<PAGE> 1
000
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
KENSEY NASH CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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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
[KENSEY NASH LOGO]
Marsh Creek Corporate Center
55 East Uwchlan Avenue
Exton, Pennsylvania 19341
October 29, 1997
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the 1997
Annual Meeting of Stockholders of Kensey Nash Corporation. The Annual Meeting
will be held on Wednesday, December 3, 1997 beginning at 10:00 a.m., local
time, at the offices of Kensey Nash Corporation, 55 East Uwchlan Avenue, Exton,
Pennsylvania 19341. 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,
/s/ Joseph W. Kaufmann
Joseph W. Kaufmann
President and Chief Executive Officer
<PAGE> 3
[KENSEY NASH LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 3, 1997
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 3,
1997 at the offices of Kensey Nash Corporation, 55 East Uwchlan Avenue, Exton,
Pennsylvania 19341 for the following purposes:
(1) To elect two Class II Directors to the Company's Board of Directors;
(2) 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, 1998; and
(3) To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on October 6, 1997
as the record date for determining stockholders entitled to notice of, and to
vote at, the meeting.
By Order of the Board of Directors,
/s/ Joseph W. Kaufmann
Joseph W. Kaufmann
President and Secretary
Exton, Pennsylvania
October 29, 1997
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> 4
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 3, 1997, AT THE OFFICES OF KENSEY NASH CORPORATION,
55 E. UWCHLAN AVENUE, EXTON, PENNSYLVANIA 19341, AND ANY ADJOURNMENTS THEREOF.
THIS PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY ARE BEING MAILED TO
STOCKHOLDERS ON OR ABOUT OCTOBER 31, 1997.
VOTING SECURITIES -- The Board of Directors has fixed the close of business
on October 6, 1997, 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 the Record Date, the Company had outstanding 7,215,321 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 ratify the appointment of Deloitte & Touche
LLP as the independent auditors of the Company's financial statements for the
fiscal year ended June 30, 1998. 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 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, 1997, and continuing
through the date of the Annual Meeting at the principal offices of the Company,
55 East Uwchlan Avenue, Exton, Pennsylvania 19341.
<PAGE> 5
ANNUAL REPORT TO STOCKHOLDERS -- THE COMPANY'S ANNUAL REPORT TO
STOCKHOLDERS FOR THE FISCAL YEAR ENDED JUNE 30, 1997 ("FISCAL YEAR 1997"),
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 II Directors are to be elected
for a term of three years expiring at the 2000 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 1998 and 1999 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>
Served as
Name Age Position with Company Director Since
---- --- --------------------- --------------
<S> <C> <C> <C>
Joseph W. Kaufmann . . . 45 Chief Executive Officer, President, Chief Financial 1992
Officer, Secretary and Director
Harold N. Chefitz . . . . 62 Director 1995
</TABLE>
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 Hanson, PLC.
From 1978 to 1987, Mr. Kaufmann was employed by a subsidiary of Syntex
Corporation, 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. 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. He has been a director of
Warner Chilcott since 1995 and a director of Visible Genetics since 1994. Mr.
Chefitz serves as Chairman of Chefitz Healthcare Investment Company. From
March 1993 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, after its acquisition of Swergold Chefitz, Inc. Mr. Chefitz
served as Chairman of the Board
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<PAGE> 6
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.
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>
Served as Term
Name Age Position with Company Director Since Expires
---- --- ---------------------- -------------- -------
<S> <C> <C> <C> <C>
Kenneth R. Kensey, M.D. . . . . . . 47 Chairman of the Board 1984 1998
John E. Nash, P.E. . . . . . . . . 62 Vice Chairman of the Board and Executive 1984 1998
Vice President
Robert J. Bobb . . . . . . . . . . 49 Director 1984 1998
Douglas G. Evans, P.E. . . . . . . 33 Chief Operating Officer, Assistant 1995 1999
Secretary and Director
Walter R. Maupay, Jr. . . . . . . . 58 Director 1995 1999
</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, 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. 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 include 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. 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, and
-3-
<PAGE> 7
significantly contributes to the development and protection of the Company's
intellectual property. 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. Mr. Maupay has been a
director of Life Medical Sciences, Inc. since 1996 and currently is a director
of the Warwick Golf Farm and Neshaminy Golf Club, Inc.
DIRECTOR COMPENSATION -- The Company does not pay additional cash
compensation to executive officers for their service as Directors. During
fiscal year 1997, 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 per
share. 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 is entitled to receive 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. The options
granted to each director on December 4, 1996 are exercisable at $14.875 per
share.
MEETINGS -- During fiscal year 1997, the Board of Directors held four
formal meetings, and the Board of Directors took action on two occasions by
means of unanimous written consent. Each director attended at least 75% of the
aggregate of (a) the total number of meetings of the Board of Directors held
during the period for which he served as a director and (b) the total number of
meetings held by all committees of the Board of Directors on which he served.
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 two formal meetings in fiscal year 1997.
The Compensation Committee generally has responsibility for
recommending to the Board of Directors guidelines and standards for the
determination of executive compensation, reviewing the
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<PAGE> 8
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 1997. 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 1997.
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 all Section 16 filing
requirements applicable to its officers, directors and 10% beneficial owners
were complied with during fiscal year 1997, except (i) Mr. Bobb inadvertently
failed to timely file a Form 4 for an indirect purchase of 4,500 shares of
Common Stock by a trust of which Mr. Bobb is the sole trustee, and (ii) Mr.
Nash inadvertently failed to timely file a Form 4 in connection with his sale
of 10,000 shares of Common Stock.
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<PAGE> 9
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, 1997, 1996 and 1995 to its chief executive officer and the other
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 during fiscal year 1997 (each, a "Named Executive Officer").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities
Other Annual Underlying
Salary Bonus Compensation Options
Name and principal position Year ($) ($) ($) (#)
- --------------------------- ---- ------ ----- ------------ ----------
<S> <C> <C> <C> <C> <C>
Kenneth R. Kensey, M.D. 1997 $200,000 -- $ 9,000(1) --
Chairman of the Board 1996 $200,000 -- $ 9,000(1) --
1995 $200,000 $100,000 $ 8,567(1) --
John E. Nash, P.E. 1997 $200,000 -- $ 9,000(1) --
Vice Chairman of the Board 1996 $200,000 -- $ 9,018(1) --
and Executive Vice President 1995 $200,000 $ 50,000 $ 8,567(1) --
Joseph W. Kaufmann 1997 $200,000 -- -- 60,000(3)
President, Chief Financial 1996 $200,000 -- $2,533,143(2) 60,000
Officer, Secretary and Director 1995 $164,181 $100,000 -- --
Douglas G. Evans, P.E. 1997 $130,000 -- -- 30,000(3)
Chief Operating Officer and 1996 $107,019 -- $ 840,000(2) 30,000
Director 1995 $ 80,870 $ 50,000 -- --
</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.
(3) Granted July 23, 1997.
-6-
<PAGE> 10
OPTION GRANTS IN FISCAL YEAR 1997 -- The following table provides
information on grants of stock options and stock appreciation rights in fiscal
year 1997 to the Named Executive Officers pursuant to the Employee Plan.
OPTION/SAR GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------------------
Percent of
Total
Options/ Options/ SARs
SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#) Fiscal Year ($/Sh) Date
---- ------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Kenneth R. Kensey, M.D. . . . . . . . . . . -- -- -- --
John E. Nash, P.E. . . . . . . . . . . . . -- -- -- --
Joseph W. Kaufmann . . . . . . . . . . . . 60,000 30.6% $11.75 7/23/2007
Douglas G. Evans, P.E. . . . . . . . . . . 30,000 15.3% $11.75 7/23/2007
</TABLE>
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Option Term
-----------------------------
5% ($) 10% ($)
----- ------
<S> <C> <C>
Kenneth R. Kensey, M.D. . . . . . . . . . . -- --
John E. Nash, P.E. . . . . . . . . . . . . -- --
Joseph W. Kaufmann . . . . . . . . . . . . $443,370 $1,123,588
Douglas G. Evans, P.E. . . . . . . . . . . $221,685 $561,794
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND YEAR-END 1997
OPTION VALUES -- The following table provides information on the Named
Executive Officers' unexercised and exercised options granted under the
Employee Plan at June 30, 1997.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of securities
acquired on underlying unexercised
exercise Value Realized options at year-end 1997(#)
--------------------------
Name (#) ($) Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph W. Kaufmann . . . . . . 14,000 $107,000 227,250 113,750
Kenneth R. Kensey, M.D. . . . . -- -- -- --
John E. Nash, P.E. . . . . . . -- -- -- --
Douglas G. Evans, P.E. . . . . -- -- 137,500 62,500
- ------------------
</TABLE>
<TABLE>
<CAPTION>
Value of unexercised
in-the-money options at
year-end 1997($)(1)
-----------------------
Exercisable Unexercisable
- -----------------------------------------------------------------------------------
<S> <C> <C>
Joseph W. Kaufmann . . . . . . $443,375 $160,625
Kenneth R. Kensey, M.D. . . . . -- --
John E. Nash, P.E. . . . . . . -- --
Douglas G. Evans, P.E. . . . . $294,375 $ 98,125
- ------------------
</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
30, 1997 of $10.75.
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> 11
401(K) PLAN
The Company's 401(k) Salary Reduction Plan and Trust (the "401(k)
Plan") became effective on July 1, 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.
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 the employment
agreements 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 1997 will be based
upon his level of achievement in the following areas, among others: developing
the Company's products, developing and executing financing plans and
strengthening the Company's management team. The Compensation Committee will
present its proposal for Mr. Kaufmann's fiscal year 1997 bonus to the Board of
Directors at a meeting scheduled for November 10, 1997. Mr. Kaufmann's bonus
for fiscal year 1998 will be based upon the achievement of specified
objectives, subject to the discretion of the Board of Directors.
The Compensation Committee also grants stock options, from time to
time, 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 is generally 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. On July 23, 1997, subsequent to the end of fiscal year 1997, the
Compensation Committee approved a grant of 60,000 stock options for Mr.
Kaufmann and 30,000 stock options for Mr. Evans. The exercise price of these
options is the fair market value of the underlying Common Stock on the date of
the grant.
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
-8-
<PAGE> 12
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
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.
-9-
<PAGE> 13
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, 1997, 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
[COMPARISON OF CUMULATIVE TOTAL RETURNS GRAPH]
<TABLE>
<CAPTION>
12/13/95 6/30/96 6/30/97
-------- ------- -------
<S> <C> <C> <C>
KENSEY NASH CORPORATION 100 103 83
Nasdaq Market Composite Index 100 112 138
Standard & Poor's Medical Products and Supplies Index 100 101 140
</TABLE>
-10-
<PAGE> 14
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of October 15, 1997, 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>
<CAPTION>
Amount and Nature of Percent of
Names and Address Beneficial Ownership (1) Class
- ------------------------------------------------------------- ----------------------- ----------
<S> <C> <C>
Kenneth R. Kensey, M.D. (2)(3) . . . . . . . . . . . . . . . 2,301,327 31.9%
John E. Nash, P.E. (2)(4) . . . . . . . . . . . . . . . . . . 1,054,165 14.6
Joseph W. Kaufmann (5) . . . . . . . . . . . . . . . . . . . 393,083 5.3
Douglas G. Evans, P.E. (6) . . . . . . . . . . . . . . . . . 207,500 2.8
Robert J. Bobb (7) . . . . . . . . . . . . . . . . . . . . . 62,834 *
Harold N. Chefitz . . . . . . . . . . . . . . . . . . . . . . 5,834 *
Walter R. Maupay, Jr. . . . . . . . . . . . . . . . . . . . . 5,834 *
All Named Executive Officers and Directors as a group
(7 persons) . . . . . . . . . . . . . . . . . . . . . . . . 4,030,577 53.0
- ------------------
</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 2,301,327 shares of Common Stock held by the Kenneth Kensey
Revocable Trust. Excludes 18,750 shares of Common Stock held by the
Kenneth Kensey Gift Trust, to which Dr. Kensey disclaims beneficial
interest.
(4) Represents 1,054,165 shares of Common Stock held by the John E. Nash
Revocable Trust.
(5) Represents 165,833 shares of Common Stock and 227,250 stock options which
may be exercised within 60 days.
(6) Represents 70,000 shares of Common Stock and 137,500 stock options which
may be exercised within 60 days.
(7) Represents 52,500 shares of Common Stock held by Mr. Bobb, 4,500 shares of
Common Stock held by the Robert J. Bobb Money Purchase Plan and Trust, and
5,834 stock options which may be exercised within 60 days.
PROPOSAL 2
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 1998.
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 1998 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.
-11-
<PAGE> 15
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 1998 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 29, 1998.
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.
-12-
<PAGE> 16
ADDITIONAL INFORMATION -- THE COMPANY WILL FURNISH WITHOUT CHARGE A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR ITS 1997 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,
/s/ Joseph W. Kaufmann
Joseph W. Kaufmann
President and Secretary
Exton, Pennsylvania
October 29, 1997
-13-
<PAGE> 17
PROXY KENSEY NASH CORPORATION
Marsh Creek Corporate Center - East Uwchlan Avenue - Exton, Pennsylvania 19341
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 3, 1997
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 6, 1997 which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held on December 3, 1997, at the offices of Kensey Nash
Corporation, 55 East Uwchlan Avenue, Exton, Pennsylvania 19341 at 10:00 a.m.,
local time, and at any adjournment thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES
LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(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)
<TABLE>
<S> <C>
Joseph W. Kaufmann Harold N. Chefitz
(term to expire in 2000) (term to expire in 2000)
</TABLE>
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY'S FINANCIAL STATEMENTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 PROPOSAL 2, 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 , 1997
--------------------------------------
--------------------------------------
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.
