a certain purchase volume in any one year. Novoste continues to have until August 31, 2002 to pay for the option in full. C. Common Final Provisions 1. This Agreement, including this Para. 1., may only be amended or modified at any time and in all respects by an instrument in writing executed by NOVOSTE and BEBIG. 2. Any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent by registered or certified mail, postage prepaid, addressed to: To BEBIG: BEBIG Isotopentechnik und Umweltdiagnostik GmbH Robert-Rossle-Stra(beta)e 10 D-13125 Berlin, Germany Attn: Dr. Andreas Eckert - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this page of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as "XXXXX". The portions omitted have been filed separately with the Securities and Exchange Commission pursuant to such request for confidential treatment. To NOVOSTE: NOVOSTE Corporation 4340-C International Blvd. Norcross, GA 30093-3027 Attn: David N. Gill or to such other address as shall be furnished in writing by a party to the other and shall be deemed to have been given as of the date so personally delivered or three (3) days after being deposited in the United States mail, postage pre-paid, as the case may be. 3. It is the intention of the parties that the laws of the Federal Republic of Germany, both substantive and remedial, should govern the validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties. Place of jurisdiction shall be Berlin, Germany. 4. Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 5. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. 6. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of, and be enforceable by, BEBIG and NOVOSTE and their successors and valid assigns. 7. This Agreement constitutes the entire agreement between the parties hereto, and there are no agreements, understandings, restrictions, warranties or representations between the parties other than those set forth herein. 8. BEBIG may not assign this Agreement. 9. Should any provision of this Agreement be or become invalid or void, the remaining provisions will continue to be in effect. Invalid or void provisions are to be replaced by such provisions which will fulfill the economic purpose of this Agreement in a legally binding form. The same applies mutatis mutandis if a gap is found which requires a regulation. 10. All the provisions of the Purchase Option agreement mentioned in the Preamble remain fully in effect if not expressly changed by the previous sections. 11. This Agreement shall be executed in an English version only. Norcross, ___________________ Berlin, _________________ - ---------------------------- ------------------------ NOVOSTE BEBIG EX-27 7 FINANCIAL DATA SCHEDULE
5 6-MOS Dec-31-1998 Jan-01-1998 Jun-30-1998 32,842,206 7,247,546 0 0 0 40,336,161 2,841,529 1,036,722 42,573,096 2,442,631 0 0 0 105,716 40,024,749 42,573,096 0 0 0 9,836,929 0 0 1,213,088 (8,623,841) 0 (8,623,841) 0 0 0 (8,623,841) (.83) (.83)
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