<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 Section 240.14a-11(c) or Section 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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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE> 3
[KENSEY NASH GRAPHIC]
Marsh Creek Corporate Center
55 East Uwchlan Avenue
Exton, Pennsylvania 19341
November 1, 2000
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the 2000
Annual Meeting of Stockholders of Kensey Nash Corporation. The Annual Meeting
will be held on Wednesday, December 6, 2000 beginning at 10:00 a.m., local time,
at the offices of Kensey Nash Corporation, 55 East Uwchlan Avenue, Exton,
Pennsylvania 19341. The formal notice of the Annual Meeting appears on the next
page.
The attached Notice of Annual Meeting and Proxy Statement describe matters that
we expect will be acted upon at the meeting. During the meeting, stockholders
will view a company presentation and have the opportunity to ask questions.
It is important that your views be represented whether or not you are able to be
present at the Annual Meeting. Please sign and date the enclosed proxy card and
promptly return it to us in the postpaid envelope. If you sign and return your
proxy card without specifying your choices, it will be understood that you wish
to have your shares voted in accordance with the recommendations of the Board of
Directors contained in the Proxy Statement.
We are gratified by our stockholders' continued interest in Kensey Nash
Corporation and urge you to return your proxy card as soon as possible.
Sincerely,
/s/ Joseph W. Kaufmann
Joseph W. Kaufmann
President and Chief Executive Officer
<PAGE> 4
[KENSEY NASH GRAPHIC]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 6, 2000
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 6,
2000 at the offices of Kensey Nash Corporation, 55 East Uwchlan Avenue, Exton,
Pennsylvania 19341 for the following purposes:
(1) To elect three Class II Directors to the Company's Board of
Directors;
(2) To consider and vote upon the Third Amended and Restated Kensey
Nash Corporation Employee Incentive Compensation Plan;
(3) To consider and vote upon the Fourth Amended and Restated Kensey
Nash Corporation Nonemployee Directors' Stock Option Plan;
(4) To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as the independent auditors of the Company's financial
statements for the year ended June 30, 2001; and
(5) 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 20,
2000 as the record date for determining stockholders entitled to notice of, and
to vote at, the meeting.
By Order of the Board of Directors,
/s/ Joseph W. Kaufmann
Joseph W. Kaufmann
President and Secretary
Exton, Pennsylvania
November 1, 2000
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY. WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID
ENVELOPE FURNISHED FOR THAT PURPOSE.
<PAGE> 5
KENSEY NASH CORPORATION
MARSH CREEK CORPORATE CENTER
55 EAST UWCHLAN AVENUE
EXTON, PENNSYLVANIA 19341
(610) 524-0188
PROXY STATEMENT
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF KENSEY
NASH CORPORATION, A DELAWARE CORPORATION, FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS (THE "ANNUAL MEETING") TO BE HELD AT 10:00 A.M., LOCAL TIME,
WEDNESDAY, DECEMBER 6, 2000, 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 3, 2000.
VOTING SECURITIES -- The Board of Directors has fixed the close of
business on October 20, 2000, 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 10,459,525 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 Employee Incentive Compensation Plan (the
"Restated Employee Plan"); (ii) approve the proposed Fourth Amended and Restated
Kensey Nash Corporation Nonemployee Directors' Stock Option Plan (the "Restated
Directors' Plan"); and (iii) ratify the appointment of Deloitte & Touche LLP as
the independent auditors of the Company's financial statements for the fiscal
year ended June 30, 2001. Each stockholder will be entitled to vote the number
of shares of Common Stock held as of the Record Date by such stockholder for the
number of directors to be elected. Stockholders will not be allowed to cumulate
their votes in the election of directors.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and will also count abstentions for
purposes of voting on any proposal presented at the meeting or any adjournment
thereof. Abstentions will have the same effect as a vote against a proposal. If
a broker indicates on the proxy that it does not have discretionary authority as
to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
STOCKHOLDER LIST -- A list of stockholders entitled to vote at the
Annual Meeting, arranged in alphabetical order, showing the address of and
number of shares registered in the name of each stockholder, will be open to the
examination of any stockholder for any purpose germane to the Annual Meeting
during ordinary business hours commencing November 24, 2000, and continuing
through the date of the Annual Meeting at the principal offices of the Company,
55 East Uwchlan Avenue, Exton, Pennsylvania 19341.
<PAGE> 6
ANNUAL REPORT TO STOCKHOLDERS -- THE COMPANY'S ANNUAL REPORT TO
STOCKHOLDERS FOR THE FISCAL YEAR ENDED JUNE 30, 2000 ("FISCAL YEAR 2000"),
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 previously consisted of seven
directors. On July 19, 2000, the Company announced that C. McCollister Evarts,
M.D. and Steven James Lee were appointed to the Board of Directors in an
expansion that increased the Company's Board of Directors to nine members.
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, three Class II Directors are to be elected for a term of
three years expiring at the 2003 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 six directors whose terms of office expire in 2001 and 2002 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>
Joseph W. Kaufmann..................... 48 Chief Executive Officer, President, 1992
Secretary and Director
Harold N. Chefitz...................... 65 Director 1995
Steven J. Lee.......................... 53 Director 2000
</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 BS 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 and is a Director of several private
companies. He was a
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Senior Managing Director of Gerard Klauer Mattison & Co. LLC from June 1995
through November 1998. 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 BS degree from Boston
University and attended Boston College Law School. Mr. Chefitz is a member of
the Company's Audit, Compensation and Executive Committees.
Mr. Lee has been a Director of the Company since July 2000. Mr. Lee is
Chairman and Chief Executive Officer of PolyMedica Corporation. Prior to
becoming Chief Executive Officer, Mr. Lee served as President of PolyMedica from
1990 through June 1996. Mr. Lee served as manager in the Mergers and
Acquisitions practice at Coopers & Lybrand L.L.P. from March 1990 to May 1990.
Previously, he was President and a director of Shawmut National Ventures from
November 1987 to March 1990 and served as President, Chief Executive Officer and
a director of RepliGen Corporation from 1984 to 1986. Mr. Lee received a BA from
Lehigh University, an MBA from the Wharton School of Finance and Commerce at the
University of Pennsylvania, and a Juris Doctor degree from Fordham University
School of Law. He is a member of the Massachusetts and New York State Bar
Associations. Mr. Lee is a Director of PolyMedica Corporation, Commonwealth
BioVentures, Inc. and Fibersense Technology Corporation.
OTHER DIRECTORS
The following persons will continue to serve as Directors of the
Company after the Annual Meeting until their terms of office expire (as
indicated below) or until their successors are elected and qualified.
<TABLE>
<CAPTION>
SERVED AS TERM
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE EXPIRES
---- --- --------------------- -------------- -------
<S> <C> <C> <C> <C>
Kenneth R. Kensey, M.D........ 50 Director 1984 2001
John E. Nash, P.E............. 65 Vice President of New Technologies
and Director 1984 2001
Robert J. Bobb................ 52 Director 1984 2001
Douglas G. Evans, P.E......... 36 Chief Operating Officer, Assistant
Secretary and Director 1995 2002
Walter Maupay................. 61 Director 1995 2002
C. McCollister Evarts, M.D.... 69 Director 2000 2002
</TABLE>
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 President and CEO of Visco Technologies, Inc., a private company in
Exton, Pa. Dr. Kensey is also 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 BA 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 Research and Development. Mr. Nash holds
qualifications in Mechanical and Production Engineering from Kingston
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<PAGE> 8
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 BS degree
from Western Michigan University and a JD degree from the University of Notre
Dame Law School and studied at the University of Belgrade and the University of
London. Mr. Bobb is Chairman of the Company's Compensation Committee and a
member of the Audit and Executive Committees.
Mr. Evans has served as Chief Operating Officer of the Company since
March 1995, was elected 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 BS degree in Engineering Science
and a Masters degree in Business Management from The Pennsylvania State
University and an MS degree in Electrical Engineering from the University of
Pennsylvania. Mr. Evans is a Registered Professional Engineer in the United
States.
Mr. Maupay has been a Director of the Company since June 1995. At his
retirement in 1995, Mr. Maupay was a group executive with Bristol-Myers Squibb
and President of Calgon Vestal Laboratories. 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 BS degree in Pharmacy from Temple
University and an MBA degree from Lehigh University. Mr. Maupay has been a
Director of Life Medical Sciences, Inc., Cubist Pharmaceuticals 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.
Dr. Evarts has been a Director of the Company since July 2000. Dr.
Evarts is Chief Executive Officer of The Milton S. Hershey Medical Center as
well as Senior Vice President for Health Affairs and Dean and University
Professor for The Pennsylvania State University, College of Medicine.
Previously, Dr. Evarts served as Professor and Chair of the Department of
Orthopedics at the University of Rochester School of Medicine and Dentistry and
Medical Center Vice President for Development. Prior to that, he was Chair of
the Department of Orthopedic Surgery at the Cleveland Clinic Foundation. Dr.
Evarts holds an AB degree from Colgate University. He graduated from the
University of Rochester School of Medicine and Dentistry and served his
internship and residency at the University of Rochester Strong Memorial
Hospital. Dr. Evarts is a Director of the Carpenter Technology Corporation and
The Hershey Foods Corporation.
DIRECTOR COMPENSATION -- The Company does not pay additional cash
compensation to executive officers for their service as directors. During fiscal
year 2000, 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 of Messrs. Bobb,
Chefitz and Maupay was granted options to purchase 5,000 shares of Common Stock
upon the Company's initial public offering, exercisable at $12.00 per share.
Each of Mr. Lee and Dr. Evarts was granted options to purchase 5,000 shares of
Common Stock upon their initial appointment to the Board of Directors,
exercisable at $10.75 per share, the fair market value on the date of grant. 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 7,500 shares of
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Common Stock, exercisable at the fair market value of such shares on the date of
grant. In addition, the Compensation Committee authorized additional grants of
stock options for 15,000 shares to each of Messrs. Bobb, Chefitz and Maupay in
fiscal year 2000. The exercise price of these options was $13.25, the fair
market value on the date of grant, the December 1, 1999 Annual Meeting.
MEETINGS -- During fiscal year 2000, the Board of Directors held ten
formal meetings including teleconference 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 assessing
processes related to risks and control environment, overseeing financial
reporting, evaluating independent audit processes and reporting to the full
Board of Directors regarding all of the foregoing. The Audit Committee held one
formal meeting in fiscal year 2000.
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 2000. See "Report of the Compensation Committee of the Board of
Directors."
The Executive Committee has those responsibilities delegated to it from
time to time by the Board of Directors. The Executive Committee held two formal
meetings in fiscal year 2000.
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. Subsequent to the end of fiscal year 2000, Mr. Todd M. DeWitt
was appointed Vice President of Biomaterials and Ms. Caron S. D'Ambruso was
appointed Vice President of Marketing.
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 2000, except that Mr.
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<PAGE> 10
Nash and Dr. Kensey each inadvertently filed a Form 4 four days late with
respect to the shares they sold in the Company's secondary offering and Mr.
Chefitz inadvertently failed to file a Form 4 for the purchase of 5,000 shares
of Common Stock for the Chefitz Healthcare Investment Account for which he is a
beneficial owner.
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<PAGE> 11
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, 2000, 1999 and 1998 to its chief executive officer and the other
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 during fiscal year 2000 (each, a "Named Executive Officer").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
($) ($) ($) (#)
--------------------------- ---- ------ ----- ------------ -------
<S> <C> <C> <C> <C> <C>
Joseph W. Kaufmann 2000 $200,000 --(1) $9,000(2) 75,000(5)
President, Chief Executive Officer, 1999 $200,000 $75,000 $9,000(2) 300,000
Secretary and Director 1998 $200,000 -- -- 30,000(6)
John E. Nash, P.E. 2000 $180,000 -- $1,499(3) --
Vice President of New 1999 $200,000 -- $9,000(2) --
Technologies and Director 1998 $200,000 -- $9,000(2) --
--
Douglas G. Evans, P.E. 2000 $160,000 (1) $9,228(4) 75,000(5)
Chief Operating Officer, Assistant 1999 $160,000 $63,000 $9,000(2) 170,000
Secretary and Director 1998 $155,000 -- -- 15,000(6)
Julie N. Broderick 2000 $111,820 -- $1,128(3) 15,000(5)
Vice President of Clinical 1999 $98,750 $20,000 -- 30,000
and Regulatory Affairs 1998 $87,522 $1,673 -- 7,000(6)
Wendy F. DiCicco, CPA 2000 $98,067 -- $1,009(3) 20,000(5)
Chief Financial Officer 1999 $85,780 $20,000 -- 30,000
1998 $75,717 $1,480 -- 7,000(6)
</TABLE>
---------------------------
(1) Each of Mr. Kaufmann and Mr. Evans elected not to receive a bonus for
fiscal year 2000 under the Company's bonus plan.
(2) Represents allowance for automobile.
(3) Represents the Company's matching cash contribution paid and/or accrued
under the Company's 401(k) Plan.
(4) Represents $9,000 allowance for automobile and $228 of the Company's
matching cash contribution paid and/or accrued under the Company's
401(k) Plan.
(5) Granted August 16, 2000.
(6) Granted August 28, 1998.
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<PAGE> 12
OPTION GRANTS IN FISCAL YEAR 2000 -- The following table provides
information on grants of stock options and stock appreciation rights in fiscal
year 2000 to the Named Executive Officers pursuant to the Employee Plan.
OPTION/SAR GRANTS IN FISCAL YEAR 2000
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
PERCENT OF TOTAL STOCK PRICE APPRECIATION
OPTIONS/ SARS GRANTED EXERCISE OR FOR OPTION TERM
OPTIONS/ TO EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME SARS GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------------- --------------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Kaufmann ....... 75,000 20.0% $13.13 8/16/10 $619,068 $1,568,840
John E. Nash, P.E. ....... -- -- -- -- -- --
Douglas G. Evans, P.E. ... 75,000 20.0% $13.13 8/16/10 $619,068 $1,568,840
Julie N. Broderick ....... 15,000 4.0% $13.13 8/16/10 $123,814 $313,768
Wendy F. DiCicco, CPA .... 20,000 5.3% $13.13 8/16/10 $165,085 $418,357
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000 AND YEAR-END 2000
OPTION VALUES -- The following table provides information on the Named Executive
Officers' unexercised and exercised options granted under the Employee Plan at
June 30, 2000.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000 AND YEAR-END 2000 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ON EXERCISE VALUE OPTIONS AT YEAR-END 2000(#) YEAR-END 2000($)(1)
--------------- REALIZED ------------------------------- ------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Kaufmann ....... -- -- 491,000 240,000 $981,875 $545,000
John E. Nash, P.E. ....... -- -- -- -- -- --
Douglas G. Evans, P.E. ... -- -- 285,000 130,000 $616,250 $296,250
Julie N. Broderick ....... -- -- 41,334 27,666 $72,294 $63,831
Wendy F. DiCicco, CPA .... -- -- 20,834 27,166 $31,919 $63,831
</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, 2000 of $11.125.
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 other things,
severance pay equal to their base salary for a period of two years. Messrs.
Kaufmann and Evans would be
8
<PAGE> 13
entitled to receive an additional payment, net of taxes, to compensate for any
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.
Following 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 will 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 any 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. Following 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 any
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.
Following 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, up to the legal limit, instead of receiving that amount
in cash. During fiscal year 2000, the Company agreed to match up to 25% of an
employee's first 6% contribution of their pay.
9
<PAGE> 14
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. On August 16, 2000, the
Compensation Committee approved a raise of Mr. Kaufmann's base salary to
$250,000 effective October 1, 2000.
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. Each of Mr. Kaufmann and Mr. Evans elected not to receive a bonus for
fiscal year 2000 under the Company's bonus plan. Mr. Kaufmann's bonus for fiscal
year 2001 will be based upon the achievement of specified objectives, including
achievement of revenue and earnings per share goals in the Company's fiscal year
2001 plan. The fiscal year 2001 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 August 16, 2000, the Compensation Committee approved a grant of 75,000 stock
options for each of Mr. Kaufmann and Mr. Evans, 20,000 stock options for Ms.
DiCicco and 15,000 stock options for Ms. Broderick. A portion of these option
grants will vest in six months from the date of grant and the remaining options
will vest in equal amounts over a three-year period. The exercise price of these
options is $13.13, 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
10
<PAGE> 15
responsibilities of the executive, review of compensation of executives in
medical device companies at a comparable stage of development, and review of the
number of stock options each executive currently possesses.
COMPLIANCE WITH SECTION 162(m) -- The Compensation Committee currently
intends for all compensation paid to the executive officers to be tax deductible
to the Company. Section 162(m) of the Internal Revenue Code of 1986, as amended
("Section 162(m)"), provides that compensation paid to certain executive
officers in excess of $1,000,000 is nondeductible by the Company for Federal
income tax purposes unless, in general, such compensation is performance-based,
is established by a committee comprised solely of two or more independent
directors, is objective and the plan or agreement providing for such performance
based compensation has been approved by stockholders in advance of payment. The
Compensation Committee believes that the requirements of Section 162(m) may
arbitrarily impact the Company. In the future, the Compensation Committee may
determine to adopt a compensation program that does not satisfy the conditions
of Section 162(m), if in its judgment, after considering the additional costs of
not satisfying Section 162(m), such program is appropriate.
COMPENSATION COMMITTEE
--------------------------------
Robert J. Bobb, Chairman
Harold N. Chefitz
Walter R. Maupay, Jr.
11
<PAGE> 16
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, 2000, for the Company, the
Nasdaq Market Composite Index and the Russell 2000 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 the 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
[LINE GRAPH]
<TABLE>
<CAPTION>
12/13/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
<S> <C> <C> <C> <C> <C> <C>
KENSEY NASH CORPORATION 100 103 83 73 62 86
Nasdaq Market Composite Index 100 112 138 181 258 381
Russell 2000 Index 100 111 127 146 146 165
</TABLE>
12
<PAGE> 17
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of October 20, 2000, 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
NAMES AND ADDRESS BENEFICIAL OWNERSHIP (1) OF CLASS
----------------- ------------------------ --------
<S> <C> <C>
Kenneth R. Kensey, M.D. (2)(4).......................... 1,781,327 17.0%
John E. Nash, P.E. (3)(5)............................... 685,000 6.6
Joseph W. Kaufmann (3)(6)............................... 686,833 6.3
Douglas G. Evans, P.E. (7).............................. 371,050 3.5
Julie N. Broderick (8).................................. 58,717 *
Walter R. Maupay, Jr.(9)................................ 34,334 *
Harold N. Chefitz (10).................................. 28,334 *
Wendy F. DiCicco, CPA (11).............................. 26,267 *
Robert J. Bobb (12)..................................... 23,334 *
Steven J. Lee........................................... -- *
C. McCollister Evarts, M.D.............................. -- *
All Named Executive Officers and Directors as a group
(11 persons)........................................ 3,695,196 32.4%
</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 Visco Technologies, Inc., 15 East
Uwchlan Ave., Suite 414, Exton, Pennsylvania 19341.
(3) The address of the stockholder is c/o the Company, 55 East Uwchlan
Ave., Exton, Pennsylvania 19341.
(4) Represents 1,778,827 shares of Common Stock held by the Kenneth Kensey
Revocable Trust and 2,500 stock options which may be exercised within
60 days. Excludes 18,750 shares of Common Stock held by the Kenneth
Kensey Gift Trust, to which Dr. Kensey disclaims beneficial interest.
(5) Represents 685,000 shares of Common Stock held by the John E. Nash
Revocable Trust.
(6) Represents 165,833 shares of Common Stock and 521,000 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
300,000 stock options which may be exercised within 60 days.
(8) Represents 13,150 shares of Common Stock held by Ms. Broderick and
45,567 stock options which may be exercised within 60 days.
(9) Represents 11,000 shares of Common Stock held by Mr. Maupay and 23,334
stock options which may be exercised within 60 days.
(10) Represents 5,000 shares of Common Stock held by the Chefitz Healthcare
Investment Account and 23,334 stock options held by Mr. Chefitz which
may be exercised within 60 days.
(11) Represents 600 shares of Common Stock held by Ms. DiCicco and 25,667
stock options which may be exercised within 60 days.
(12) Represents 23,334 stock options held by Mr. Bobb which may be exercised
within 60 days.
PROPOSAL 2
APPROVAL OF THE RESTATED EMPLOYEE PLAN
BACKGROUND
Effective April 1, 1995, the Board of Directors adopted the Kensey Nash
Corporation Employee Incentive Compensation Plan (the "Employee Plan") pursuant
to which options to acquire up to 900,000 shares of Common Stock may be issued
on the terms described below. On December 4, 1996 and on August 28, 1998, it was
proposed and approved by stockholders at the Annual Meeting to reserve an
additional 300,000 and 1,000,000 shares of Common Stock, respectively, for the
Employee Plan, bringing the total number of shares in the
13
<PAGE> 18
Employee Plan to 2,200,000.
On October 19, 2000, the Board of Directors agreed to present the
Restated Employee Plan for stockholder approval at the Annual Meeting. The
Restated Employee Plan authorizes and reserves an additional 1,000,000 shares
for the Employee Plan, all of which are reserved for officers, employees and
consultants. Assuming the adoption of Proposal 2, if options for 3,200,000
shares of Common Stock available under the Restated Employee Plan were issued,
such shares would constitute approximately 31% of the issued and outstanding
Common Stock on October 20, 2000. The Restated Employee Plan will not be
implemented if it is not approved by a majority of the votes cast, in person or
by proxy, at the Annual Meeting. The Board believes that the size and terms of
the Restated Employee Plan are 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 key employees of a proprietary interest in the Company; (ii)
the ability to fashion attractive incentive awards based upon the performance of
the Company and the price for Common Stock; and (iii) better alignment of the
interests of officers, employees and consultants with the interests of the
Company's stockholders. In adopting the Restated Employee Plan, the Board of
Directors noted that many other companies have adopted equity plans to
compensate their officers, employees and consultants with grants comparable in
size to that to be effected by the Restated Employee Plan. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE RESTATED
EMPLOYEE PLAN, AND BELIEVES THAT THE RESTATED EMPLOYEE PLAN IS APPROPRIATE TO
COMPENSATE EMPLOYEES AND CONSULTANTS.
The following brief summary of certain features of the Restated
Employee Plan is qualified in its entirety by reference to the full text of the
Restated Employee Plan, 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
Employee Plan effective as of December 6, 2000, subject to stockholders'
approval. The Restated Employee Plan is a flexible plan that provides the
Compensation Committee broad discretion to fashion the terms of the awards to
provide eligible participants with such stock-based and performance-related
incentives as the Compensation Committee deems appropriate. The Restated
Employee Plan permits the issuance of awards in a variety of forms, including:
(i) nonqualified and incentive stock options for the purchase of Common Stock,
(ii) stock appreciation rights, (iii) restricted stock, (iv) deferred stock, (v)
bonus stock and awards in lieu of obligations, (vi) dividend equivalents, (vii)
other stock-based awards, (viii) performance awards and (ix) cash incentive
awards. Options granted will provide for the purchase of Common Stock at prices
determined by the Compensation Committee, but in no event less than fair market
value on the date of grant.
The persons eligible to participate in the Restated Employee Plan are
officers, employees and consultants of the Company or any subsidiary of the
Company who, in the opinion of the Compensation Committee, contribute to the
growth and success of the Company or its subsidiaries. The purpose of the
Restated Employee Plan is to promote the overall financial objectives of the
Company and its stockholders by motivating eligible participants to achieve
long-term growth in stockholder equity in the Company and to retain the
association of these individuals. The Restated Employee Plan currently is
administered by the Compensation Committee. The Compensation Committee is
composed solely of at least two "disinterested" directors within the meaning of
Rule 16b-3 under the Exchange Act, who are also "outside directors" under
Section 162(m) of the Internal Revenue Code of 1986, as amended. A member of the
Compensation Committee will not exercise any discretion with respect to himself
or herself under the Restated Employee Plan
14
<PAGE> 19
The Restated Employee Plan provides for the award of up to 3,200,000
shares of Common Stock. As of October 20, 2000, options for 1,974,363 shares of
Common Stock had been granted and remain outstanding under the terms of the
Employee Plan, 1,117,431 of which are currently exercisable. At the discretion
of the Compensation Committee, shares of Common Stock subject to an award under
the Restated Employee Plan that remain unissued upon termination of such award,
are forfeited or are received by the Company as consideration for the exercise
or payment of an award. In the event of a stock dividend, stock split,
recapitalization, sale of substantially all of the assets of the Company,
reorganization or other similar event, the Compensation Committee will adjust
the aggregate number of shares of Common Stock subject to the Restated Employee
Plan and the number, class and price of shares subject to outstanding awards.
Awards are subject to vesting schedules specified in the award.
As of October 20, 2000, stock options for 2,201,250 shares have been
granted under the terms of the Employee Plan. The benefits to be received by
participants in the Restated Employee Plan are not currently determinable.
NEW PLAN BENEFITS
EMPLOYEE INCENTIVE COMPENSATION PLAN
<TABLE>
<CAPTION>
Name and Position Dollar Value ($)(1) Number of Units (2)
----------------- ------------------- -------------------
<S> <C> <C>
Joseph W. Kaufmann, Chief Executive Officer,
President, Secretary and Director -- 75,000
John E. Nash, P.E., Vice President of New
Technologies, Director -- --
Douglas G. Evans, P.E., Chief Operating
Officer, Assistant Secretary and Director -- 75,000
Wendy F. DiCicco, Chief Financial Officer -- 20,000
Julie N. Broderick, Vice President Clinical
and Regulatory Affairs -- 15,000
Executive Group -- 185,000
Nonemployee Director Group -- --
Non-Executive Officer Employee Group -- 80,000
</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.
(2) The Company is seeking approval of the Restated Employee Plan to
reserve shares to award to eligible participants at the discretion of
the Compensation Committee. The number of units to be granted under the
Restated Employee Plan is indeterminate at this time. The number of
units listed above reflects grants made in fiscal year 2000 under the
Employee Plan.
EFFECT OF FEDERAL INCOME TAXATION
Stock options granted under the Employee Plan may be either incentive
stock options qualified under Section 422 of the Code ("ISOs") or non-qualified
stock options ("NQSOs"). The following summary of tax consequences with respect
to the awards granted under the Restated Employee Plan is not comprehensive and
is based upon laws and regulations in effect on October 20, 2000. Such laws and
regulations are subject to change.
There are generally no Federal income tax consequences either to the
option holder or to the Company upon the grant of a stock option. On exercise of
an ISO, the option holder will not recognize any income and the
15
<PAGE> 20
Company will not be entitled to a deduction for tax purposes, although such
exercise may give rise to liability for the option holder under the alternative
minimum tax provisions of the Code. Generally, if the option holder disposes of
shares acquired upon exercise of an ISO within two years of the date of grant or
one year of the date of exercise the option holder will recognize compensation
income and the Company will be entitled to a deduction for tax purposes in the
amount of the excess of the fair market value of the shares on the date of
exercise over the option exercise price (or the gain on sale, if less).
Otherwise, the Company will not be entitled to any deduction for tax purposes
upon disposition of such shares, and the entire gain for the option holder will
be treated as a capital gain. On exercise of an NQSO, the amount by which the
fair market value of the shares on the date of exercise exceeds the option
exercise price will generally be taxable to the option holder as compensation
income and will generally be deductible for tax purposes by the Company. The
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
Employee Plan, constitute "parachute payments" under Section 280G of the Code,
depending upon the amount of such payments accruing and the other income of the
option holder from the Company, the option holder may be subject to an excise
tax (in addition to ordinary income tax) and the Company may be disallowed a
deduction for the amount of the actual payment.
PROPOSAL 3
APPROVAL OF THE RESTATED DIRECTORS' PLAN
BACKGROUND
Effective 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. On December 1, 1999, it
was proposed and approved by the stockholders at the Annual Meeting to reserve
an additional 150,000 shares of Common Stock for the Directors' Plan, bringing
the total number of shares in the Directors' Plan to 210,000 shares. In
addition, it was proposed and approved to increase the grant received 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 such meeting to serve as
a nonemployee director by 2,500 shares as well as to provide that additional
grants of options may be made, from time-to time, as determined by the
Compensation Committee.
On October 20, 2000, the Board of Directors agreed to present the
Restated Directors' Plan for stockholder approval at the Annual Meeting. The
Restated Directors' Plan authorizes and reserves an additional 200,000 shares
for the Directors' Plan, all of which are reserved for nonemployee directors.
Assuming the adoption of Proposal 3, if options for 410,000 shares of Common
Stock available under the Restated Directors' Plan were issued, such shares
would constitute approximately 4% of the issued and outstanding Common Stock on
October 20, 2000. 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 and terms of the Restated
Directors' Plan are 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
16
<PAGE> 21
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 6, 2000, 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 410,000
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 or to each nonemployee director on the date of their
initial appointment ("Initial Grant") 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 ("Annual Grant"). 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.
As of October 20, 2000, stock options for 137,500 shares have been
granted under the terms of the Directors' Plan, 37,503 of which are exercisable.
The benefits to be received by participants in the Directors' Plan are not
currently determinable.
NEW PLAN BENEFITS
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) Number of Units
----------------- ---------------- ---------------
<S> <C> <C>
Joseph W. Kaufmann, Chief Executive Officer,
President, Secretary and Director -- --
John E. Nash, P.E., Vice President of New
Technologies, Director -- --
Douglas G. Evans, P.E., Chief Operating
Officer, Assistant Secretary and Director -- --
Wendy F. DiCicco, Chief Financial Officer -- --
</TABLE>
17
<PAGE> 22
<TABLE>
<S> <C> <C>
Julie N. Broderick, Vice President Clinical
and Regulatory Affairs -- --
Executive Group -- --
Nonemployee Director Group (1) -- 137,500
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 20, 2000. 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.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee,
has appointed Deloitte & Touche LLP, independent certified public accountants,
as auditors of the Company's financial statements for 2001. 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 2001 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.
18
<PAGE> 23
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 2001 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, 2001.
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.
ADDITIONAL INFORMATION -- THE COMPANY WILL FURNISH WITHOUT CHARGE A
COPY OF BOTH THE THIRD AMENDED AND RESTATED KENSEY NASH CORPORATION EMPLOYEE
INCENTIVE COMPENSATION PLAN AND THE FOURTH 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 2000 FISCAL YEAR, AS FILED WITH THE SEC,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, UPON THE WRITTEN
REQUEST OF ANY PERSON WHO IS A STOCKHOLDER AS OF THE RECORD DATE, AND WILL
PROVIDE COPIES OF THE EXHIBITS TO SUCH ANNUAL REPORT UPON PAYMENT OF A
REASONABLE FEE WHICH SHALL NOT EXCEED THE COMPANY'S REASONABLE EXPENSES INCURRED
IN CONNECTION THEREWITH. REQUESTS FOR SUCH MATERIALS SHOULD BE DIRECTED TO
KENSEY NASH CORPORATION--INVESTOR RELATIONS, 55 EAST UWCHLAN AVENUE, EXTON,
PENNSYLVANIA 19341, ATTENTION: SECRETARY.
By order of the Board of Directors,
/S/ Joseph W. Kaufmann
Joseph W. Kaufmann
President and Secretary
Exton, Pennsylvania
November 1, 2000
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EXHIBIT A
THIRD AMENDED AND RESTATED
KENSEY NASH CORPORATION
EMPLOYEE INCENTIVE COMPENSATION PLAN
ARTICLE I
ESTABLISHMENT
1.1 Purpose. The Kensey Nash Corporation Employee Incentive
Compensation Plan ("Plan") is hereby established by Kensey Nash Corporation
("Company"). The purpose of the Plan is to promote the overall financial
objectives of the Company and its stockholders by motivating those persons
selected to participate in the Plan to achieve long-term growth in stockholder
equity in the Company and by retaining the association of those individuals who
are instrumental in achieving this growth. The Plan is intended to qualify
certain compensation awarded under the Plan for tax deductibility under Section
162(m) of the Code (as defined herein) to the extent deemed appropriate by the
Committee (as defined herein). The Plan and the grant of awards thereunder are
expressly conditioned upon the Plan's approval by the stockholders of the
Company. If such approval is not obtained, then this Plan and all Awards (as
defined herein) hereunder shall be null and void ab initio. The Plan is adopted,
subject to stockholder approval, effective as of April 1, 1995.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms are defined as set forth
below:
2.1 "Affiliate" means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
association or other entity (other than the Company) that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the Company including, without limitation, any member
of an affiliated group of which the Company is a common parent corporation as
provided in Section 1504 of the Code.
2.2 "Agreement" or "Award Agreement" means, individually or
collectively, any agreement entered into pursuant to the Plan pursuant to which
an Award is granted to a Participant.
2.3 "Award" means any Option, SAR, Restricted Stock, Deferred Stock,
Stock, Dividend Equivalent, Other Stock-Based Award, Performance Award or Cash
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
2.4 "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted hereunder. If, upon a Participant's
death, there is no designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary means the Participant's Representative.
2.5 "Board of Directors" or "Board" means the Board of Directors of the
Company.
2.6 "Cash Incentive Award" means a conditional right granted to a
Participant under Section 10.4(c) hereof to receive a cash payment, unless
otherwise determined by the Committee, after the end of a specified period.
2.7 "Cause" shall mean, for purposes of whether and when a Participant
has incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written agreement or arrangement between
the Participant and the Company or an Affiliate for "cause" as defined in such
agreement
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<PAGE> 25
EXHIBIT A
or arrangement, or in the event there is no such agreement or arrangement or the
agreement or arrangement does not define the term "cause" or a substantially
equivalent term, then Cause shall mean (a) any act or failure to act deemed to
constitute cause under the Company's established practices, policies or
guidelines applicable to the Participant or (b) the Participant's act or
omission which constitutes gross misconduct with respect to the Company or an
Affiliate in any material respect, including, without limitation, an act or
omission of a criminal nature, the result of which is detrimental to the
interests of the Company or an Affiliate, or conduct, or the omission of
conduct, which constitutes a material breach of a duty the Participant owes to
the Company or an Affiliate.
2.8 "Change in Control" and "Change in Control Price" have the meanings
set forth in Sections 12.2 and 12.3, respectively.
2.9 "Code" or "Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.
2.10 "Commission" means the Securities and Exchange Commission or any
successor agency.
2.11 "Committee" means the Compensation Committee of the Board or such
other Board committee as may be designated by the Board to administer the Plan;
provided, however, that on and after a Public Offering the Committee shall
consist solely of two or more directors, each of whom is a "disinterested
person" within the meaning of Rule 16b-3 under the Exchange Act and each of whom
is also an "outside director" under Section 162(m) of the Code. In the absence
of appointment, the Board (or on any after a Public Offering, the portion
thereof that are disinterested persons and outside directors) shall constitute
the Committee.
2.12 "Common Stock" means the shares of the $0.01 par value common
stock of the Company, whether presently or hereafter issued, and any other stock
or security resulting from adjustment thereof as described hereinafter or the
common stock of any successor to the Company which is designated for the purpose
of the Plan.
2.13 "Company" means Kensey Nash Corporation, a Delaware corporation,
and includes any successor or assignee corporation or corporations into which
the Company may be merged, changed or consolidated; any corporation for whose
securities the securities of the Company shall be exchanged; and any assignee of
or successor to substantially all of the assets of the Company.
2.14 "Covered Employee" means a Participant who is a "covered employee"
within the meaning of Section 162(m) of the Code.
2.15 "Deferred Stock" means a right, granted to a Participant under
Section 9.1 hereof, to receive Common Stock, cash or a combination thereof at
the end of a specified deferral period.
2.16 "Disability" means a mental or physical illness that entitles the
Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan if
it is the result of (i) a willfully self-inflicted injury or willfully
self-induced sickness; or (ii) an injury or disease contracted, suffered, or
incurred while participating in a criminal offense. The determination of
Disability shall be made by the Committee. The determination of Disability for
purposes of this Plan shall not be construed to be an admission of disability
for any other purpose.
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<PAGE> 26
EXHIBIT A
2.17 "Dividend Equivalent" means a right, granted to a Participant
under Section 10.2, to receive cash, Common Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Common Stock.
2.18 "Effective Date" means April 1, 1995.
2.19 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2.20 "Fair Market Value" means:
(a) prior to a Public Offering, the value determined on the
basis of the good faith determination of the Committee and without regard to
whether the Common Stock is restricted, illiquid or represents a minority
interest, unless expressly provided otherwise in an Agreement; and
(b) on or after a Public Offering, the value determined on the
basis of the good faith determination of the Committee, without regard to
whether the Common Stock is restricted or represents a minority interest,
pursuant to the applicable method described below:
(i) if the Common Stock is listed on a national
securities exchange or quoted on NASDAQ, the closing price of the Common Stock
on the relevant date (or, if such date is not a business day or a day on which
quotations are reported, then on the immediately preceding date on which
quotations were reported), as reported by the principal national exchange on
which such shares are traded (in the case of an exchange) or by NASDAQ, as the
case may be;
(ii) if the Common Stock is not listed on a national
securities exchange or quoted on NASDAQ, but is actively traded in the
over-the-counter market, the average of the closing bid and asked prices for the
Common Stock on the relevant date (or, if such date is not a business day or a
day on which quotations are reported, then on the immediately preceding date on
which quotations were reported), or the most recent preceding date for which
such quotations are reported; and
(iii) if, on the relevant date, the Common Stock is
not publicly traded or reported as described in (i) or (ii), the value
determined in good faith by the Committee.
2.21 "Grant Date" means the date as of which an Award is granted
pursuant to the Plan.
2.22 "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.23 "Kensey Nash Entities" mean Kenneth R. Kensey ("Kensey") and John
Nash ("Nash"), their respective spouses, their respective heirs, and any group
(within the meaning of Section 13(d)(3) of the Exchange Act) of which any of
Kensey, Nash, their spouses or their heirs is a member for purposes of
acquiring, holding or disposing of securities of the Company, any trust
established by or for the benefit of any of the foregoing and any other entity
controlled by or for the benefit of any of the foregoing.
2.24 "Kensey Nash Interests" mean the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) or the pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the Exchange Act)
of the Kensey Nash Entities in the outstanding voting securities of the Company
entitled to vote generally in the election of directors or such other securities
as may be specifically referenced.
22
<PAGE> 27
EXHIBIT A
2.25 "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq
National Market.
2.26 "Nonqualified Stock Option" means an Option to purchase Common
Stock in the Company granted under the Plan, the taxation of which is pursuant
to Section 83 of the Code.
2.27 "Option Period" means the period during which an Option shall be
exercisable in accordance with the related Agreement and Article VI.
2.28 "Option Price" means the price at which the Common Stock may be
purchased under an Option as provided in Section 6.3(b).
2.29 "Other Stock Based Awards" means Awards granted to a Participant
under Section 10.3 hereof.
2.30 "Participant" means a person who satisfies the eligibility
conditions of Article V and to whom an Award has been granted by the Committee
under the Plan, and in the event a Representative is appointed for a Participant
or another person becomes a Representative, then the term "Participant" shall
mean such Representative. The term shall also include a trust for the benefit of
the Participant, a partnership the interest of which was held by or for the
benefit of the Participant, the Participant's parents, spouse or descendants, or
a custodian under a uniform gifts to minors act or similar statute for the
benefit of the Participant's descendants, to the extent permitted by the
Committee and not inconsistent with Rule 16b-3. Notwithstanding the foregoing,
the term "Termination of Employment" shall mean the Termination of Employment of
the person to whom the Award was originally granted.
2.31 "Performance Award" means a right, granted to a Participant under
Section 10.4 hereof, to receive Awards based upon performance criteria specified
by the Committee.
2.32 "Plan" means the Kensey Nash Corporation Employee Incentive
Compensation Plan, as herein set forth and as may be amended from time to time.
2.33 "Public Offering" means the initial public offering of shares of
Common Stock under the Securities Act.
2.34 "Representative" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been permissibly transferred; provided that
only one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.
2.35 "Restricted Stock" means Common Stock granted to a Participant
under Section 8.1 hereof, that is subject to certain restrictions and to a risk
of forfeiture.
2.36 "Retirement" means the Participant's Termination of Employment
after attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company or an Affiliate, if the Participant is covered by such a plan, or if
the Participant is not covered by such a plan, then age 65, or age 55 with the
accrual of 10 years of service.
2.37 "Rule 16b-3"and "Rule 16a-1(c)(3)" mean Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission
23
<PAGE> 28
EXHIBIT A
under Section 16 of the Exchange Act.
2.38 "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
2.39 "Stock Appreciation Right" means a right granted under Article
VII.
2.40 "Stock Option" or "Option" means a right, granted to a Participant
under Section 6.1 hereof, to purchase Common Stock or other Awards at a
specified price during specified time periods.
2.41 "Termination of Employment" means the occurrence of any act or
event, whether pursuant to an employment agreement or otherwise, that actually
or effectively causes or results in the person's ceasing, for whatever reason,
to be an officer, independent contractor, director or employee of the Company or
of any Affiliate, or to be an officer, independent contractor, director or
employee of any entity that provides services to the Company or an Affiliate,
including, without limitation, death, Disability, dismissal, severance at the
election of the Participant, Retirement, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company or its Affiliates
of all businesses owned or operated by the Company or its Affiliates. With
respect to any person who is not an employee with respect to the Company or an
Affiliate of the Company, the Agreement shall establish what act or event shall
constitute a Termination of Employment for purposes of the Plan. A transfer of
employment from the Company to an Affiliate, or from an Affiliate to the
Company, shall not be a Termination of Employment, unless expressly determined
by the Committee. A Termination of Employment shall occur for an employee who is
employed by an Affiliate of the company if the Affiliate shall cease to be an
Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate of the Company.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
ARTICLE III
ADMINISTRATION
3.1 Committee Structure and Authority. The Plan shall be administered
by the Committee. A majority of the Committee shall constitute a quorum at any
meeting thereof (including by telephone conference) and the acts of a majority
of the members present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for purposes of
this Plan. The Committee may authorize any one or more of its members or an
officer of the Company to execute and deliver documents on behalf of the
Committee. A member of the Committee shall not exercise any discretion
respecting himself or herself under the Plan. The Board shall have the authority
to remove, replace or fill any vacancy of any member of the Committee upon
notice to the Committee and the affected member. Any member of the Committee may
resign upon notice to the Board. The Committee may allocate among one or more of
its members, or may delegate to one or more of its agents, such duties and
responsibilities as it determines.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) to select those persons to whom Awards may be granted from
time to time;
(b) to determine whether and to what extent Awards or any
combination thereof are to be granted hereunder;
(c) to determine the number of shares of Common Stock to be
covered by each stock-based Award granted hereunder;
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<PAGE> 29
EXHIBIT A
(d) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the Option Price, the Option Period,
any exercise restriction or limitation and any exercise acceleration, forfeiture
or waiver regarding any Award, any shares of Common Stock relating thereto, any
performance criteria and the satisfaction of each criteria);
(e) to adjust the terms and conditions, at any time or from
time to time, of any Award, subject to the limitations of Section 13.1;
(f) to determine to what extent and under what circumstances
Common Stock and other amounts payable with respect to an Award shall be
deferred;
(g) to determine under what circumstances an Award may be
settled in cash or Common Stock;
(h) to provide for the forms of Agreements to be utilized in
connection with the Plan;
(i) to determine whether a Participant has a Disability or a
Retirement;
(j) to determine what securities law requirements are
applicable to the Plan, Awards and the issuance of shares of Common Stock under
the Plan and to require of a Participant that appropriate action be taken with
respect to such requirements;
(k) to cancel, with the consent of the Participant or as
otherwise provided in the Plan or an Agreement, outstanding Awards;
(l) to interpret and make final determinations with respect to
the remaining number of shares of Common Stock available under this Plan;
(m) to require, as a condition of the exercise of an Award or
the issuance or transfer of a certificate of Common Stock, the withholding from
a Participant of the amount of any Federal, state or local taxes as may be
necessary in order for the Company or any other employer to obtain a deduction
or as may be otherwise required by law;
(n) to determine whether and with what effect a Participant
has incurred a Termination of Employment;
(o) to determine whether the Company or any other person has a
right or obligation to purchase Common Stock from a Participant and, if so, the
terms and conditions on which such Common Stock is to be purchased;
(p) to determine the restrictions or limitations on the
transfer of Common Stock;
(q) to determine whether an Award is to be adjusted, modified
or purchased, or is to become fully exercisable, under the Plan or the terms of
an Agreement;
(r) to determine the permissible methods of Award exercise and
payment, including cashless exercise arrangements;
(s) to adopt, amend and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of the Plan; and
(t) to appoint and compensate agents, counsel, auditors or
other specialists to aid it in the discharge of
25
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EXHIBIT A
its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan. The Committee's policies and
procedures may differ with respect to Awards granted at different times or to
different Participants.
Any determination made by the Committee pursuant to the provisions of
the Plan shall be made in its sole discretion, and in the case of any
determination relating to an Award, may be made at the time of the grant of the
Award or, unless in contravention of any express term of the Plan or an
Agreement, at any time thereafter. All decisions made by the Committee pursuant
to the provisions of the Plan shall be final and binding on all persons,
including the Company and Participants. No determination shall be subject to de
novo review if challenged in court.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Number of Shares. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for distribution
pursuant to Awards under the Plan shall be 3,200,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares.
4.2 Release of Shares. Subject to Section 7.3(f), if any shares of
Common Stock that are subject to any Award cease to be subject to an Award or
are forfeited, if any Award otherwise terminates without issuance of shares of
Common Stock being made to the Participant, or if any shares (whether or not
restricted) of Common Stock are received by the Company in connection with the
exercise of an Award, including the satisfaction of any tax withholding
obligation, such shares, in the discretion of the Committee, may again be
available for distribution in connection with Awards under the Plan.
4.3 Restrictions on Shares. Shares of Common Stock issued as or in
conjunction with an Award shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Committee in
its discretion may determine or provide in an Award Agreement. The Company shall
not be required to issue or deliver any certificates for shares of Common Stock,
cash or other property prior to (i) the listing of such shares on any stock
exchange or NASDAQ (or other public market) on which the Common Stock may then
be listed (or regularly traded), (ii) the completion of any registration or
qualification of such shares under Federal or state law, or any ruling or
regulation of any government body which the Committee determines to be necessary
or advisable, and (iii) the satisfaction of any applicable withholding
obligation in order for the Company or an Affiliate to obtain a deduction with
respect to the exercise of an Award. The Company may cause any certificate for
any share of Common Stock to be delivered to be properly marked with a legend or
other notation reflecting the limitations on transfer of such Common Stock as
provided in this Plan or as the Committee may otherwise require. The Committee
may require any person exercising an Award to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of the shares of Common Stock in compliance with applicable
law or otherwise. Fractional shares shall not be delivered, but shall be rounded
to the next lower whole number of shares.
4.4 Stockholder Rights. No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Award until, after proper
exercise of the Award or other action required, such shares shall have been
recorded on the Company's official stockholder records as having been issued or
transferred. Upon exercise of the Award or any portion thereof, the Company will
have thirty (30) days in which to issue the shares, and the Participant will not
be treated as a stockholder for any purpose whatsoever prior to such issuance.
No adjustment
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<PAGE> 31
EXHIBIT A
shall be made for cash dividends or other rights for which the record date is
prior to the date such shares are recorded as issued or transferred in the
Company's official stockholder records, except as provided herein or in an
Agreement.
4.5 Best Efforts To Register. If there has been a Public Offering, the
Company will register under the Securities Act the Common Stock delivered or
deliverable pursuant to Awards on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon after stockholder approval of the Plan as the Committee, in its
sole discretion, shall deem such registration appropriate. The Company will use
its best efforts to cause the registration statement to become effective and
will file such supplements and amendments to the registration statement as may
be necessary to keep the registration statement in effect until the earliest of
(a) one year following the expiration of the Option Period of the last Option
outstanding, (b) the date the Company is no longer a reporting company under the
Exchange Act and (c) the date all Participants have disposed of all shares
delivered pursuant to any Award. The Company may delay the foregoing obligation
if the Committee reasonably determines that any such registration would
materially and adversely affect the Company's interests or if there is no
material benefit to Participants.
4.6 Adjustments. In the event of any Company stock dividend, stock
split, combination or exchange of shares, recapitalization or other change in
the capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets (measured on either a
stand-alone or consolidated basis), reorganization, rights offering, a partial
or complete liquidation, or any other corporate transaction, Company stock
offering or event involving the Company and having an effect similar to any of
the foregoing, then the Committee shall adjust or substitute, as the case may
be, the number of shares of Common Stock available for Awards under the Plan,
the number of shares of Common Stock covered by outstanding Awards, the exercise
price per share of outstanding Awards, and performance conditions and any other
characteristics or terms of the Awards as the Committee shall deem necessary or
appropriate to reflect equitably the effects of such changes to the
Participants; provided, however, that the Committee may limit any such
adjustment so as to maintain the deductibility of the Awards under Section
162(m) and that any fractional shares resulting from such adjustment shall be
eliminated by rounding to the next lower whole number of shares with appropriate
payment for such fractional shares as shall reasonably be determined by the
Committee.
ARTICLE V
ELIGIBILITY
5.1 Eligibility. Except as herein provided, the persons who shall be
eligible to participate in the Plan and be granted Awards shall be those persons
who are directors, officers, employees and consultants of the Company or any
subsidiary of the Company, who shall be in a position, in the opinion of the
Committee, to make contributions to the growth, management, protection and
success of the Company and its subsidiaries. Of those persons described in the
preceding sentence, the Committee may, from time to time, select persons to be
granted Awards and shall determine the terms and conditions with respect
thereto. In making any such selection and in determining the form of the Award,
the Committee may give consideration to the person's functions and
responsibilities, the person's contributions to the Company and its
subsidiaries, the value of the individual's service to the Company and its
subsidiaries and such other factors deemed relevant by the Committee. The
Committee may designate in writing that any person who is not eligible to
participate in the Plan if such person would otherwise be eligible to
participate in this Plan (and members of the Committee are expressly excluded
from participation in the Plan).
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EXHIBIT A
ARTICLE VI
STOCK OPTIONS
6.1 General. The Committee shall have authority to grant Stock Options
under the Plan at any time or from time to time. Stock Options may be granted
alone or in addition to other Awards and may be either Incentive Stock Options
or Nonqualified Stock Options. A Stock Option shall entitle the Participant to
receive shares of Common Stock upon exercise of such Option, subject to the
Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement (the terms and
provisions of which may differ from other Agreements), including, without
limitation, payment of the Option Price. During any three-calendar year period,
Options for no more than 1,000,000 shares of Common Stock shall be granted to
any Participant.
6.2 Grant and Exercise. The grant of a Stock Option shall occur as of
the date the Committee determines. Each Option granted under this Plan shall be
evidenced by an Agreement, in a form approved by the Committee, which shall
embody the terms and conditions of such Option and which shall be subject to the
express terms and conditions set forth in the Plan. Such Agreement shall become
effective upon execution by the Participant. Only a person who is a common-law
employee of the Company, any parent corporation of the Company or a subsidiary
(as such terms are defined in Section 424 of the Code) on the date of grant
shall be eligible to be granted an Option which is intended to be and is an
Incentive Stock Option. To the extent that any Stock Option is not designated as
an Incentive Stock Option or even if so designated does not qualify as an
Incentive Stock Option, it shall constitute a Nonqualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be exercised, so as
to disqualify the Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify any Incentive Stock Option under such
Section 422.
6.3 Terms and Conditions. Stock Options shall be subject to such terms
and conditions as shall be determined by the Committee, including the following:
(a) Option Period. The Option Period of each Stock Option
shall be fixed by the Committee; provided that no Stock Option shall be
exercisable more than ten (10) years after the date the Stock Option is granted.
In the case of an Incentive Stock Option granted to an individual who owns more
than ten percent (10%) of the combined voting power of all classes of stock of
the Company, a corporation which is a parent corporation of the Company or any
subsidiary of the Company (each as defined in Section 424 of the Code), the
Option Period shall not exceed five (5) years from the date of grant. No Option
which is intended to be an Incentive Stock Option shall be granted more than ten
(10) years from the date the Plan is adopted by the Company or the date the Plan
is approved by the stockholders of the Company, whichever is earlier.
(b) Option Price. The Option Price per share of the Common
Stock purchasable under a Stock Option shall be determined by the Committee;
provided, however, that the Option Price per share shall be not less than the
Fair Market Value per share on the date the Option is granted. If such Option is
intended to qualify as an Incentive Stock Option and is granted to an individual
who owns or who is deemed to own stock possessing more than ten percent (10%) of
the combined voting power of all classes of stock of the Company, a corporation
which is a parent corporation of the Company or any subsidiary of the Company
(each as defined in Section 424 of the Code), the Option Price per share shall
not be less than one hundred ten percent (110%) of such Fair Market Value per
share.
(c) Exercisability. Subject to Section 12.1, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may at
any time waive such installment exercise provisions, in whole or in part. In
addition, the Committee may at any time accelerate the exercisability of any
Stock Option. If the Committee intends that an Option be an Incentive Stock
Option, the Committee may,
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EXHIBIT A
in its discretion, provide that the aggregate Fair Market Value (determined at
the Grant Date) of the Common Stock as to which such Incentive Stock Option
which is exercisable for the first time during any calendar year shall not
exceed $100,000.
(d) Method of Exercise. Subject to the provisions of this
Article VI, a Participant may exercise Stock Options, in whole or in part, at
any time during the Option Period by the Participant's giving written notice of
exercise on a form provided by the Committee (if available) to the Company
specifying the number of shares of Common Stock subject to the Stock Option to
be purchased. Such notice shall be accompanied by payment in full of the
purchase price by cash or check or such other form of payment as the Company may
accept. If approved by the Committee, payment in full or in part may also be
made (i) by delivering Common Stock already owned by the Participant for a
period of at least six (6) months prior to such payment and having a total Fair
Market Value on the date of such delivery equal to the Option Price; (ii) by the
execution and delivery of a full recourse promissory note or other full recourse
evidence of indebtedness (and any security agreement thereunder) satisfactory to
the Committee and permitted in accordance with Section 6.3(e); (iii) by
authorizing the Company to retain shares of Common Stock already owned by the
Participant for a period of at least six (6) months prior to such payment and
which would otherwise be issuable upon exercise of the Option having a total
Fair Market Value on the date of delivery equal to the Option Price; (iv) by the
delivery of cash or the extension of credit by a broker-dealer to whom the
Participant has submitted a notice of exercise or otherwise indicated an intent
to exercise an Option (in accordance with Part 220, Chapter II, Title 12 of the
Code of Federal Regulations, so-called "cashless" exercise); or (v) by any
combination of the foregoing. If payment of the Option Price of a Nonqualified
Stock Option is made in whole or in part in the form of Restricted Stock or
Deferred Stock, the number of shares of Common Stock to be received upon such
exercise that is equal to the number of shares of Restricted Stock or Deferred
Stock used for payment of the Option Price shall be subject to the same
forfeiture restrictions or deferral limitations to which such Restricted Stock
or Deferred Stock was subject, unless otherwise determined by the Committee. In
the case of an Incentive Stock Option, the right to make a payment in the form
of already owned shares of Common Stock of the same class as the Common Stock
subject to the Stock Option may be authorized only at the time the Stock Option
is granted. No shares of Common Stock shall be issued until full payment
therefor, as determined by the Committee, has been made. Subject to any
forfeiture restrictions or deferral limitations that may apply if a Stock Option
is exercised using Restricted Stock or Deferred Stock, a Participant shall have
all of the rights of a stockholder of the Company holding the class of Common
Stock that is subject to such Stock Option (including, if applicable, the right
to vote the shares and the right to receive dividends), when the Participant has
given written notice of exercise, has paid in full for such shares and such
shares have been recorded on the Company's official stockholder records as
having been issued or transferred.
(e) Company Loan or Guarantee. Upon the exercise of any Option
and subject to the pertinent Agreement and the discretion of the Committee, the
Company may, at the request of the Participant:
(i) lend to the Participant, on a full recourse
basis, an amount equal to such portion of the Option Price as the Committee may
determine; or
(ii) guarantee a loan obtained by the Participant on
a full recourse basis from a third-party for the purpose of tendering the Option
Price.
The remaining terms and conditions of any loan or guarantee, including
the interest rate and any security interest thereunder, shall be determined by
the Committee, except that (1) the term of any loan may not exceed twenty-four
(24) months and (2) no extension of credit or guarantee shall obligate the
Company for an amount to exceed the lesser of the aggregate Fair Market Value
per share of the Common Stock on the date of exercise, less the par value of the
shares of Common Stock to be purchased upon the exercise of the Award, or the
amount permitted under applicable laws or the regulations and rules of the
Federal Reserve Board and any other governmental agency having jurisdiction.
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EXHIBIT A
(f) Non-transferability of Options. Except as provided herein
or in an Agreement, no Stock Option or interest therein shall be transferable by
the Participant other than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable during the Participant's lifetime
only by the Participant. If and to the extent transferability is permitted by
Rule 16b-3 or does not result in liability to any Participant and except as
otherwise provided by an Agreement, every Option granted hereunder shall be
freely transferable, but only if such transfer is consistent with the use of
Form S-8 (or the Committee's waiver of such condition) and consistent with an
Award's intended status as an Incentive Stock Option (as applicable).
6.4 Termination by Reason of Death. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable for a period of ninety
(90) days following the date of the appointment of a Representative (or such
other period or no period as the Committee may specify) or until the expiration
of the Option Period, whichever period is the shorter.
6.5 Termination by Reason of Disability. Unless otherwise provided in
an Agreement or determined by the Committee, if a Participant incurs a
Termination of Employment due to a Disability, any unexpired and unexercised
Stock Option held by such Participant shall thereafter be fully exercisable by
the Participant for the one (1) year period (or such other period or no period
as the Committee may specify) immediately following the date of such Termination
of Employment or until the expiration of the Option Period, whichever period is
shorter, and the Participant's death at any time following such Termination of
Employment due to Disability shall not affect the foregoing. In the event of
Termination of Employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Nonqualified Stock Option.
6.6 Other Termination. Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of Employment
which is a Retirement, or the Termination of Employment is involuntary on the
part of the Participant (but is not due to death or Disability or with Cause),
any Stock Option held by such Participant shall thereupon terminate, except that
such Stock Option, to the extent then exercisable, may be exercised for the
lesser of the ninety (90) day period commencing with the date of such
Termination of Employment or until the expiration of the Option Period. If the
Participant incurs a Termination of Employment which is either (a) voluntary on
the part of the Participant (and is not a Retirement) or (b) with Cause, the
Option shall terminate immediately. The death or Disability of a Participant
after a Termination of Employment otherwise provided herein shall not extend the
time permitted to exercise an Option.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 General. The Committee shall have authority to grant Stock
Appreciation Rights under the Plan at any time or from time to time. Subject to
the Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right shall entitle the Participant to surrender to the Company the
Stock Appreciation Right and to be paid therefor in shares of the Common Stock,
cash or a combination thereof as herein provided, the amount described in
Section 7.3(b).
7.2 Grant. Stock Appreciation Rights may be granted in conjunction with
all or part of any Stock Option granted under the Plan, in which case the
exercise of the Stock Appreciation Right shall require the cancellation of a
corresponding portion of the Stock Option, and the exercise of a Stock Option
shall result in the cancellation of a corresponding portion of the Stock
Appreciation Right. In the case of a Nonqualified Stock Option, such rights may
be granted either at or after the time of grant of such Stock Option. In the
case of an Incentive Stock Option, such rights may be granted only at the time
of grant of such Stock Option. A Stock Appreciation Right
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EXHIBIT A
may also be granted on a stand-alone basis. The grant of a Stock Appreciation
Right shall occur as of the date the Committee determines. Each Stock
Appreciation Right granted under this Plan shall be evidenced by an Agreement,
which shall embody the terms and conditions of such Stock Appreciation Right and
which shall be subject to the terms and conditions set forth in this Plan.
During any three-calendar year period, Stock Appreciation Rights covering no
more than 1,000,000 shares of Common Stock shall be granted to any Participant.
7.3 Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:
(a) Period and Exercise. The term of a Stock Appreciation
Right shall be established by the Committee. If granted in conjunction with a
Stock Option, the Stock Appreciation Right shall have a term which is the same
as the Option Period and shall be exercisable only at such time or times and to
the extent the related Stock Options would be exercisable in accordance with the
provisions of Article VI. A Stock Appreciation Right which is granted on a
stand-alone basis shall be for such period and shall be exercisable at such
times and to the extent provided in an Agreement. Stock Appreciation Rights
shall be exercised by the Participant's giving written notice of exercise on a
form provided by the Committee (if available) to the Company specifying the
portion of the Stock Appreciation Right to be exercised.
(b) Amount. Upon the exercise of a Stock Appreciation Right
granted in conjunction with a Stock Option, a Participant shall be entitled to
receive an amount in cash, shares of Common Stock or both as determined by the
Committee or as otherwise permitted in an Agreement equal in value to the excess
of the Fair Market Value per share of Common Stock over the Option Price per
share of Common Stock specified in the related Agreement multiplied by the
number of shares in respect of which the Stock Appreciation Right is exercised.
In the case of a Stock Appreciation Right granted on a stand-alone basis, the
Agreement shall specify the value to be used in lieu of the Option Price per
share of Common Stock. The aggregate Fair Market Value per share of the Common
Stock shall be determined as of the date of exercise of such Stock Appreciation
Right.
(c) Special Rules. In the case of Stock Appreciation Rights
relating to Stock Options held by Participants who are actually or potentially
subject to Section 16(b) of the Exchange Act:
(i) The Committee may require that such Stock
Appreciation Rights be exercised only in accordance with the applicable "window
period" provisions of Rule 16b-3;
(ii) The Committee may provide that the amount to be
paid upon exercise of such Stock Appreciation Rights (other than those relating
to Incentive Stock Options) during a Rule 16b-3 "window period" shall be based
on the highest mean sales price of the Common Stock on the principal exchange on
which the Common Stock is traded, NASDAQ or other relevant market for
determining value on any day during such "window period"; and
(iii) No Stock Appreciation Right shall be
exercisable during the first six (6) months of its term, except that this
limitation shall not apply in the event of death or Disability of the
Participant prior to the expiration of the six (6)-month period.
(d) Non-transferability of Stock Appreciation Rights. Stock
Appreciation Rights shall be transferable only when and to the extent that a
Stock Option would be transferable under the Plan unless otherwise provided in
an Agreement.
(e) Termination. A Stock Appreciation Right shall terminate at
such time as a Stock Option would
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EXHIBIT A
terminate under the Plan, unless otherwise provided in an Agreement.
(f) Effect on Shares Under the Plan. To the extent required by
Rule 16b-3, upon the exercise of a Stock Appreciation Right, the Stock Option or
part thereof to which such Stock Appreciation Right is related shall be deemed
to have been exercised for the purpose of the limitation set forth in Section
4.2 on the number of shares of Common Stock to be issued under the Plan, but
only to the extent of the number of shares of Common Stock covered by the Stock
Appreciation Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.
(g) Incentive Stock Option. A Stock Appreciation Right granted
in tandem with an Incentive Stock Option shall not be exercisable unless the
Fair Market Value of the Common Stock on the date of exercise exceeds the Option
Price. In no event shall any amount paid pursuant to the Stock Appreciation
Right exceed the difference between the Fair Market Value on the date of
exercise and the Option Price.
ARTICLE VIII
RESTRICTED STOCK
8.1 General. The Committee shall have authority to grant Restricted
Stock under the Plan at any time or from time to time. Shares of Restricted
Stock may be awarded either alone or in addition to other Awards granted under
the Plan. The Committee shall determine the persons to whom and the time or
times at which grants of Restricted Stock will be awarded, the number of shares
of Restricted Stock to be awarded to any Participant, the time or times within
which such Awards may be subject to forfeiture and any other terms and
conditions of the Awards. Each Award shall be confirmed by, and be subject to
the terms of, an Agreement. The Committee may condition the grant of Restricted
Stock upon the attainment of specified performance goals by the Participant or
by the Company or an Affiliate (including a division or department of the
Company or an Affiliate) for or within which the Participant is primarily
employed or upon such other factors or criteria (such as length of tenure) as
the Committee shall determine. The provisions of Restricted Stock Awards need
not be the same with respect to any Participant.
8.2 Awards and Certificates. Notwithstanding the limitations on
issuance of shares of Common Stock otherwise provided in the Plan, each
Participant receiving an Award of Restricted Stock shall be issued a certificate
in respect of such shares of Restricted Stock. Such certificate shall be
registered in the name of such Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award as
determined by the Committee. The Committee may require that the certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award of Restricted
Stock, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Common Stock covered by such Award.
8.3 Terms and Conditions. Shares of Restricted Stock shall be subject
to the following terms and conditions:
(a) Limitations on Transferability. Subject to the provisions
of the Plan and the Agreement, during a period set by the Committee commencing
with the date of such Award (the "Restriction Period"), the Participant shall
not be permitted to sell, assign, transfer, pledge or otherwise encumber any
interest in shares of Restricted Stock.
(b) Rights. Except as provided in Section 8.3(a), the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a stockholder of the Company holding the class of Common Stock
that is the subject of the Restricted Stock, including, if applicable, the right
to vote the shares and the right to receive any cash dividends. Unless otherwise
determined by the Committee and subject to the Plan, cash dividends on the class
of Common Stock that is the subject of the Restricted Stock shall be
automatically deferred and
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EXHIBIT A
reinvested in additional Restricted Stock, and dividends on the class of Common
Stock that is the subject of the Restricted Stock payable in Common Stock shall
be paid in the form of Restricted Stock of the same class as the Common Stock on
which such dividend was paid.
(c) Acceleration. Based on service, performance by the
Participant or by the Company or an Affiliate, including any division or
department for which the Participant is employed, or such other factors or
criteria as the Committee may determine, the Committee may provide for the lapse
of restrictions in installments and may accelerate the vesting of all or any
part of any Award and waive the restrictions for all or any part of such Award.
(d) Forfeiture. Unless otherwise provided in an Agreement or
determined by the Committee, if the Participant incurs a Termination of
Employment during the Restriction Period due to death or Disability, the
restrictions shall lapse and the Participant shall be fully vested in the
Restricted Stock. Except to the extent otherwise provided in the applicable
Agreement and the Plan, upon a Participant's Termination of Employment for any
reason during the Restriction Period other than death or Disability, all shares
of Restricted Stock still subject to restriction shall be forfeited by the
Participant, except the Committee shall have the discretion to waive in whole or
in part any or all remaining restrictions with respect to any or all of such
Participant's shares of Restricted Stock.
(e) Delivery. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to such Restriction
Period, unlegended certificates for such shares shall be delivered to the
Participant.
(f) Election. A Participant may elect to further defer receipt
of the Restricted Stock for a specified period or until a specified event,
subject in each case to the Committee's approval and to such terms as are
determined by the Committee. Subject to any exceptions adopted by the Committee,
such election must be made one (1) year prior to completion of the Restriction
Period.
ARTICLE IX
DEFERRED STOCK
9.1 General. The Committee shall have authority to grant Deferred Stock
under the Plan at any time or from time to time. Shares of Deferred Stock may be
awarded either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the persons to whom and the time or times at which
Deferred Stock will be awarded, the number of shares of Deferred Stock to be
awarded to any Participant, the duration of the period (the "Deferral Period")
prior to which the Common Stock will be delivered, and the conditions under
which receipt of the Common Stock will be deferred and any other terms and
conditions of the Awards. Each Award shall be confirmed by, and be subject to
the terms of, an Agreement. The Committee may condition the grant of Deferred
Stock upon the attainment of specified performance goals by the Participant or
by the Company or an Affiliate, including a division or department of the
Company or an Affiliate for or within which the Participant is primarily
employed, or upon such other factors or criteria as the Committee shall
determine. The provisions of Deferred Stock Awards need not be the same with
respect to any Participant.
9.2 Terms and Conditions. Deferred Stock Awards shall be subject to the
following terms and conditions:
(a) Limitations on Transferability. Subject to the provisions
of the Plan and an Agreement, Deferred Stock Awards, or any interest therein,
may not be sold, assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period (or Elective
Deferral Period as defined in Section 9.2(e), where applicable), the Committee
may elect to deliver Common Stock, cash equal to the Fair Market Value of such
Common Stock or a combination of cash and Common Stock to the Participant for
the shares covered by the Deferred Stock Award.
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(b) Rights. Unless otherwise determined by the Committee and
subject to the Plan, cash dividends on the Common Stock that is the subject of
the Deferred Stock Award shall be automatically deferred and reinvested in
additional Deferred Stock, and dividends on the Common Stock that is the subject
of the Deferred Stock Award payable in Common Stock shall be paid in the form of
Deferred Stock of the same class as the Common Stock on which such dividend was
paid.
(c) Acceleration. Based on service, performance by the
Participant or by the Company or the Affiliate, including any division or
department for which the Participant is employed, or such other factors or
criteria as the Committee may determine, the Committee may provide for the lapse
of deferral limitations in installments and may accelerate the vesting of all or
any part of any Award and waive the deferral limitations for all or any part of
such Award.
(d) Forfeiture. Unless otherwise provided in an Agreement or
determined by the Committee, if the Participant incurs a Termination of
Employment during the Deferral Period due to death or Disability, the
restrictions shall lapse and the Participant shall be fully vested in the
Deferred Stock. Unless otherwise provided in an Agreement or determined by the
Committee, upon a Participant's Termination of Employment for any reason during
the Deferral Period other than death or Disability, the rights to the shares
still covered by the Award shall be forfeited by the Participant, except the
Committee shall have the discretion to waive in whole or in part any or all
remaining deferral limitations with respect to any or all of such Participant's
Deferred Stock.
(e) Election. A Participant may elect further to defer receipt
of the Deferred Stock payable under an Award (or an installment of an Award) for
a specified period or until a specified event, subject in each case to the
Committee's approval and to such terms as are determined by the Committee.
Subject to any exceptions adopted by the Committee, such election must be made
at least one (1) year prior to completion of the Deferral Period for the Award
(or of the applicable installment thereof).
ARTICLE X
OTHER AWARDS
10.1 Bonus Stock and Awards In Lieu of Obligations. The Committee is
authorized to grant Common Stock as a bonus, or to grant Common Stock or other
Awards in lieu of Company obligations to pay cash or deliver other property
under other plans or compensatory arrangements, provided that, in the case of
Participants subject to Section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that acquisition of Common Stock or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Common Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee.
10.2 Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Common Stock, other Awards, or other property equal in value to dividends
paid with respect to a specified number of shares of Common Stock. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents will be paid
or distributed when accrued or will be deemed to have been reinvested in
additional Common Stock, Awards, or other investment vehicles, and subject to
such restrictions on transferability and risks of forfeiture, as the Committee
may specify.
10.3 Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt
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EXHIBIT A
securities, other rights convertible or exchangeable into Common Stock, purchase
rights for Common Stock, Awards with value and payment contingent upon
performance of the Company or any other factors designated by the Committee, and
Awards valued by reference to the book value of Common Stock or the value of
securities of or the performance of specified subsidiaries. The Committee shall
determine the terms and conditions of such Awards. Common Stock delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 10.3 shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Common
Stock, other Awards, or other property, as the Committee shall determine. Cash
awards, as an element of or supplement to any other Award under the Plan, may
also be granted pursuant to this Section 10.3.
10.4 Performance Awards.
(a) Performance Conditions. The right of a Participant to
exercise or receive a grant or settlement of any Award, and its timing, may be
subject to performance conditions specified by the Committee. The Committee may
use business criteria and other measures of performance it deems appropriate in
establishing any performance conditions, and may exercise its discretion to
reduce or increase the amounts payable under any Award subject to performance
conditions, except as limited under Sections 10.4(b) and 10.4(c) hereof in the
case of a Performance Award intended to qualify under Code Section 162(m).
(b) Performance Awards Granted to Designated Covered
Employees. If the Committee determines that a Performance Award to be granted to
a person the Committee regards as likely to be a Covered Employee should qualify
as "performance-based compensation" for purposes of Code Section 162(m), the
grant and/or settlement of such Performance Award shall be contingent upon
achievement of preestablished performance goals and other terms set forth in
this Section 10.4(b).
(i) Performance Goals Generally. The performance
goals for such Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to such criteria, as
specified by the Committee consistent with this Section 10.4(b). Performance
goals shall be objective and shall otherwise meet the requirements of Code
Section 162(m), including the requirement that the level or levels of
performance targeted by the Committee result in the performance goals being
"substantially uncertain." The Committee may determine that more than one
performance goal must be achieved as a condition to settlement of such
Performance Awards. Performance goals may differ for Performance Awards granted
to any one Participant or to different Participants.
(ii) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis, and/or for specified
subsidiaries or business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used exclusively
by the Committee in establishing performance goals for such Performance Awards:
(1) total stockholder return; (2) such total stockholder return as compared to
total return (on a comparable basis) of a publicly available index such as, but
not limited to, the Standard & Poor's 500 or the Nasdaq-U.S. Index; (3) net
income; (4) pre-tax earnings; (5) EBITDA or earnings before interest expense,
taxes, depreciation and amortization; or (6) pre-tax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or special
items; (7) operating margin; (8) earnings per share; (9) return on equity; (10)
return on capital; (11) return on investment; (12) operating income before
payment of executive bonuses; and (13) working capital. The foregoing business
criteria shall also be exclusively used in establishing performance goals for
Cash Incentive Awards granted under Section 10.4(c) hereof.
(iii) Performance Period: Timing For Establishing
Performance Goals. Achievement of performance goals in respect of such
Performance Awards shall be measured over such periods as may be specified by
the Committee. Performance goals shall be established on or before the dates
that are required or permitted for
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EXHIBIT A
"performance-based compensation" under Code Section 162(m).
(iv) Settlement of Performance Awards; Other Terms.
Settlement of Performance Awards may be in cash or Common Stock, or other
Awards, or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to be made
in connection with such Performance Awards, but may not exercise discretion to
increase any such amount payable in respect of a Performance Award subject to
this Section 10.4(b). The Committee shall specify the circumstances in which
such Performance Awards shall be forfeited or paid in the event of a Termination
of Employment or a Change in Control prior to the end of a performance period or
settlement of Performance Awards, and other terms relating to such Performance
Awards.
(c) Cash Incentive Awards Granted to Designated Covered
Employees. The Committee may grant Cash Incentive Awards to Participants
including those designated by the Committee as likely to be Covered Employees,
which Awards shall represent a conditional right to receive a payment in cash,
unless otherwise determined by the Committee, after the end of a specified
calendar year or calendar quarter or other period specified by the Committee, in
accordance with this Section 10.6(c).
(i) Cash Incentive Award. The Cash Incentive Award
for Participants that the Committee regards as likely to be regarded as Covered
Employees shall be based on achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section 10.4(b), and may be
based on such criteria for any other Participant. The Committee may specify the
amount of the individual Cash Incentive Award as a percentage of any such
business criteria, a percentage thereof in excess of a threshold amount, or
another amount which need not bear a strictly mathematical relationship to such
relationship criteria. The Committee may establish an Cash Incentive Award pool
that includes Participants the Committee regards likely to be regarded as
Covered Employees, which shall be an unfunded pool, for purposes of measuring
Company performance in connection with Cash Incentive Awards. The amount of the
Cash Incentive Award pool shall be based upon the achievement of a performance
goal or goals based on one or more of the business criteria set forth in Section
10.4(b) hereof in the given performance period, as specified by the Committee.
The Committee may specify the amount of the Cash Incentive Award pool as a
percentage of any of such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(ii) Potential Cash Incentive Awards. Not later than
the date required or permitted for "qualified performance-based compensation"
under Code Section 162(m), the Committee shall determine the Participants who
will potentially receive Cash Incentive Awards for the specified year, quarter
or other period, either as individual Cash Incentive Awards or out of an Cash
Incentive Award pool established by such date and the amount or method for
determining the amount of the individual Cash Incentive Award or the amount of
such Participant's portion of the Cash Incentive Award pool or the individual
Cash Incentive Award.
(iii) Payout of Cash Incentive Awards. After the end
of the specified year, quarter or other period, as the case may be, the
Committee shall determine the amount, if any, of potential individual Cash
Incentive Award otherwise payable to a Participant, the Cash Incentive Award
pool and the maximum amount of potential Cash Incentive Award payable to each
Participant in the Cash Incentive Award pool. The Committee may, in its
discretion, determine that the amount payable to any Participant as a final Cash
Incentive Award shall be increased or reduced from the amount of his or her
potential Cash Incentive Award, including a determination to make no final Award
whatsoever, but may not exercise discretion to increase any such amount in the
case of an Cash Incentive Award intended to qualify under Code Section 162(m).
The Committee shall specify the circumstances in which an Cash Incentive Award
shall be paid or forfeited in the event of Termination of Employment by the
Participant or a Change in Control prior to the end of the period for measuring
performance or the payout of such Cash Incentive Award, and other terms relating
to such Cash Incentive Award in
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EXHIBIT A
accordance with the Plan. Upon the completion of the measuring period and the
determination of the right to payment and the amount, the Committee shall direct
the Committee to make payment.
(d) Written Determinations. All determinations by the
Committee as to the establishment of performance goals and the potential
Performance Awards or Cash Incentive Awards related to such performance goals
and as to the achievement of performance goals relating to such Awards, the
amount of any Cash Incentive Award pool and the amount of final Cash Incentive
Awards, shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Cash Incentive Awards.
ARTICLE XI
PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
11.1 Right of First Refusal.
(a) General. Unless provided otherwise in an Agreement, and
unless and until there is a Public Offering, at which time this Section 11.1
shall be ineffective, a Participant may sell shares of Common Stock acquired
pursuant to an Award to any person or organization, other than the Company, an
Affiliate or an employee benefit plan (or related trust) maintained by the
Company or an Affiliate, only after first offering to sell all such shares of
Common Stock to the Company (or, in the event the Company shall assign its right
to purchase such Common Stock, to the person to whom the Company has assigned
its right) as follows.
(b) Purchase Price and Conditions. The Participant who desires
to sell shares of Common Stock described in Section 11.1(a) shall serve written
notice upon each of the Company and the Committee, indicating that the
Participant has a bona fide offer for the purchase of the shares and stating the
name and address of the person desiring to purchase them and the sales price and
related terms of payment, and enclosing photocopies of all written
communications regarding such sale and a statement that the Participant intends
to sell such shares at the offered price and terms. Said notice shall also
contain an offer to sell the Common Stock to the Company, upon the same terms
and conditions as set forth in the aforesaid bona fide offer of purchase. For a
period of thirty (30) days after the receipt of such notice by the Company, the
Company shall have the option to purchase any or all of the shares of Common
Stock by giving written notice thereof to the Participant. If the Company (or
the person to whom the Company shall assign its right hereunder) elects to
exercise its option to purchase the shares of Common Stock, the sale shall be
consummated as provided in Section 11.1(d).
(c) Closing. The sale of shares of Common Stock to the Company
shall be consummated within fifteen (15) days after the close of the thirty (30)
day period described in Section 11.1(b), unless another date shall be agreed
upon by the Participant and the Committee, at the principal executive offices of
the Company or such other location as the parties may mutually agree. At the
closing, the Participant shall deliver to the Company stock certificates duly
endorsed for transfer, or accompanied by duly endorsed stock powers,
representing all of the shares of Common Stock, free and clear of all claims,
liens or encumbrances (other than the restrictions pursuant to this Plan)
together with such other documentation as legal counsel for the Company may
reasonably require. If the Committee shall determine, it may withhold from
payment to the Participant, or require the Participant to pay, such amount as
the Committee may deem necessary to entitle the Company or an Affiliate to a
current deduction or to comply with withholding requirements.
(d) Purchase by Third Party. In the event that the Company (or
any person to whom the Company may assign its rights hereunder) shall not
exercise the option to purchase, as provided herein, all of the shares of Common
Stock offered pursuant to Section 11.1(a), the offer shall be deemed to have
been rejected as to any shares of Common Stock not purchased and the offering
Participant shall have the right to dispose of all, but not less than all, of
the remaining shares of Common Stock offered pursuant to Section 11.1(a) to the
person named
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EXHIBIT A
in the bona fide offer of purchase at the price and upon the terms and
conditions set forth in the offer and to consummate the resulting transaction at
any time during the thirty (30) days immediately following the expiration of the
offer made to the Company. At or prior to the closing of such transaction, the
transferor and transferee shall execute and deliver to the Company such
documents as the Company reasonably requests for compliance with state and
federal securities laws, and the transferor shall deliver to the Company such
amount of cash as the Committee may deem necessary or appropriate, or as may be
required for the Company to comply with federal, state or local income taxes
(including withholding) and the Company shall not be required to deliver the
Common Stock until such amount shall be tendered. In the event such transaction
is not consummated within thirty (30) days following the termination of the
Company's option described herein, the shares of Common Stock may not be sold
without the Participant again complying with the provisions of this Section.
Shares of Common Stock transferred pursuant to this Section 11.1 and the
transferee thereof shall be subject to all the terms and conditions of this Plan
and the Agreement pursuant to which the Participant acquired the Common Stock,
including, without limitation, any restrictions on transfer of Common Stock
provided in this Section 11.1, and the transferee shall be considered for all
purposes of this Plan, as the Participant, except Termination of Employment
shall mean the Termination of Employment of the original Participant. Any
transfer of shares of Common Stock made in conflict or derogation of the terms
of this Plan shall be void.
11.2 Purchase of Stock Subsequent to a Termination of Employment.
(a) Prior to Public Offering. Unless provided otherwise in an
Agreement, and unless and until there is a Public Offering, at which time this
Section 11.2 shall be ineffective, if a Participant incurs a Termination of
Employment, the Company, or such other person as the Committee may designate in
writing (provided such person accepts in writing the obligations hereunder),
shall have the right, but not the obligation, to the extent it may lawfully do
so, for a period of ninety (90) consecutive days commencing with the date of the
Termination of Employment to purchase from the Participant, and the Participant
shall have the obligation to sell to the Company (or the person designated by
the Committee) if requested by the Company, all of the Participant's shares of
Common Stock acquired pursuant to an Award (including any shares of Common Stock
which could yet be acquired to the extent exercisable on the date the right is
exercised under this Section 11.2 pursuant to an Option) on the terms and
conditions expressed in this Section 11.2.
(b) Price; Payment Terms.
(i) In the event the Company or the person designated
by the Committee shall have the right to purchase the shares of Common Stock
pursuant to this Section 11.2 upon or following a Termination of Employment
other than for Cause, the purchase price per share of Common Stock shall be the
Fair Market Value per share of the Common Stock on the date the Company notifies
the Participant it intends to purchase the shares.
(ii) In the event the Company or person designated by
the Committee shall have the right to purchase shares of Common Stock pursuant
to this Section 11.2 upon or following a Termination of Employment for Cause,
the purchase price per share of Common Stock shall be the lesser of the Fair
Market Value per share of the Common Stock on the date the Company notifies the
Participant it intends to purchase the shares and the price per share for the
Common Stock paid by the Participant upon the exercise of the Award (i.e., if
the Participant paid nothing to exercise the Award, then nothing shall be paid
to the Participant);
(iii) The purchase price for shares of Common Stock
transferred to the Company in accordance with this Section 11.2 shall be paid,
in the sole discretion of the Committee, in a single sum or in such number of
equal annual or monthly installments as the Committee may determine, but not to
exceed a period of five (5) years from the Closing Date. The first installment
of the purchase price shall be paid by the Company on the last day of the
calendar quarter next following the calendar quarter in which occurs the
exercise of the Company's right to purchase the shares of Common Stock pursuant
to this Section 11.2. Subsequent installments shall be
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EXHIBIT A
due on the successive annual or monthly (whichever the case) anniversary dates
of the closing date. Interest shall accrue from the closing date on the balance
of the purchase price remaining unpaid from time to time at a rate equal to the
minimum "applicable federal rate" required to be stated in order to avoid the
imputation of interest income as determined by the Committee, and accrued
interest shall be payable together with each installment of the purchase price
paid on the annual anniversary of the closing date, including the last
installment payment. The interest rate will be set as of the closing date and
adjusted prospectively thereafter on the first day of each following calendar
quarter. The Company shall be entitled to prepay all or part of the purchase
price without interest, penalty or premium.
(c) Closing. The Participant's Common Stock shall be
transferred at a closing at such place and time as the Committee designates. The
Committee shall give the Participant at least fifteen (15) days prior written
notice of the closing date and place of closing. At the closing, the Participant
shall deliver to the Company stock certificate(s) duly endorsed for transfer, or
accompanied by duly endorsed stock powers, representing all of the Common Stock
acquired pursuant to an Award free and clear of all claims, liens or
encumbrances of any third parties (other than the restrictions pursuant to this
Plan) together with such other documentation as the Company's legal counsel may
reasonably require. If the Committee shall determine, it may withhold from
payment to the Participant, or require the Participant to pay, such amount as
the Committee may deem necessary to entitle the Company or an Affiliate to a
current deduction or to comply with withholding requirements.
(d) Maximum Amount. Notwithstanding any provision herein to
the contrary, subject to the discretion of the Committee, in the event that
during any fiscal year of the Company the aggregate payments due Participants
exceed ten percent (10%) of the Company's after-tax net earnings (determined in
accordance with generally accepted accounting principles) for the immediately
preceding fiscal year of the Company, such payments shall be reduced
proportionately so that all such payments for the fiscal year equal ten percent
(10%) of the Company's after-tax net earnings for the preceding fiscal year. The
portion of any payment to a Participant which is reduced by application of this
Section shall be credited with interest from the date the portion of the payment
is not paid until the date the payment is paid at a rate equal to the minimum
"applicable federal rate" required to be stated in order to avoid any imputation
of interest income under the Code as determined by the Committee. The interest
rate will be set as of the date the payment is not paid and shall be adjusted
prospectively thereafter on the first day of each following quarter. The portion
of any payment and accrued interest which is not paid as a result of an
application of the next to the preceding sentence shall be payable as part of
the installment payment(s) for the next following year of the Company in
addition to the installment payment(s) originally due in that year, but all
installment payments whether originally due on said date or carried over by
application of the preceding sentence and accrued interest shall continue to be
subject to the payment limitations of this Section. In the event that, because
of the limitation herein, the total purchase price and any accrued interest
shall not have been paid in their entirety by the last scheduled installment
date, then the payment of any such amounts shall be deferred for consecutive
one-year periods, to a maximum of five years, and shall be paid on successive
anniversaries of the last scheduled payment date, subject to the limitations of
this Section 11.2. The Company shall be entitled to pay all or any part of any
payment or accrued interest which is not paid without penalty or premium. The
term "Company's after-tax earnings," as used herein, shall mean the net income,
after taxes, of the Company determined in the sole discretion of the Committee.
If, with respect to the purchase of any Common Stock by the Company pursuant to
the provisions of this Section, the Company shall be prohibited from buying such
shares as a result of any applicable law or agreement, any other person
designated by the Committee may purchase such shares.
11.3 Restrictions on Purchases.
(a) Financing Agreements. Notwithstanding any other provision
of this Agreement, the Company shall not be permitted to complete a purchase of
any shares of Common Stock under this Article if (i) such purchase would result
in a violation of the terms or provisions of, or result in a default or an event
of default under any
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EXHIBIT A
credit, guarantee, financing or security agreement or document entered into in
connection with the operations of the Company or its Affiliates from time to
time (such agreements and documents, as each may be amended, modified or
supplemented from time to time, are referred to herein as the "Financing
Agreements"), in each case as the same may be amended, modified or supplemented
from time to time, or (ii) such purchase would violate any of the terms or
provisions of the Certificate of Incorporation of the Company or (iii) the
Company has no funds legally available therefor under the General Corporation
Law of the State of Delaware.
(b) Delay of Purchase. In the event that the completion of a
purchase by the Company pursuant to the Company's election under this Article is
prevented solely by the terms of this Section, (i) such purchase shall be
postponed and shall take place without the application of further conditions or
impediments (other than as set forth in Section 11.1 or 11.2 hereof or in this
Section 11.3) at the first opportunity thereafter when the Company has funds
legally available therefor and when such purchase will not result in any
default, event of default or violation under any of the Financing Agreements or
in a violation of any term or provision of the Certificate of Incorporation of
the Company and (ii) such purchase obligation shall rank against other similar
purchase obligations with respect to shares of Common Stock according to
priority in time of the effective date of the event giving rise to such purchase
obligation, provided that any such purchase obligations as to which a common
date determines priority shall be of equal priority and shall share pro rata in
any repurchase payments made pursuant to clause (i) above.
(c) Purchase Price Adjustment. In the event that a purchase of
shares of Common Stock is delayed pursuant to this Section 11.3, the purchase
price per share of Common Stock when the purchase of such shares eventually
takes place as contemplated by Section 11.3(b) shall be (i) the sum of (A) the
purchase price determined in accordance with Section 11.1 or 11.2 above, as
applicable, as of the time that the purchase of such shares would have occurred
pursuant to such provision in connection with the Company's election to purchase
the shares but for the operation of this Section 11.3, plus (B) an amount equal
to interest on such purchase price for the period from the date on which the
shares would have been so purchased to the date on which such purchase actually
takes place pursuant to Section 11.3(b) (the "Delay Period") at a rate equal to
the weighted average cost of the Company's bank indebtedness obligations
outstanding during the Delay Period.
11.4 Take-Along Rights.
(a) Take-Along Notice. Unless provided otherwise in an
Agreement, and unless and until there is a Public Offering, at which time this
Section 11.4 shall be ineffective, for as long as the Kensey Nash Entities hold
at least fifty and one-tenth percent (50.1%) of the Outstanding Company Common
Stock or the Outstanding Company Voting Securities (as such terms are defined in
Section 12.2), if the Kensey Nash Entities intend to effect a sale of all of
their shares of Common Stock to a third party ("Buyer") and elect to exercise
their rights under this Section 11.4, the Kensey Nash Entities shall deliver
written notice (a "Take-Along Notice") to the Committee and to each Participant,
which notice shall (a) state (i) that the Kensey Nash Entities wish to exercise
their rights under this Section 11.4 with respect to such transfer, (ii) the
name and address of the Buyer, (iii) the per share amount and form of
consideration the Kensey Nash Entities propose to receive for their shares of
Common Stock and (iv) the terms and conditions of payment of such consideration
and all other material terms and conditions of such transfer, (b) contain an
offer (the "Take-Along Offer") by the Buyer to purchase from a Participant all
of his shares on and subject to the same terms and conditions offered to the
Kensey Nash Entities and (c) state the anticipated time and place of the closing
of the purchase and sale of the shares (the "Closing"), which (subject to such
terms and conditions) shall occur not fewer than ten (10) days nor more than
ninety (90) days after the date such Take-Along Notice is delivered, provided
that if such Closing shall not occur prior to the expiration of such ninety (90)
day period, the Kensey Nash Entities shall be entitled to deliver additional
Take-Along Notices with respect to such Take-Along Offer.
(b) Conditions to Take-Along. Unless provided otherwise in an
Agreement, upon delivery of a Take-
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EXHIBIT A
Along Notice, a Participant shall have the obligation to transfer all of his
shares of Common Stock owned and acquired pursuant to this Plan (including any
shares of Common Stock which could yet be acquired pursuant to an Award)
pursuant to the Take-Along Offer, as the same may be modified from time to time,
provided that the Kensey Nash Entities transfer all of their shares of Common
Stock to the Buyer at the Closing. Within ten (10) days of receipt of the
Take-Along Notice, the Participant shall (i) execute and deliver to the
Committee and to the Kensey Nash Entities a power of attorney and a letter of
transmittal and custody agreement in favor of, and in form and substance
satisfactory to, the Kensey Nash Entities constituting one or more persons
designated by the Kensey Nash Entities (the "Custodian"), the true and lawful
attorney-in-fact and custodian for the Participant, with full power of
substitution, and authorizing the Custodian to take such actions as the
Custodian may deemed necessary or appropriate to effect the sale and transfer of
the shares of Common Stock to the Buyer, upon receipt of the purchase price
therefor at the Closing, free and clear of all security interests, liens,
claims, encumbrances, charges, options, restrictions on transfer, proxies and
voting and other agreements of whatever nature, and to take such other action as
may be necessary or appropriate in connection with such sale, including
consenting to any amendments, waivers, modifications or supplements to the terms
of the sale (provided that the Kensey Nash Entities also so consent, and sell
and transfer their shares of Common Stock on the same terms as so amended,
waived, modified or supplemented) and (ii) deliver to the Kensey Nash Entities
certificates representing the shares, together with all necessary duly executed
stock powers.
(c) Remedies. Unless provided otherwise in an Agreement, the
Participant shall acknowledge that the Kensey Nash Entities would be irreparably
damaged in the event of a breach or a threatened breach by the Participant of
any of his obligations under this Section 11.4 and the Participant shall agree
that, in the event of a breach or a threatened breach by the Participant of any
such obligation, the Kensey Nash Entities, shall, in addition to any other
rights and remedies available to them in respect of such breach, be entitled to
an injunction from a court of competent jurisdiction granting them specific
performance by the Participant of his obligations under this Section 11.4. In
the event that the Kensey Nash Entities shall file suit to enforce the covenants
contained in this Section 11.4 (or obtain any other remedy in respect of any
breach thereof), the prevailing party in the suit shall be entitled to recover,
in addition to all other damages to which it may be entitled, the costs incurred
by such party in conducting the suit, including reasonable attorney's fees and
expenses. In the event that, following a breach or a threatened breach by a
Participant of the provisions of this Section 11.4, the Kensey Nash Entities do
not obtain an injunction granting them specific performance of the Participant's
obligations under this Section 11.4 in connection with such proposed sale prior
to the time the Kensey Nash Entities complete the sale of their shares of Common
Stock or, in their sole discretion, abandon such sale, then the Company shall
have the option to purchase the shares from the Participant at a purchase price
per share equal to the lesser of (i) the Fair Market Value of such shares as of
the date of the breach or threatened breach that gives rise to the right to
repurchase and (ii) the price at which the Participant purchased such shares
from the Company.
11.5 Transfer of Shares. A Participant may at any time make a transfer
of shares of Common Stock received pursuant to the exercise of an Award to his
parents, spouse or descendants, to any trust for the benefit of the foregoing or
to a partnership the interests of which are principally for the foregoing or to
a custodian under a uniform gifts to minors act or similar statute for the
benefit of any of the Participant's descendants. Any transfer of shares received
pursuant to the exercise of an Award shall not be permitted or valid unless and
until the transferee agrees to be bound by the provisions of this Plan, and any
provision respecting Common Stock under the Agreement, provided that
"Termination of Employment" shall continue to refer to the Termination of
Employment of the Employee.
11.6 Limited Transfer During Offering. In the event there is an
effective registration statement under the Securities Act pursuant to which
shares of Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Award.
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EXHIBIT A
11.7 Committee Discretion. The Committee may in its sole discretion
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Award (including the
purchase of any unexercised Awards which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company, upon such terms and
conditions as the Committee may determine and set forth in an Agreement. The
provisions of this Article XI shall be construed by the Committee in its sole
discretion, and shall be subject to such other terms and conditions as the
Committee may from time to time determine. Notwithstanding any provision herein
to the contrary, the Company may upon determination by the Committee assign its
right to purchase shares of Common Stock under this Article XI, whereupon the
assignee of such right shall have all the rights, duties and obligations of the
Company with respect to purchase of the shares of Common Stock.
11.8 No Company Obligation. None of the Company, an Affiliate or the
Committee shall have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of, any material information regarding the Company
or any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Award or the Company's purchase of Common Stock or an Award from
such holder in accordance with the terms hereof.
ARTICLE XII
CHANGE IN CONTROL PROVISIONS
12.1 Impact of Event. Notwithstanding any other provision of the Plan
to the contrary, unless otherwise provided in an Agreement, in the event of a
Change in Control (as defined in Section 12.2):
(a) Any Stock Appreciation Rights and Stock Options
outstanding as of the date such Change in Control and not then exercisable shall
become fully exercisable to the full extent of the original grant;
(b) The restrictions and deferral limitations applicable to
any Restricted Stock, Deferred Stock or other Award shall lapse, and such
Restricted Stock, Deferred Stock or other Award shall become free of all
restrictions and become fully vested and transferable to the full extent of the
original grant.
(c) The performance goals and other conditions with respect to
any outstanding Performance Award or Cash Incentive Award shall be deemed to
have been satisfied in full, and such Award shall be fully distributable, if and
to the extent provided by the Committee in the Agreement relating to such Award
or otherwise, notwithstanding that the Award may not be fully deductible to the
Company under Section 162(m) of the Code.
(d) Notwithstanding any other provision of the Plan, unless
the Committee shall provide otherwise in an Agreement, any Award of any
Participant who is an officer or director of the Company (within the meaning of
Section 16(b) of the Exchange Act) for which the Grant Date is less than six (6)
months prior to the Change in Control, shall be cancelled in exchange for a cash
payment to the Participant, at the time of the Participant's Termination of
Employment, equal to the amount which the Change in Control Price (as defined in
Section 12.3) per share of Common Stock on the date of such election shall
exceed the amount which the Participant must pay to exercise the Award per share
of Common Stock under the Award (the "Spread") multiplied by the number of
shares of Common Stock granted under the Award, plus interest on such amount at
the prime rate as reported from time to time in The Wall Street Journal,
compounded annually and determined from time to time.
12.2 Definition of Change in Control. For purposes of the
Plan, a "Change in Control" shall mean the happening of any of the following
events:
(a) An acquisition of at least twenty percent (20%) by any
individual, entity or group (within the
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EXHIBIT A
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided
that such acquisition would result in the Kensey Nash Entities beneficially
owning (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
following the acquisition less than forty percent (40%) of the Outstanding
Company Common Stock or less than forty percent (40%) of the Outstanding Company
Voting Securities; or
(b) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or dissolution of
the Company, the sale or disposition of all or substantially all of the assets
of the Company or similar corporate transaction (in each case referred to in
this Section 12.2 as a "Corporate Transaction") or, if consummation of such
Corporate Transaction is subject, at the time of such approval by stockholders,
to the consent of any government or governmental agency, the obtaining of such
consent (either explicitly or implicitly); or
(c) A change in the composition of the Board such that the
individuals who, as of the date of the Public Offering, constitute the Board
(such Board shall be hereinafter referred to as the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however,
for purposes of this Section 12.2(c), that any individual who becomes a member
of the Board subsequent to the date of the Company's Public Offering whose
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but, provided, further, that any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a member of the Incumbent Board.
Notwithstanding the foregoing provisions of this Section, the following shall be
excluded from the events described in (a) and (b) above: (i) any acquisition by
or consummation of a or Corporate Transaction with the Company, an Affiliate or
by an employee benefit plan (or related trust) sponsored or maintained by the
Company or an Affiliate, (ii) any acquisition by or consummation of a Corporate
Transaction with a Kensey Nash Entity, (iii) the acquisition by or consummation
of a or Corporate Transaction with any Person who beneficially owned,
immediately prior to such acquisition or Corporate Transaction, directly or
indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities, or (iv) any acquisition or Corporate
Transaction, if more than a majority of the beneficial ownership of the entity
resulting from the acquisition or Corporate Transaction is held by Persons who
held the beneficial ownership of the Outstanding Company Voting Securities
before the acquisition or Corporate Transaction.
12.3 Change in Control Price. For purposes of the Plan, "Change in
Control Price" means the higher of (a) the highest reported sales price of a
share of Common Stock in any transaction reported on the principal exchange on
which such shares are listed or on NASDAQ during the sixty (60)-day period prior
to and including the date of a Change in Control or (b) if the Change in Control
is the result of a tender or exchange offer or Corporate Transaction, the
highest price per share of Common Stock paid in such tender or exchange offer or
Corporate Transaction, except that, in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, such price shall
be based only on the Fair Market Value of the Common Stock on the date any such
Incentive Stock Option or Stock Appreciation Right is exercised. To the extent
that the consideration paid in any such transaction described above consists all
or in part of securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined in the sole
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EXHIBIT A
discretion of the Committee.
ARTICLE XIII
MISCELLANEOUS
13.1 Amendments and Termination. The Board may amend, alter or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a Participant
under a Stock Option, Stock Appreciation Right, Restricted Stock Award or
Deferred Stock Award theretofore granted without the Participant's consent,
except such an amendment made to cause the Plan to qualify for the exemption
provided by Rule 16b-3 or (b) disqualify the Plan from the exemption provided by
Rule 16b-3. In addition, no such amendment shall be made without the approval of
the Company's stockholders to the extent such approval is required by law or
agreement.
The Committee may amend the Plan at any time provided that (a) no
amendment shall impair the rights of any Participant under any Award theretofore
granted without the Participant's consent, (b) no amendment shall disqualify the
Plan from the exemption provided by Rule 16b-3, and (c) any amendment shall be
subject to the approval or rejection of the Board.
The Committee may amend the terms of any Award or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any Participant without the Participant's consent or reduce
an Option Price, except such an amendment made to cause the Plan or Award to
qualify for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules,
as well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval. Notwithstanding
anything in the Plan to the contrary, if any right under this Plan would cause a
transaction to be ineligible for pooling of interest accounting that would, but
for the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest accounting
shall be available, including the substitution of Common Stock having a Fair
Market Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be ineligible for pooling of interest accounting.
13.2 Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require the surrender
of such other Award or award in consideration for the grant of the new Award. In
addition, Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of the Company or any subsidiary, in
which the Fair Market Value of Common Stock subject to the Award is equivalent
in value to the cash compensation, or in which the exercise price, grant price
or purchase price of the Award in the nature of a right that may be exercised is
equal to the Fair Market Value of the underlying Common Stock minus the value of
the cash compensation surrendered.
13.3 Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Agreement, payments to be made by the
Company or an Affiliate upon the exercise of an Award or settlement of an Award
may be made in such forms as the Committee shall determine, including, without
limitation, cash, Common Stock, other Awards or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in lieu of Common
Stock in connection with such settlement, in the discretion of the Committee or
upon
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EXHIBIT A
occurrence of one or more specified events (in addition to a Change in Control).
Installment or deferred payments may be required by the Committee (subject to
Section 13.1 of the Plan) or permitted at the election of the Participant.
Payments may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
granting or crediting of Dividend Equivalents in respect of installment or
deferred payments denominated in Common Stock.
13.4 Status of Awards Under Code Section 162(m). It is the intent of
the Company that Awards granted to persons who are Covered Employees within the
meaning of Code Section 162(m) shall constitute "qualified performance-based
compensation" satisfying the requirements of Code Section 162(m). Accordingly,
the provisions of the Plan shall be interpreted in a manner consistent with Code
Section 162(m). If any provision of the Plan or any agreement relating to such
an Award does not comply or is inconsistent with the requirements of Code
Section 162(m), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.
13.5 Unfunded Status of Plan; Limits on Transferability. It is intended
that the Plan be an "unfunded" plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock or make payments;
provided, however, that, unless the Committee otherwise determines, the
existence of such trusts or other arrangements is consistent with the "unfunded"
status of the Plan. Unless otherwise provided in this Plan or in an Agreement,
no Award shall be subject to the claims of Participant's creditors and no Award
may be transferred, assigned, alienated or encumbered in any way other than by
will or the laws of descent and distribution or to a Representative upon the
death of the Participant.
13.6 General Provisions.
(a) Representation. The Committee may require each person
purchasing or receiving shares pursuant to an Award to represent to and agree
with the Company in writing that such person is acquiring the shares without a
view to the distribution thereof. The certificates for such shares may include
any legend which the Committee deems appropriate to reflect any restrictions on
transfer.
(b) No Additional Obligation. Nothing contained in the Plan
shall prevent the Company or an Affiliate from adopting other or additional
compensation arrangements for its employees.
(c) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of the Participant for Federal
income tax purposes with respect to any Award, the Participant shall pay to the
Company (or other entity identified by the Committee), or make arrangements
satisfactory to the Company or other entity identified by the Committee
regarding the payment of, any Federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount required in order for
the Company or an Affiliate to obtain a current deduction. If the Participant
disposes of shares of Common Stock acquired pursuant to an Incentive Stock
Option in any transaction considered to be a disqualifying transaction under the
Code, the Participant must give written notice of such transfer and the Company
shall have the right to deduct any taxes required by law to be withheld from any
amounts otherwise payable to the Participant. Unless otherwise determined by the
Committee, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding
requirement, provided that any applicable requirements under Section 16 of the
Exchange Act are satisfied. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements, and the Company and its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the Participant.
(d) Reinvestment. The reinvestment of dividends in additional
Deferred or Restricted Stock at the time of any dividend payment shall be
permissible only if sufficient shares of Common Stock are available under the
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EXHIBIT A
Plan for such reinvestment (taking into account then outstanding Options and
other Awards).
(e) Representation. The Committee shall establish such
procedures as it deems appropriate for a Participant to designate a
Representative to whom any amounts payable in the event of the Participant's
death are to be paid.
(f) Controlling Law. The Plan and all Awards made and actions
taken thereunder shall be governed by and construed in accordance with the laws
of the State of Delaware (other than its law respecting choice of law). The Plan
shall be construed to comply with all applicable law and to avoid liability to
the Company, an Affiliate or a Participant, including, without limitation,
liability under Section 16(b) of the Exchange Act.
(g) Offset. Any amounts owed to the Company or an Affiliate by
the Participant of whatever nature may be offset by the Company from the value
of any shares of Common Stock, cash or other thing of value under this Plan or
an Agreement to be transferred to the Participant, and no shares of Common
Stock, cash or other thing of value under this Plan or an Agreement shall be
transferred unless and until all disputes between the Company and the
Participant have been fully and finally resolved and the Participant has waived
all claims to such against the Company or an Affiliate.
(h) Fail Safe. With respect to persons subject to Section 16
of the Exchange Act, transactions under this Plan are intended to comply with
all applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3), as applicable. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee. Moreover, in the event the Plan does not
include a provision required by Rule 16b-3 or Rule 16a-1(c)(3) to be stated
herein, such provision (other than one relating to eligibility requirements or
the price and amount of Awards) shall be deemed to be incorporated by reference
into the Plan with respect to Participants subject to Section 16.
13.7 Mitigation of Excise Tax. If any payment or right accruing to a
Participant under this Plan (without the application of this Section 13.7),
either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate ("Total Payments"), would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the amount payable or
right accruing under the Plan being subject to an excise tax under Section 4999
of the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith after consultation
with the Participant, and such determination shall be conclusive and binding on
the Participant. The Participant shall cooperate in good faith with the
Committee in making such determination and providing the necessary information
for this purpose.
13.8 No Rights with Respect to Continuance of Employment. Nothing
contained herein shall be deemed to alter the relationship between the Company
or an Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract. The Company or an
Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan. There shall be no inference as to the length
of employment or service hereby, and the Company or an Affiliate reserves the
same rights to terminate the Participant's employment or service as existed
prior to the individual's becoming a Participant in this Plan.
13.9 Awards in Substitution for Awards Granted by Other Corporations.
Awards (including cash in respect of fractional shares) may be granted under the
Plan from time to time in substitution for awards held by
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EXHIBIT A
employees, directors or service providers of other corporations who are about to
become officers, directors or employees of the Company or an Affiliate as the
result of a merger or consolidation of the employing corporation with the
Company or an Affiliate, or the acquisition by the Company or an Affiliate of
the assets of the employing corporation, or the acquisition by the Company or
Affiliate of the stock of the employing corporation, as the result of which it
becomes a designated employer under the Plan. The terms and conditions of the
Awards so granted may vary from the terms and conditions set forth in this Plan
at the time of such grant as the majority of the members of the Committee may
deem appropriate to conform, in whole or in part, to the provisions of the
awards in substitution for which they are granted.
13.10 Procedure for Adoption. Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the Board
of Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its employees as of the date
specified in the board resolution.
13.11 Procedure for Withdrawal. Any Affiliate which has adopted the
Plan may, by resolution of the board of directors of such Affiliate, with the
consent of the Board of Directors and subject to such conditions as may be
imposed by the Board of Directors, terminate its adoption of the Plan.
13.12 Delay. If at the time a Participant incurs a Termination of
Employment (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to the
extent necessary to avoid the imposition of liability shall be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six (6) months and one (1) day and not to exceed the Option
Period, or the period for exercise of a Stock Appreciation Right as provided in
the Agreement, whichever is shorter. The Company shall have the right to suspend
or delay any time period described in the Plan or an Agreement if the Committee
shall determine that the action may constitute a violation of any law or result
in liability under any law to the Company, an Affiliate or a stockholder of the
Company until such time as the action required or permitted shall not constitute
a violation of law or result in liability to the Company, an Affiliate or a
stockholder of the Company. The Committee shall have the discretion to suspend
the application of the provisions of the Plan required solely to comply with
Rule 16b-3 if the Committee shall determine that Rule 16b-3 does not apply to
the Plan.
13.13 Headings. The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.
13.14 Severability. If any provision of this Plan shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed as
if such invalid or unenforceable provision were omitted.
13.15 Successors and Assigns. This Plan shall inure to the benefit of
and be binding upon each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.
13.16 Entire Agreement. This Plan and the Agreement constitute the
entire agreement with respect to the subject matter hereof and thereof, provided
that in the event of any inconsistency between the Plan and the Agreement, the
terms and conditions of this Plan shall control.
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EXHIBIT A
Executed on this ____ day of ________, 1995.
KENSEY NASH CORPORATION
By
---------------------
Title:
------------------
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EXHIBIT B
FOURTH 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 to
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EXHIBIT B
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.
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EXHIBIT B
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 B
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 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
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EXHIBIT B
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;
(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;
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EXHIBIT B
(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 410,000 shares of Common Stock authorized for
issuance on the Effective Date. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
4.2 Release of Shares. If any shares of Common Stock that have been optioned
cease to be subject to an Option, if any shares of Common Stock that are subject
to any Option are forfeited, if any Option otherwise terminates without issuance
of shares of Common Stock being made to the Participant, or if any shares
(whether or not restricted) of Common Stock are received by the Company in
connection with the exercise of an Option including the satisfaction of any tax
withholding, such shares, in the discretion of the Committee, may again be
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EXHIBIT B
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 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
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<PAGE> 60
EXHIBIT B
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 or who is appointed a Director shall be granted an Option on
such date to purchase Five Thousand (5,000) shares of Common Stock without
further action by the Board or the Committee. On the date of each regular annual
stockholder meeting of the Company to occur after the Effective Date, each
person who is a Director on such date and is either continuing as a Director
subsequent to the meeting or is elected to serve as a Director at such meeting
shall be granted an Option to purchase 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
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EXHIBIT B
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
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:
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EXHIBIT B
(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.
ARTICLE VI
MISCELLANEOUS
6.1 Amendments and Termination. The Board may amend, alter, or discontinue
the Plan at any time, but no amendment, alteration or discontinuation shall be
made which would (a) impair the rights of a Participant under an Option granted
without the Participant's consent, except such an amendment made to cause the
Plan to qualify for the exemption provided by Rule 16b-3 or (b) disqualify the
Plan from the exemption provided by Rule 16b-3. In addition, no such amendment
shall be made without the approval of the Company's stockholders to the extent
such approval is required by law or agreement. Notwithstanding the foregoing,
the Plan may not be amended more than once every six (6) months to change the
Plan provisions listed in Section (c)(2)(ii)(A) of Rule 16b-3, other than to
comport with changes in the Code or Rule 16b-3.
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EXHIBIT B
The Committee may amend the Plan at any time provided that (a) no amendment
shall impair the rights of any Participant under any Option theretofore granted
without the Participant's consent, (b) no amendment shall disqualify the Plan
from the exemption provided by Rule 16b-3, and (c) any amendment shall be
subject to the approval or rejection of the Board. Notwithstanding the
foregoing, the Plan may not be amended more than once every six (6) months to
change the Plan provisions listed in Section (c)(2)(ii)(A) of Rule 16b-3, other
than to comport with changes in the Code or Rule 16b-3.
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without the Participant's consent, except such an amendment made
to cause the Plan or Option to qualify for the exemption provided by Rule 16b-3.
The Committee's discretion to amend the Plan or Agreement shall be limited to
the Plan's constituting a plan described in Section (c)(2)(ii) of Rule 16b-3.
Subject to the above provisions, the Board shall have authority to amend this
Plan to take into account changes in law and tax and accounting rules, as well
as other developments and to grant Options which qualify for beneficial
treatment under such rules without stockholder approval.
Notwithstanding the foregoing, if any right under this Plan would cause an
otherwise eligible transaction to be ineligible for pooling of interest
accounting treatment, the Committee may modify or adjust the right so that
pooling of interest accounting treatment shall be available.
6.2 Unfunded Status of Plan . It is intended that the Plan be an "unfunded"
plan of deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
6.3 General Provisions.
(a) Representation. The Committee may require each person purchasing or
receiving shares pursuant to an Option to represent to and agree with the
Company in writing that such person is acquiring the shares without a view
to the distribution thereof in violation of the Securities Act. The
certificates for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
(b) No Additional Obligation. Nothing contained in the Plan shall
prevent the Company or an Affiliate from adopting other or additional
compensation arrangements.
(c) Withholding. If determined to be required to protect the Company,
no later than the date as of which an amount first becomes includable in
the gross income of the Participant for Federal income tax purposes with
respect to any Option, the Participant shall pay to the Company (or other
entity identified by the Committee), or make arrangements 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
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EXHIBIT B
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.
(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
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EXHIBIT B
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 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.
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EXHIBIT B
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: _________________________________
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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 6, 2000
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 20, 2000 which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held on December 6, 2000, 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, 3 AND 4.
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> <C>
Joseph W. Kaufmann Harold N. Chefitz Steven J. Lee
(term to expire in 2003) (term to expire in 2003) (term to expire in 2003)
</TABLE>
2. PROPOSAL TO APPROVE THE THIRD AMENDED AND RESTATED KENSEY NASH CORPORATION
EMPLOYEE INCENTIVE COMPENSATION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE THE FOURTH AMENDED AND RESTATED KENSEY NASH CORPORATION
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY'S FINANCIAL STATEMENTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Each of the persons named as proxies herein are authorized, in such person's
discretion, to vote upon such other matters as may properly come before the
Annual Meeting.
(Continued and to be signed and dated on reverse side.)
<PAGE> 68
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENT THEREOF IN THE MANNER
DESCRIBED HEREIN. IF NO CONTRARY INDICATION IS MADE THE PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSALS 2, 3 AND 4, AND IN ACCORDANCE
WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
Dated , 2000
--------------------------------------
--------------------------------------
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.
