<PAGE> 1
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 ss.240.14a-11(c) or ss.240.14a-12
KENSEY NASH CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(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:
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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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[ ] 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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4) Date Filed:
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<PAGE> 2
[KENSEY NASH LOGO]
Marsh Creek Corporate Center
55 East Uwchlan Avenue
Exton, Pennsylvania 19341
November 1, 1999
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1999 Annual Meeting of Stockholders of Kensey Nash Corporation. The
Annual Meeting will be held on Wednesday, December 1, 1999 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,
Joseph W. Kaufmann
President and Chief Executive Officer
<PAGE> 3
[KENSEY NASH LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 1, 1999
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 1,
1999 at the offices of Kensey Nash Corporation, 55 East Uwchlan Avenue, Exton,
Pennsylvania 19341 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 Third Amended and Restated Kensey Nash
Corporation Nonemployee Directors' Stock Option Plan;
(3) 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, 2000; and
(4) 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 13, 1999
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
November 1, 1999
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, FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS (THE "ANNUAL MEETING") TO BE HELD AT 10:00 A.M., LOCAL TIME,
WEDNESDAY, DECEMBER 1, 1999, 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 NOVEMBER 4, 1999.
VOTING SECURITIES -- The Board of Directors has fixed the close of business
on October 13, 1999, as the record date (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 7,471,760 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 Third Amended and
Restated Kensey Nash Corporation Nonemployee Directors' Stock Option Plan (the
"Restated Plan"); and (ii) ratify the appointment of Deloitte & Touche LLP as
the independent auditors of the Company's financial statements for the fiscal
year ended June 30, 2000. 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 20, 1999, 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, 1999 ("FISCAL YEAR 1999"),
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 2002 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 2000 and 2001 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 of Directors,
as the Board of Directors 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>
Douglas G. Evans, P.E. .... 35 Chief Operating Officer, Assistant Secretary and Director 1995
Walter R. Maupay, Jr....... 60 Director 1995
</TABLE>
Mr. Evans has served as Chief Operating Officer of the Company since March
1995, was elected a Director in May 1995 and has served as Assistant Secretary
since October 1995. Mr. Evans is responsible for protecting and developing the
Company's intellectual property, assessing new technologies, and overseeing the
Company's daily 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 and has served as a
Director for Laser Cellular Corporation since 1999.
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,
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<PAGE> 6
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 has been a Director of
Life Medical Sciences, Inc. since 1996 and is a Director of several private
companies. Mr. Maupay is Chairman of the Company's Audit Committee and a member
of the Compensation and Executive 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>
SERVED AS TERM
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE EXPIRES
- ------------------------------------- --- ----------------------------------- -------------- -------
<S> <C> <C> <C> <C>
Joseph W. Kaufmann................... 47 Chief Executive Officer, President, 1992 2000
Secretary and Director
Harold N. Chefitz.................... 64 Director 1995 2000
Kenneth R. Kensey, M.D. ............. 49 Director 1984 2001
John E. Nash, P.E. .................. 64 Vice President of New Technologies and 1984 2001
Director
Robert J. Bobb....................... 51 Director 1984 2001
</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 was appointed Vice President, Finance and Administration
in January 1994. He has been a Director since September 1992 and has served as
Secretary since 1989. Prior to joining the Company, Mr. Kaufmann held executive
finance positions at divisions of both Hanson, PLC and Syntex Corporation. 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. Mr. Chefitz
has numerous years of experience in investment banking in the healthcare
industry and is presently a General Partner at CK Capital L.P., as well as a
Partner at Boles Knop & Company LLC. He was a Senior Managing Director of Gerard
Klauer Mattison & Co. LLC from June 1995 through November 1998 and has been a
Director of Warner Chilcott since 1995 and of Precision Therapeutics since 1999.
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. 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,
Compensation and Executive Committees.
Dr. Kensey is a co-founder and a Director of the Company. He served as
Chairman of the Board since its inception in 1984 until October 1998. He also
served as the Company's Chief Executive Officer until 1992. Currently, Dr.
Kensey is a limited partner in several real estate holding companies and is
involved in several private research and development companies as well. Prior to
his co-founding of the Company, Dr. Kensey was a cardiology fellow at Michael
Reese Hospital in Chicago. Dr. Kensey received a B.A. degree from Ohio Wesleyan
University and an M.D. degree from Ohio State University.
Mr. Nash is a co-founder of the Company and is currently the Vice President
of New Technologies and a Director. He served as Vice Chairman of the Board and
Executive Vice President from 1984 to October 1998. 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
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<PAGE> 7
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. For over fifteen
years, Mr. Bobb has been a principal equity investor and key management
participant in a number of operating companies. 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.
DIRECTOR COMPENSATION -- The Company does not pay additional cash
compensation to executive officers for their service as directors. During fiscal
year 1999, 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 Kensey Nash Corporation Nonemployee
Directors' Stock Option Plan (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 5,000
shares of Common Stock, exercisable at the fair market value of such shares on
the date of grant. Upon stockholder approval, the Board of Directors has agreed
to increase these annual option grants to 7,500 shares of Common Stock. In
addition, the Compensation Committee has authorized, subject to Board of
Directors approval, and stockholders' approval of the Restated Directors' Plan,
additional grants of stock options for 15,000 shares to each of Messrs. Bobb,
Chefitz and Maupay. The exercise price of these options will be the fair market
value of the underlying Common Stock on the date of grant.
MEETINGS -- During fiscal year 1999, the Board of Directors held six formal
meetings. 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
Messrs. Kaufmann (Chairman), Bobb, Chefitz and Maupay. The Company does not have
a Nominating Committee.
The Audit Committee generally has responsibility for recommending
independent auditors to the Board of Directors 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 1999.
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 1999. See "Report
of the Compensation Committee of the Board of Directors."
4
<PAGE> 8
The Executive Committee has those responsibilities delegated to it from
time to time by the Board of Directors. The Executive Committee held three
formal meetings in fiscal year 1999.
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 Messrs. Kaufmann, Evans and Nash has an employment
agreement with the Company. In addition, Ms. Julie N. Broderick, Vice President
of Clinical and Regulatory Affairs, and Ms. Wendy F. DiCicco, Chief Financial
Officer, have employment agreements with the Company. Ms. Broderick is Mr.
Nash's daughter.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT -- 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 1999, except Mr. Maupay
inadvertently failed to timely file a Form 4 for a purchase of 1,000 shares of
Common Stock.
5
<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, 1999, 1998 and 1997 to its chief executive officer and the other
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 during fiscal year 1999 (each, a "Named Executive Officer").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- ------------------
OTHER ANNUAL SECURITIES
SALARY BONUS COMPENSATION UNDERLYING OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)
- ----------------------------------- ------ --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
John E. Nash, P.E. 1999 $ 200,000 -- $ 3,750(1) --
Vice President of New 1998 $ 200,000 -- $ 9,000(1) --
Technologies and Director 1997 $ 200,000 -- $ 9,000(1) --
Joseph W. Kaufmann 1999 $ 200,000 $75,000 $ 9,000(1) 300,000
President, Chief Executive Officer, 1998 $ 200,000 -- -- 30,000(2)
Secretary and Director 1997 $ 200,000 -- -- 60,000(3)
Kenneth R. Kensey, M.D. 1999 $ 66,667 (4) -- $ 3,000(1) --
Director 1998 $ 200,000 -- $ 9,000(1) --
1997 $ 200,000 -- $ 9,000(1) --
Douglas G. Evans, P.E. 1999 $ 160,000 $63,000 $ 9,000(1) 170,000
Chief Operating Officer, Assistant 1998 $ 155,000 -- -- 15,000(2)
Secretary and Director 1997 $ 130,000 -- -- 30,000(3)
Julie N. Broderick 1999 $ 98,750 $20,000 -- 30,000
Vice President of Clinical 1998 $ 87,522 $1,673 -- 7,000(2)
and Regulatory Affairs 1997 $ 79,898 $3,128 -- 9,000(3)
Wendy F. DiCicco, CPA 1999 $ 85,780 $20,000 -- 30,000
Chief Financial Officer 1998 $ 75,717 $1,480 -- 7,000(2)
1997 $ 71,386 $2,763 -- 7,500(3)
</TABLE>
- ---------------------------
(1) Represents allowance for automobile.
(2) Granted August 28, 1998.
(3) Granted July 23, 1997.
(4) Dr. Kensey served as Chairman of the Board until October 1998. If he had
served for the full fiscal year 1999, his salary would have been $200,000.
<PAGE> 10
OPTION GRANTS IN FISCAL YEAR 1999 -- The following table provides
information on grants of stock options and stock appreciation rights in fiscal
year 1999 to the Named Executive Officers pursuant to the Employee Plan.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN FISCAL YEAR 1999
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
TOTAL STOCK PRICE APPRECIATION FOR
OPTIONS/ OPTION TERM
OPTIONS/ SARS -----------------------------
SARs GRANTED TO EXERCISES OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/Sh) DATE 5% ($) 10%($)
- ----------------------------------- --------- ------------ ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John E. Nash, P.E. ................ -- -- -- -- -- --
Joseph W. Kaufmann................. 300,000 43.5% $8.75 4/9/09 $1,650,848 $4,183,574
Kenneth R. Kensey, M.D. ........... -- -- -- -- -- --
Douglas G. Evans, P.E. ............ 170,000 24.7% $8.75 4/9/09 $935,481 $2,370,692
Julie N. Broderick................. 30,000 4.4% $8.75 4/9/09 $165,085 $418,357
Wendy F. DiCicco, CPA.............. 30,000 4.4% $8.75 4/9/09 $165,085 $418,357
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND YEAR-END 1999 OPTION
VALUES -- The following table provides information on the Named Executive
Officers' unexercised and exercised options granted under the Employee Plan at
June 30, 1999
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND YEAR-END 1999 OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE OPTIONS AT YEAR-END 1999(#) YEAR-END 1999($)(1)
ON EXERCISE REALIZED ----------------------------------------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John E. Nash, P.E. ........ -- -- -- -- -- --
$0
Joseph W. Kaufmann......... -- -- 361,000 370,000 $11,250
Kenneth R. Kensey, M.D .... -- -- -- -- -- --
$0
Douglas G. Evans, P.E. .... -- -- 210,000 205,000 $5,625
$0
Julie N. Broderick......... -- -- 26,000 43,000 $2,625
$0
Wendy F. DiCicco, CPA...... -- -- 5,375 42,625 $2,625
</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, 1999 of $8.00.
EMPLOYMENT AGREEMENTS
Each of Messrs. Kaufmann and Evans is party to three-year written
Employment and Non-Competition Agreements with the Company which expire in July,
2001. These agreements provide for annual base salaries of $200,000 and
$160,000, respectively, subject to annual increases 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
Messrs. Kaufmann and Evans from competing with the Company during the term of
the agreement and for twelve months after termination of their employment with
the Company. Messrs. Kaufmann and Evans are also party to Termination and Change
in Control Agreements pursuant to which upon a Change in Control or Termination
(as defined therein) they will be entitled to receive, among
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<PAGE> 11
other things, severance pay equal to their base salary for a period of two
years. Messrs. Kaufmann and Evans would be entitled to receive an additional
payment, net of taxes, to compensate for the excise tax imposed on these and
other payments if they are determined to be excess parachute payments under the
Internal Revenue Code of 1986, as amended. Pursuant to a Change in Control, all
unvested options granted to Messrs. Kaufmann and Evans shall immediately become
vested.
Mr. Nash is party to a three-year written Employment and Non-Competition
Agreement with the Company which expires in December, 2001. This agreement
provides for an annual base salary of $200,000, subject to annual increases as
determined by the Board of Directors. If Mr. Nash reduces his level of
employment, his base salary shall be proportionately reduced. An annual bonus
may be paid at the discretion of the Board of Directors. The agreement restricts
Mr. Nash from competing with the Company during the term of the agreement and
for twelve months after termination of his employment with the Company. Mr. Nash
is also party to a Termination and Change in Control Agreement pursuant to which
upon a Change in Control or Termination (as defined therein) he will be entitled
to receive, among other things, severance pay equal to his base salary for a
period of two years. Mr. Nash would be entitled to receive an additional
payment, net of taxes, to compensate for the excise tax imposed on these and
other payments if they are determined to be excess parachute payments under the
Internal Revenue Code of 1986, as amended. Pursuant to a Change in Control, all
unvested options granted to Mr. Nash shall immediately become vested.
Each of Ms. Broderick and Ms. DiCicco is party to two-year written
Employment and Non-Competition Agreements with the Company which expire in
April, 2001. These agreements provide for annual base salaries of $100,512 and
$88,150, 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 Ms. Broderick and Ms. DiCicco from competing
with the Company during the term of the agreement and for twelve months after
termination of their employment with the Company. Ms. Broderick and Ms. DiCicco
are also party to Termination and Change in Control Agreements pursuant to which
upon a Change in Control or Termination (as defined therein) they will be
entitled to receive, among other things, severance pay equal to their base
salary for a period of two years. Ms. Broderick and Ms. DiCicco would be
entitled to receive an additional payment, net of taxes, to compensate for the
excise tax imposed on these and other payments if they are determined to be
excess parachute payments under the Internal Revenue Code of 1986, as amended.
Pursuant to a Change in Control, all unvested options granted to Ms. Broderick
and Ms. DiCicco shall immediately become vested.
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 one to 15 percent of his or her compensation
each year, instead of receiving that amount in cash, up to the legal limit.
8
<PAGE> 12
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 Messrs. Kaufmann, Evans and Nash, as well as Ms.
Broderick and Ms. DiCicco. 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 1999, 2000 and 2001.
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. The Compensation Committee awarded Mr. Kaufmann a bonus of $75,000 for
fiscal year 1999. Mr. Kaufmann's bonus for fiscal year 2000 will be based upon
the achievement of specified objectives, including achievement of revenue and
earnings per share goals in the Company's Annual Plan. The fiscal year 2000
bonus will be 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 three-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 April 20, 1999, the Compensation Committee approved a grant of 300,000 stock
options for Mr. Kaufmann, 170,000 stock options for Mr. Evans and 30,000 stock
options for each of Ms. Broderick and Ms. DiCicco. In addition to three-year
vesting periods, these options will only become exercisable prior to April 9,
2006 in the event that the price of the underlying Common Stock reaches specific
strike prices of $15, $17 and $20 respectively, over the three year period. 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 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.
9
<PAGE> 13
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> 14
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, 1999, for the Company, the Nasdaq Market
Composite Index, Standard & Poor's Medical Products and Supplies Index and
Russell 2000 Index. The Company added the Russell 2000 Index in fiscal year 1999
to the performance graph because it believes that the Russell 2000 Index more
accurately represents the Company's industry than the Standard & Poor's Medical
Products and Supplies Index. The comparison assumes $100 was invested on
December 13, 1995, in the Common Stock of the Company, the Nasdaq Market
Composite Index, Standard & Poor's Medical Products and Supplies Index and
Russell 2000 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
[GRAPHIC]
<TABLE>
<CAPTION>
12/13/95 6/30/96 6/30/97 6/30/98 6/30/99
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
KENSEY NASH CORPORATION 100 103 83 73 62
Nasdaq Market Composite Index 100 112 138 181 258
Standard & Poor's Medical Products and Supplies Index 100 101 140 178 212
Russell 2000 Index 100 111 127 146 146
</TABLE>
11
<PAGE> 15
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of October 13, 1999, 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>
2,136,327
Kenneth R. Kensey, M.D. (2)(4).................................. 28.6%
965,000
John E. Nash, P.E. (3)(5)....................................... 12.9
556,833
Joseph W. Kaufmann (3)(6)....................................... 7.1
296,050
Douglas G. Evans, P.E. (7)...................................... 3.8
65,001
Robert J. Bobb (8).............................................. *
44,484
Julie N. Broderick (9).......................................... *
13,501
Walter R. Maupay, Jr.(10)....................................... *
12,501
Harold N. Chefitz(11)........................................... *
10,809
Wendy F. DiCicco, CPA (12)...................................... *
All Named Executive Officers and Directors as a group 4,100,506
(9 persons)................................................... 50.2%
</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 Edgehill Enterprises, 75 East Uwchlan
Ave., Exton, Pennsylvania 19341.
(3) The address of the stockholder is c/o the Company, 55 East Uwchlan Ave.,
Exton, Pennsylvania 19341.
(4) Represents 2,136,327 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.
(5) Represents 965,000 shares of Common Stock held by the John E. Nash
Revocable Trust.
(6) Represents 165,833 shares of Common Stock and 391,000 stock options which
may be exercised within 60 days.
(7) Represents 70,000 shares of Common Stock held by the Douglas G. Evans
Revocable Trust, 1,050 shares held indirectly by his minor children and
225,000 stock options which may be exercised within 60 days.
(8) Represents 52,500 shares of Common Stock held by Mr. Bobb and 12,501 stock
options which may be exercised within 60 days.
(9) Represents 13,150 shares of Common Stock held by Ms. Broderick and 31,334
stock options which may be exercised within 60 days.
(10) Represents 1,000 shares of Common Stock held by Mr. Maupay and 12,501
stock options which may be exercised within 60 days.
(11) Represents 12,501 stock options held by Mr. Chefitz which may be exercised
within 60 days.
(12) Represents 600 shares of Common Stock held by Ms. DiCicco and 10,209 stock
options which may be exercised within 60 days.
PROPOSAL 2
APPROVAL OF THE RESTATED DIRECTORS' PLAN
BACKGROUND
Effective April 1, 1995, the Board of Directors adopted 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 December 4, 1996, it was proposed and
approved by stockholders at the Annual Meeting to reserve an additional 30,000
shares of Common Stock for the Directors' Plan, bringing the total number of
shares in the Directors' Plan to 60,000. The 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 initial public offering date (the "Initial Grant") and (ii) a grant of an
option to purchase 5,000 shares of Common Stock on the date of each regular
annual stockholder meeting 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
12
<PAGE> 16
such meeting to serve as a nonemployee director (the "Annual Grant"). The
Directors' Plan currently does not provide for any grants of options other than
the Initial Grant and the Annual Grant.
On October 22, 1999, the Board of Directors agreed to present the Restated
Directors' Plan for stockholder approval at the Annual Meeting. The Restated
Directors' Plan (i) authorizes and reserves an additional 150,000 shares for the
Directors' Plan, all of which are reserved for nonemployee directors, (ii)
increases the Annual Grant by an additional 2,500 shares of Common Stock, and
(iii) provides that additional grants of options may be made, from time-to-time,
as determined by the Compensation Committee. Assuming the adoption of Proposal
2, if options for 210,000 shares of Common Stock available under the Restated
Directors' Plan were issued, such shares would constitute approximately 3% of
the issued and outstanding Common Stock on October 13, 1999. 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 on or dilution of 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)
better 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, copies of which will be furnished by the Company without charge
upon written request.
SUMMARY OF PROVISIONS
The Company's Board of Directors approved the adoption of the Restated
Directors' Plan effective as of December 1, 1999, 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
currently is administered by the Compensation Committee.
The Restated Directors' Plan provides for the award of up to 210,000 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 initial public
offering date and (ii) a grant of an option to purchase 7,500 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. In addition, the
Restated Directors' Plan provides that additional grants of options may be made,
from time-to-time, as determined by the Compensation Committee ("Additional
Grants"). Options granted under the Restated 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 of the date of its
grant.
13
<PAGE> 17
As of October 13, 1999, stock options for 52,500 shares have been granted
under the terms of the Directors' Plan, 25,002 of which are exercisable. The
benefits to be received by participants in the Directors' Plan are not currently
determinable. In addition, the Compensation Committee has authorized, subject to
Board of Directors approval and stockholders' approval of the Restated
Directors' Plan, Additional Grants of options for 15,000 shares under the terms
of the Directors' Plan to each of Messrs. Bobb, Chefitz and Maupay.
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, Secretary and Director...................... -- --
Kenneth R. Kensey, M.D., Director........................... -- --
John E. Nash, P.E., Vice President of New
Technologies and Director................................ -- --
Douglas G. Evans, P.E., Chief Operating Officer, Assistant
Secretary and Director................................... -- --
Executive Group............................................. -- --
Nonemployee Director Group(1)............................... -- 52,500
Non-Executive Officer Employee Group........................ -- --
</TABLE>
- ----------------
(1) The dollar value of the grants is indeterminate at this time as grants
will be subject to a vesting schedule and the value of the grants will be
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 13, 1999. 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 disposition 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).
In the event that 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 excise
tax (in addition to ordinary income tax) and the Company may be disallowed a
deduction for the amount of the actual payment.
14
<PAGE> 18
PROPOSAL 3
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 2000. 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 2000 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 2000 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 31, 2000.
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.
15
<PAGE> 19
ADDITIONAL INFORMATION -- THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF
THE THIRD AMENDED AND RESTATED KENSEY NASh CORPORATION NONEMPLOYEE DIRECTORS'
STOCK OPTION PLAN, AS FILED WITH THE SEC, AND ITS ANNUAL REPORT ON FORM 10-K FOR
ITS 1999 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
November 1, 1999
16
<PAGE> 20
EXHIBIT A
THIRD 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:
(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
17
<PAGE> 21
EXHIBIT A
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 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.
18
<PAGE> 22
EXHIBIT A
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.
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.
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EXHIBIT A
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.
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.
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
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EXHIBIT A
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 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;
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EXHIBIT A
(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;
(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 210,000 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.
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EXHIBIT A
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 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
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EXHIBIT A
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 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.
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
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EXHIBIT A
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 Seven Thousand and Five Hundred (7,500)
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. In addition, the Compensation Committee may make additional
grants of Options, from time-to-time, as determined by the Compensation
Committee in accordance with the provisions of 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 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
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EXHIBIT A
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 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.
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EXHIBIT A
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.
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.
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EXHIBIT A
(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 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 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.
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EXHIBIT A
(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 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
29
<PAGE> 33
EXHIBIT A
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.
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:
----------------------------------
<PAGE> 34
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 1, 1999
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 13, 1999 which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held on December 1, 1999, 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 PROPOSALS 2 AND 3.
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>
Douglas G. Evans, P.E. Walter R. Maupay, Jr.
(term to expire in 2002) (term to expire in 2002)
</TABLE>
2. PROPOSAL TO APPROVE THE THIRD AMENDED AND RESTATED KENSEY NASH CORPORATION
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY'S FINANCIAL STATEMENTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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 AND 3, 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 __________________________, 1999
--------------------------------------
--------------------------------------
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.
