<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS
/X/ Definitive Proxy Statement PERMITTED BY RULE 14A-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
KENSEY NASH CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
<TABLE>
<S> <C>
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
</TABLE>
1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
5) Total fee paid:
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
</TABLE>
1) Amount Previously Paid:
- - --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
Marsh Creek Corporate Center
55 East Uwchlan Avenue
Exton, Pennsylvania 19341
October 30, 1996
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to
attend the 1996 Annual Meeting of Stockholders of Kensey Nash
Corporation. The Annual Meeting will be held on Wednesday,
December 4, beginning at 10:00 a.m., local time, at The Top of the
Bell Tower, 1717 Arch Street, 50th Floor - Furness Forum,
Philadelphia, Pennsylvania 19103. The formal notice of the Annual
Meeting appears on the next page.
The attached Notice of Annual Meeting and Proxy Statement describe
matters that we expect will be acted upon at the meeting. During
the meeting, stockholders will view a Company presentation and have
the opportunity to ask questions.
It is important that your views be represented whether or not you
are able to be present at the Annual Meeting. Please sign and date
the enclosed proxy card and promptly return it to us in the postpaid
envelope. If you sign and return your proxy card without specifying
your choices, it will be understood that you wish to have your
shares voted in accordance with the recommendations of the Board of
Directors contained in the Proxy Statement.
We are gratified by our stockholders' continued interest in Kensey
Nash Corporation and urge you to return your proxy card as soon as
possible.
Sincerely,
Joseph W. Kaufmann
President and Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 4, 1996
To the Stockholders of
Kensey Nash Corporation:
The Annual Meeting of Stockholders of Kensey Nash Corporation
(the "Company") will be held at 10:00 a.m., local time, on
Wednesday, December 4, 1996 at The Top of the Bell Tower, 1717 Arch
Street, 50th Floor - Furness Forum, Philadelphia, Pennsylvania
19103, for the following purposes:
(1) To elect two Class I Directors to the Company's
Board of Directors;
(2) To consider and vote upon the First Amended and
Restated Kensey Nash Corporation Employee Incentive
Compensation Plan;
(3) To consider and vote upon the First Amended and
Restated Kensey Nash Corporation Nonemployee Directors'
Stock Option Plan;
(4) To ratify the appointment by the Board of
Directors of Deloitte & Touche LLP as the independent
auditors of the Company's financial statements for the
year ended June 30, 1997; and
(5) To transact such other business as may properly
come before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
October 7, 1996, as the record date for determining stockholders
entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
Joseph W. Kaufmann
President and Secretary
Exton, Pennsylvania
October 30, 1996
<PAGE> 4
All stockholders are urged to attend the meeting in person or by
proxy. Whether or not you expect to be present at the meeting,
please complete, sign and date the enclosed proxy card and return it
promptly in the enclosed postage paid envelope furnished for that
purpose.
<PAGE> 5
KENSEY NASH CORPORATION
MARSH CREEK CORPORATE CENTER
55 EAST UWCHLAN AVENUE
EXTON, PENNSYLVANIA 19341
(610) 524-0188
PROXY STATEMENT
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF KENSEY NASH CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"),
FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS (THE "ANNUAL MEETING")
TO BE HELD AT 10:00 A.M., LOCAL TIME, WEDNESDAY, DECEMBER 4, 1996,
AT THE TOP OF THE BELL TOWER, 1717 ARCH STREET, 50TH FLOOR - FURNESS
FORUM, PHILADELPHIA, PENNSYLVANIA 19103, AND ANY ADJOURNMENTS
THEREOF. THIS PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY ARE
BEING MAILED TO STOCKHOLDERS ON OR ABOUT OCTOBER 30, 1996.
VOTING SECURITIES -- The Board of Directors has fixed the close
of business on October 7, 1996, as the Record Date for the
determination of stockholders entitled to notice of, and to vote at,
the Annual Meeting or any adjournments thereof. As of October 7,
1996, the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting, the Company had
outstanding 7,165,810 shares of Common Stock, par value $.001 per
share. Each of the outstanding shares of Common Stock is entitled
to one vote on all matters to come before the Annual Meeting.
PROXIES -- Joseph W. Kaufmann and Douglas G. Evans, the
persons named as proxies on the proxy card accompanying this Proxy
Statement, were selected by the Board of Directors of the Company to
serve in such capacity. Messrs. Kaufmann and Evans are officers and
directors of the Company. Each executed and returned proxy will be
voted in accordance with the directions indicated thereon, or if no
direction is indicated, such proxy will be voted in accordance with
the recommendations of the Board of Directors contained in this
Proxy Statement. Each stockholder giving a proxy has the power to
revoke it at any time before the shares it represents are voted.
Revocation of a proxy is effective upon receipt by the Secretary of
the Company of either (i) an instrument revoking the proxy, or (ii)
a duly executed proxy bearing a later date. Additionally, a
stockholder may change or revoke a previously executed proxy by
voting in person at the Annual Meeting.
REQUIRED VOTE -- A plurality of the votes cast in person or by
proxy is required to elect the nominees for director. A majority of
the votes cast in person or by proxy is required to (i) approve the
proposed First Amended and Restated Kensey Nash Corporation Employee
Incentive Compensation Plan (the "Restated Employee Plan"); (ii)
approve the proposed First Amended and Restated Kensey Nash
Corporation Nonemployee Directors' Stock Option Plan (the "Restated
Directors' Plan"); and (iii) ratify the appointment of Deloitte &
Touche LLP as the independent auditors of the Company's financial
statements for the fiscal year ended June 30, 1997. Each
stockholder will be entitled to vote the number of shares of Common
Stock held as of the record date by such stockholder for the number
of Directors to be elected. Stockholders will not be allowed to
cumulate their votes in the election of directors.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and
will determine whether or not a quorum is present. The
<PAGE> 6
election inspectors will treat abstentions as shares that are
present and entitled to vote for purposes of determining the
presence of a quorum and will also count abstentions for purposes of
voting on any proposal presented at the meeting or any adjournment
thereof. Abstentions will have the same effect as a vote against a
proposal. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
STOCKHOLDER LIST -- A list of stockholders entitled to vote at
the Annual Meeting, arranged in alphabetical order, showing the
address of and number of shares registered in the name of each
stockholder, will be open to the examination of any stockholder for
any purpose germane to the Annual Meeting during ordinary business
hours commencing November 24, 1996, and continuing through the date
of the Annual Meeting at the principal offices of the Company, 55
East Uwchlan Avenue, Exton, Pennsylvania 19341.
ANNUAL REPORT TO STOCKHOLDERS -- THE COMPANY'S ANNUAL REPORT TO
STOCKHOLDERS FOR THE FISCAL YEAR ENDED JUNE 30, 1996 ("FISCAL YEAR
1996"), CONTAINING FINANCIAL AND OTHER INFORMATION PERTAINING TO THE
COMPANY, IS BEING FURNISHED TO STOCKHOLDERS SIMULTANEOUSLY WITH THIS
PROXY STATEMENT.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of seven
Directors. Article Five of the Company's Certificate of
Incorporation, as amended, provides that the Board of Directors
shall be classified with respect to the terms for which its members
shall hold office by dividing the members into three classes. At
the Annual Meeting, two Class I Directors are to be elected for a
term of three years expiring at the 1999 Annual Meeting of
Stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE IN FAVOR OF THE ELECTION OF THE NOMINEES NAMED IN
THIS PROXY STATEMENT TO CONTINUE TO SERVE AS DIRECTORS OF THE
COMPANY. See "Nominees" below.
The five Directors whose terms of office expire in 1997 and
1998 will continue to serve after the Annual Meeting until such time
as their respective terms of office expire or their successors are
duly elected and qualified. See "Other Directors" below.
If at the time of the Annual Meeting any of the nominees should
be unable or decline to serve, the person named in the proxy will
vote for such substitute nominee or nominees as the Board of
Directors recommends, or vote to allow the vacancy created thereby
to remain open until filled by the Board, as the Board recommends.
The Board of Directors has no reason to believe that any nominee
will be unable or will decline to serve as a director if elected.
NOMINEES
The names of the nominees for the office of director, together
with certain information concerning such nominees, are set forth
below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- - --------------------- --- --------------------------------------------------------- --------------
<S> <C> <C> <C>
Douglas G. Evans, P.E. 32 Chief Operating Officer, Assistant Secretary and Director 1995
Walter R. Maupay, Jr. 57 Director 1995
</TABLE>
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<PAGE> 7
Mr. Evans has served as Chief Operating Officer of the Company
since March 1995, was elected as Director in May 1995 and has served
as Assistant Secretary since October 1995. Mr. Evans is responsible
for the Company's product development, manufacturing and quality
control operations. From 1989 to 1993, Mr. Evans held several
senior positions at the Company in product development and
engineering. From 1986 until joining the Company in 1989, Mr. Evans
held a number of positions in engineering and business development
for several divisions of the General Electric Company. Mr. Evans
received a B.S. degree in Engineering Science and a Masters degree
in Business Management from Pennsylvania State University and an
M.S. degree in Electrical Engineering from the University of
Pennsylvania. Mr. Evans is a Registered Professional Engineer in
the United States.
Mr. Maupay has been a Director of the Company since June 1995.
In May 1995, he retired from his position as Group Executive and
President of Calgon Vestal Laboratories, a division of Bristol Myers
Squibb, a position he held since January 1995. From 1988 to
December 1994, Mr. Maupay served as President of Calgon Vestal
Laboratories, then a division of Merck & Co. Mr. Maupay spent
thirty-three years in corporate and divisional positions at Merck &
Co. Mr. Maupay received a B.S. degree in Pharmacy from Temple
University and an M.B.A. degree from Lehigh University. Mr. Maupay
is Chairman of the Company's Audit Committee and a member of the
Compensation Committee.
OTHER DIRECTORS
The following persons will continue to serve as Directors of
the Company after the Annual Meeting until their terms of office
expire (as indicated below) or until their successors are elected
and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY SERVED AS TERM
DIRECTOR SINCE EXPIRES
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kenneth R. Kensey, M.D. 46 Chairman of the Board 1984 1998
John E. Nash, P.E. 61 Vice Chairman of the 1984 1998
Board and Executive Vice
President
Joseph W. Kaufmann 44 Chief Executive Officer, 1992 1997
President, Chief
Financial Officer,
Secretary and Director
Robert J. Bobb 48 Director 1984 1998
Harold N. Chefitz 61 Director 1995 1997
</TABLE>
Dr. Kensey is a co-founder of the Company and has served as its
Chairman of the Board since its inception in 1984. He also served
as the Company's Chief Executive Officer until 1992. Prior to his
co-founding of the Company, Dr. Kensey was a cardiology fellow at
Michael Reese Hospital in Chicago. Dr. Kensey is a lecturer and the
author of numerous articles on various topics in medicine, including
the Angio-Seal device, cardiology, the use of rotational energy and
the cause of atherosclerosis. Dr. Kensey received a B.A. degree
from Ohio Wesleyan University and an M.D. degree from Ohio State
University. Dr. Kensey is a member of the Company's Executive
Committee.
Mr. Nash is a co-founder of the Company and has served as Vice
Chairman of the Board and Executive Vice President since August
1984. Mr. Nash now concentrates on new product development, from
concept development to product feasibility demonstration, and the
protection of the resulting intellectual property. Prior to his
co-founding the Company, Mr. Nash was employed by Syntex Corporation
in a number of engineering and development positions within its
Syntex Dental subsidiary,
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<PAGE> 8
including Vice President of Research and Development. Mr. Nash
holds qualifications in Mechanical and Production Engineering from
Kingston College of Technology in the United Kingdom and is a
Registered Professional Engineer in both the United Kingdom and the
United States.
Mr. Kaufmann has served as Chief Executive Officer and
President of the Company since March 1995. Mr. Kaufmann joined the
Company in 1989 as Chief Financial Officer and Secretary and
continues to serve in these capacities. He has been a Director
since September 1992. He was appointed Vice President, Finance and
Administration in January 1994. From 1987 to 1989, Mr. Kaufmann was
Controller for the Progress Lighting Company, a subsidiary of Syntex
Corporation from 1978 to 1987, where his last position was Vice
President of Finance. Mr. Kaufmann received a B.S. degree in
Accounting from St. Joseph's University. Mr. Kaufmann is Chairman
of the Company's Executive Committee.
Mr. Bobb has been a Director of the Company since 1984. Since
1982, Mr. Bobb has been a principal equity investor and key
management participant in a number of operating companies whose
businesses included steel processing, beer distribution, trucking,
equipment leasing, banking and commercial and residential real
estate development and management. From 1978 to 1982, Mr. Bobb was
the Chief Operating Officer of a privately held company formed
specifically to invest in operating businesses. From 1972 to 1978,
Mr. Bobb was a lawyer in private practice. Mr. Bobb received a B.S.
degree from Western Michigan University and a J.D. degree from the
University of Notre Dame Law School and studied at the University of
Belgrade and the University of London. Mr. Bobb is Chairman of the
Company's Compensation Committee and a member of the Audit and
Executive Committees.
Mr. Chefitz has been a Director of the Company since June 1995.
He is presently a Senior Managing Director of Gerard Klauer
Mattison & Co. LLC an investment banking firm headquartered in New
York. Mr. Chefitz serves as Chairman of Chefitz Healthcare
Investment Company. From November 1992 until March 1995, he served
as a Managing Director and Head of Healthcare Investment Banking for
Prudential Securities Incorporated in New York City. From January
1990 until November 1992, Mr. Chefitz served as a Senior Managing
Director -- Co-head Healthcare Investment Banking of Furman Selz
Incorporated. Mr. Chefitz served as Chairman of the Board of
Trustees of Columbia University -- School of Pharmaceutical
Sciences. Mr. Chefitz received a B.S. degree from Boston University
and attended Boston College Law School. Mr. Chefitz is a member of
the Company's Audit and Compensation Committees.
DIRECTOR COMPENSATION -- The Company does not pay additional
cash compensation to executive officers for their service as
Directors. During fiscal year 1996, Nonemployee Directors were paid
a fee of $2,500 per meeting (not to exceed $10,000 per fiscal year)
plus travel expenses and other costs associated with attending
meetings. Pursuant to the Directors' Plan, each Nonemployee
Director was granted options to purchase 5,000 shares of Common
Stock upon the Company's initial public offering, exercisable at
$12.00, the initial public offering price. In consideration of
their service on the Board of Directors, on the date of each annual
meeting of the stockholders of the Company, each Nonemployee
Director who is elected, re-elected or continues to serve as a
Director because his term has not expired shall be granted
Non-Qualified Stock Options ("NQSOs") to purchase 2,500 shares of
Common Stock, exercisable at the fair market value of such shares on
the date of grant.
MEETINGS -- During fiscal year 1996, the Board of Directors
held six formal meetings. All appropriate Directors attended all
board and committee meetings held during fiscal year 1996.
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<PAGE> 9
COMMITTEES OF THE BOARD OF DIRECTORS -- The Board of Directors
has established an Audit Committee, a Compensation Committee and an
Executive Committee. The Audit Committee includes Messrs. Bobb,
Chefitz and Maupay (Chairman), each a Nonemployee Director. The
Compensation Committee includes Messrs. Bobb (Chairman), Chefitz and
Maupay. The Executive Committee includes Dr. Kensey and Messrs.
Kaufmann (Chairman) and Bobb. The Company does not have a
Nominating Committee.
The Audit Committee generally has responsibility for
recommending independent auditors to the Board for selection,
reviewing the plan and scope of the accountants' audit, reviewing
the Company's audit and control functions and reporting to the full
Board of Directors regarding all of the foregoing. The Audit
Committee held one formal meeting in fiscal year 1996.
The Compensation Committee generally has responsibility for
recommending to the Board of Directors guidelines and standards for
the determination of executive compensation, reviewing the Company's
executive policies and reporting to the full Board of Directors
regarding the foregoing. The Compensation Committee also has
responsibility for administering the Employee Plan and the
Directors' Plan, determining the number of options to be granted to
the Company's executive officers and employees pursuant to the
Employee Plan, and reporting to the full Board of Directors
regarding the foregoing functions. The Compensation Committee held
one formal meeting in fiscal year 1996. See "Report of the
Compensation Committee of the Board of Directors."
The Executive Committee has those responsibilities delegated to
it from time to time by the Board of Directors. The Executive
Committee held no formal meetings in fiscal year 1996.
EXECUTIVE OFFICERS
The Board of Directors elects officers annually and such
officers, subject to the terms of certain employment agreements,
serve at the discretion of the Board. See "Executive Compensation
and Certain Transactions -- Employment Agreements." Each of Dr.
Kensey and Messrs. Nash, Kaufmann and Evans has an employment
agreement with the Company. There are no family relations among any
of the directors or executive officers of the Company.
SECTION 16(A) COMPLIANCE -- Section 16 of the Securities and
Exchange Act of 1934, as amended (the "1934 Act"), requires the
Company's officers, directors and persons who own greater than 10%
of a registered class of the Company's equity securities to file
reports of ownership and changes in ownership with the Securities
and Exchange Commission (the "SEC") and the Nasdaq National Market.
Based solely on a review of the forms it has received and on written
representations from certain reporting persons that no such forms
were required for them, the Company believes that, except as set
forth below, during fiscal year 1996 all Section 16 filing
requirements applicable to its officers, directors and 10%
beneficial owners were complied with by such persons. Each of
Messrs. Kaufmann and Evans inadvertently did not timely report a
stock option grant pursuant to the Employee Plan on a Form 5 for
fiscal year 1996.
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<PAGE> 10
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
The following table sets forth information with respect to the
cash compensation paid by the Company for services rendered during
the fiscal years ended June 30, 1996, 1995 and 1994 to its chief
executive officer and the other executive officers of the Company
whose total annual salary and bonus exceeded $100,000 during fiscal
year 1996 (each, a "Named Executive Officer").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Compensation
Awards
---------------------------------------- ----------------------
Securities Underlying
Options (#)
Name and principal position Year Salary Bonus Other Annual
($) ($) Compensation
($)
- - --------------------------- ---- ------- ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Kenneth R. Kensey, M.D. 1996 $200,000 $100,000 $ 9,000(1) --
Chairman of the Board
1995 $200,000 -- $ 8,567(1) --
1994 $200,000 $ 30,000 $ 8,653(1) --
John E. Nash, P.E. 1996 $200,000 $ 50,000 $ 9,018(1) --
Vice Chairman of the Board and
Executive Vice President 1995 $200,000 -- $ 8,567(1) --
1994 $200,000 $ 30,000 $ 8,653(1) --
Joseph W. Kaufmann 1996 $200,000 $100,000 $2,533,143(2) 60,000
President, Chief Financial Officer,
Secretary and Director
1995 $164,181 -- -- --
1994 $100,249 $ 1,923 -- --
Douglas G. Evans, P.E. 1996 $107,019 $ 50,000 $ 840,000(2) 30,000
Chief Operating Officer and Director
1995 $ 80,870 -- -- --
1994 $ 65,930 $ 7,449 -- --
</TABLE>
- - ---------------
(1) Represents allowance for automobile.
(2) Represents the fair market value in excess of the price paid by
such employee for certain employee stock rights which were
converted into Common Stock on the date of the Company's initial
public offering.
OPTION GRANTS IN FISCAL YEAR 1996 -- The following table provides
information on grants of stock options and stock appreciation rights in
fiscal year 1996 to the Named Executive Officers pursuant to the
Employee Plan.
OPTION/SAR GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - -----------------------------------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL RATES OF
OPTIONS/ STOCK PRICE APPRECIATION FOR
SARS OPTION TERM
GRANTED TO
EMPLOYEES
IN FISCAL
YEAR
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
--------------------
NAME OPTIONS/ EXERCISE OR EXPIRATION 5% ($) 10% ($)
SARS BASE PRICE DATE
Granted ($/SH)
(#)
- - ---------------------- ---------- ----------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth R. Kensey, M.D. -- -- -- -- -- --
John E. Nash, P.E. -- -- -- -- -- --
Joseph W. Kaufmann 60,000 32% $13.375 6/30/2006 $504,688 $1,278,978
Douglas G. Evans, P.E. 30,000 16% $13.375 6/30/2006 $252,344 $ 639,489
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND YEAR-END 1996
OPTION VALUES -- The following table provides information on the Named
Executive Officers' unexercised options at June 30, 1996. Included are
options granted under the Employee Plan. No options were exercised by
the Named Executive Officers during fiscal year 1996.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
NAME SHARES VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY-OPTIONS AT
ON ($) OPTIONS AT YEAR-END 1996 (#) YEAR-END 1996 ($)(1)
EXERCISE ---------------------------------------------------------------
(#) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Kaufmann -- -- 184,375 170,625 $885,546.88 $531,328.13
Kenneth R. Kensey, M.D. -- -- -- -- -- --
John E. Nash, P.E. -- -- -- -- -- --
Douglas G. Evans, P.E. -- -- 106,250 93,750 $524,218.75 $314,531.25
</TABLE>
- - ---------------
(1) The value per option is calculated by subtracting the exercise
price from the closing price of the Common Stock on the Nasdaq
National Market on June 28, 1996 of $13.375.
EMPLOYMENT AGREEMENTS
Each of Dr. Kensey and Mr. Nash is party to a five-year written
Employment and Non-Competition Agreement, which expires on July 1,
1998. The agreements provide that each will receive an annual base
salary of $200,000 subject to annual increases or decreases as
determined by the Board of Directors and a $750 per month automobile
allowance. An annual bonus may be paid at the discretion of the Board
of Directors. The agreements restrict Dr. Kensey and Mr. Nash from
competing with the Company during the term of their agreement and for
three years after termination of employment with the Company.
Each of Messrs. Kaufmann and Evans is party to three-year written
Employment and Non-Competition Agreements with the Company which expire
on March 23, 1998. These agreements provide for annual base salaries
of $200,000 and $100,000, respectively, subject to annual increases as
determined by the Board of Directors. An annual bonus may be paid at
the discretion of the Board of Directors. The agreements restrict Mr.
Kaufmann and Mr. Evans from competing with the Company during the term
of the agreement and for twelve months after termination of their
employment with the Company.
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<PAGE> 12
401(K) PLAN
The Company's 401(k) Salary Reduction Plan and Trust (the "401(k)
Plan") became effective on JulyE1, 1989. All employees of the Company
that are at least 21 years of age are eligible to participate in the
401(k) Plan. An eligible employee may elect to contribute two to 15
percent of his or her compensation each year, instead of receiving that
amount in cash, up to the legal limit.
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<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The objectives of the Compensation Committee in determining the
levels and components of executive compensation are (i) retaining the
executive officers in their present positions, (ii) providing them with
both cash and equity incentives to further the interests of the Company
and its stockholders, (iii) compensating them at levels comparable to
those of executive officers at other medical device companies at a
comparable stage of development, and (iv) attracting executive officers
whose experience and backgrounds would help the growth and development
of the Company. Generally, the compensation of all executive officers
is composed of a base salary plus a discretionary bonus based upon
achievement of specified goals. In addition, stock options are granted
to provide the opportunity for compensation based upon the performance
of the Common Stock over time.
The Compensation Committee determined the terms of employment
agreement for each of Dr. Kensey and Messrs. Nash, Kaufmann and Evans.
In determining the base salaries of the executive officers, the
Compensation Committee considered the performance of each executive,
the nature of the executive's responsibilities, the salary levels of
executives at medical device companies at a comparable stage of
development, including other publicly-held companies that are
developing medical device products, and the Company's general
compensation practices. Based on these criteria, the employment
agreement for Mr. Kaufmann provides for a base salary of $200,000 for
fiscal years 1996, 1997 and 1998.
Discretionary bonuses for each of the Company's executive officers
are directly tied to achievement of specified goals of the Company and
are a function of the criteria which the Compensation Committee
believes appropriately take into account the specific areas of
responsibility of the particular officer. Mr. Kaufmann's bonus for
fiscal year 1996 was based upon his level of achievement in the
following areas, among others: developing the Company's products,
developing and executing financing plans (including the Company's
initial public offering) and strengthening the Company's management
team. The Compensation Committee also considered the bonuses paid to
other executive officers in determining Mr. Kaufmann's bonus. The
Compensation Committee awarded Mr. Kaufmann a total cash bonus base of
$100,000 for fiscal year 1996, which amount represented approximately
50% of Mr. Kaufmann's fiscal year 1996 salary. Mr. Kaufmann's bonus
for fiscal year 1997 will be based upon the achievement of specified
objectives, subject to the discretion of the Board of Directors.
The Compensation Committee also granted stock options to executive
officers and other employees in order to provide a long-term incentive
which is directly tied to the performance of the Company's stock. The
exercise price of these stock options were the fair market value of the
Common Stock on the dates of grant. The options generally vest over a
four-year period, based on the date of grant. Vesting periods are used
to retain key employees and to emphasize the long-term aspect of
contribution and performance.
The Compensation Committee granted options based upon its belief
that it is necessary in a highly competitive environment to provide key
personnel the opportunity for significant continuing equity
participation and incentive to create stockholder value over a longer
investment horizon. These options provide an incentive to maximize
stockholder value because they reward option holders only if
stockholders also benefit. In making stock option grants to executives
under the Employee Plan, the Compensation Committee considered a number
of factors, including the past performance of the executive,
achievement of specific delineated goals, the responsibilities of the
executive, review of compensation of executives in
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<PAGE> 14
medical device companies at a comparable stage of development, and
review of the number of stock options each executive currently
possesses.
COMPLIANCE WITH SECTION 162(M) -- The Compensation Committee
currently intends for all compensation paid to the executive officers
to be tax deductible to the Company. Section 162(m) of the Internal
Revenue Code of 1986, as amended ("Section 162(m)"), provides that
compensation paid to certain executive officers in excess of $1,000,000
is nondeductible by the Company for Federal income tax purposes unless,
in general, such compensation is performance-based, is established by a
committee comprised solely of two or more independent directors, is
objective and the plan or agreement providing for such performance
based compensation has been approved by stockholders in advance of
payment. The Compensation Committee believes that the requirements of
Section 162(m) may arbitrarily impact the Company. In the future, the
Compensation Committee may determine to adopt a compensation program
that does not satisfy the conditions of Section 162(m) if in its
judgment, after considering the additional costs of not satisfying
Section 162(m), such program is appropriate.
COMPENSATION COMMITTEE
---------------------------
Robert J. Bobb, Chairman
Harold N. Chefitz
Walter R. Maupay, Jr.
-10-
<PAGE> 15
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns
during the period commencing on December 13, 1995, the date of the
Company's initial public offering, and ending on June 30, 1996, for
the Company, the Nasdaq Market Composite Index and Standard & Poor's
Medical Products and Supplies Index. The comparison assumes $100 was
invested on December 13, 1995, in the Common Stock, the Nasdaq Market
Composite Index and Standard & Poor's Medical Products and Supplies
Index, and assumes the reinvestment of all dividends, if any. Although
the Common Stock was offered at $12.00 per Share in the initial public
offering, the performance graph must begin with the closing price of
the Common Stock on the date of the initial public offering, which was
$13.00.
COMPARISON OF CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
12/13/95 6/30/96
-------- -------
<S> <C> <C>
KENSEY NASH CORPORATION 100 103
Nasdaq Market Composite Index 100 112
Standard & Poor's Medical Products and Supplies Index 100 101
</TABLE>
-11-
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
At the beginning of fiscal year 1996, Dr. Kensey and Messrs. Bobb,
Chefitz, Kaufmann and Maupay served as the Company's Compensation
Committee. Dr. Kensey and Mr. Kaufmann resigned from the Compensation
Committee, effective as of December 13, 1995, the date of the Company's
initial public offering. None of the other Compensation Committee
members has ever served as an officer or employee of the Company.
-12-
<PAGE> 17
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of October 15, 1996, certain
information with respect to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock,
(ii) each Company director, (iii) each of the Named Executive Officers
and (iv) all Company executive officers and Directors as a group.
<TABLE>
Amount and Nature
of Beneficial
Names and Address Ownership (1) Percent of Class
- - ------------------------------------------- -------------------- -----------------
<S> <C> <C>
Kenneth R. Kensey, M.D. (2)(3)............. 2,257,657 31.5%
John E. Nash, P.E. (2)(4).................. 1,114,165 15.
Joseph W. Kaufmann (5)..................... 350,208 4.
Douglas G. Evans, P.E. (6)................. 176,250 2.
Robert J. Bobb (7)......................... 55,000
Harold N. Chefitz.......................... 2,500
Walter R. Maupay, Jr....................... 2,500
All Named Executive Officers and Directors
as a group (7 persons)..................... 3,958,280 53.
</TABLE>
- - ---------------
* Denotes less than one percent.
(1) Unless otherwise indicated below, the persons in the above
table have sole voting and investment power with respect to all
shares owned by them.
(2) The address of the stockholder is c/o the Company, 55 East
Uwchlan Ave., Exton, Pennsylvania 19341.
(3) Represents 2,257,657 shares of Common Stock held by the Kenneth
Kensey Revocable Trust. Excludes 120,000 shares of Common Stock
held by the Kenneth Kensey Gift Trust, to which Dr. Kensey
disclaims beneficial interest.
(4) Represents 1,114,165 shares of Common Stock held by the John E.
Nash Revocable Trust.
(5) Represents 165,833 shares of Common Stock and 184,375 stock
options which may be exercised within 60 days.
(6) Represents 70,000 shares of Common Stock and 106,250 stock
options which may be exercised within 60 days.
(7) Represents 52,500 shares of Common Stock and 2,500 stock options
which may be exercised within 60 days.
PROPOSAL 2
APPROVAL OF THE RESTATED EMPLOYEE PLAN
BACKGROUND
Effective April 1, 1995, the Board of Directors adopted the Kensey
Nash Corporation Employee Incentive Compensation Plan (the "Employee
Plan") pursuant to which options to acquire up to 900,000 shares of
Common Stock may be issued on the terms described below.
On September 16, 1996, the Board of Directors agreed to present
the Restated Employee Plan in the form attached hereto as Exhibit A,
for stockholder approval at the Annual Meeting. The Restated Employee
Plan authorizes and reserves an additional 300,000 shares for the
Employee Plan, all of which are reserved for officers, employees and
consultants. Assuming the adoption of Proposal 2, if options for
1,200,000 shares of Common Stock available under the Restated Employee
Plan were issued, such shares would constitute approximately 14% of the
issued and outstanding Common Stock on OctoberE15, 1996. The Restated
Employee Plan will not be implemented if it is not approved by a
majority of the votes cast, in person or by proxy, at the Annual
Meeting. The Board believes that the size of the Restated Employee
Plan is appropriate.
The Board of Directors believes that the well recognized benefits
of stock option plans outweigh any burden on or dilution of the
stockholders attendant to the award of stock options, and include (i)
the
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<PAGE> 18
encouragement of the acquisition of key employees of a proprietary
interest in the Company; (ii) the ability to fashion attractive
incentive awards based upon the performance of the Company and the
price for Common Stock; and (iii) better alignment of the interests of
officers, employees and consultants with the interests of the Company's
stockholders. In adopting the Restated Employee Plan, the Board of
Directors noted that many other companies have adopted equity plans to
compensate their officers, employees and consultants with grants
comparable in size to that to be effected by the Restated Employee
Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN
FAVOR OF THE RESTATED EMPLOYEE PLAN, AND BELIEVES THAT THE RESTATED
EMPLOYEE PLAN IS APPROPRIATE TO COMPENSATE EMPLOYEES AND CONSULTANTS.
The following brief summary of certain features of the Restated
Employee Plan is qualified in its entirety by reference to the full
text of the Restated Employee Plan.
SUMMARY OF PROVISIONS
The Company's Board of Directors approved the adoption of the
Restated Employee Plan effective as of December 4, 1996, subject to
stockholders' approval. The Restated Employee Plan is a flexible plan
that provides the Compensation Committee broad discretion to fashion
the terms of the awards to provide eligible participants with
stock-based and performance-related incentives as the Compensation
Committee deems appropriate. The Restated Employee Plan permits the
issuance of awards in a variety of forms, including: (i) nonqualified
and incentive stock options for the purchase of Common Stock,
(ii) stock appreciation rights, (iii) restricted stock, (iv) deferred
stock, (v) bonus stock and awards in lieu of obligations, (vi) dividend
equivalents, (vii) other stock-based awards and (viii) performance
awards and cash incentive awards. Options granted will provide for the
purchase of Common Stock at prices determined by the Compensation
Committee, but in no event less than fair market value on the date of
grant.
The persons eligible to participate in the Restated Employee Plan
are officers, employees and consultants of the Company or any
subsidiary of the Company who, in the opinion of the Compensation
Committee, contribute to the growth and success of the Company or its
subsidiaries. The purpose of the Restated Employee Plan is to promote
the overall financial objectives of the Company and its stockholders by
motivating eligible participants to achieve long-term growth in
stockholder equity in the Company and to retain the association of
these individuals. The Restated Employee Plan currently is
administered by the Compensation Committee. The Compensation Committee
is composed solely of at least two "disinterested" directors within the
meaning of Rule 16b-3 under the Exchange Act, who are also "outside
directors" under Section 162(m) of the Internal Revenue Code of 1986,
as amended. A member of the Compensation Committee will not exercise
any discretion with respect to himself or herself under the Restated
Employee Plan.
The Restated Employee Plan provides for the award of up to
1,200,000 shares of Common Stock. As of October 15, 1996, options for
791,568 shares of Common Stock had been granted under the terms of the
Employee Plan and were outstanding, 399,708 of which are currently
exercisable. At the discretion of the Compensation Committee, shares
of Common Stock subject to an award under the Restated Employee Plan
that remain unissued upon termination of such award, are forfeited or
are received by the Company as consideration for the exercise or
payment of an award. In the event of a stock dividend, stock split,
recapitalization, sale of substantially all of the assets of the
Company, reorganization or other similar event, the Compensation
Committee will adjust the aggregate number of shares of Common Stock
subject to the Restated Employee Plan and the number, class and price
of shares subject to outstanding awards. Awards are subject to vesting
schedules specified in the award.
-14-
<PAGE> 19
As of October 15, 1996, stock options for 803,600 shares have been
granted under the terms of the Employee Plan. The benefits to be
received by participants in the Restated Employee Plan are not
currently determinable.
NEW PLAN BENEFITS
EMPLOYEE INCENTIVE COMPENSATION PLAN
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) (1) Number of Units
- - ------------------ -------------------- ---------------
<S> <C> <C>
Joseph W. Kaufmann, Chief Executive Officer, President,
Chief Financial Officer, Secretary and Director -- 60,000
Kenneth R. Kensey, M.D., Chairman of the Board -- --
John E. Nash, P.E., Vice Chairman of the Board and
Executive Vice President -- --
Douglas G. Evans, P.E., Chief Operating Officer,
Assistant Secretary and Director -- 30,000
Executive Group -- 90,000
Nonemployee Director Group -- --
Non-Executive Officer Employee Group -- 187,500
</TABLE>
(1) The dollar value of the grants is indeterminate at this time as
these grants are subject to a vesting schedule and the value of
the grants are dependent on the price of the Common Stock
achieving levels above the grant price. All of the grants were
granted at the fair market value of the Common Stock on the date
of grant.
EFFECT OF FEDERAL INCOME TAXATION
Stock options granted under the Employee Plan may be either
incentive stock options qualified under Section 422 of the Code
("ISOs") or NQSOs. The following summary of tax consequences with
respect to the awards granted under the Restated Employee Plan is not
comprehensive and is based upon laws and regulations in effect on
October 15, 1996. Such laws and regulations are subject to change.
There are generally no Federal income tax consequences either to
the option holder or to the Company upon the grant of a stock option.
On exercise of an ISO, the option holder will not recognize any income
and the Company will not be entitled to a deduction for tax purposes,
although such exercise may give rise to liability for the option holder
under the alternative minimum tax provisions of the Code. Generally,
if the option holder disposes of shares acquired upon exercise of an
ISO within two years of the date of grant or one year of the date of
exercise, the option holder will recognize compensation income and the
Company will be entitled to a deduction for tax purposes in the amount
of the excess of the fair market value of the shares on the date of
exercise over the option exercise price (or the gain on sale, if less).
Otherwise, the Company will not be entitled to any deduction for tax
purposes upon disposition of such shares, and the entire gain for the
option holder will be treated as a capital gain. On exercise of an
NQSO, the amount by which the fair market value of the shares on the
date of exercise exceeds the option exercise price will generally be
taxable to the option holder as compensation income and will generally
be deductible for tax purposes by the Company. The dispositions of
shares acquired upon exercise of an NQSO will generally result in a
capital gain or loss for the option holder, but will have no
consequences for the Company. See "Report of the Compensation
Committee of the Board of Directors" for the description of the
implications of Section 162(m).
-15-
<PAGE> 20
In the event any payments or rights accruing to an option holder
upon a "change in control", or any other payments awarded under the
Restated Employee Plan, constitute "parachute payments" under Section
280G of the Code, depending upon the amount of such payments accruing
and the other income of the option holder from the Company, the option
holder may be subject to an exercise tax (in addition to ordinary
income tax) and the Company may be disallowed a deduction for the
amount of the actual payment.
PROPOSAL 3
APPROVAL OF THE RESTATED DIRECTORS' PLAN
BACKGROUND
Effective September 1, 1995, the Board of Directors adopted the
Kensey Nash Corporation Nonemployee Directors' Stock Option Plan (the
"Directors' Plan") pursuant to which options to acquire up to 30,000
shares of Common Stock may be issued on the terms described below.
On September 16, 1996, the Board of Directors agreed to present
the Restated Directors' Plan in the form attached hereto as Exhibit B,
for stockholder approval at the Annual Meeting. The Restated
Directors' Plan provides for an additional 30,000 shares to the
Directors' Plan, all of which are reserved for nonemployee directors.
Assuming the adoption of Proposal 3, if options for 60,000 shares of
Common Stock available under the Restated Directors' Plan were issued,
such shares would constitute approximately 1% of the issued and
outstanding Common Stock on October 15, 1996. The Restated Directors'
Plan will not be implemented if it is not approved by a majority of the
votes cast, in person or by proxy, at the Annual Meeting. The Board
believes that the size of the Restated Directors' Plan is appropriate.
The Board of Directors believes that the well recognized benefits
of stock option plans outweigh any burden to the stockholders attendant
to the award of stock options, and include (i) the encouragement of the
acquisition of nonemployee directors of a proprietary interest in the
Company; and (ii)Ebetter alignment of the interests of nonemployee
directors with the interests of the Company's stockholders. In
adopting the Restated Directors' Plan, the Board of Directors noted
that many other companies have adopted equity plans to compensate their
nonemployee directors with grants comparable in size to that to be
effected by the Restated Directors' Plan. THE BOARD OF DIRECTORS
RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE RESTATED
DIRECTORS' PLAN, AND BELIEVES THAT THE RESTATED DIRECTORS' PLAN IS
APPROPRIATE TO COMPENSATE NONEMPLOYEE DIRECTORS.
The following brief summary of certain features of the Restated
Directors' Plan is qualified in its entirety by reference to the full
text of the Restated Directors' Plan.
SUMMARY OF PROVISIONS
The Company's Board of Directors approved the adoption of the
Restated Directors' Plan effective as of December 4, 1996, subject to
stockholders' approval. The Restated Directors' Plan grants
nonqualified stock options for the purchase of Common Stock to
directors who are not employees.
The purpose of the Restated Directors' Plan is to promote the
overall financial objectives of the Company and its stockholders by
motivating directors to achieve long-term growth in stockholder equity
in the Company, to further align the interest of such directors with
those of the Company's stockholders and to retain the association of
these directors. The Restated Directors' Plan is currently
administered by the Compensation Committee.
-16-
<PAGE> 21
The Restated Directors' Plan provides for the award of up to
60,000 shares of Common Stock. The Restated Directors' Plan provides
for (i) the grant of an option to purchase 5,000 shares of Common Stock
to each participant who was a Nonemployee Director of the Company or of
a subsidiary on the Offering date and (ii) a grant of an option to
purchase 2,500 shares of Common Stock on the date of each regular
annual stockholder meeting after the effective date to each participant
who is a Nonemployee Director upon such date and either is continuing
as a Nonemployee Director subsequent to the meeting or who is elected
at such meeting to serve as a Nonemployee Director. Options granted
under the Directors' Plan must provide for the purchase of Common Stock
at fair market value on the date of grant. No stock option may be
exercisable later than the tenth anniversary date of its grant.
As of October 15, 1996, stock options for 15,000 shares have been
granted under the terms of the Restated Directors' Plan, 7,500 of which
are exercisable. The benefits to be received by participants in the
Restated Directors' Plan are not currently determinable.
NEW PLAN BENEFITS
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) Number of Units
- - ---------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Joseph W. Kaufmann, Chief Executive Officer, President,
Chief Financial Officer, Secretary and Director -- --
Kenneth R. Kensey, M.D., Chairman of the Board -- --
John E. Nash, P.E., Vice Chairman of the Board and
Executive Vice President -- --
Douglas G. Evans, P.E., Chief Operating Officer,
Assistant Secretary and Director -- --
Executive Group -- --
Nonemployee Director Group (1) -- 15,000
Non-Executive Officer Employee Group -- --
</TABLE>
(1) The dollar value of the grants is indeterminate at this time as
these grants are subject to a vesting schedule and the value of
the grants are dependent on the price of the Common Stock
achieving levels above the grant price. All of the grants were
granted at the fair market value of the Common Stock on the date
of grant.
EFFECT OF FEDERAL INCOME TAXATION
Stock options granted under the Restated Directors' Plan are
NQSOs. The following summary of tax consequences with respect to the
awards granted under the Restated Directors' Plan is not comprehensive
and is based upon laws and regulations in effect on October 15, 1996.
Such laws and regulations are subject to change.
There are generally no Federal income tax consequences either to
the option holder or to the Company upon the grant of a stock option.
On exercise of an NQSO, the amount by which the fair market value of
the shares on the date of exercise exceeds the option exercise price
will generally be taxable to the option holder as compensation income
and will generally be deductible for tax purposes by the Company. The
dispositions of shares acquired upon exercise of an NQSO will generally
result in a capital gain or loss for
-17-
<PAGE> 22
the option holder, but will have no consequences for the Company. See
"Report of the Compensation Committee of the Board of Directors" for
the description of the implications of Section 162(m).
In the event any payments or rights accruing to an option holder
upon a "change in control", or any other payments awarded under the
Restated Directors' Plan, constitute "parachute payments" under Section
280G of the Code, depending upon the amount of such payments accruing
and the other income of the option holder from the Company, the option
holder may be subject to an exercise tax (in addition to ordinary
income tax) and the Company may be disallowed a deduction for the
amount of the actual payment.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of the Audit
Committee, has appointed Deloitte & Touche LLP, independent certified
public accountants, as auditors of the Company's financial statements
for 1997. Deloitte & Touche LLP has acted as auditors for the Company
since 1990.
The Board of Directors has determined to afford stockholders the
opportunity to express their opinions on the matter of auditors, and,
accordingly, is submitting to the stockholders at the Annual Meeting a
proposal to ratify the Board of Directors' appointment of Deloitte &
Touche LLP. If a majority of the shares voted at the Annual Meeting,
in person or by proxy, are not voted in favor of the ratification of
the appointment of Deloitte & Touche LLP, the Board of Directors will
interpret this as an instruction to seek other auditors. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS AUDITORS
FOR THE 1997 FISCAL YEAR.
It is expected that representatives of Deloitte & Touche LLP will
be present at the meeting and will be available to respond to
questions. They will be given an opportunity to make a statement if
they desire to do so.
MISCELLANEOUS AND OTHER MATTERS
SOLICITATION -- The cost of this proxy solicitation will be borne
by the Company. The Company may request banks, brokers, fiduciaries,
custodians, nominees and certain other record holders to send proxies,
proxy statements and other materials to their principals at the
Company's expense. Such banks, brokers, fiduciaries, custodians,
nominees and other record holders will be reimbursed by the Company for
their reasonable out-of-pocket expenses of solicitation. The Company
does not anticipate that costs and expenses incurred in connection with
this proxy solicitation will exceed an amount normally expended for a
proxy solicitation for an election of directors in the absence of a
contest.
PROPOSALS OF STOCKHOLDERS -- Proposals of stockholders intended to
be considered at the 1997 Annual Meeting of Stockholders must be
received by the Secretary of the Company not less than 120 days nor
more than 150 days prior to October 30, 1997.
OTHER BUSINESS -- The Board of Directors is not aware of any other
matters to be presented at the Annual Meeting other than those
mentioned in the Company's Notice of Annual Meeting of Stockholders
enclosed herewith. If any other matters are properly brought before
the Annual Meeting, however, it is intended that the persons named in
the proxy will vote as the Board of Directors directs.
-18-
<PAGE> 23
ADDITIONAL INFORMATION -- THE COMPANY WILL FURNISH WITHOUT CHARGE
A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR ITS 1996 FISCAL YEAR, AS
FILED WITH THE SEC, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO, UPON THE WRITTEN REQUEST OF ANY PERSON WHO IS A STOCKHOLDER AS
OF THE RECORD DATE, AND WILL PROVIDE COPIES OF THE EXHIBITS TO SUCH
ANNUAL REPORT UPON PAYMENT OF A REASONABLE FEE WHICH SHALL NOT EXCEED
THE COMPANY'S REASONABLE EXPENSES INCURRED IN CONNECTION THEREWITH.
REQUESTS FOR SUCH MATERIALS SHOULD BE DIRECTED TO KENSEY NASH
CORPORATION--INVESTOR RELATIONS, 55 EAST UWCHLAN AVENUE, EXTON,
PENNSYLVANIA 19341, ATTENTION: SECRETARY.
By order of the Board of Directors,
Joseph W. Kaufmann
President and Secretary
Exton, Pennsylvania
October 30, 1996
-19-
<PAGE> 24
EXHIBIT A
FIRST AMENDED AND RESTATED
KENSEY NASH CORPORATION
EMPLOYEE INCENTIVE COMPENSATION PLAN
ARTICLE I
ESTABLISHMENT
1.1 Purpose. The Kensey Nash Corporation Employee
Incentive Compensation Plan ("Plan") is hereby established by Kensey Nash
Corporation ("Company"). The purpose of the Plan is to promote the overall
financial objectives of the Company and its stockholders by motivating those
persons selected to participate in the Plan to achieve long-term growth in
stockholder equity in the Company and by retaining the association of those
individuals who are instrumental in achieving this growth. The Plan is
intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as defined herein) to the
extent deemed appropriate by the Committee (as defined herein). The Plan and
the grant of awards thereunder are expressly conditioned upon the Plan's
approval by the stockholders of the Company. If such approval is not obtained,
then this Plan and all Awards (as defined herein) hereunder shall be null and
void ab initio. The Plan is adopted, subject to stockholder approval,
effective as of April 1, 1995.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
2.1 "Affiliate" means any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated association or other entity (other than the Company) that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company including, without
limitation, any member of an affiliated group of which the Company is a common
parent corporation as provided in Section 1504 of the Code.
2.2 "Agreement" or "Award Agreement" means, individually or
collectively, any agreement entered into pursuant to the Plan pursuant to which
an Award is granted to a Participant.
2.3 "Award" means any Option, SAR, Restricted Stock, Deferred
Stock, Stock, Dividend Equivalent, Other Stock-Based Award, Performance Award
or Cash Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
-1-
<PAGE> 25
2.4 "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted hereunder. If,
upon a Participant's death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the Participant's
Representative.
2.5 "Board of Directors" or "Board" means the Board of Directors
of the Company.
2.6 "Cash Incentive Award" means a conditional right granted to a
Participant under Section 10.4(c) hereof to receive a cash payment, unless
otherwise determined by the Committee, after the end of a specified period.
2.7 "Cause" shall mean, for purposes of whether and when a
Participant has incurred a Termination of Employment for Cause, any act or
omission which permits the Company to terminate the written agreement or
arrangement between the Participant and the Company or an Affiliate for "cause"
as defined in such agreement or arrangement, or in the event there is no such
agreement or arrangement or the agreement or arrangement does not define the
term "cause" or a substantially equivalent term, then Cause shall mean (a) any
act or failure to act deemed to constitute cause under the Company's
established practices, policies or guidelines applicable to the Participant or
(b) the Participant's act or omission which constitutes gross misconduct with
respect to the Company or an Affiliate in any material respect, including,
without limitation, an act or omission of a criminal nature, the result of
which is detrimental to the interests of the Company or an Affiliate, or
conduct, or the omission of conduct, which constitutes a material breach of a
duty the Participant owes to the Company or an Affiliate.
2.8 "Change in Control" and "Change in Control Price" have the
meanings set forth in Sections 12.2 and 12.3, respectively.
2.9 "Code" or "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.
2.10 "Commission" means the Securities and Exchange Commission or
any successor agency.
2.11 "Committee" means the Compensation Committee of the Board or
such other Board committee as may be designated by the Board to administer the
Plan; provided, however, that on and after a Public Offering the Committee
shall consist solely of two or more directors, each of whom is a "disinterested
person" within the meaning of Rule 16b-3 under the Exchange Act and each of
whom is also an "outside director" under Section 162(m) of the Code. In the
absence of appointment, the Board (or on any after a Public Offering, the
portion thereof that are disinterested persons and outside directors) shall
constitute the Committee.
-2-
<PAGE> 26
2.12 "Common Stock" means the shares of the $0.01 par value common
stock of the Company, whether presently or hereafter issued, and any other
stock or security resulting from adjustment thereof as described hereinafter or
the common stock of any successor to the Company which is designated for the
purpose of the Plan.
2.13 "Company" means Kensey Nash Corporation, a Delaware
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.
2.14 "Covered Employee" means a Participant who is a "covered
employee" within the meaning of Section 162(m) of the Code.
2.15 "Deferred Stock" means a right, granted to a Participant under
Section 9.1 hereof, to receive Common Stock, cash or a combination thereof at
the end of a specified deferral period.
2.16 "Disability" means a mental or physical illness that entitles
the Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable
of performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan
if it is the result of (i) a willfully self-inflicted injury or willfully
self-induced sickness; or (ii) an injury or disease contracted, suffered, or
incurred while participating in a criminal offense. The determination of
Disability shall be made by the Committee. The determination of Disability for
purposes of this Plan shall not be construed to be an admission of disability
for any other purpose.
2.17 "Dividend Equivalent" means a right, granted to a Participant
under Section 10.2, to receive cash, Common Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Common Stock.
2.18 "Effective Date" means April 1, 1995.
2.19 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2.20 "Fair Market Value" means:
(a) prior to a Public Offering, the value determined on
the basis of the good faith determination of the Committee and without regard
to whether the Common Stock is restricted, illiquid or represents a minority
interest, unless expressly provided otherwise in an Agreement; and
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(b) on or after a Public Offering, the value determined
on the basis of the good faith determination of the Committee, without regard
to whether the Common Stock is restricted or represents a minority interest,
pursuant to the applicable method described below:
(i) if the Common Stock is listed on a national
securities exchange or quoted on NASDAQ, the closing price of
the Common Stock on the relevant date (or, if such date is not
a business day or a day on which quotations are reported, then
on the immediately preceding date on which quotations were
reported), as reported by the principal national exchange on
which such shares are traded (in the case of an exchange) or
by NASDAQ, as the case may be;
(ii) if the Common Stock is not listed on a
national securities exchange or quoted on NASDAQ, but is
actively traded in the over-the-counter market, the average of
the closing bid and asked prices for the Common Stock on the
relevant date (or, if such date is not a business day or a day
on which quotations are reported, then on the immediately
preceding date on which quotations were reported), or the most
recent preceding date for which such quotations are reported;
and
(iii) if, on the relevant date, the Common Stock is
not publicly traded or reported as described in (i) or (ii),
the value determined in good faith by the Committee.
2.21 "Grant Date" means the date as of which an Award is granted
pursuant to the Plan.
2.22 "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of Section 422
of the Code.
2.23 "Kensey Nash Entities" mean Kenneth R. Kensey ("Kensey") and
John Nash ("Nash"), their respective spouses, their respective heirs, and any
group (within the meaning of Section 13(d)(3) of the Exchange Act) of which any
of Kensey, Nash, their spouses or their heirs is a member for purposes of
acquiring, holding or disposing of securities of the Company, any trust
established by or for the benefit of any of the foregoing and any other entity
controlled by or for the benefit of any of the foregoing.
2.24 "Kensey Nash Interests" mean the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) or the pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the Exchange Act)
of the Kensey Nash Entities in the outstanding voting securities of the Company
entitled to vote generally in the election of directors or such other
securities as may be specifically referenced.
2.25 "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq
National Market.
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2.26 "Nonqualified Stock Option" means an Option to purchase Common
Stock in the Company granted under the Plan, the taxation of which is pursuant
to Section 83 of the Code.
2.27 "Option Period" means the period during which an Option shall
be exercisable in accordance with the related Agreement and Article VI.
2.28 "Option Price" means the price at which the Common Stock may
be purchased under an Option as provided in Section 6.3(b).
2.29 "Other Stock Based Awards" means Awards granted to a
Participant under Section 10.3 hereof.
2.30 "Participant" means a person who satisfies the eligibility
conditions of Article V and to whom an Award has been granted by the Committee
under the Plan, and in the event a Representative is appointed for a
Participant or another person becomes a Representative, then the term
"Participant" shall mean such Representative. The term shall also include a
trust for the benefit of the Participant, a partnership the interest of which
was held by or for the benefit of the Participant, the Participant's parents,
spouse or descendants, or a custodian under a uniform gifts to minors act or
similar statute for the benefit of the Participant's descendants, to the extent
permitted by the Committee and not inconsistent with Rule 16b-3.
Notwithstanding the foregoing, the term "Termination of Employment" shall mean
the Termination of Employment of the person to whom the Award was originally
granted.
2.31 "Performance Award" means a right, granted to a Participant
under Section 10.4 hereof, to receive Awards based upon performance criteria
specified by the Committee.
2.32 "Plan" means the Kensey Nash Corporation Employee Incentive
Compensation Plan, as herein set forth and as may be amended from time to time.
2.33 "Public Offering" means the initial public offering of shares
of Common Stock under the Securities Act.
2.34 "Representative" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of
the Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or
(d) any person to whom an Option has been permissibly transferred; provided
that only one of the foregoing shall be the Representative at any point in time
as determined under applicable law and recognized by the Committee.
2.35 "Restricted Stock" means Common Stock granted to a Participant
under Section 8.1 hereof, that is subject to certain restrictions and to a risk
of forfeiture.
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2.36 "Retirement" means the Participant's Termination of Employment
after attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company or an Affiliate, if the Participant is covered by such a plan, or
if the Participant is not covered by such a plan, then age 65, or age 55 with
the accrual of 10 years of service.
2.37 "Rule 16b-3"and "Rule 16a-1(c)(3)" mean Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
2.38 "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
2.39 "Stock Appreciation Right" means a right granted under Article
VII.
2.40 "Stock Option" or "Option" means a right, granted to a
Participant under Section 6.1 hereof, to purchase Common Stock or other Awards
at a specified price during specified time periods.
2.41 "Termination of Employment" means the occurrence of any act or
event, whether pursuant to an employment agreement or otherwise, that actually
or effectively causes or results in the person's ceasing, for whatever reason,
to be an officer, independent contractor, director or employee of the Company
or of any Affiliate, or to be an officer, independent contractor, director or
employee of any entity that provides services to the Company or an Affiliate,
including, without limitation, death, Disability, dismissal, severance at the
election of the Participant, Retirement, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company or its Affiliates
of all businesses owned or operated by the Company or its Affiliates. With
respect to any person who is not an employee with respect to the Company or an
Affiliate of the Company, the Agreement shall establish what act or event shall
constitute a Termination of Employment for purposes of the Plan. A transfer of
employment from the Company to an Affiliate, or from an Affiliate to the
Company, shall not be a Termination of Employment, unless expressly determined
by the Committee. A Termination of Employment shall occur for an employee who
is employed by an Affiliate of the company if the Affiliate shall cease to be
an Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate of the Company.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
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ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. The Plan shall be
administered by the Committee. A majority of the Committee shall constitute a
quorum at any meeting thereof (including by telephone conference) and the acts
of a majority of the members present, or acts approved in writing by a majority
of the entire Committee without a meeting, shall be the acts of the Committee
for purposes of this Plan. The Committee may authorize any one or more of its
members or an officer of the Company to execute and deliver documents on behalf
of the Committee. A member of the Committee shall not exercise any discretion
respecting himself or herself under the Plan. The Board shall have the
authority to remove, replace or fill any vacancy of any member of the Committee
upon notice to the Committee and the affected member. Any member of the
Committee may resign upon notice to the Board. The Committee may allocate
among one or more of its members, or may delegate to one or more of its agents,
such duties and responsibilities as it determines.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) to select those persons to whom Awards may be granted
from time to time;
(b) to determine whether and to what extent Awards or any
combination thereof are to be granted hereunder;
(c) to determine the number of shares of Common Stock to
be covered by each stock-based Award granted hereunder;
(d) to determine the terms and conditions of any Award
granted hereunder (including, but not limited to, the Option Price,
the Option Period, any exercise restriction or limitation and any
exercise acceleration, forfeiture or waiver regarding any Award, any
shares of Common Stock relating thereto, any performance criteria and
the satisfaction of each criteria);
(e) to adjust the terms and conditions, at any time or
from time to time, of any Award, subject to the limitations of Section
13.1;
(f) to determine to what extent and under what
circumstances Common Stock and other amounts payable with respect to
an Award shall be deferred;
(g) to determine under what circumstances an Award may be
settled in cash or Common Stock;
(h) to provide for the forms of Agreements to be
utilized in connection with the Plan;
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(i) to determine whether a Participant has a Disability
or a Retirement;
(j) to determine what securities law requirements are
applicable to the Plan, Awards and the issuance of shares of Common
Stock under the Plan and to require of a Participant that appropriate
action be taken with respect to such requirements;
(k) to cancel, with the consent of the Participant or as
otherwise provided in the Plan or an Agreement, outstanding Awards;
(l) to interpret and make final determinations with
respect to the remaining number of shares of Common Stock available
under this Plan;
(m) to require, as a condition of the exercise of an
Award or the issuance or transfer of a certificate of Common Stock,
the withholding from a Participant of the amount of any Federal, state
or local taxes as may be necessary in order for the Company or any
other employer to obtain a deduction or as may be otherwise required
by law;
(n) to determine whether and with what effect a
Participant has incurred a Termination of Employment;
(o) to determine whether the Company or any other person
has a right or obligation to purchase Common Stock from a Participant
and, if so, the terms and conditions on which such Common Stock is to
be purchased;
(p) to determine the restrictions or limitations on the
transfer of Common Stock;
(q) to determine whether an Award is to be adjusted,
modified or purchased, or is to become fully exercisable, under the
Plan or the terms of an Agreement;
(r) to determine the permissible methods of Award
exercise and payment, including cashless exercise arrangements;
(s) to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration
of the Plan; and
(t) to appoint and compensate agents, counsel, auditors
or other specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan. The Committee's policies and
procedures may differ with respect to Awards granted at different times or to
different Participants.
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Any determination made by the Committee pursuant to the provisions of
the Plan shall be made in its sole discretion, and in the case of any
determination relating to an Award, may be made at the time of the grant of the
Award or, unless in contravention of any express term of the Plan or an
Agreement, at any time thereafter. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Participants. No determination shall be
subject to de novo review if challenged in court.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Number of Shares. Subject to the adjustment under Section
4.6, the total number of shares of Common Stock reserved and available for
distribution pursuant to Awards under the Plan shall be 1,200,000 shares of
Common Stock authorized for issuance on the Effective Date. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
4.2 Release of Shares. Subject to Section 7.3(f), if any shares
of Common Stock that are subject to any Award cease to be subject to an Award
or are forfeited, if any Award otherwise terminates without issuance of shares
of Common Stock being made to the Participant, or if any shares (whether or not
restricted) of Common Stock are received by the Company in connection with the
exercise of an Award, including the satisfaction of any tax withholding
obligation, such shares, in the discretion of the Committee, may again be
available for distribution in connection with Awards under the Plan.
4.3 Restrictions on Shares. Shares of Common Stock issued as or
in conjunction with an Award shall be subject to the terms and conditions
specified herein and to such other terms, conditions and restrictions as the
Committee in its discretion may determine or provide in an Award Agreement.
The Company shall not be required to issue or deliver any certificates for
shares of Common Stock, cash or other property prior to (i) the listing of such
shares on any stock exchange or NASDAQ (or other public market) on which the
Common Stock may then be listed (or regularly traded), (ii) the completion of
any registration or qualification of such shares under Federal or state law, or
any ruling or regulation of any government body which the Committee determines
to be necessary or advisable, and (iii) the satisfaction of any applicable
withholding obligation in order for the Company or an Affiliate to obtain a
deduction with respect to the exercise of an Award. The Company may cause any
certificate for any share of Common Stock to be delivered to be properly marked
with a legend or other notation reflecting the limitations on transfer of such
Common Stock as provided in this Plan or as the Committee may otherwise
require. The Committee may require any person exercising an Award to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares of Common Stock in
compliance with applicable law or otherwise. Fractional shares shall not be
delivered, but shall be rounded to the next lower whole number of shares.
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4.4 Stockholder Rights. No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Award until, after
proper exercise of the Award or other action required, such shares shall have
been recorded on the Company's official stockholder records as having been
issued or transferred. Upon exercise of the Award or any portion thereof, the
Company will have thirty (30) days in which to issue the shares, and the
Participant will not be treated as a stockholder for any purpose whatsoever
prior to such issuance. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to the date such shares are
recorded as issued or transferred in the Company's official stockholder
records, except as provided herein or in an Agreement.
4.5 Best Efforts To Register. If there has been a Public
Offering, the Company will register under the Securities Act the Common Stock
delivered or deliverable pursuant to Awards on Commission Form S-8 if available
to the Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon after stockholder approval of the Plan as the Committee, in its
sole discretion, shall deem such registration appropriate. The Company will
use its best efforts to cause the registration statement to become effective
and will file such supplements and amendments to the registration statement as
may be necessary to keep the registration statement in effect until the
earliest of (a) one year following the expiration of the Option Period of the
last Option outstanding, (b) the date the Company is no longer a reporting
company under the Exchange Act and (c) the date all Participants have disposed
of all shares delivered pursuant to any Award. The Company may delay the
foregoing obligation if the Committee reasonably determines that any such
registration would materially and adversely affect the Company's interests or
if there is no material benefit to Participants.
4.6 Adjustments. In the event of any Company stock dividend,
stock split, combination or exchange of shares, recapitalization or other
change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split- up, spin-off,
split-off or distribution to Company stockholders other than a normal cash
dividend), sale by the Company of all or a substantial portion of its assets
(measured on either a stand-alone or consolidated basis), reorganization,
rights offering, a partial or complete liquidation, or any other corporate
transaction, Company stock offering or event involving the Company and having
an effect similar to any of the foregoing, then the Committee shall adjust or
substitute, as the case may be, the number of shares of Common Stock available
for Awards under the Plan, the number of shares of Common Stock covered by
outstanding Awards, the exercise price per share of outstanding Awards, and
performance conditions and any other characteristics or terms of the Awards as
the Committee shall deem necessary or appropriate to reflect equitably the
effects of such changes to the Participants; provided, however, that the
Committee may limit any such adjustment so as to maintain the deductibility of
the Awards under Section 162(m) and that any fractional shares resulting from
such adjustment shall be eliminated by rounding to the next lower whole number
of shares with appropriate payment for such fractional shares as shall
reasonably be determined by the Committee.
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ARTICLE V
ELIGIBILITY
5.1 Eligibility. Except as herein provided, the persons who shall
be eligible to participate in the Plan and be granted Awards shall be those
persons who are directors, officers, employees and consultants of the Company
or any subsidiary of the Company, who shall be in a position, in the opinion of
the Committee, to make contributions to the growth, management, protection and
success of the Company and its subsidiaries. Of those persons described in the
preceding sentence, the Committee may, from time to time, select persons to be
granted Awards and shall determine the terms and conditions with respect
thereto. In making any such selection and in determining the form of the
Award, the Committee may give consideration to the person's functions and
responsibilities, the person's contributions to the Company and its
subsidiaries, the value of the individual's service to the Company and its
subsidiaries and such other factors deemed relevant by the Committee. The
Committee may designate in writing that any person who is not eligible to
participate in the Plan if such person would otherwise be eligible to
participate in this Plan (and members of the Committee are expressly excluded
from participation in the Plan).
ARTICLE VI
STOCK OPTIONS
6.1 General. The Committee shall have authority to grant Stock
Options under the Plan at any time or from time to time. Stock Options may be
granted alone or in addition to other Awards and may be either Incentive Stock
Options or Nonqualified Stock Options. A Stock Option shall entitle the
Participant to receive shares of Common Stock upon exercise of such Option,
subject to the Participant's satisfaction in full of any conditions,
restrictions or limitations imposed in accordance with the Plan or an Agreement
(the terms and provisions of which may differ from other Agreements),
including, without limitation, payment of the Option Price. During any
three-calendar year period, Options for no more than 1,000,000 shares of Common
Stock shall be granted to any Participant.
6.2 Grant and Exercise. The grant of a Stock Option shall occur
as of the date the Committee determines. Each Option granted under this Plan
shall be evidenced by an Agreement, in a form approved by the Committee, which
shall embody the terms and conditions of such Option and which shall be subject
to the express terms and conditions set forth in the Plan. Such Agreement
shall become effective upon execution by the Participant. Only a person who is
a common-law employee of the Company, any parent corporation of the Company or
a subsidiary (as such terms are defined in Section 424 of the Code) on the date
of grant shall be eligible to be granted an Option which is intended to be and
is an Incentive Stock Option. To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Nonqualified Stock
Option. Anything in the Plan to the contrary
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notwithstanding, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under Section
422 of the Code or, without the consent of the Participant affected, to
disqualify any Incentive Stock Option under such Section 422.
6.3 Terms and Conditions. Stock Options shall be subject to such
terms and conditions as shall be determined by the Committee, including the
following:
(a) Option Period. The Option Period of each Stock
Option shall be fixed by the Committee; provided that no Stock Option
shall be exercisable more than ten (10) years after the date the Stock
Option is granted. In the case of an Incentive Stock Option granted
to an individual who owns more than ten percent (10%) of the combined
voting power of all classes of stock of the Company, a corporation
which is a parent corporation of the Company or any subsidiary of the
Company (each as defined in Section 424 of the Code), the Option
Period shall not exceed five (5) years from the date of grant. No
Option which is intended to be an Incentive Stock Option shall be
granted more than ten (10) years from the date the Plan is adopted by
the Company or the date the Plan is approved by the stockholders of
the Company, whichever is earlier.
(b) Option Price. The Option Price per share of the
Common Stock purchasable under a Stock Option shall be determined by
the Committee; provided, however, that the Option Price per share
shall be not less than the Fair Market Value per share on the date the
Option is granted. If such Option is intended to qualify as an
Incentive Stock Option and is granted to an individual who owns or who
is deemed to own stock possessing more than ten percent (10%) of the
combined voting power of all classes of stock of the Company, a
corporation which is a parent corporation of the Company or any
subsidiary of the Company (each as defined in Section 424 of the
Code), the Option Price per share shall not be less than one hundred
ten percent (110%) of such Fair Market Value per share.
(c) Exercisability. Subject to Section 12.1, Stock
Options shall be exercisable at such time or times and subject
to such terms and conditions as shall be determined by the Committee.
If the Committee provides that any Stock Option is exercisable
only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part. In addition,
the Committee may at any time accelerate the exercisability of any
Stock Option. If the Committee intends that an Option be an Incentive
Stock Option, the Committee may, in its discretion, provide that the
aggregate Fair Market Value (determined at the Grant Date) of the
Common Stock as to which such Incentive Stock Option which is
exercisable for the first time during any calendar year shall not
exceed $100,000.
(d) Method of Exercise. Subject to the provisions of
this Article VI, a Participant may exercise Stock Options, in whole or
in part, at any time during the Option Period by the Participant's
giving written notice of exercise on a form provided by the Committee
(if
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available) to the Company specifying the number of shares of Common
Stock subject to the Stock Option to be purchased. Such notice shall
be accompanied by payment in full of the purchase price by cash or
check or such other form of payment as the Company may accept. If
approved by the Committee, payment in full or in part may also be made
(i) by delivering Common Stock already owned by the Participant for a
period of at least six (6) months prior to such payment and having a
total Fair Market Value on the date of such delivery equal to the
Option Price; (ii) by the execution and delivery of a full recourse
promissory note or other full recourse evidence of indebtedness (and
any security agreement thereunder) satisfactory to the Committee and
permitted in accordance with Section 6.3(e); (iii) by authorizing the
Company to retain shares of Common Stock already owned by the
Participant for a period of at least six (6) months prior to such
payment and which would otherwise be issuable upon exercise of the
Option having a total Fair Market Value on the date of delivery equal
to the Option Price; (iv) by the delivery of cash or the extension of
credit by a broker- dealer to whom the Participant has submitted a
notice of exercise or otherwise indicated an intent to exercise an
Option (in accordance with Part 220, Chapter II, Title 12 of the Code
of Federal Regulations, so-called "cashless" exercise); or (v) by any
combination of the foregoing. If payment of the Option Price of a
Nonqualified Stock Option is made in whole or in part in the form of
Restricted Stock or Deferred Stock, the number of shares of Common
Stock to be received upon such exercise that is equal to the number of
shares of Restricted Stock or Deferred Stock used for payment of the
Option Price shall be subject to the same forfeiture restrictions or
deferral limitations to which such Restricted Stock or Deferred Stock
was subject, unless otherwise determined by the Committee. In the
case of an Incentive Stock Option, the right to make a payment in the
form of already owned shares of Common Stock of the same class as the
Common Stock subject to the Stock Option may be authorized only at the
time the Stock Option is granted. No shares of Common Stock shall be
issued until full payment therefor, as determined by the Committee,
has been made. Subject to any forfeiture restrictions or deferral
limitations that may apply if a Stock Option is exercised using
Restricted Stock or Deferred Stock, a Participant shall have all of
the rights of a stockholder of the Company holding the class of Common
Stock that is subject to such Stock Option (including, if applicable,
the right to vote the shares and the right to receive dividends), when
the Participant has given written notice of exercise, has paid in full
for such shares and such shares have been recorded on the Company's
official stockholder records as having been issued or transferred.
(e) Company Loan or Guarantee. Upon the exercise of any
Option and subject to the pertinent Agreement and the discretion of
the Committee, the Company may, at the request of the Participant:
(i) lend to the Participant, on a full recourse
basis, an amount equal to such portion of the Option Price as
the Committee may determine; or
(ii) guarantee a loan obtained by the Participant
on a full recourse basis from a third-party for the purpose of
tendering the Option Price.
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The remaining terms and conditions of any loan or guarantee, including
the interest rate and any security interest thereunder, shall be
determined by the Committee, except that (1) the term of any loan may
not exceed twenty-four (24) months and (2) no extension of credit or
guarantee shall obligate the Company for an amount to exceed the
lesser of the aggregate Fair Market Value per share of the Common
Stock on the date of exercise, less the par value of the shares of
Common Stock to be purchased upon the exercise of the Award, or the
amount permitted under applicable laws or the regulations and rules of
the Federal Reserve Board and any other governmental agency having
jurisdiction.
(f) Non-transferability of Options. Except as provided
herein or in an Agreement, no Stock Option or interest therein shall
be transferable by the Participant other than by will or by the laws
of descent and distribution, and all Stock Options shall be
exercisable during the Participant's lifetime only by the Participant.
If and to the extent transferability is permitted by Rule 16b- 3 or
does not result in liability to any Participant and except as
otherwise provided by an Agreement, every Option granted hereunder
shall be freely transferable, but only if such transfer is consistent
with the use of Form S-8 (or the Committee's waiver of such condition)
and consistent with an Award's intended status as an Incentive Stock
Option (as applicable).
6.4 Termination by Reason of Death. Unless otherwise provided in
an Agreement or determined by the Committee, if a Participant incurs a
Termination of Employment due to death, any unexpired and unexercised Stock
Option held by such Participant shall thereafter be fully exercisable for a
period of ninety (90) days following the date of the appointment of a
Representative (or such other period or no period as the Committee may specify)
or until the expiration of the Option Period, whichever period is the shorter.
6.5 Termination by Reason of Disability. Unless otherwise
provided in an Agreement or determined by the Committee, if a Participant
incurs a Termination of Employment due to a Disability, any unexpired and
unexercised Stock Option held by such Participant shall thereafter be fully
exercisable by the Participant for the one (1) year period (or such other
period or no period as the Committee may specify) immediately following the
date of such Termination of Employment or until the expiration of the Option
Period, whichever period is shorter, and the Participant's death at any time
following such Termination of Employment due to Disability shall not affect the
foregoing. In the event of Termination of Employment by reason of Disability,
if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Nonqualified Stock Option.
6.6 Other Termination. Unless otherwise provided in an Agreement
or determined by the Committee, if a Participant incurs a Termination of
Employment which is a Retirement, or the Termination of Employment is
involuntary on the part of the Participant (but is not due to death or
Disability or with Cause), any Stock Option held by such Participant shall
thereupon terminate, except that such Stock Option, to the extent then
exercisable, may be exercised for the lesser of the ninety (90) day period
commencing with the date of such Termination of Employment or until the
expiration
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of the Option Period. If the Participant incurs a Termination of Employment
which is either (a) voluntary on the part of the Participant (and is not a
Retirement) or (b) with Cause, the Option shall terminate immediately. The
death or Disability of a Participant after a Termination of Employment
otherwise provided herein shall not extend the time permitted to exercise an
Option.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 General. The Committee shall have authority to grant Stock
Appreciation Rights under the Plan at any time or from time to time. Subject
to the Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right shall entitle the Participant to surrender to the Company
the Stock Appreciation Right and to be paid therefor in shares of the Common
Stock, cash or a combination thereof as herein provided, the amount described
in Section 7.3(b).
7.2 Grant. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan, in
which case the exercise of the Stock Appreciation Right shall require the
cancellation of a corresponding portion of the Stock Option, and the exercise
of a Stock Option shall result in the cancellation of a corresponding portion
of the Stock Appreciation Right. In the case of a Nonqualified Stock Option,
such rights may be granted either at or after the time of grant of such Stock
Option. In the case of an Incentive Stock Option, such rights may be granted
only at the time of grant of such Stock Option. A Stock Appreciation Right may
also be granted on a stand-alone basis. The grant of a Stock Appreciation
Right shall occur as of the date the Committee determines. Each Stock
Appreciation Right granted under this Plan shall be evidenced by an Agreement,
which shall embody the terms and conditions of such Stock Appreciation Right
and which shall be subject to the terms and conditions set forth in this Plan.
During any three-calendar year period, Stock Appreciation Rights covering no
more than 1,000,000 shares of Common Stock shall be granted to any Participant.
7.3 Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions as shall be determined by the Committee,
including the following:
(a) Period and Exercise. The term of a Stock Appreciation
Right shall be established by the Committee. If granted in
conjunction with a Stock Option, the Stock Appreciation Right shall
have a term which is the same as the Option Period and shall be
exercisable only at such time or times and to the extent the related
Stock Options would be exercisable in accordance with the provisions
of Article VI. A Stock Appreciation Right which is granted on a
stand-alone basis shall be for such period and shall be exercisable at
such times and to the extent provided in an Agreement. Stock
Appreciation Rights shall be exercised by the Participant's giving
written notice of exercise on a form provided by the
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Committee (if available) to the Company specifying the portion of the
Stock Appreciation Right to be exercised.
(b) Amount. Upon the exercise of a Stock Appreciation
Right granted in conjunction with a Stock Option, a Participant shall
be entitled to receive an amount in cash, shares of Common Stock or
both as determined by the Committee or as otherwise permitted in an
Agreement equal in value to the excess of the Fair Market Value per
share of Common Stock over the Option Price per share of Common Stock
specified in the related Agreement multiplied by the number of shares
in respect of which the Stock Appreciation Right is exercised. In the
case of a Stock Appreciation Right granted on a stand-alone basis, the
Agreement shall specify the value to be used in lieu of the Option
Price per share of Common Stock. The aggregate Fair Market Value per
share of the Common Stock shall be determined as of the date of
exercise of such Stock Appreciation Right.
(c) Special Rules. In the case of Stock Appreciation
Rights relating to Stock Options held by Participants who are actually
or potentially subject to Section 16(b) of the Exchange Act:
(i) The Committee may require that such Stock
Appreciation Rights be exercised only in accordance with the
applicable "window period" provisions of Rule 16b-3;
(ii) The Committee may provide that the amount to
be paid upon exercise of such Stock Appreciation Rights (other
than those relating to Incentive Stock Options) during a Rule
16b-3 "window period" shall be based on the highest mean sales
price of the Common Stock on the principal exchange on which
the Common Stock is traded, NASDAQ or other relevant market
for determining value on any day during such "window period";
and
(iii) No Stock Appreciation Right shall be
exercisable during the first six (6) months of its term,
except that this limitation shall not apply in the event of
death or Disability of the Participant prior to the expiration
of the six (6)-month period.
(d) Non-transferability of Stock Appreciation Rights.
Stock Appreciation Rights shall be transferable only when and to the
extent that a Stock Option would be transferable under the Plan unless
otherwise provided in an Agreement.
(e) Termination. A Stock Appreciation Right shall
terminate at such time as a Stock Option would terminate under the
Plan, unless otherwise provided in an Agreement.
(f) Effect on Shares Under the Plan. To the extent
required by Rule 16b-3, upon the exercise of a Stock Appreciation
Right, the Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have been exercised
for the purpose
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of the limitation set forth in Section 4.2 on the number of shares of
Common Stock to be issued under the Plan, but only to the extent of
the number of shares of Common Stock covered by the Stock Appreciation
Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.
(g) Incentive Stock Option. A Stock Appreciation Right
granted in tandem with an Incentive Stock Option shall not be
exercisable unless the Fair Market Value of the Common Stock on the
date of exercise exceeds the Option Price. In no event shall any
amount paid pursuant to the Stock Appreciation Right exceed the
difference between the Fair Market Value on the date of exercise and
the Option Price.
ARTICLE VIII
RESTRICTED STOCK
8.1 General. The Committee shall have authority to grant
Restricted Stock under the Plan at any time or from time to time. Shares of
Restricted Stock may be awarded either alone or in addition to other Awards
granted under the Plan. The Committee shall determine the persons to whom and
the time or times at which grants of Restricted Stock will be awarded, the
number of shares of Restricted Stock to be awarded to any Participant, the time
or times within which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards. Each Award shall be confirmed by, and be
subject to the terms of, an Agreement. The Committee may condition the grant
of Restricted Stock upon the attainment of specified performance goals by the
Participant or by the Company or an Affiliate (including a division or
department of the Company or an Affiliate) for or within which the Participant
is primarily employed or upon such other factors or criteria (such as length of
tenure) as the Committee shall determine. The provisions of Restricted Stock
Awards need not be the same with respect to any Participant.
8.2 Awards and Certificates. Notwithstanding the limitations on
issuance of shares of Common Stock otherwise provided in the Plan, each
Participant receiving an Award of Restricted Stock shall be issued a
certificate in respect of such shares of Restricted Stock. Such certificate
shall be registered in the name of such Participant and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award as determined by the Committee. The Committee may
require that the certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed and that, as a
condition of any Award of Restricted Stock, the Participant shall have
delivered a stock power, endorsed in blank, relating to the Common Stock
covered by such Award.
8.3 Terms and Conditions. Shares of Restricted Stock shall be
subject to the following terms and conditions:
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(a) Limitations on Transferability. Subject to the
provisions of the Plan and the Agreement, during a period set by the
Committee commencing with the date of such Award (the "Restriction
Period"), the Participant shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber any interest in shares of
Restricted Stock.
(b) Rights. Except as provided in Section 8.3(a), the
Participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a stockholder of the Company holding the
class of Common Stock that is the subject of the Restricted Stock,
including, if applicable, the right to vote the shares and the right
to receive any cash dividends. Unless otherwise determined by the
Committee and subject to the Plan, cash dividends on the class of
Common Stock that is the subject of the Restricted Stock shall be
automatically deferred and reinvested in additional Restricted Stock,
and dividends on the class of Common Stock that is the subject of the
Restricted Stock payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock on which such
dividend was paid.
(c) Acceleration. Based on service, performance by the
Participant or by the Company or an Affiliate, including any division
or department for which the Participant is employed, or such other
factors or criteria as the Committee may determine, the Committee may
provide for the lapse of restrictions in installments and may
accelerate the vesting of all or any part of any Award and waive the
restrictions for all or any part of such Award.
(d) Forfeiture. Unless otherwise provided in an Agreement
or determined by the Committee, if the Participant incurs a
Termination of Employment during the Restriction Period due to death
or Disability, the restrictions shall lapse and the Participant shall
be fully vested in the Restricted Stock. Except to the extent
otherwise provided in the applicable Agreement and the Plan, upon a
Participant's Termination of Employment for any reason during the
Restriction Period other than death or Disability, all shares of
Restricted Stock still subject to restriction shall be forfeited by
the Participant, except the Committee shall have the discretion to
waive in whole or in part any or all remaining restrictions with
respect to any or all of such Participant's shares of Restricted
Stock.
(e) Delivery. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to such
Restriction Period, unlegended certificates for such shares shall be
delivered to the Participant.
(f) Election. A Participant may elect to further defer
receipt of the Restricted Stock for a specified period or until a
specified event, subject in each case to the Committee's approval and
to such terms as are determined by the Committee. Subject to any
exceptions adopted by the Committee, such election must be made one
(1) year prior to completion of the Restriction Period.
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ARTICLE IX
DEFERRED STOCK
9.1 General. The Committee shall have authority to grant Deferred
Stock under the Plan at any time or from time to time. Shares of Deferred
Stock may be awarded either alone or in addition to other Awards granted under
the Plan. The Committee shall determine the persons to whom and the time or
times at which Deferred Stock will be awarded, the number of shares of Deferred
Stock to be awarded to any Participant, the duration of the period (the
"Deferral Period") prior to which the Common Stock will be delivered, and the
conditions under which receipt of the Common Stock will be deferred and any
other terms and conditions of the Awards. Each Award shall be confirmed by,
and be subject to the terms of, an Agreement. The Committee may condition the
grant of Deferred Stock upon the attainment of specified performance goals by
the Participant or by the Company or an Affiliate, including a division or
department of the Company or an Affiliate for or within which the Participant
is primarily employed, or upon such other factors or criteria as the Committee
shall determine. The provisions of Deferred Stock Awards need not be the same
with respect to any Participant.
9.2 Terms and Conditions. Deferred Stock Awards shall be subject
to the following terms and conditions:
(a) Limitations on Transferability. Subject to the
provisions of the Plan and an Agreement, Deferred Stock Awards, or any
interest therein, may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Deferral Period. At the expiration of
the Deferral Period (or Elective Deferral Period as defined in Section
9.2(e), where applicable), the Committee may elect to deliver Common
Stock, cash equal to the Fair Market Value of such Common Stock or a
combination of cash and Common Stock to the Participant for the shares
covered by the Deferred Stock Award.
(b) Rights. Unless otherwise determined by the Committee
and subject to the Plan, cash dividends on the Common Stock that is
the subject of the Deferred Stock Award shall be automatically
deferred and reinvested in additional Deferred Stock, and dividends on
the Common Stock that is the subject of the Deferred Stock Award
payable in Common Stock shall be paid in the form of Deferred Stock of
the same class as the Common Stock on which such dividend was paid.
(c) Acceleration. Based on service, performance by the
Participant or by the Company or the Affiliate, including any division
or department for which the Participant is employed, or such other
factors or criteria as the Committee may determine, the Committee may
provide for the lapse of deferral limitations in installments and may
accelerate the vesting of all or any part of any Award and waive the
deferral limitations for all or any part of such Award.
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(d) Forfeiture. Unless otherwise provided in an Agreement
or determined by the Committee, if the Participant incurs a
Termination of Employment during the Deferral Period due to death or
Disability, the restrictions shall lapse and the Participant shall be
fully vested in the Deferred Stock. Unless otherwise provided in an
Agreement or determined by the Committee, upon a Participant's
Termination of Employment for any reason during the Deferral Period
other than death or Disability, the rights to the shares still covered
by the Award shall be forfeited by the Participant, except the
Committee shall have the discretion to waive in whole or in part any
or all remaining deferral limitations with respect to any or all of
such Participant's Deferred Stock.
(e) Election. A Participant may elect further to defer
receipt of the Deferred Stock payable under an Award (or an
installment of an Award) for a specified period or until a specified
event, subject in each case to the Committee's approval and to such
terms as are determined by the Committee. Subject to any exceptions
adopted by the Committee, such election must be made at least one (1)
year prior to completion of the Deferral Period for the Award (or of
the applicable installment thereof).
ARTICLE X
OTHER AWARDS
10.1 Bonus Stock and Awards In Lieu of Obligations. The Committee
is authorized to grant Common Stock as a bonus, or to grant Common Stock or
other Awards in lieu of Company obligations to pay cash or deliver other
property under other plans or compensatory arrangements, provided that, in the
case of Participants subject to Section 16 of the Exchange Act, the amount of
such grants remains within the discretion of the Committee to the extent
necessary to ensure that acquisition of Common Stock or other Awards are exempt
from liability under Section 16(b) of the Exchange Act. Common Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined
by the Committee.
10.2 Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Common Stock, other Awards, or other property equal in value to dividends
paid with respect to a specified number of shares of Common Stock. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents will be
paid or distributed when accrued or will be deemed to have been reinvested in
additional Common Stock, Awards, or other investment vehicles, and subject to
such restrictions on transferability and risks of forfeiture, as the Committee
may specify.
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10.3 Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such
other Awards that may be denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, Common Stock, as deemed
by the Committee to be consistent with the purposes of the Plan, including,
without limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Common Stock, purchase rights for Common
Stock, Awards with value and payment contingent upon performance of the Company
or any other factors designated by the Committee, and Awards valued by
reference to the book value of Common Stock or the value of securities of or
the performance of specified subsidiaries. The Committee shall determine the
terms and conditions of such Awards. Common Stock delivered pursuant to an
Award in the nature of a purchase right granted under this Section 10.3 shall
be purchased for such consideration, paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Common Stock, other
Awards, or other property, as the Committee shall determine. Cash awards, as
an element of or supplement to any other Award under the Plan, may also be
granted pursuant to this Section 10.3.
10.4 Performance Awards.
(a) Performance Conditions. The right of a Participant to
exercise or receive a grant or settlement of any Award, and its
timing, may be subject to performance conditions specified by the
Committee. The Committee may use business criteria and other measures
of performance it deems appropriate in establishing any performance
conditions, and may exercise its discretion to reduce or increase the
amounts payable under any Award subject to performance conditions,
except as limited under Sections 10.4(b) and 10.4(c) hereof in the
case of a Performance Award intended to qualify under Code Section
162(m).
(b) Performance Awards Granted to Designated Covered
Employees. If the Committee determines that a Performance Award to be
granted to a person the Committee regards as likely to be a Covered
Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant and/or settlement of such
Performance Award shall be contingent upon achievement of
preestablished performance goals and other terms set forth in this
Section 10.4(b).
(i) Performance Goals Generally. The performance
goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of
performance with respect to such criteria, as specified by the
Committee consistent with this Section 10.4(b). Performance
goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m), including the requirement
that the level or levels of performance targeted by the
Committee result in the performance goals being "substantially
uncertain." The Committee may determine that more than one
performance goal must be achieved as a condition to settlement
of such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to
different Participants.
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(ii) Business Criteria. One or more of the
following business criteria for the Company, on a consolidated
basis, and/or for specified subsidiaries or business units of
the Company (except with respect to the total stockholder
return and earnings per share criteria), shall be used
exclusively by the Committee in establishing performance goals
for such Performance Awards: (1) total stockholder return;
(2) such total stockholder return as compared to total return
(on a comparable basis) of a publicly available index such as,
but not limited to, the Standard & Poor's 500 or the
Nasdaq-U.S. Index; (3) net income; (4) pre-tax earnings; (5)
EBITDA or earnings before interest expense, taxes,
depreciation and amortization; or (6) pre-tax operating
earnings after interest expense and before bonuses, service
fees, and extraordinary or special items; (7) operating
margin; (8) earnings per share; (9) return on equity; (10)
return on capital; (11) return on investment; (12) operating
income before payment of executive bonuses; and (13) working
capital. The foregoing business criteria shall also be
exclusively used in establishing performance goals for Cash
Incentive Awards granted under Section 10.4(c) hereof.
(iii) Performance Period: Timing For Establishing
Performance Goals. Achievement of performance goals in
respect of such Performance Awards shall be measured over such
periods as may be specified by the Committee. Performance
goals shall be established on or before the dates that are
required or permitted for "performance-based compensation"
under Code Section 162(m).
(iv) Settlement of Performance Awards; Other
Terms. Settlement of Performance Awards may be in cash or
Common Stock, or other Awards, or other property, in the
discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance Awards, but may not
exercise discretion to increase any such amount payable in
respect of a Performance Award subject to this Section
10.4(b). The Committee shall specify the circumstances in
which such Performance Awards shall be forfeited or paid in
the event of a Termination of Employment or a Change in
Control prior to the end of a performance period or settlement
of Performance Awards, and other terms relating to such
Performance Awards.
(c) Cash Incentive Awards Granted to Designated Covered
Employees. The Committee may grant Cash Incentive Awards to
Participants including those designated by the Committee as likely to
be Covered Employees, which Awards shall represent a conditional right
to receive a payment in cash, unless otherwise determined by the
Committee, after the end of a specified calendar year or calendar
quarter or other period specified by the Committee, in accordance with
this Section 10.6(c).
(i) Cash Incentive Award. The Cash Incentive
Award for Participants that the Committee regards as likely to
be regarded as Covered Employees shall be based on achievement
of a performance goal or goals based on one or more of the
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business criteria set forth in Section 10.4(b), and may be
based on such criteria for any other Participant. The
Committee may specify the amount of the individual Cash
Incentive Award as a percentage of any such business criteria,
a percentage thereof in excess of a threshold amount, or
another amount which need not bear a strictly mathematical
relationship to such relationship criteria. The Committee may
establish an Cash Incentive Award pool that includes
Participants the Committee regards likely to be regarded as
Covered Employees, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with
Cash Incentive Awards. The amount of the Cash Incentive Award
pool shall be based upon the achievement of a performance goal
or goals based on one or more of the business criteria set
forth in Section 10.4(b) hereof in the given performance
period, as specified by the Committee. The Committee may
specify the amount of the Cash Incentive Award pool as a
percentage of any of such business criteria, a percentage
thereof in excess of a threshold amount, or as another amount
which need not bear a strictly mathematical relationship to
such business criteria.
(ii) Potential Cash Incentive Awards. Not later
than the date required or permitted for "qualified
performance- based compensation" under Code Section 162(m),
the Committee shall determine the Participants who will
potentially receive Cash Incentive Awards for the specified
year, quarter or other period, either as individual Cash
Incentive Awards or out of an Cash Incentive Award pool
established by such date and the amount or method for
determining the amount of the individual Cash Incentive Award
or the amount of such Participant's portion of the Cash
Incentive Award pool or the individual Cash Incentive Award.
(iii) Payout of Cash Incentive Awards. After the
end of the specified year, quarter or other period, as the
case may be, the Committee shall determine the amount, if any,
of potential individual Cash Incentive Award otherwise payable
to a Participant, the Cash Incentive Award pool and the
maximum amount of potential Cash Incentive Award payable to
each Participant in the Cash Incentive Award pool. The
Committee may, in its discretion, determine that the amount
payable to any Participant as a final Cash Incentive Award
shall be increased or reduced from the amount of his or her
potential Cash Incentive Award, including a determination to
make no final Award whatsoever, but may not exercise
discretion to increase any such amount in the case of an Cash
Incentive Award intended to qualify under Code Section 162(m).
The Committee shall specify the circumstances in which an Cash
Incentive Award shall be paid or forfeited in the event of
Termination of Employment by the Participant or a Change in
Control prior to the end of the period for measuring
performance or the payout of such Cash Incentive Award, and
other terms relating to such Cash Incentive Award in
accordance with the Plan. Upon the completion of the
measuring period and the determination of the right to payment
and the amount, the Committee shall direct the Committee to
make payment.
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(d) Written Determinations. All determinations by the
Committee as to the establishment of performance goals and the
potential Performance Awards or Cash Incentive Awards related to such
performance goals and as to the achievement of performance goals
relating to such Awards, the amount of any Cash Incentive Award pool
and the amount of final Cash Incentive Awards, shall be made in
writing in the case of any Award intended to qualify under Code
Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Cash Incentive Awards.
ARTICLE XI
PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
11.1 Right of First Refusal.
(a) General. Unless provided otherwise in an Agreement,
and unless and until there is a Public Offering, at which time this
Section 11.1 shall be ineffective, a Participant may sell shares of
Common Stock acquired pursuant to an Award to any person or
organization, other than the Company, an Affiliate or an employee
benefit plan (or related trust) maintained by the Company or an
Affiliate, only after first offering to sell all such shares of Common
Stock to the Company (or, in the event the Company shall assign its
right to purchase such Common Stock, to the person to whom the Company
has assigned its right) as follows.
(b) Purchase Price and Conditions. The Participant who
desires to sell shares of Common Stock described in Section 11.1(a)
shall serve written notice upon each of the Company and the Committee,
indicating that the Participant has a bona fide offer for the purchase
of the shares and stating the name and address of the person desiring to
purchase them and the sales price and related terms of payment, and
enclosing photocopies of all written communications regarding such sale
and a statement that the Participant intends to sell such shares at the
offered price and terms. Said notice shall also contain an offer to
sell the Common Stock to the Company, upon the same terms and conditions
as set forth in the aforesaid bona fide offer of purchase. For a period
of thirty (30) days after the receipt of such notice by the Company, the
Company shall have the option to purchase any or all of the shares of
Common Stock by giving written notice thereof to the Participant. If
the Company (or the person to whom the Company shall assign its right
hereunder) elects to exercise its option to purchase the shares of
Common Stock, the sale shall be consummated as provided in Section
11.1(d).
(c) Closing. The sale of shares of Common Stock to the
Company shall be consummated within fifteen (15) days after the close of
the thirty (30) day period described in Section 11.1(b), unless another
date shall be agreed upon by the Participant and the Committee, at the
principal executive offices of the Company or such other location as the
parties may mutually agree. At the closing, the Participant shall
deliver to the Company stock certificates duly endorsed for transfer, or
accompanied by duly endorsed stock powers,
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representing all of the shares of Common Stock, free and clear of all
claims, liens or encumbrances (other than the restrictions pursuant to
this Plan) together with such other documentation as legal counsel for
the Company may reasonably require. If the Committee shall determine,
it may withhold from payment to the Participant, or require the
Participant to pay, such amount as the Committee may deem necessary to
entitle the Company or an Affiliate to a current deduction or to comply
with withholding requirements.
(d) Purchase by Third Party. In the event that the
Company (or any person to whom the Company may assign its rights
hereunder) shall not exercise the option to purchase, as provided
herein, all of the shares of Common Stock offered pursuant to Section
11.1(a), the offer shall be deemed to have been rejected as to any
shares of Common Stock not purchased and the offering Participant shall
have the right to dispose of all, but not less than all, of the
remaining shares of Common Stock offered pursuant to Section 11.1(a) to
the person named in the bona fide offer of purchase at the price and
upon the terms and conditions set forth in the offer and to consummate
the resulting transaction at any time during the thirty (30) days
immediately following the expiration of the offer made to the Company.
At or prior to the closing of such transaction, the transferor and
transferee shall execute and deliver to the Company such documents as
the Company reasonably requests for compliance with state and federal
securities laws, and the transferor shall deliver to the Company such
amount of cash as the Committee may deem necessary or appropriate, or as
may be required for the Company to comply with federal, state or local
income taxes (including withholding) and the Company shall not be
required to deliver the Common Stock until such amount shall be
tendered. In the event such transaction is not consummated within
thirty (30) days following the termination of the Company's option
described herein, the shares of Common Stock may not be sold without the
Participant again complying with the provisions of this Section. Shares
of Common Stock transferred pursuant to this Section 11.1 and the
transferee thereof shall be subject to all the terms and conditions of
this Plan and the Agreement pursuant to which the Participant acquired
the Common Stock, including, without limitation, any restrictions on
transfer of Common Stock provided in this Section 11.1, and the
transferee shall be considered for all purposes of this Plan, as the
Participant, except Termination of Employment shall mean the Termination
of Employment of the original Participant. Any transfer of shares of
Common Stock made in conflict or derogation of the terms of this Plan
shall be void.
11.2 Purchase of Stock Subsequent to a Termination of Employment.
(a) Prior to Public Offering. Unless provided otherwise
in an Agreement, and unless and until there is a Public Offering, at
which time this Section 11.2 shall be ineffective, if a Participant
incurs a Termination of Employment, the Company, or such other person as
the Committee may designate in writing (provided such person accepts in
writing the obligations hereunder), shall have the right, but not the
obligation, to the extent it may lawfully do so, for a period of ninety
(90) consecutive days commencing with the date of the Termination of
Employment to purchase from the Participant, and the Participant shall
have the obligation to sell to the Company (or the person designated by
the Committee) if requested by the Company,
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all of the Participant's shares of Common Stock acquired pursuant to an
Award (including any shares of Common Stock which could yet be acquired
to the extent exercisable on the date the right is exercised under this
Section 11.2 pursuant to an Option) on the terms and conditions
expressed in this Section 11.2.
(b) Price; Payment Terms.
(i) In the event the Company or the person
designated by the Committee shall have the right to purchase
the shares of Common Stock pursuant to this Section 11.2 upon
or following a Termination of Employment other than for Cause,
the purchase price per share of Common Stock shall be the Fair
Market Value per share of the Common Stock on the date the
Company notifies the Participant it intends to purchase the
shares.
(ii) In the event the Company or person designated
by the Committee shall have the right to purchase shares of
Common Stock pursuant to this Section 11.2 upon or following a
Termination of Employment for Cause, the purchase price per
share of Common Stock shall be the lesser of the Fair Market
Value per share of the Common Stock on the date the Company
notifies the Participant it intends to purchase the shares and
the price per share for the Common Stock paid by the
Participant upon the exercise of the Award (i.e., if the
Participant paid nothing to exercise the Award, then nothing
shall be paid to the Participant);
(iii) The purchase price for shares of Common Stock
transferred to the Company in accordance with this Section
11.2 shall be paid, in the sole discretion of the Committee,
in a single sum or in such number of equal annual or monthly
installments as the Committee may determine, but not to exceed
a period of five (5) years from the Closing Date. The first
installment of the purchase price shall be paid by the Company
on the last day of the calendar quarter next following the
calendar quarter in which occurs the exercise of the Company's
right to purchase the shares of Common Stock pursuant to this
Section 11.2. Subsequent installments shall be due on the
successive annual or monthly (whichever the case) anniversary
dates of the closing date. Interest shall accrue from the
closing date on the balance of the purchase price remaining
unpaid from time to time at a rate equal to the minimum
"applicable federal rate" required to be stated in order to
avoid the imputation of interest income as determined by the
Committee, and accrued interest shall be payable together with
each installment of the purchase price paid on the annual
anniversary of the closing date, including the last
installment payment. The interest rate will be set as of the
closing date and adjusted prospectively thereafter on the
first day of each following calendar quarter. The Company
shall be entitled to prepay all or part of the purchase price
without interest, penalty or premium.
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(c) Closing. The Participant's Common Stock shall be
transferred at a closing at such place and time as the Committee
designates. The Committee shall give the Participant at least fifteen
(15) days prior written notice of the closing date and place of closing.
At the closing, the Participant shall deliver to the Company stock
certificate(s) duly endorsed for transfer, or accompanied by duly
endorsed stock powers, representing all of the Common Stock acquired
pursuant to an Award free and clear of all claims, liens or encumbrances
of any third parties (other than the restrictions pursuant to this Plan)
together with such other documentation as the Company's legal counsel
may reasonably require. If the Committee shall determine, it may
withhold from payment to the Participant, or require the Participant to
pay, such amount as the Committee may deem necessary to entitle the
Company or an Affiliate to a current deduction or to comply with
withholding requirements.
(d) Maximum Amount. Notwithstanding any provision herein
to the contrary, subject to the discretion of the Committee, in the
event that during any fiscal year of the Company the aggregate payments
due Participants exceed ten percent (10%) of the Company's after-tax net
earnings (determined in accordance with generally accepted accounting
principles) for the immediately preceding fiscal year of the Company,
such payments shall be reduced proportionately so that all such payments
for the fiscal year equal ten percent (10%) of the Company's after-tax
net earnings for the preceding fiscal year. The portion of any payment
to a Participant which is reduced by application of this Section shall
be credited with interest from the date the portion of the payment is
not paid until the date the payment is paid at a rate equal to the
minimum "applicable federal rate" required to be stated in order to
avoid any imputation of interest income under the Code as determined by
the Committee. The interest rate will be set as of the date the payment
is not paid and shall be adjusted prospectively thereafter on the first
day of each following quarter. The portion of any payment and accrued
interest which is not paid as a result of an application of the next to
the preceding sentence shall be payable as part of the installment
payment(s) for the next following year of the Company in addition to the
installment payment(s) originally due in that year, but all installment
payments whether originally due on said date or carried over by
application of the preceding sentence and accrued interest shall
continue to be subject to the payment limitations of this Section. In
the event that, because of the limitation herein, the total purchase
price and any accrued interest shall not have been paid in their
entirety by the last scheduled installment date, then the payment of any
such amounts shall be deferred for consecutive one-year periods, to a
maximum of five years, and shall be paid on successive anniversaries of
the last scheduled payment date, subject to the limitations of this
Section 11.2. The Company shall be entitled to pay all or any part of
any payment or accrued interest which is not paid without penalty or
premium. The term "Company's after-tax earnings," as used herein, shall
mean the net income, after taxes, of the Company determined in the sole
discretion of the Committee. If, with respect to the purchase of any
Common Stock by the Company pursuant to the provisions of this Section,
the Company shall be prohibited from buying such shares as a result of
any applicable law or agreement, any other person designated by the
Committee may purchase such shares.
11.3 Restrictions on Purchases.
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(a) Financing Agreements. Notwithstanding any other
provision of this Agreement, the Company shall not be permitted to
complete a purchase of any shares of Common Stock under this Article if
(i) such purchase would result in a violation of the terms or provisions
of, or result in a default or an event of default under any credit,
guarantee, financing or security agreement or document entered into in
connection with the operations of the Company or its Affiliates from
time to time (such agreements and documents, as each may be amended,
modified or supplemented from time to time, are referred to herein as
the "Financing Agreements"), in each case as the same may be amended,
modified or supplemented from time to time, or (ii) such purchase would
violate any of the terms or provisions of the Certificate of
Incorporation of the Company or (iii) the Company has no funds legally
available therefor under the General Corporation Law of the State of
Delaware.
(b) Delay of Purchase. In the event that the completion
of a purchase by the Company pursuant to the Company's election under
this Article is prevented solely by the terms of this Section, (i) such
purchase shall be postponed and shall take place without the application
of further conditions or impediments (other than as set forth in Section
11.1 or 11.2 hereof or in this Section 11.3) at the first opportunity
thereafter when the Company has funds legally available therefor and
when such purchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation of any
term or provision of the Certificate of Incorporation of the Company and
(ii) such purchase obligation shall rank against other similar purchase
obligations with respect to shares of Common Stock according to priority
in time of the effective date of the event giving rise to such purchase
obligation, provided that any such purchase obligations as to which a
common date determines priority shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i)
above.
(c) Purchase Price Adjustment. In the event that a
purchase of shares of Common Stock is delayed pursuant to this Section
11.3, the purchase price per share of Common Stock when the purchase of
such shares eventually takes place as contemplated by Section 11.3(b)
shall be (i) the sum of (A) the purchase price determined in accordance
with Section 11.1 or 11.2 above, as applicable, as of the time that the
purchase of such shares would have occurred pursuant to such provision
in connection with the Company's election to purchase the shares but for
the operation of this Section 11.3, plus (B) an amount equal to interest
on such purchase price for the period from the date on which the shares
would have been so purchased to the date on which such purchase actually
takes place pursuant to Section 11.3(b) (the "Delay Period") at a rate
equal to the weighted average cost of the Company's bank indebtedness
obligations outstanding during the Delay Period.
11.4 Take-Along Rights.
(a) Take-Along Notice. Unless provided otherwise in an
Agreement, and unless and until there is a Public Offering, at which
time this Section 11.4 shall be ineffective, for as long as the Kensey
Nash Entities hold at least fifty and one-tenth percent (50.1%) of the
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Outstanding Company Common Stock or the Outstanding Company Voting
Securities (as such terms are defined in Section 12.2), if the Kensey
Nash Entities intend to effect a sale of all of their shares of Common
Stock to a third party ("Buyer") and elect to exercise their rights
under this Section 11.4, the Kensey Nash Entities shall deliver written
notice (a "Take-Along Notice") to the Committee and to each Participant,
which notice shall (a) state (i) that the Kensey Nash Entities wish to
exercise their rights under this Section 11.4 with respect to such
transfer, (ii) the name and address of the Buyer, (iii) the per share
amount and form of consideration the Kensey Nash Entities propose to
receive for their shares of Common Stock and (iv) the terms and
conditions of payment of such consideration and all other material terms
and conditions of such transfer, (b) contain an offer (the "Take-Along
Offer") by the Buyer to purchase from a Participant all of his shares on
and subject to the same terms and conditions offered to the Kensey Nash
Entities and (c) state the anticipated time and place of the closing of
the purchase and sale of the shares (the "Closing"), which (subject to
such terms and conditions) shall occur not fewer than ten (10) days nor
more than ninety (90) days after the date such Take-Along Notice is
delivered, provided that if such Closing shall not occur prior to the
expiration of such ninety (90) day period, the Kensey Nash Entities
shall be entitled to deliver additional Take-Along Notices with respect
to such Take-Along Offer.
(b) Conditions to Take-Along. Unless provided otherwise
in an Agreement, upon delivery of a Take-Along Notice, a Participant
shall have the obligation to transfer all of his shares of Common Stock
owned and acquired pursuant to this Plan (including any shares of Common
Stock which could yet be acquired pursuant to an Award) pursuant to the
Take-Along Offer, as the same may be modified from time to time,
provided that the Kensey Nash Entities transfer all of their shares of
Common Stock to the Buyer at the Closing. Within ten (10) days of
receipt of the Take-Along Notice, the Participant shall (i) execute and
deliver to the Committee and to the Kensey Nash Entities a power of
attorney and a letter of transmittal and custody agreement in favor of,
and in form and substance satisfactory to, the Kensey Nash Entities
constituting one or more persons designated by the Kensey Nash Entities
(the "Custodian"), the true and lawful attorney-in-fact and custodian
for the Participant, with full power of substitution, and authorizing
the Custodian to take such actions as the Custodian may deemed necessary
or appropriate to effect the sale and transfer of the shares of Common
Stock to the Buyer, upon receipt of the purchase price therefor at the
Closing, free and clear of all security interests, liens, claims,
encumbrances, charges, options, restrictions on transfer, proxies and
voting and other agreements of whatever nature, and to take such other
action as may be necessary or appropriate in connection with such sale,
including consenting to any amendments, waivers, modifications or
supplements to the terms of the sale (provided that the Kensey Nash
Entities also so consent, and sell and transfer their shares of Common
Stock on the same terms as so amended, waived, modified or supplemented)
and (ii) deliver to the Kensey Nash Entities certificates representing
the shares, together with all necessary duly executed stock powers.
(c) Remedies. Unless provided otherwise in an Agreement,
the Participant shall acknowledge that the Kensey Nash Entities would be
irreparably damaged in the event of a
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breach or a threatened breach by the Participant of any of his
obligations under this Section 11.4 and the Participant shall agree
that, in the event of a breach or a threatened breach by the Participant
of any such obligation, the Kensey Nash Entities, shall, in addition to
any other rights and remedies available to them in respect of such
breach, be entitled to an injunction from a court of competent
jurisdiction granting them specific performance by the Participant of
his obligations under this Section 11.4. In the event that the Kensey
Nash Entities shall file suit to enforce the covenants contained in this
Section 11.4 (or obtain any other remedy in respect of any breach
thereof), the prevailing party in the suit shall be entitled to recover,
in addition to all other damages to which it may be entitled, the costs
incurred by such party in conducting the suit, including reasonable
attorney's fees and expenses. In the event that, following a breach or
a threatened breach by a Participant of the provisions of this Section
11.4, the Kensey Nash Entities do not obtain an injunction granting them
specific performance of the Participant's obligations under this Section
11.4 in connection with such proposed sale prior to the time the Kensey
Nash Entities complete the sale of their shares of Common Stock or, in
their sole discretion, abandon such sale, then the Company shall have
the option to purchase the shares from the Participant at a purchase
price per share equal to the lesser of (i) the Fair Market Value of such
shares as of the date of the breach or threatened breach that gives rise
to the right to repurchase and (ii) the price at which the Participant
purchased such shares from the Company.
11.5 Transfer of Shares. A Participant may at any time make a
transfer of shares of Common Stock received pursuant to the exercise of an
Award to his parents, spouse or descendants, to any trust for the benefit of
the foregoing or to a partnership the interests of which are principally for
the foregoing or to a custodian under a uniform gifts to minors act or similar
statute for the benefit of any of the Participant's descendants. Any transfer
of shares received pursuant to the exercise of an Award shall not be permitted
or valid unless and until the transferee agrees to be bound by the provisions
of this Plan, and any provision respecting Common Stock under the Agreement,
provided that "Termination of Employment" shall continue to refer to the
Termination of Employment of the Employee.
11.6 Limited Transfer During Offering. In the event there is an
effective registration statement under the Securities Act pursuant to which
shares of Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of
shares received directly or indirectly pursuant to an exercise of an Award.
11.7 Committee Discretion. The Committee may in its sole
discretion include in any Agreement an obligation that the Company purchase a
Participant's shares of Common Stock received upon the exercise of an Award
(including the purchase of any unexercised Awards which have not expired), or
may obligate a Participant to sell shares of Common Stock to the Company, upon
such terms and conditions as the Committee may determine and set forth in an
Agreement. The provisions of this Article XI shall be construed by the
Committee in its sole discretion, and shall be subject to such other terms and
conditions as the Committee may from time to time determine.
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Notwithstanding any provision herein to the contrary, the Company may upon
determination by the Committee assign its right to purchase shares of Common
Stock under this Article XI, whereupon the assignee of such right shall have
all the rights, duties and obligations of the Company with respect to purchase
of the shares of Common Stock.
11.8 No Company Obligation. None of the Company, an Affiliate or
the Committee shall have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of, any material information regarding the Company
or any Affiliate at any time prior to, upon or in connection with receipt or
the exercise of an Award or the Company's purchase of Common Stock or an Award
from such holder in accordance with the terms hereof.
ARTICLE XII
CHANGE IN CONTROL PROVISIONS
12.1 Impact of Event. Notwithstanding any other provision of the
Plan to the contrary, unless otherwise provided in an Agreement, in the event
of a Change in Control (as defined in Section 12.2):
(a) Any Stock Appreciation Rights and Stock Options
outstanding as of the date such Change in Control and not then
exercisable shall become fully exercisable to the full extent of the
original grant;
(b) The restrictions and deferral limitations applicable
to any Restricted Stock, Deferred Stock or other Award shall lapse,
and such Restricted Stock, Deferred Stock or other Award shall become
free of all restrictions and become fully vested and transferable to
the full extent of the original grant.
(c) The performance goals and other conditions with
respect to any outstanding Performance Award or Cash Incentive Award
shall be deemed to have been satisfied in full, and such Award shall
be fully distributable, if and to the extent provided by the Committee
in the Agreement relating to such Award or otherwise, notwithstanding
that the Award may not be fully deductible to the Company under
Section 162(m) of the Code.
(d) Notwithstanding any other provision of the Plan,
unless the Committee shall provide otherwise in an Agreement, any
Award of any Participant who is an officer or director of the Company
(within the meaning of Section 16(b) of the Exchange Act) for which
the Grant Date is less than six (6) months prior to the Change in
Control, shall be cancelled in exchange for a cash payment to the
Participant, at the time of the Participant's Termination of
Employment, equal to the amount which the Change in Control Price (as
defined in Section 12.3) per share of Common Stock on the date of such
election shall exceed
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the amount which the Participant must pay to exercise the Award per
share of Common Stock under the Award (the "Spread") multiplied by the
number of shares of Common Stock granted under the Award, plus
interest on such amount at the prime rate as reported from time to
time in The Wall Street Journal, compounded annually and determined
from time to time.
12.2 Definition of Change in Control. For purposes of the
Plan, a "Change in Control" shall mean the happening of any of the following
events:
(a) An acquisition of at least twenty percent (20%) by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided that such acquisition would result in the Kensey
Nash Entities beneficially owning (within the meaning of Rule 13d-3
promulgated under the Exchange Act) following the acquisition less than
forty percent (40%) of the Outstanding Company Common Stock or less than
forty percent (40%) of the Outstanding Company Voting Securities; or
(b) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or
dissolution of the Company, the sale or disposition of all or
substantially all of the assets of the Company or similar corporate
transaction (in each case referred to in this Section 12.2 as a
"Corporate Transaction") or, if consummation of such Corporate
Transaction is subject, at the time of such approval by stockholders, to
the consent of any government or governmental agency, the obtaining of
such consent (either explicitly or implicitly); or
(c) A change in the composition of the Board such that the
individuals who, as of the date of the Public Offering, constitute the
Board (such Board shall be hereinafter referred to as the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board; provided, however, for purposes of this Section 12.2(c), that any
individual who becomes a member of the Board subsequent to the date of
the Company's Public Offering whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were
also members of the Incumbent Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but, provided, further, that any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered as a
member of the Incumbent Board.
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Notwithstanding the foregoing provisions of this Section, the following
shall be excluded from the events described in (a) and (b) above: (i)
any acquisition by or consummation of a or Corporate Transaction with
the Company, an Affiliate or by an employee benefit plan (or related
trust) sponsored or maintained by the Company or an Affiliate, (ii) any
acquisition by or consummation of a Corporate Transaction with a Kensey
Nash Entity, (iii) the acquisition by or consummation of a or Corporate
Transaction with any Person who beneficially owned, immediately prior to
such acquisition or Corporate Transaction, directly or indirectly,
twenty percent (20%) or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, or (iv) any acquisition or
Corporate Transaction, if more than a majority of the beneficial
ownership of the entity resulting from the acquisition or Corporate
Transaction is held by Persons who held the beneficial ownership of the
Outstanding Company Voting Securities before the acquisition or
Corporate Transaction.
12.3 Change in Control Price. For purposes of the Plan,
"Change in Control Price" means the higher of (a) the highest reported
sales price of a share of Common Stock in any transaction reported on
the principal exchange on which such shares are listed or on NASDAQ
during the sixty (60)-day period prior to and including the date of a
Change in Control or (b) if the Change in Control is the result of a
tender or exchange offer or Corporate Transaction, the highest price per
share of Common Stock paid in such tender or exchange offer or Corporate
Transaction, except that, in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, such
price shall be based only on the Fair Market Value of the Common Stock
on the date any such Incentive Stock Option or Stock Appreciation Right
is exercised. To the extent that the consideration paid in any such
transaction described above consists all or in part of securities or
other non-cash consideration, the value of such securities or other
non-cash consideration shall be determined in the sole discretion of the
Committee.
ARTICLE XIII
MISCELLANEOUS
13.1 Amendments and Termination. The Board may amend, alter or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a
Participant under a Stock Option, Stock Appreciation Right, Restricted Stock
Award or Deferred Stock Award theretofore granted without the Participant's
consent, except such an amendment made to cause the Plan to qualify for the
exemption provided by Rule 16b-3 or (b) disqualify the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without
the approval of the Company's stockholders to the extent such approval is
required by law or agreement.
The Committee may amend the Plan at any time provided that (a) no
amendment shall impair the rights of any Participant under any Award
theretofore granted without the Participant's consent, (b) no amendment shall
disqualify the Plan from the exemption provided by Rule 16b-3, and (c) any
amendment shall be subject to the approval or rejection of the Board.
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The Committee may amend the terms of any Award or other Award
theretofore granted, prospectively or retroactively, but no such amendment
shall impair the rights of any Participant without the Participant's consent or
reduce an Option Price, except such an amendment made to cause the Plan or
Award to qualify for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting
rules, as well as other developments, and to grant Awards which qualify for
beneficial treatment under such rules without stockholder approval.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee may modify or adjust the right so that
pooling of interest accounting shall be available, including the substitution
of Common Stock having a Fair Market Value equal to the cash otherwise payable
hereunder for the right which caused the transaction to be ineligible for
pooling of interest accounting.
13.2 Stand-Alone, Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company
or a subsidiary, or any other right of a Participant to receive payment from
the Company or any subsidiary. Such additional, tandem, and substitute or
exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award or award, the Committee shall
require the surrender of such other Award or award in consideration for the
grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of
the Company or any subsidiary, in which the Fair Market Value of Common Stock
subject to the Award is equivalent in value to the cash compensation, or in
which the exercise price, grant price or purchase price of the Award in the
nature of a right that may be exercised is equal to the Fair Market Value of
the underlying Common Stock minus the value of the cash compensation
surrendered.
13.3 Form and Timing of Payment Under Awards; Deferrals. Subject
to the terms of the Plan and any applicable Agreement, payments to be made by
the Company or an Affiliate upon the exercise of an Award or settlement of an
Award may be made in such forms as the Committee shall determine, including,
without limitation, cash, Common Stock, other Awards or other property, and may
be made in a single payment or transfer, in installments, or on a deferred
basis. The settlement of any Award may be accelerated, and cash paid in lieu
of Common Stock in connection with such settlement, in the discretion of the
Committee or upon occurrence of one or more specified events (in addition to a
Change in Control). Installment or deferred payments may be required by the
Committee (subject to Section 13.1 of the Plan) or permitted at the election of
the Participant. Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the granting or crediting of Dividend Equivalents in respect of installment
or deferred payments denominated in Common Stock.
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13.4 Status of Awards Under Code Section 162(m). It is the intent
of the Company that Awards granted to persons who are Covered Employees within
the meaning of Code Section 162(m) shall constitute "qualified
performance-based compensation" satisfying the requirements of Code Section
162(m). Accordingly, the provisions of the Plan shall be interpreted in a
manner consistent with Code Section 162(m). If any provision of the Plan or
any agreement relating to such an Award does not comply or is inconsistent with
the requirements of Code Section 162(m), such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements.
13.5 Unfunded Status of Plan; Limits on Transferability. It is
intended that the Plan be an "unfunded" plan for incentive and deferred
compensation. The Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock or make payments; provided, however, that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements is consistent
with the "unfunded" status of the Plan. Unless otherwise provided in this Plan
or in an Agreement, no Award shall be subject to the claims of Participant's
creditors and no Award may be transferred, assigned, alienated or encumbered in
any way other than by will or the laws of descent and distribution or to a
Representative upon the death of the Participant.
13.6 General Provisions.
(a) Representation. The Committee may require each person
purchasing or receiving shares pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring
the shares without a view to the distribution thereof. The
certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
(b) No Additional Obligation. Nothing contained in the
Plan shall prevent the Company or an Affiliate from adopting other or
additional compensation arrangements for its employees.
(c) Withholding. No later than the date as of which an
amount first becomes includible in the gross income of the Participant
for Federal income tax purposes with respect to any Award, the
Participant shall pay to the Company (or other entity identified by
the Committee), or make arrangements satisfactory to the Company or
other entity identified by the Committee regarding the payment of, any
Federal, state, local or foreign taxes of any kind required by law to
be withheld with respect to such amount required in order for the
Company or an Affiliate to obtain a current deduction. If the
Participant disposes of shares of Common Stock acquired pursuant to an
Incentive Stock Option in any transaction considered to be a
disqualifying transaction under the Code, the Participant must give
written notice of such transfer and the Company shall have the right
to deduct any taxes required by law to be withheld from any amounts
otherwise payable to the Participant. Unless otherwise determined by
the Committee, withholding obligations may be settled with Common
Stock, including Common Stock that is part of the Award that gives
rise to the withholding
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requirement, provided that any applicable requirements under Section
16 of the Exchange Act are satisfied. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements,
and the Company and its Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment
otherwise due to the Participant.
(d) Reinvestment. The reinvestment of dividends in
additional Deferred or Restricted Stock at the time of any dividend
payment shall be permissible only if sufficient shares of Common Stock
are available under the Plan for such reinvestment (taking into
account then outstanding Options and other Awards).
(e) Representation. The Committee shall establish such
procedures as it deems appropriate for a Participant to designate a
Representative to whom any amounts payable in the event of the
Participant's death are to be paid.
(f) Controlling Law. The Plan and all Awards made and
actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Delaware (other than its law
respecting choice of law). The Plan shall be construed to comply with
all applicable law and to avoid liability to the Company, an Affiliate
or a Participant, including, without limitation, liability under
Section 16(b) of the Exchange Act.
(g) Offset. Any amounts owed to the Company or an
Affiliate by the Participant of whatever nature may be offset by the
Company from the value of any shares of Common Stock, cash or other
thing of value under this Plan or an Agreement to be transferred to
the Participant, and no shares of Common Stock, cash or other thing of
value under this Plan or an Agreement shall be transferred unless and
until all disputes between the Company and the Participant have been
fully and finally resolved and the Participant has waived all claims
to such against the Company or an Affiliate.
(h) Fail Safe. With respect to persons subject to Section
16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or Rule
16a-1(c)(3), as applicable. To the extent any provision of the Plan
or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
Committee. Moreover, in the event the Plan does not include a
provision required by Rule 16b-3 or Rule 16a-1(c)(3) to be stated
herein, such provision (other than one relating to eligibility
requirements or the price and amount of Awards) shall be deemed to be
incorporated by reference into the Plan with respect to Participants
subject to Section 16.
13.7 Mitigation of Excise Tax. If any payment or right accruing to
a Participant under this Plan (without the application of this Section 13.7),
either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate ("Total Payments"), would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations
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thereunder), such payment or right shall be reduced to the largest amount or
greatest right that will result in no portion of the amount payable or right
accruing under the Plan being subject to an excise tax under Section 4999 of
the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith after
consultation with the Participant, and such determination shall be conclusive
and binding on the Participant. The Participant shall cooperate in good faith
with the Committee in making such determination and providing the necessary
information for this purpose.
13.8 No Rights with Respect to Continuance of Employment. Nothing
contained herein shall be deemed to alter the relationship between the Company
or an Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract. The Company or
an Affiliate shall have no obligation to retain the Participant in its employ
or service as a result of this Plan. There shall be no inference as to the
length of employment or service hereby, and the Company or an Affiliate
reserves the same rights to terminate the Participant's employment or service
as existed prior to the individual's becoming a Participant in this Plan.
13.9 Awards in Substitution for Awards Granted by Other
Corporations. Awards (including cash in respect of fractional shares) may be
granted under the Plan from time to time in substitution for awards held by
employees, directors or service providers of other corporations who are about
to become officers, directors or employees of the Company or an Affiliate as
the result of a merger or consolidation of the employing corporation with the
Company or an Affiliate, or the acquisition by the Company or an Affiliate of
the assets of the employing corporation, or the acquisition by the Company or
Affiliate of the stock of the employing corporation, as the result of which it
becomes a designated employer under the Plan. The terms and conditions of the
Awards so granted may vary from the terms and conditions set forth in this Plan
at the time of such grant as the majority of the members of the Committee may
deem appropriate to conform, in whole or in part, to the provisions of the
awards in substitution for which they are granted.
13.10 Procedure for Adoption. Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the
Board of Directors and subject to such conditions as may be imposed by the
Board of Directors, adopt the Plan for the benefit of its employees as of the
date specified in the board resolution.
13.11 Procedure for Withdrawal. Any Affiliate which has adopted the
Plan may, by resolution of the board of directors of such Affiliate, with the
consent of the Board of Directors and subject to such conditions as may be
imposed by the Board of Directors, terminate its adoption of the Plan.
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13.12 Delay. If at the time a Participant incurs a Termination of
Employment (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to
the extent necessary to avoid the imposition of liability shall be suspended
and delayed during the period the Participant would be subject to such
liability, but not more than six (6) months and one (1) day and not to exceed
the Option Period, or the period for exercise of a Stock Appreciation Right as
provided in the Agreement, whichever is shorter. The Company shall have the
right to suspend or delay any time period described in the Plan or an Agreement
if the Committee shall determine that the action may constitute a violation of
any law or result in liability under any law to the Company, an Affiliate or a
stockholder of the Company until such time as the action required or permitted
shall not constitute a violation of law or result in liability to the Company,
an Affiliate or a stockholder of the Company. The Committee shall have the
discretion to suspend the application of the provisions of the Plan required
solely to comply with Rule 16b-3 if the Committee shall determine that Rule
16b-3 does not apply to the Plan.
13.13 Headings. The headings contained in this Plan are for
reference purposes only and shall not affect the meaning or interpretation of
this Plan.
13.14 Severability. If any provision of this Plan shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provision hereby, and this Plan
shall be construed as if such invalid or unenforceable provision were omitted.
13.15 Successors and Assigns. This Plan shall inure to the benefit
of and be binding upon each successor and assign of the Company. All
obligations imposed upon a Participant, and all rights granted to the Company
hereunder, shall be binding upon the Participant's heirs, legal representatives
and successors.
13.16 Entire Agreement. This Plan and the Agreement constitute the
entire agreement with respect to the subject matter hereof and thereof,
provided that in the event of any inconsistency between the Plan and the
Agreement, the terms and conditions of this Plan shall control.
Executed on this ____ day of ________, 1995.
KENSEY NASH CORPORATION
By __________________________________
Title: ___________________________
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EXHIBIT B
FIRST AMENDED AND RESTATED
KENSEY NASH CORPORATION
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT
1.1 Purpose. The Kensey Nash Corporation Nonemployee Directors' Stock
Option Plan ("Plan") is hereby established by Kensey Nash Corporation
("Company"), effective September 1, 1995 ("Effective Date"). The purpose of the
Plan is to promote the overall financial objectives of the Company and its
stockholders by motivating directors of the Company who are not employees and to
further align the interests of such directors with those of the stockholders of
the Company and to achieve long-term growth and performance of the Company. The
Plan and the grant of Options thereunder are expressly conditioned upon the
Plan's approval by the security holders of the Company to the extent required by
Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and if such
approval is not obtained, then the Plan and all Options granted thereunder shall
be null and void ab initio.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
2.1 "Affiliate" means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
association or other entity (other than the Company) that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the Company including, without limitation, any member
of an affiliated group of which the Company is a common parent corporation as
provided in Section 1504 of the Code.
2.2 "Agreement" or "Option Agreement" means, individually or collectively,
any agreement entered into pursuant to this Plan pursuant to which an Option is
granted to a Participant.
2.3 "Board of Directors" or "Board" means the Board of Directors of the
Company.
2.4 "Change in Control" shall be deemed to have occurred on the first to
occur of any of the following events:
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(a) An acquisition of at least twenty percent (20%) by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided that such acquisition would result in
the Kensey Nash Entities beneficially owning (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) following the
acquisition less than forty percent (40%) of the Outstanding Company
Common Stock or less than forty percent (40%) of the Outstanding
Company Voting Securities; or
(b) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or
dissolution of the Company, the sale or disposition of all or
substantially all of the assets of the Company or similar corporate
transaction (in each case referred to in this Section as a "Corporate
Transaction") or, if consummation of such Corporate Transaction is
subject, at the time of such approval by stockholders, to the consent
of any government or governmental agency, the obtaining of such consent
(either explicitly or implicitly); or
(c) A change in the composition of the Board such that the
individuals who, as of the date of the Public Offering, constitute the
Board (such Board shall be hereinafter referred to as the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board; provided, however, for purposes of this Section, that any
individual who becomes a member of the Board subsequent to the date of
the Company's Public Offering whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at
least a majority of those individuals who are members of the Board and
who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided, further, that any
such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board.
Notwithstanding the foregoing provisions of this Section, the following shall
be excluded from the events described in (a) and (b) above: (i) any acquisition
by or consummation of a or Corporate Transaction with the Company, an Affiliate
or by an employee benefit plan (or related trust) sponsored or maintained by
the Company or an Affiliate, (ii) any acquisition by or consummation of a
Corporate Transaction with a Kensey Nash Entity, (iii) the acquisition by or
consummation of a or Corporate Transaction with any Person who beneficially
owned, immediately prior to such acquisition or Corporate Transaction, directly
or indirectly, twenty percent (20%) or more of the Outstanding
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Company Common Stock or Outstanding Company Voting Securities, or (iv)
any acquisition or Corporate Transaction, if more than a majority of
the beneficial ownership of the entity resulting from the acquisition
or Corporate Transaction is held by Persons who held the beneficial
ownership of the Outstanding Company Voting Securities before the
acquisition or Corporate Transaction.
2.5 "Code" or "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.
2.6 "Commission" means the Securities and Exchange Commission or
any successor agency.
2.7 "Committee" means the person or persons appointed by the Board
of Directors to administer the Plan, as further described in the Plan.
2.8 "Common Stock" means the shares of the $.01 par value common
stock of the Company, whether presently or hereafter issued, and any other stock
or security resulting from adjustment thereof as described hereinafter or the
common stock of any successor to the Company which is designated for the purpose
of the Plan.
2.9 "Company" means Kensey Nash Corporation, a Delaware
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.
2.10 "Director" means each and any director who serves on the Board
and who is not an officer or employee of the Company or any of its Affiliates.
2.11 "Disability" means a mental or physical illness that renders a
Participant totally and permanently incapable of performing the Participant's
duties for the Company or an Affiliate. Notwithstanding the foregoing, a
Disability shall not qualify under the Plan if it is the result of (i) a
willfully self-inflicted injury or willfully self-induced sickness; or (ii) an
injury or disease contracted, suffered, or incurred, while participating in a
criminal offense. The determination of Disability shall be made by the
Committee. The determination of Disability for purposes of the Plan shall not
be construed to be an admission of disability for any other purpose.
2.12 "Effective Date" means September 1, 1995.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2.14 "Extraordinary Termination of Directorship" means the
Termination of Directorship of the Participant due to death or Disability.
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2.15 "Fair Market Value" means:
(a) prior to a Public Offering, the value determined on
the basis of the good faith determination of the Committee and without regard
to whether the Common Stock is restricted, illiquid or represents a minority
interest, unless expressly provided otherwise in an Agreement; and
(b) on or after a Public Offering, the value determined
on the basis of the good faith determination of the Committee, without regard
to whether the Common Stock is restricted or represents a minority interest,
pursuant to the applicable method described below:
(i) if the Common Stock is listed on a national
securities exchange or quoted on NASDAQ, the closing price of
the Common Stock on the relevant date (or, if such date is not
a business day or a day on which quotations are reported, then
on the immediately preceding date on which quotations were
reported), as reported by the principal national exchange on
which such shares are traded (in the case of an exchange) or
by NASDAQ, as the case may be;
(ii) if the Common Stock is not listed on a
national securities exchange or quoted on NASDAQ, but is
actively traded in the over-the-counter market, the average of
the closing bid and asked prices for the Common Stock on the
relevant date (or, if such date is not a business day or a day
on which quotations are reported, then on the immediately
preceding date on which quotations were reported), or the most
recent preceding date for which such quotations are reported;
and
(iii) if, on the relevant date, the Common Stock is
not publicly traded or reported as described in (i) or (ii),
the value determined in good faith by the Committee.
2.16 "Grant Date" means the date that as of which an Option is
granted pursuant to the Plan.
2.17 "Kensey Nash Entities" mean Kenneth R. Kensey ("Kensey") and
John Nash ("Nash"), their respective spouses, their respective heirs, and any
group (within the meaning of Section 13(d)(3) of the Exchange Act) of which any
of Kensey, Nash, their spouses or their heirs is a member for purposes of
acquiring, holding or disposing of securities of the Company, any trust
established by or for the benefit of any of the foregoing and any other entity
controlled by or for the benefit of any of the foregoing.
2.18 "Kensey Nash Interests" mean the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) or the pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the Exchange Act)
of the Kensey Nash Entities in the outstanding voting securities of the Company
entitled to vote generally in the election of directors or such other securities
as may be specifically referenced.
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2.19 "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq
National Market.
2.20 "Option" means the right to purchase the number of shares of
Common Stock specified by the Plan at a price and for a term fixed by the Plan,
and subject to such other limitations and restrictions as the Plan and the
Committee imposes.
2.21 "Option Period" means the period during which the Option shall
be exercisable in accordance with the Agreement and Article V.
2.22 "Option Price" means the price at which the Common Stock may be
purchased under an Option as provided in Section 5.3.
2.23 "Participant" means a Director to whom an Option has been
granted under the Plan, and in the event a Representative is appointed for a
Participant or another person becomes a Representative, then the term
"Participant" shall mean such appointed Representative. The term shall also
include a trust for the benefit of the Participant, the Participant's parents,
spouse or descendants; a partnership the interests in which are for the benefit
of the Participant, the Participant's parents, spouse or descendants; or a
custodian under a uniform gifts to minors act or similar statute for the
benefit of the Participant's descendants, to the extent permitted by the
Committee and not inconsistent with an application of Rule 16b-3.
Notwithstanding the foregoing, the term "Termination of Directorship" shall
mean the Termination of Directorship of the Director.
2.24 "Plan" means the Kensey Nash Corporation Nonemployee
Directors' Stock Option Plan, as herein set forth and as may be amended from
time to time.
2.25 "Public Offering" means the initial public offering of shares
of Common Stock under the Securities Act.
2.26 "Representative" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of
the Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or
(d) any person to whom an Option has been permissibly transferred by the
Committee; provided that only one of the foregoing shall be the Representative
at any point in time as determined under applicable law and recognized by the
Committee.
2.27 "Rule 16b-3" or "Rule 16a-1(c)(3)" mean Rule 16b-3 and Rule
16a-1(c)(3), as promulgated under the Exchange Act, as amended from time to
time, or any successor thereto, in effect and applicable to the Plan and
Participants.
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2.28 "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
2.29 "Termination of Directorship" means the occurrence of any act
or event that actually or effectively causes or results in the person's
ceasing, for whatever reason, to be a Director of the Company or of any
Affiliate, including, without limitation, death, Disability, dismissal,
severance at the election of the Participant, retirement, or severance as a
result of the discontinuance, liquidation, sale or transfer by the Company or
its Affiliates of all businesses owned or operated by the Company or its
Affiliates. A person who becomes an employee or officer of the Company shall
not have incurred a Termination of Directorship.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. The Plan shall be
administered by the Committee which, except as provided herein, shall be
comprised of one or more persons. The Committee shall be the Compensation
Committee of the Board of Directors, unless such committee does not exist or the
Board establishes another committee whose purpose is the administration of the
Plan. In the absence of an appointment, the Board shall be the Committee;
provided that only those members of the Compensation Committee of the Board who
participate in the decision relative to Options under the Plan shall be deemed
to be part of the "Committee" for purposes of the Plan. A majority of the
Committee shall constitute a quorum at any meeting thereof (including telephone
conference) and the acts of a majority of the members present, or acts approved
in writing by a majority of the entire Committee without a meeting, shall be the
acts of the Committee for purposes of the Plan. The Committee may authorize any
one or more of its members or an officer of the Company to execute and deliver
documents on behalf of the Committee. A member of the Committee shall not
exercise any discretion respecting himself or herself under the Plan. The Board
shall have the authority to remove, replace or fill any vacancy of any member of
the Committee upon notice to the Committee and the affected member. Any member
of the Committee may resign upon notice to the Board. The Committee may
allocate among one or more of its members, or may delegate to one or more of its
agents, such duties and responsibilities as it determines.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan and the Company's intent that transactions be exempt
under Rule 16b-3:
(a) to determine the terms and conditions of any Option
granted hereunder (including, but not limited to, the Option Price,
the Option Period, any exercise restriction or
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limitation and any exercise acceleration or forfeiture waiver
regarding any Option and the shares of Common Stock relating thereto);
(b) to provide for the forms of Agreement to be utilized
in connection with the Plan;
(c) to determine whether a Participant has a Disability
or retires;
(d) to determine what securities law requirements are
applicable to the Plan, Options, and the issuance of shares of Common
Stock and to require of a Participant that appropriate action be
taken with respect to such requirements;
(e) to interpret and make a final determination with
respect to the remaining number of shares of Common Stock available
under the Plan;
(f) to determine the restrictions or limitations on the
transfer of Common Stock;
(g) to adjust the terms and conditions, at any time or
from time to time, of any Option, subject to the limitations of
Sections 6.1 and 6.3;
(h) to provide for any forms to be utilized in connection
with the Plan;
(i) to cancel, with the consent of the Participant or as
otherwise provided in the Plan or an Agreement, outstanding Options;
(j) to require as a condition of the exercise of an Option
or the issuance or transfer of a certificate of Common Stock, the
withholding from a Participant of the amount of any federal, state
or local taxes as may be necessary in order for the Company or any
other entity to obtain a deduction or as may be otherwise required by
law;
(k) to determine whether and with what effect an
individual has incurred a Termination of Directorship;
(l) to determine whether the Company or any other person
has a right or obligation to purchase Common Stock from a Participant
and, if so, the terms and conditions on which such Common Stock
is to be purchased;
(m) to determine whether an Option is to be adjusted or
modified;
(n) to determine the permissible methods of Option
exercise and payment, including cashless exercise arrangements;
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(o) to adopt, amend and rescind such rules and regulations
as, in its opinion, may be advisable in the administration of the
Plan; and
(p) to appoint and compensate agents, counsel, auditors
or other specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Option issued under the Plan and to otherwise supervise the
administration of the Plan. The Committee's policies and procedures may differ
with respect to Options granted at different times or to different
Participants.
Any determination made by the Committee pursuant to the provisions of
the Plan shall be made in its sole discretion. All decisions made by the
Committee pursuant to the provisions of the Plan shall be final and binding on
all persons, including the Company and Participants. Any determination shall
not be subject to de novo review if challenged in court.
ARTICLE IV
SPECIAL PROVISIONS REGARDING STOCK
4.1 Number of Shares. Subject to the adjustment under Section 4.6,
the total number of shares of Common Stock reserved and available for issuance
pursuant to Options under the Plan shall be 60,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in
whole or in part, of authorized and unissued shares or treasury shares.
4.2 Release of Shares. If any shares of Common Stock that have
been optioned cease to be subject to an Option, if any shares of Common Stock
that are subject to any Option are forfeited, if any Option otherwise terminates
without issuance of shares of Common Stock being made to the Participant, or if
any shares (whether or not restricted) of Common Stock are received by the
Company in connection with the exercise of an Option including the satisfaction
of any tax withholding, such shares, in the discretion of the Committee, may
again be available for distribution in connection with Options under this Plan.
If any shares could not again be available for Options to a particular
Participant under any applicable law, such shares shall be available exclusively
for Options to Participants who are not subject to such limitations.
4.3 Restrictions on Shares. Shares of Common Stock issued upon
exercise of an Option shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Committee in
its discretion may determine or provide in the Option Agreement. The Company
shall not be required to issue or deliver any certificates for shares of Common
Stock, cash or other property prior to (i) the listing of such shares on any
stock exchange, NASDAQ or other public market on which the Common Stock may then
be listed (or regularly traded), (ii) the
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completion of any registration or qualification of such shares under federal or
state law, or any ruling or regulation of any government body which the
Committee determines to be necessary or advisable, and (iii) the satisfaction of
any applicable withholding obligation in order for the Company or an Affiliate
to obtain a deduction with respect to the exercise of an Option. The Company
may cause any certificate for any share of Common Stock to be delivered to be
properly marked with a legend or other notation reflecting the limitations on
transfer of such Common Stock as provided in the Plan or as the Committee may
otherwise require. The Committee may require any person exercising an Option to
make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the shares of Common
Stock in compliance with applicable law or otherwise. Fractional shares shall
not be delivered, but shall be rounded to the next lower whole number of shares.
4.4 Stockholder Rights. No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Option until, after
proper exercise of the Option or other action required, such shares shall have
been recorded on the Company's official stockholder records as having been
issued or transferred. Upon exercise of the Option or any portion thereof, the
Company will have thirty (30) days in which to issue the shares, and the
Participant will not be treated as a stockholder for any purpose whatsoever
prior to such issuance. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such shares are recorded
as issued and transferred in the Company's official stockholder records, except
as provided herein or in an Agreement.
4.5 Best Efforts To Register. If there has been a Public Offering,
the Company will register under the Securities Act the Common Stock delivered or
deliverable pursuant to Options on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon as such forms are available for registration to the Company for
this purpose. The Company will use its best efforts to cause the registration
statement to become effective as soon as possible and will file such supplements
and amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the Option Period of the last Option outstanding, (b) the date
the Company is no longer a reporting company under the Exchange Act and (c) the
date all Participants have disposed of all shares delivered pursuant to any
Option. The Company may delay the foregoing obligation if the Committee
reasonably determines that any such registration would materially and adversely
affect the Company's interests or if there is no material benefit to
Participants.
4.6 Adjustments. In the event of any change in capitalization,
such as a stock dividend, stock split, combination or exchange of shares,
recapitalization or other change in the capital structure of the Company,
corporate separation or division of the Company (including, but not limited to,
a split-up, spin-off, split-off or distribution to Company stockholders other
than a normal cash dividend), sale by the Company of all or a substantial
portion of its assets (measured on either a stand-alone or consolidated basis),
reorganization, rights offering, a partial or complete liquidation,
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or any other corporate transaction, Company stock offering or event involving
the Company and having an effect similar to any of the foregoing, then the
Committee shall adjust or substitute, as the case may be, the number of shares
of Common Stock available for Options under the Plan, the number of shares of
Common Stock covered by outstanding Options, the exercise price per share of
outstanding Options, and any other characteristics or terms of the Options as
the Committee shall deem necessary or appropriate to reflect equitably the
effects of such changes to the Participants; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated by
rounding to the next lower whole number of shares with appropriate payment for
such fractional share as shall reasonably be determined by the Committee.
4.7 Transfer of Shares. A Participant may at any time make a
transfer of shares of Common Stock received pursuant to the exercise of an
Option to his parents, spouse or descendants, to any trust for the benefit of
the foregoing or to a partnership the interests of which are principally for the
benefit of the Participant, his parents, spouse or descendants or to a custodian
under a uniform gifts to minors act or similar statute for the benefit of any of
the Participant's descendants. Any transfer of shares received pursuant to the
exercise of an Option shall not be permitted or valid unless and until the
transferee agrees to be bound by the provisions of this Plan, and any provision
respecting Common Stock under the Agreement, provided that "Termination of
Directorship" shall continue to refer to the Termination of Directorship of the
Director.
4.8 Limited Transfer During Offering. In the event there is an
effective registration statement under the Securities Act pursuant to which
shares of Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Option.
4.9 Committee Discretion. The Committee may in its sole discretion
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Option (including the
purchase of any unexercised Options which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company upon such terms and
conditions as the Committee may determine and set forth in an Agreement. The
provisions of this Section shall be construed by the Committee and shall be
subject to such other terms and conditions as the Committee may from time to
time determine.
4.10 No Company Obligation. None of the Company, an Affiliate or
the Committee shall have any duty or obligation to affirmatively disclose to a
record or beneficial holder of Common Stock or an Option, and such holder shall
have no right to be advised of any material information regarding the Company or
any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Option or the Company's purchase of Common Stock or an Option
from such holder in accordance with the terms hereof.
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ARTICLE V
OPTIONS
5.1 Eligibility. Each Director shall be granted Options to
purchase shares of Common Stock as provided herein.
5.2 Grant and Exercise. Each Participant who is a Director on the
date of the Public Offering shall be granted an Option on such date to purchase
Five Thousand (5,000) shares of Common Stock without further action by the Board
or the Committee. On the date of each regular annual stockholder meeting of the
Company to occur after the Effective Date, each person who is a Director on such
date and is either continuing as a Director subsequent to the meeting or is
elected to serve as a Director at such meeting shall be granted an Option to
purchase Two Thousand Five Hundred (2,500) shares of Common Stock without
further action by the Board or the Committee. If the number of shares of Common
Stock available to grant under the Plan on a scheduled date of grant is
insufficient to make all automatic grants required to be made pursuant to the
Plan on such date, then each eligible Director shall receive an Option to
purchase a pro rata number of the remaining shares of Common Stock available
under the Plan; provided further, however, that if such proration results in
fractional shares of Common Stock, then such Option shall be rounded down to the
nearest number of whole shares of Common Stock. If there is no whole number of
shares remaining to be granted, then no grants shall be made under the Plan.
Each Option granted under the Plan shall be evidenced by an Agreement, in a form
approved by the Committee, which shall embody the terms and conditions of such
Option and which shall be subject to the express terms and conditions set forth
in the Plan. Such Agreement shall become effective upon execution by the
Participant.
5.3 Terms and Conditions. Options shall be subject to the
following terms and conditions and to such terms and conditions as shall be
determined by the Committee, including the following:
(a) Option Period. The Option Period of each Option shall be fixed
by the Committee; provided that no Option shall be exercisable more than ten
(10) years after the date the Option is granted.
(b) Option Price. The Option Price per share of the Common Stock
purchasable under an Option shall be the Fair Market Value on the Grant Date.
(c) Exercisability. Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee. Except as provided in an Agreement, an Option shall not be
exercisable until the earlier of the day immediately preceding the date of the
first anniversary of the Grant Date, provided the Participant is a Director on
that date, and the date of the Participant's Extraordinary Termination of
Directorship. If the Committee provides that any Option is exercisable only in
installments, the Committee may at any time waive such installment
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exercise provisions, in whole or in part. In addition, the Committee may at
any time accelerate the exercisability of any Option.
(d) Method of Exercise. Subject to the provisions of this Article
V, a Participant may exercise Options, in whole or in part, at any time during
the Option Period by the Participant's giving written notice of exercise on a
form provided by the Committee (if available) to the Company specifying the
number of shares of Common Stock subject to the Option to be purchased. Such
notice shall be accompanied by payment in full of the purchase price by cash or
check or such other form of payment as the Company may accept. If approved by
the Committee, payment in full or in part may also be made (i) by delivering
Common Stock already owned by the Participant for a period of at least six (6)
months prior to such payment date and having a total Fair Market Value on the
date of such delivery equal to the Option Price; (ii) by the execution and
delivery of a full recourse promissory note or other full recourse evidence of
indebtedness (and any security agreement thereunder) satisfactory to the
Committee and permitted in accordance with Section 5.3(e); (iii) by authorizing
the Company to retain shares of Common Stock already owned by the Participant
for a period of at least six (6) months prior to such payment and which would
otherwise be issuable upon exercise of the Option having a total Fair Market
Value on the date of delivery equal to the Option Price; (iv) by the delivery of
cash or the extension of credit by a broker-dealer to whom the Participant has
submitted a notice of exercise or otherwise indicated an intent to exercise an
Option (in accordance with Part 220, Chapter II, Title 12 of the Code of Federal
Regulations, so-called "cashless" exercise); or (v) by any combination of the
foregoing. No shares of Common Stock shall be issued until full payment
therefor, as determined by the Committee, has been made. A Participant shall
have all of the rights of a stockholder of the Company holding the class of
Common Stock that is subject to such Stock Option (including, if applicable, the
right to vote the shares and the right to receive dividends), when the
Participant has given written notice of exercise, has paid in full for such
shares and such shares have been recorded on the Company's official stockholder
records as having been issued and transferred.
(e) Company Loan or Guarantee. Upon the exercise of any Option and
subject to the pertinent Agreement and the discretion of the Committee, the
Company may at the request of the Participant:
(i) lend to the Participant, on a full recourse basis, an
amount equal to such portion of the Option Price as the Committee may
determine; or
(ii) guarantee a loan obtained by the Participant on a
full recourse basis from a third-party for the purpose of tendering
the Option Price.
The remaining terms and conditions of any loan or guarantee, including the
interest rate, and any security interest thereunder, shall be determined by the
Committee, except that (1) the term of any loan may not exceed twenty-four
months and (2) no extension of credit or guarantee shall obligate the Company
for an amount to exceed the least of the Option Price, the aggregate Fair
Market Value per share of the Common Stock on the date of exercise, less the
par value of the shares of Common
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Stock to be purchased upon the exercise of the Option, or the amount permitted
under applicable laws or the regulations and rules of the Federal Reserve Board
and any other governmental agency having jurisdiction.
(f) Nontransferability of Options. Except as provided herein or in
an Agreement, no Option or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution, and
all Options shall be exercisable during the Participant's lifetime only by the
Participant. If and to the extent transferability is permitted by Rule 16b-3
and except as otherwise provided herein or by an Agreement, every Option granted
hereunder shall be freely transferable, but only if such transfer does not
result in liability under Section 16 of the Exchange Act to the Participant or
other Participants and is consistent with registration of the Option and sale of
Common Stock on Form S-8 (or a successor form) or the Committee's waiver of such
condition.
5.4 Extraordinary Termination of Directorship. Unless otherwise
provided in an Agreement or determined by the Committee, if a Participant incurs
an Extraordinary Termination of Directorship, any unexpired and unexercised
Option held by such Participant shall thereafter be fully exercisable for a
period of one (1) year (or such other period or no period as the Committee may
specify) immediately following the date of such Extraordinary Termination of
Directorship or until the expiration of the Option Period, whichever period is
the shorter.
5.5 Other Termination. Unless otherwise provided in an Agreement
or determined by the Committee, if a Participant incurs a Termination of
Directorship other than due to an Extraordinary Termination of Directorship, any
Option held by such Participant shall thereupon terminate, except that such
Option, to the extent then exercisable, may be exercised for the lesser of the
three (3)-month period commencing with the date of such Termination of
Directorship or until the expiration of the Option Period. The death or
Disability of a Participant after a Termination of Directorship otherwise
provided herein shall not extend the exercisability of the time permitted to
exercise an Option.
ARTICLE VI
MISCELLANEOUS
6.1 Amendments and Termination. The Board may amend, alter, or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a Participant
under an Option granted without the Participant's consent, except such an
amendment made to cause the Plan to qualify for the exemption provided by Rule
16b-3 or (b) disqualify the Plan from the exemption provided by Rule 16b-3. In
addition, no such amendment shall be made without the approval of the Company's
stockholders to the extent such approval is required by law or agreement.
Notwithstanding the foregoing, the Plan may not be amended more than once every
six (6) months to change the Plan provisions listed in Section (c)(2)(ii)(A) of
Rule 16b-3, other than to comport with changes in the Code or Rule 16b- 3.
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The Committee may amend the Plan at any time provided that (a) no
amendment shall impair the rights of any Participant under any Option
theretofore granted without the Participant's consent, (b) no amendment shall
disqualify the Plan from the exemption provided by Rule 16b-3, and (c) any
amendment shall be subject to the approval or rejection of the Board.
Notwithstanding the foregoing, the Plan may not be amended more than once every
six (6) months to change the Plan provisions listed in Section (c)(2)(ii)(A) of
Rule 16b-3, other than to comport with changes in the Code or Rule 16b-3.
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights
of any Participant without the Participant's consent, except such an amendment
made to cause the Plan or Option to qualify for the exemption provided by Rule
16b-3. The Committee's discretion to amend the Plan or Agreement shall be
limited to the Plan's constituting a plan described in Section (c)(2)(ii) of
Rule 16b-3.
Subject to the above provisions, the Board shall have authority to
amend this Plan to take into account changes in law and tax and accounting
rules, as well as other developments and to grant Options which qualify for
beneficial treatment under such rules without stockholder approval.
Notwithstanding the foregoing, if any right under this Plan would
cause an otherwise eligible transaction to be ineligible for pooling of
interest accounting treatment, the Committee may modify or adjust the right so
that pooling of interest accounting treatment shall be available.
6.2 Unfunded Status of Plan. It is intended that the Plan be an
"unfunded" plan of deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that,
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
6.3 General Provisions.
(a) Representation. The Committee may require each
person purchasing or receiving shares pursuant to an Option to
represent to and agree with the Company in writing that such person is
acquiring the shares without a view to the distribution thereof in
violation of the Securities Act. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
(b) No Additional Obligation. Nothing contained in the
Plan shall prevent the Company or an Affiliate from adopting other or
additional compensation arrangements.
(c) Withholding. If determined to be required to protect
the Company, no later than the date as of which an amount first
becomes includable in the gross income of the Participant for Federal
income tax purposes with respect to any Option, the Participant shall
pay to the Company (or other entity identified by the Committee), or
make arrangements
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satisfactory to the Company or other entity identified by the
Committee regarding the payment of, any Federal, state, local or
foreign taxes of any kind required by law to be withheld with respect
to such amount required in order for the Company or an Affiliate to
obtain a current tax deduction. Unless otherwise determined by the
Committee, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Option that gives rise to
the withholding requirement provided that any applicable requirements
under Section 16 of the Exchange Act are satisfied. The obligations
of the Company under the Plan shall be conditional on such payment or
arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant.
(d) Representation. The Committee shall establish such
procedures as it deems appropriate for a Participant to designate a
Representative to whom any amounts payable in the event of the
Participant's death are to be paid.
(e) Controlling Law. The Plan and all Options made and
actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Delaware (other than its law
respecting choice of law). The Plan shall be construed to comply with
all applicable law, and to avoid liability to the Company, an
Affiliate or a Participant, including, without limitation, liability
under Section 16(b) of the Exchange Act.
(f) Offset. Any amounts owed to the Company or an
Affiliate by the Participant of whatever nature may be offset by the
Company from the value of any shares of Common Stock, cash or other
thing of value under the Plan or an Agreement to be transferred to the
Participant, and no shares of Common Stock, cash or other thing of
value under the Plan or an Agreement shall be transferred unless and
until all disputes between the Company and the Participant have been
fully and finally resolved and the Participant has waived all claims
to such against the Company or an Affiliate.
(g) Fail-Safe. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or
Rule 16a-1(c)(3). To the extent any provision of the Plan or action
by the Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
Moreover, in the event the Plan does not include a provision required
by Rule 16b-3 or Rule 16a-1(c)(3) to be stated therein, such provision
(other than one relating to eligibility requirements, or the price and
amount of Options) shall be deemed to be incorporated by reference
into the Plan with respect to Participants subject to Section 16.
6.4 Special Provisions Regarding a Change in Control.
(a) In the event of a Change in Control, before the
Plan's approval by stockholders in accordance with Rule 16b-3, the
condition of the Plan's approval by stockholders shall be
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waived and the Plan and grant of all Options shall be given effect
without regard to such condition;
(b) Notwithstanding any other provision of this Plan to
the contrary, in the event of a Change in Control, any Options
outstanding as of the date such Change in Control and not then
exercisable shall become fully exercisable.
(c) In the event of a Change in Control, if the Change in
Control is within six (6) months of the Grant Date of an Option, such
Option shall be cancelled in exchange for a payment to the Participant
at the time of the Participant's Termination of Directorship equal to
the amount by which the "Change in Control Price" (as defined in
Section 6.4(d) per share of Common Stock exceeds the Option Price per
share of Common Stock, multiplied by the number of shares of Common
Stock granted under the Option to which this right applies, plus
interest on such amount at the prime rate as reported from time to
time in The Wall Street Journal, compounded annually and determined
from time to time;
(d) For purposes of this Section, "Change in Control
Price" means the higher of (i) the highest reported sales price of a
share of Common Stock in any transaction reported on the principal
exchange on which such shares are listed during the sixty (60)-day
period prior to and including the date of a Change in Control, or (ii)
if the Change in Control is the result of a Corporate Transaction (as
defined in Section 2.4(b) above), the highest price per share of
Common Stock paid in such tender or exchange offer or a Corporate
Transaction. To the extent that the consideration paid in any such
transaction described above consists all or in part of securities or
other non-cash consideration, the value of such securities or other
non-cash consideration shall be determined in the sole discretion of
the Committee; and
(e) Notwithstanding the foregoing, if any right under
this Plan would cause a transaction to be ineligible for pooling of
interest accounting that would, but for the right hereunder, be
eligible for such accounting treatment, the Committee may modify or
adjust the right so that pooling of interest accounting shall be
available, including the substitution of Common Stock having a Fair
Market Value equal to the cash otherwise payable hereunder for the
right which caused the transaction to be ineligible for pooling of
interest accounting.
6.5 Rights with Respect to Continuance as a Director. Nothing
contained herein shall be deemed to alter the relationship between the Company
or an Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract. The Company or
an Affiliate shall have no obligation to retain the Participant in its employ
or service as a result of the Plan. There shall be no inference as to the
length of employment or service hereby, and
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the Company or an Affiliate reserves the same rights to terminate the
Participant's employment or service as existed prior to the individual becoming
a Participant in the Plan.
6.6 Options in Substitution for Options Granted by Other
Corporations. Options may be granted under the Plan from time to time in
substitution for awards held by employees, directors or service providers of
other corporations who are about to become Directors of the Company or an
Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or an Affiliate, or the acquisition by the Company
or an Affiliate of the assets of the employing corporation, or the acquisition
by the Company or Affiliate of the stock of the employing corporation, as the
result of which it becomes a designated employer under the Plan. The terms and
conditions of the Options so granted may vary from the terms and conditions set
forth in the Plan at the time of such grant as the majority of the members of
the Committee may deem appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.
6.7 Procedure for Adoption. Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the
Board of Directors and subject to such conditions as may be imposed by the
Board of Directors, adopt the Plan for the benefit of its directors as of the
date specified in the board resolution.
6.8 Procedure for Withdrawal. Any Affiliate which has adopted the
Plan may, by resolution of the board of directors of such direct or indirect
subsidiary, with the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, terminate its adoption
of the Plan.
6.9 Delay. If at the time, the Participant is subject to
"short-swing" liability under Section 16 of the Exchange Act, any time period
provided for under the Plan to the extent necessary to avoid the imposition of
liability shall be suspended and delayed during the period the Participant
would be subject to such liability.
6.10 Headings. The headings contained in the Plan are for
reference purposes only and shall not affect the meaning or interpretation of
the Plan.
6.11 Severability. If any provision of the Plan shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provision hereby, and the Plan
shall be construed as if such invalid or unenforceable provision were omitted.
6.12 Successors and Assigns. The Plan shall inure to the benefit
of and be binding upon each successor and assign of the Company. All
obligations imposed upon a Participant, and all rights granted to the Company
hereunder, shall be binding upon the Participant's heirs, legal representatives
and successors.
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6.13 Entire Agreement. The Plan and the Agreement constitute the
entire agreement with respect to the subject matter hereof and thereof,
provided that in the event of any inconsistency between the Plan and the
Agreement, the terms and conditions of the Plan shall control.
Executed on this ____ day of ________, 1995.
KENSEY NASH CORPORATION
By:_____________________________________
Title: _________________________________
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PROXY KENSEY NASH CORPORATION
Marsh Creek Corporate Center - 55 East Uwchlan Avenue - Exton, Pennsylvania
19341
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 4, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) hereby appoints Joseph W. Kaufmann and Douglas
G. Evans, and each of them, with full power of substitution, as attorneys and
proxies for and in the name and place of the undersigned, and hereby authorizes
each of them to represent and to vote all of the shares of Common Stock of
Kensey Nash Corporation (the "Company") held of record by the undersigned as of
October 7, 1996 which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held on December 4, 1996, at The Top of the Bell Tower,
1717 Arch Street, 50th Floor - Furness Forum, Philadelphia, Pennsylvania 19103
at 10:00 a.m., Philadelphia time, and at any adjournment thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES
LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS:
Douglas G. Evans (term to expire in 1999) Walter R. Maupay, Jr. (term to expire in 1999)
[ ] FOR all nominees listed below
(except as marked to the contrary below)
<CAPTION>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
<CAPTION>
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
- - --------------------------------------------------------------------------------
(Instruction: to withhold authority to vote for any individual nominee, strike a
line through the nominee's name below)
2. PROPOSAL TO APPROVE THE FIRST AMENDED AND RESTATED KENSEY NASH CORPORATION
EMPLOYEE INCENTIVE COMPENSATION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE THE FIRST AMENDED AND RESTATED KENSEY NASH CORPORATION
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY'S FINANCIAL STATEMENTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Each of the persons named as proxies herein are authorized, in such person's
discretion, to vote upon such other matters as may properly come before the
Annual Meeting.
(Continued and to be signed and dated on reverse side.)
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENT THEREOF IN THE MANNER
DESCRIBED HEREIN. IF NO CONTRARY INDICATION IS MADE THE PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSALS 2, 3 AND 4, AND IN ACCORDANCE
WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
Dated , 1996
--------------------------------------
--------------------------------------
Signature(s)
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
[ ] MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT
This Proxy must be signed exactly as your name appears hereon. When shares are
held by joint tenants, both should sign. Attorneys, executors, administrators,
trustees and guardians should indicate their capacities. If the signer is a
corporation, please print full corporate name and indicate capacity of duly
authorized officer executing on behalf of the corporation. If the signer is a
partnership, please print full partnership name and indicate capacity of duly
authorized person executing on behalf of the partnership.
