SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Haemonetics Corporation
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HAEMONETICS CORPORATION
Notice of Special Meeting of Stockholders
December 14, 2000
To the Stockholders:
A Special Meeting of the Stockholders of Haemonetics Corporation will
be held on Thursday, December 14, 2000 at 9:00 a.m. at the offices of
Haemonetics Corporation, 400 Wood Road, Braintree, Massachusetts for the
following purposes.
1. To consider and act upon a proposal to approve the Haemonetics
Corporation 2000 Long-Term Incentive Plan.
2. To consider and act upon any other business which may properly
come before the meeting.
The Board of Directors has fixed the close of business on October 27,
2000 as the record date for the meeting. All stockholders of record on that
date are entitled to notice of and to vote at the meeting.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By Order of the Board of Directors
Alicia R. Lopez,
Clerk
Braintree, Massachusetts
November 13, 2000
HAEMONETICS CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Haemonetics Corporation (the
"Company") for use at the Special Meeting of Stockholders to be held on
Thursday, December 14, 2000, at the time and place set forth in the notice
of meeting, and at any adjournment thereof. The approximate date on which
this Proxy Statement and form of proxy are first being sent to stockholders
is November 13, 2000.
If the enclosed proxy is properly executed and returned, it will be
voted in the manner directed by the stockholder. If no instructions are
specified with respect to any particular matter to be acted upon, the proxy
will be voted in favor thereof. Any person giving the enclosed form of
proxy has the power to revoke it by voting in person at the meeting or by
giving written notice of revocation to the Clerk of the Company at any time
before the proxy is exercised.
The holders of a majority in interest of all Common Stock issued,
outstanding and entitled to vote are required to be present in person or be
represented by proxy at the Meeting in order to constitute a quorum for
transaction of business. The affirmative vote of the holders of at least a
majority of the shares of Common Stock voting thereon in person or by proxy
at the meeting is required to approve Item 1 listed in the notice of
meeting. Abstentions are counted as present in determining whether the
quorum requirement is satisfied. Abstentions will be counted in the
tabulation of votes cast on Item 1.
The Company will bear the cost of this solicitation. It is expected
that the solicitation will be made primarily by mail, but regular employees
or representatives of the Company (none of whom will receive any extra
compensation for their activities) may also solicit proxies by telephone,
telegraph or in person and arrange for brokerage houses and their
custodians, nominees and fiduciaries to send proxies and proxy materials to
their principals at the expense of the Company. The Company may retain a
proxy solicitation firm to aid in soliciting proxies from its stockholders.
The fees of any such firm are not expected to exceed $5,000 plus
reimbursement of out-of-pocket expenses.
The Company's principal executive offices are located at 400 Wood
Road, Braintree, Massachusetts 02184-9114, telephone number (781) 848-7100.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on October 27,
2000 are entitled to notice of and to vote at the meeting. On that date,
the Company had outstanding and entitled to vote 25,744,820 shares of
Common Stock with a par value of $.01 per share. Each outstanding share
entitles the record holder to one vote.
APPROVAL OF 2000 LONG-TERM INCENTIVE PLAN
There will be presented at the meeting a proposal to approve the
Haemonetics Corporation 2000 Long-Term Incentive Plan (the "Plan"), which
was adopted by the Board of Directors on October 24, 2000. The Board of
Directors recommends that the stockholders approve the Plan. Set forth
below is a summary of the principal provisions of the Plan, a copy of which
may be obtained from the Clerk of the Company upon request.
This Plan replaces the Haemonetics Corporation 2000 Long-Term
Incentive Plan (the "May Plan") which was adopted by the Board of Directors
on May 2, 2000 and originally scheduled to be considered by the
stockholders at the Annual Meeting held July 25, 2000. The May Plan was not
acted upon at the Annual Meeting because the Company determined that
changes in the Plan would be required in order to secure stockholder
approval. No options were granted under the May Plan. The revised Plan
adopted by the Board of Directors on October 24, 2000 (i) reduces the
maximum number of shares available for the grant of options to 4,000,000
from 6,000,000, (ii) eliminates a feature contained in the May Plan which
provided for automatic increases in the number of shares available for
issuance under the May Plan based upon the number of issued and outstanding
shares of the Company's Common Stock, (iii) eliminates the issuance of
stock awards and (iv) requires that the exercise price for options granted
under the Plan must be not less than the fair market value of the Company's
Common Stock at the time the option is granted. The new Plan also provides
that except for adjustments for recapitalizations, reorganizations, and
certain other corporate transactions, the exercise price for any
outstanding option granted under the Plan may not be decreased after the
date of grant, nor may an outstanding option be surrendered to the Company
as consideration for the grant of a new option with a lower exercise price.
The Company believes that it is in the best interests of its
stockholders to adopt incentive compensation programs which align the
interests of key employees with those of the stockholders. The Company's
1992 Long-Term Incentive Plan will terminate in August, 2002. The Company's
1990 Stock Option Plan terminated March 30, 2000. Accordingly, the Company
believes it is necessary to adopt the Plan so that the Company will be able
to continue to offer an incentive compensation program which will be
attractive to current and prospective key employees. Upon approval of the
Plan by the stockholders, no further options will be granted under the 1992
Long-Term Incentive Plan or under the Company's 1998 Stock Option Plan for
Non-Employee Directors. Options granted under both Plans will continue to
remain outstanding under the terms thereof.
Purpose. The Plan is intended to promote the interests of the
Company and its stockholders by strengthening the Company's ability to
attract and retain competent employees and to encourage ownership of the
Company's stock by employees, directors, consultants and advisers of the
Company and its subsidiaries upon whose efforts and initiative the growth
and success of the Company depends. The Plan permits the grant of stock
options, which may be either incentive stock options meeting the
requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or non-qualified options which are not intended to
meet the requirements of the Code. Shares issued under the Plan may be
authorized but unissued shares of Common Stock or shares of Common Stock
held in the Treasury.
Number of Shares. The maximum number of shares of the Company's
Common Stock available for stock options granted under the Plan is
4,000,000 shares of Common Stock. The maximum number of shares available
for grants is subject to adjustment for capital changes.
To the extent that any option lapses, terminates, expires or
otherwise is cancelled without the issuance of shares of Common Stock, the
shares of Common Stock covered by such grants are again available for the
granting of stock options. If any such stock option is exercised through
the full or partial payment of shares of Common Stock owned by the
optionee, shares equal in number to those tendered by the optionee are
added to the maximum number of shares available for future grants under the
Plan.
It is not possible to state the employees who will receive stock
options under the Plan in the future, nor the amount of options which will
be granted thereunder. Reference is made to the section entitled "Executive
Compensation" in this Proxy Statement for information concerning options
granted to and exercised by the named executive officers during the most
recent fiscal year and options outstanding at April 1, 2000.
Administration. The Plan is administered by the Compensation and
Management Development Committee (the "Committee") consisting of two or
more members of the Company's Board of Directors, all of whom are outside
directors. The present members of the Committee are Sir Stuart Burgess, N.
Colin Lind, Benjamin L. Holmes, Donna C. E. Williamson, and Ronald G.
Gelbman.
Termination and Amendment. Unless sooner terminated, the Plan shall
terminate ten years from October 24, 2000, the date upon which it was
adopted by the Board of Directors. The Board of Directors may at any time
terminate the Plan or make such modification or amendment as it deems
advisable; provided however that the Board of Directors may not, without
the approval of the stockholders of the Company, make any change in the
Plan which (i) requires stockholder approval under applicable law or
regulations; and (ii) increases the number of shares available for stock
options, (iii) expands the class of participants eligible to receive stock
option grants under the Plan, or (iv) materially increases benefits under
the Plan by expanding the types of permissible awards (such as by
authorizing the grant of stock awards or stock appreciation rights). The
Committee may terminate, amend or modify any outstanding option without the
consent of the option holder, provided however that, without the consent of
the optionee, the Committee shall not change the number of shares subject
to an option, nor the exercise price thereof, nor extend the term of such
option.
Eligibility to Participate. The Plan provides that options
designated as incentive stock options may be granted only to officers and
employees of the Company or any subsidiary. Options designated as non-
qualified options may be granted to officers, directors, employees,
consultants and advisers of the Company or any of its subsidiaries. The
Company does not plan to grant options to consultants and advisers except
on an occasional basis. In determining a person's eligibility to be granted
an option, the Committee takes into account the person's position and
responsiblities, the nature and value to the Company or its subsidiaries of
such person's service and accomplishments, such person's present and
potential contribution to the success of the Company or its subsidiaries,
and such other factors as the Committee deems relevant. The maximum number
of shares of the Company's Common Stock with respect to which an option may
be granted under the Plan to any employee in any one fiscal year of the
Company shall not exceed 500,000 shares (in the aggregate for all such
options taken together), subject to adjustment for capital changes.
Terms and Provisions of Options. Options granted under the Plan are
exercisable at such times and during such period as is set forth in the
option agreement, but no incentive stock option granted under the Plan can
have a term in excess of ten years from the date of grant. The option
agreement may contain such provisions and conditions (including pre-
established performance objectives and forfeiture of option gain for
competition with the Company) as may be determined by the Committee. The
option exercise price for stock options granted under the Plan must be no
less than the fair market value of the Company's Common Stock at the time
the option is granted. Except for adjustments for recapitalizations,
reorganizations, and certain other corporate transactions, the exercise
price for any outstanding option granted under the Plan may not be
decreased after the date of grant, nor may an outstanding option be
surrendered to the Company as consideration for the grant of a new option
with a lower exercise price. Options granted under the Plan may provide for
the payment of the exercise price by (i) the delivery of cash or a check in
an amount equal to the exercise price, (ii) the delivery of certificates of
shares of Common Stock of the Company owned by the optionee and acceptable
to the Committee having a fair market value equal to the exercise price of
the option being exercised, or attestation of beneficial ownership of such
shares, (iii) a "cashless exercise" (wherein a third party is authorized to
sell shares of Common Stock acquired upon exercise of the option and to
remit to the Company a sufficient portion of the sales proceeds to pay the
exercise price), (iv) using the proceeds of a recourse loan from the
Company to pay the exercise price, or (v) any combination thereof.
Except as provided in the option agreement, the right of any optionee
to exercise an option granted under the Plan is not assignable or
transferable by such optionee otherwise than by will or the laws of descent
and distribution, and any such option shall be exercisable during the
lifetime of such optionee only by him or her.
Recapitalizations, Reorganizations, Change in Control. The Plan
provides that the number and kind of shares as to which options, may be
granted thereunder and as to which outstanding options or portions thereof
then unexercised shall be exercisable shall be adjusted to prevent dilution
in the event of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares,
spin-off, distribution of assets or dividends payable in capital stock. In
addition, unless otherwise determined by the Committee in its sole
discretion, in the case of any sale or conveyance to another entity of all
or substantially all of the property and assets of the Company or a Change
in Control as defined in the Plan, the purchaser of the Company's assets or
stock may deliver to the optionee the same kind of consideration that is
delivered to the shareholders of the Company as a result of such sale,
conveyance or Change in Control or the Committee may cancel all outstanding
options in exchange for consideration in cash or in kind, which
consideration shall be equal in value to the value of those shares of stock
or other securities the optionee would have received had the option been
exercised (to the extent then exercisable) and no disposition of the shares
acquired upon such exercise has been made prior to such sale, conveyance or
Change in Control, less the option price therefor. The Committee may
provide in any option agreement that the vesting of any options shall
automatically accelerate in full or in part upon such a sale, conveyance or
Change in Control.
The Committee shall also have the power to accelerate the
exercisability of any options, notwithstanding any limitations in the Plan
or in the option agreement, upon such a sale, conveyance or Change in
Control. Change in Control is defined in the Plan as having occurred if any
person, or any two or more persons acting as a group, and all affiliates of
such person or persons, who prior to such time owned less than 35% of the
then outstanding Common Stock of the Company, shall acquire such additional
shares of the Company's Common Stock in one or more transactions, or series
of transactions, such that following such transaction or transactions, such
person or group and affiliates beneficially own 35% or more of the
Company's Common Stock outstanding.
Upon dissolution or liquidation of the Company, all options granted
under the Plan shall terminate, but each optionee shall have the right,
immediately prior to such dissolution or liquidation, to exercise his or
her options to the extent then exercisable.
In the case of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, liquidation or other similar
transaction to which Section 424(a) of the Code applies, the Committee may
grant an option or options upon such terms and conditions as it may deem
appropriate for the purpose of assumption of the outstanding options, or
substitution of new options for the outstanding option, in conformity with
provisions of Section 424(a) of the Code and the regulations thereunder,
and any such action shall not reduce the number of shares otherwise
available for issuance under the Plan.
The high and low sales prices of the Company's Common Stock on the
New York Stock Exchange on November 7, 2000 were $25.44 and $24.63,
respectively.
TAX EFFECTS OF PLAN PARTICIPATION
Options granted under the Plan are intended to be either incentive
stock options, as defined in Section 422 of the Code, or non-qualified
stock options.
Incentive Stock Options. Except as provided below with respect to the
alternative minimum tax, the optionee will not recognize taxable income
upon the grant or exercise of an incentive stock option. If the optionee
holds the shares received pursuant to the exercise of the option for at
least one year after the date of exercise and for at least two years after
the option is granted, the optionee will recognize long-term capital gain
or loss upon the disposition of the stock measured by the difference
between the option exercise price (the stock's basis) and the amount
received for such shares upon disposition.
In the event that the optionee disposes of the stock prior to the
expiration of the required holding periods (a "disqualifying disposition"),
the optionee generally will realize ordinary income in the year of
disposition equal to the difference between the exercise price and the
lower of the fair market value of the stock at the date of the option
exercise or the sale price of the stock. The basis in the stock acquired
upon exercise of the option will equal the amount of income recognized by
the optionee plus the option exercise price. Upon eventual disposition of
the stock, the optionee will recognize long-term or short-term capital gain
or loss, depending on the holding period of the stock and the difference
between the amount realized by the optionee upon disposition of the stock
and the optionee's basis in the stock.
For alternative minimum tax purposes, the excess of the fair market
value of stock on the date of the exercise of the incentive stock option
over the exercise price of the option is included in alternative minimum
taxable income for alternative minimum tax purposes for the year of
exercise. If the alternative minimum tax applies to the optionee for the
year of exercise, all or a part of the excess of the amount of the
optionee's alternative minimum tax liability over the optionee's "regular
tax" liability for the year of exercise could generate an AMT tax credit
that may be applied in one or more later tax years. The AMT credit may be
applied against the optionee's tax liability in subsequent years in which
the optionee's regular tax liability exceeds the optionee's AMT liability,
but only to the extent of such excess.
The Company will not be allowed an income tax deduction upon the
grant or exercise of an incentive stock option. Upon a disqualifying
disposition by the optionee of shares acquired upon exercise of the
incentive stock option, the Company will be allowed a deduction in an
amount equal to the ordinary income recognized by the optionee.
Under proposed regulations issued by the Internal Revenue Service,
the exercise of an option with previously acquired stock of the Company
will be treated as, in effect, two separate transactions. Pursuant to
Section 1036 of the Code, the first transaction will be a tax-free exchange
of the previously acquired shares for the same number of new shares. The
new shares will retain the basis and, except, as provided below, the
holding periods of the previously acquired shares. The second transaction
will be the issuance of additional new shares having a value equal to the
difference between the aggregate fair market value of all of the new shares
being acquired and the aggregate option exercise price for those shares.
Because the exercise of an incentive stock option does not result in the
recognition by the optionee of income, this issuance will also be tax-free
(unless the alternative minimum tax applies, as described above). The
optionee's basis in these additional shares will be zero and the optionee's
holding period for these shares will commence on the date on which the
shares are transferred. For purposes of the one and two-year holding period
requirements which must be met for favorable incentive stock option tax
treatment to apply, the holding periods of previously acquired shares are
disregarded.
Non-qualified Stock Options. As in the case of incentive stock
options, no income is recognized by the optionee on the grant of a non-
qualified stock option. On the exercise by an optionee of a non-qualified
option, generally the excess of the fair market value of the stock when the
option is exercised over its cost to the optionee will be (a) taxable to
the optionee as ordinary income and (b) deductible for income tax purposes
by the Company. The optionee's tax basis in his stock will equal his cost
for the stock plus the amount of ordinary income the optionee had to
recognize with respect to the non-qualified stock option.
The Internal Revenue Service will treat the exercise of a non-
qualified stock option with already owned stock of the Company as two
transactions. First, there will be a tax-free exchange of the old shares
for a like number of shares under Section 1036 of the Code, with such
exchanged shares retaining the basis and holding period of the old shares.
Second, there will be an issuance of additional new shares having a value
equal to the difference between the fair market value of all new shares
being acquired (including the exchanged shares and the additional new
shares) and the aggregate option price for those shares. The employee will
recognize ordinary income under Section 83 of the Code, in an amount equal
to the fair market value of the additional new shares (i.e., the spread on
the option). The additional new shares will have a basis equal to the fair
market value of the additional new shares.
Accordingly, upon a subsequent disposition of stock acquired upon the
exercise of a non-qualified stock option, the optionee will recognize
short-term or long-term capital gain or loss, depending upon the holding
period of the stock equal to the difference between the amount realized
upon disposition of the stock by the optionee and the optionee's basis in
the stock.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is intended to attract
and retain talented executives and to motivate them to achieve the
Company's business goals. The program utilizes a combination of salary,
stock options and cash bonuses awarded based on the achievement of
corporate performance objectives. The compensation received by its
executive officers is thereby linked to the Company's performance. Within
this overall policy, compensation packages for individual executive
officers are intended to reflect the responsibilities of their position and
past achievements with the Company, as well as the Company's performance.
The Compensation Committee is comprised of independent directors who
are not employees of the Company. In its deliberations, the Committee takes
into account the recommendations of appropriate Company officials. The
Compensation Committee's determinations with respect to compensation for
the fiscal year ended April 1, 2000 were made early in the fiscal year.
In arriving at the base salaries paid to the Company's executive
officers for the year ended April 1, 2000, the Committee considered their
individual contributions to the performance of the Company, their levels of
responsibility, salary increases awarded in the past, the executive's
experience and potential, and the level of compensation necessary, in the
overall competitive environment, to retain talented individuals. All of
these factors were collectively taken into account by the Committee in
making a subjective assessment as to the appropriate base salary for each
of the Company's executive officers, and no particular weight was assigned
to any one factor.
To more closely align executive compensation with stock ownership, in
May 2000, the Company's Compensation Committee approved a change in the
form of payment of fiscal year 2000 and 2001 executive bonuses earned under
the quarterly bonus program. As a result of the change, the executives in
fiscal year 2000 were required to elect the portion of their eligible
fiscal year 2000 bonus that they wish to be paid in the form of grants to
purchase the Company's Common Stock in lieu of cash. The percentage of
bonus to be paid in the form of grants to purchase the Company's Common
Stock was required to be a minimum of fifty percent of the total eligible
bonus amount. All of the executives listed on the summary compensation
table elected to convert 50% of their eligible bonus to option grants to
purchase the Company's Common Stock. For fiscal year 2001, the executives
are required to elect that 50% of their year 2001 bonus is to be paid in
the form of grants to purchase the Company's Common Stock in lieu of cash.
During the fiscal year ended April 1, 2000, the Company's quarterly
bonus program was tied to the achievement by the Company and by individual
business units of predetermined goals relating primarily to operating
margin and balance sheet measures. Under the program, attainment of these
predetermined goals resulted in payment of bonuses.
The Company's stock option program is intended to provide additional
incentive to build shareholder value, to reward long-term corporate
performance and to promote employee loyalty through stock ownership.
Information with respect to stock options held by executive officers
(including options granted during the year ended April 1, 2000) is included
in the tables following this report. In determining the number of options
granted to executive officers during the last fiscal year ended April 1,
2000, the Committee made a subjective assessment of the past and potential
contributions of particular executive officers to the financial and
operational performance of the business unit directed by the executive, and
of such officer's potential for advancement. The Committee, in arriving at
the number of options to be granted to particular executive officers, was
aware of whether or not such officers had been granted options in the past.
The vesting of options granted is not dependent upon the achievement of
predetermined performance goals. Nevertheless, the amount realized by a
recipient from an option grant will depend on the future appreciation in
the price of the Company's Common Stock.
In 1993 the Internal Revenue Code was amended to limit the deduction
a public company is permitted for compensation paid in 1994 and thereafter
to the chief executive officer and to the four most highly compensated
executive officers, other than the chief executive officer. Generally,
amounts paid in excess of $1 million to a covered executive, other than
performance-based compensation, cannot be deducted. In order to qualify as
performance-based compensation under the new tax law, certain requirements
must be met, including approval of the performance measures by the
stockholders. In its deliberations, the Committee considers ways to
maximize deductibility of executive compensation, but nonetheless retains
the discretion to compensate executive officers at levels the Committee
considers commensurate with their responsibilities and achievements.
Compensation of Chief Executive Officer
In accordance with the approval of the Compensation and Management
Development Committee in May 1999, Mr. Peterson received a salary for the
fiscal year ended April 1, 2000 of $430,744. The Committee did not grant
Mr. Peterson any new options to purchase shares of the Company's Common
Stock during the fiscal year ended April 1, 2000. Included in the options
granted to Mr. Peterson during fiscal years ended March 28, 1998 and April
3, 1999, were options to purchase 300,000 shares of the Company's Common
Stock. These 300,000 options were granted as a two-year grant on Mr.
Peterson's appointment to Chief Executive Officer. The options vest
beginning one year from the grant date at a rate of 25% per year over the
four years following the grant (except in the case of death, termination or
retirement). Years 2, 3 and 4 of the vesting schedule can be accelerated
effective one year from the grant date based upon the attainment of certain
stock fair market values as follows: 25% upon stock value appreciation to
$21.00 per share, 25% upon stock value appreciation to $26.00 per share and
25% upon stock value appreciation to $31.00 per share.
At the May 2000 Compensation Committee meeting, Mr. Peterson was
granted options to purchase up to 280,000 shares of the Company's Common
Stock. This grant is a two-year grant in anticipation of Company
performance during both fiscal years 2001 and 2002 vesting 50% on March 31,
2001 and 50% on March 31, 2002.
Mr. Peterson was not part of a bonus program during the fiscal year
ended April 1, 2000. However, in recognition of the Company's performance
during the fiscal year ended April 1, 2000, the Compensation and Management
Development Committee in May 2000 awarded Mr. Peterson a cash bonus of
$172,990.
Compensation and Management Development Committee
Sir Stuart Burgess N. Colin Lind
Donna C.E. Williamson Ronald G. Gelbman
Benjamin L. Holmes
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended April 1, 2000 the members of the
Compensation Committee were Sir Stuart Burgess, Donna C.E. Williamson,
Benjamin L. Holmes, N. Colin Lind, Jerry E. Robertson (until November 1,
1999) and effective January 25, 2000, Ronald G. Gelbman. No member of the
Compensation Committee was an officer or employee of the Company or any of
its subsidiaries during fiscal year 2000.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, or earned
by or paid to the Company's Chief Executive Officer and each of the
Company's executive officers (other than the Chief Executive Officer) whose
total annual salary and bonus exceeded $100,000 for all services rendered
as executive officers to the Company and its subsidiaries for the Company's
fiscal years ended April 1, 2000, April 3, 1999 and March 28, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------------------------------------------------------
Other
Annual Stock All Other
Name and Principal Position Year Salary(l) Bonus(l) Compensation Options Compensation(2)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Peterson 2000 $430,744(4) $172,990 $504,091(3)(4)(5) 0
President & CEO 1999 $394,658(4) $150,000 $176,642(3)(4)(5) 91,574
1998 $369,945(4) - $ 91,085(3)(4)(5) 330,000
Ronald J. Ryan 2000 $264,370 $ 77,031 $ 9,571(3) 46,508 $6,000
CFO & Sr. Vice President, 1999 $249,995 $ 81,775 $ 9,332(3) 50,000
Finance
Michael P. Mathews 2000 $244,431 $ 13,644 $294,470(3)(5) 18,217 $6,000
President, Blood Bank 1999 $237,776 $ 40,311 $173,479(3)(5) 49,000 $6,000
Division 1998 $220,080 - $230,293(5) 69,177 $3,000
Bruno Deglaire 2000 $273,712 $ 8,274 $ 22,350(3)(4)(5) 35,982
President, European and 1999 $267,582 $ 80,231 $ 28,253(3)(4)(5) 52,500
Asian Field Operations 1998 $263,362 $ 30,476 $ 28,461(3)(4)(5) 46,640
Peter A. Tomasulo, M.D. 2000 $258,381 $ 15,201 $ 82,422(3)(4)(5) 41,581
President, Surgical Division
--------------------
<FN>
<F1> Salary and bonus amounts are presented in the year earned. The
payment of such amounts may have occurred in other years.
<F2> Includes discretionary contributions paid by the Company with respect
to the Company's 401(k) Plan: i) in 1998: for Mr. Mathews $2,000. No
discretionary contributions were made by the Company with respect to
the Savings Plus Plan in 2000 or 1999. Also includes matching
contributions by the Company under its 401(k) Plan: (i) in 2000: for
Mr. Mathews $6000, for Mr. Ryan $6000, (ii) in 1999: for Mr. Mathews
$6,000, (iii) in 1998: for Mr. Mathews $1,000.
<F3> Includes the following amounts paid by the Company with respect to
vacation hours: (i) accrued in 2000 but not used: for Mr. Mathews
$4,727, (ii) accrued in 1999 but not used: for Mr. Mathews $9,267.
Additionally, includes the following amounts paid by the Company with
respect to company-owned vehicles or auto allowances: (i) in 2000:
for Mr. Peterson $23,673, for Mr. Deglaire $16,791, for Mr. Mathews
$15,284, for Mr. Ryan $6,850, for Mr. Tomasulo $15,858 (ii) in 1999:
for Mr. Peterson $23,765, for Mr. Deglaire $18,025, for Mr. Ryan
$5,282, (iii) in 1998: for Mr. Peterson $17,741, for Mr. Deglaire
$17,741.
<F4> All amounts are translated into U.S. dollars using average monthly
exchange rates.
<F5> Includes the following amounts for additional payments relating to
living abroad: (i) in 2000: for Mr. Mathews $268,581, for Mr.
Tomasulo $51,569 (ii) in 1999: for Mr. Mathews $162,855 (iii) in
1998: for Mr. Peterson $64,352, for Mr. Mathews $228,936. Includes
the following amounts for housing allowances for Mr. Peterson: in
2000 $65,198, in 1999 $104,938. Includes the following amounts for
travel allowances (i) in 2000: for Mr. Peterson $59,642, Mr. Deglaire
$2,602, (ii) in 1999: for Mr. Peterson $2,018, for Mr. Deglaire 8,384
(iii) in 1998: for Mr. Deglaire $8,252. Includes $337,235 in tax
equalization payments for Mr. Peterson in 2000. Includes $33,333 in
one time relocation expenses for Mr. Peterson in 1999.
</FN>
</TABLE>
--------------------
The Directors of the Company who are not employees of the Company
receive an annual cash fee of $10,000. Ronald G. Gelbman however, as he was
elected to the Board of Directors effective January 25, 2000, received a
cash fee of $2,500 during the fiscal year ended April 1, 2000. In addition
to this director fee, each outside director, except Ronald G. Gelbman and
Sir Stuart Burgess, was granted, during the last fiscal year, an option to
purchase up to 9,000 shares of Common Stock of the Company. Mr. Gelbman was
granted, during the last fiscal year, an option to purchase up to 6,000
shares of Common Stock of the Company. Sir Stuart Burgess, as compensation
for his additional duties performed as Chairman of the Board, was paid a
base fee of $45,000 which he elected to receive in the form of $20,000 in
cash and the remainder in options to purchase 6,732 shares of the Company's
Common Stock. Sir Stuart was also granted additional options to purchase up
to 30,000 shares of Common Stock of the Company and he received $1,000 per
day for each day devoted to Chairman responsibilities (or a total of
$58,000 for the fiscal year ended April 1, 2000.)
Option Grants in Fiscal Year Ended April 1, 2000
The following table provides information on option grants to the
executive officers of the Company listed in the Summary Compensation Table
above during the fiscal year ended April 1, 2000. Pursuant to applicable
regulations of the Securities and Exchange Commission, the table also sets
forth the hypothetical value which might be realized with respect to such
options based on assumed rates of stock appreciation of 5% and 10%
compounded annually from the date of grant to the end of the option term.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------
Percentage of Potential Realizable
Number of Total Options Value at Assumed
Securities Granted to Exercise Annual Rates of Stock
Underlying Employees or Base Price Appreciation
Options in the Fiscal Price Expiration for Option Term(3)
--------------------------
Granted Year 1999 Per Share Date 5% 10%
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Peterson - - - - - -
Michael P. Mathews 18,217(1) 1.68 $15.875 5/3/09 $181,873.10 $460,902.15
Bruno Deglaire 20,982(1) 1.94 $15.875 5/3/09 $209,478.04 $530,858.48
15,000(2) 1.38 $15.875 5/3/09 $149,755.53 $379,509.92
Peter A. Tomasulo, M.D. 6,581(1) 0.61 $15.875 5/3/09 $ 65,702.74 $166,503.65
10,000(2) 0.92 $15.875 5/3/09 $ 99,837.02 $253,006.62
25,000(2) 2.31 $17.750 10/27/09 $279,071.99 $707,223.22
Ronald J. Ryan 26,508(1) 2.45 $15.875 5/3/09 $264,647.98 $670,669.94
20,000(2) 1.84 $15.875 5/3/09 $199,674.04 $506,013.23
--------------------
<FN>
<F1> Options are exercisable upon completion of one full year of
employment following the grant date (except in the case of death,
termination or retirement) and vest at the rate of 50% per year over
the two years following the grant date.
<F2> Options are exercisable upon completion of one full year of
employment following the grant date (except in the case of death,
termination or retirement) and vest at the rate of 25% per year over
the four years following the grant date.
<F3> These values are based on assumed rates of appreciation only. Actual
gains, if any, on shares acquired on option exercises are dependent
on the future performance of the Company's Common Stock. There can be
no assurance that the values reflected in this table will be
achieved. On May 15, 2000 the closing price of the Company's Common
Stock on the New York Stock Exchange was 20 15/16.
</FN>
</TABLE>
Aggregated Option Exercises in Fiscal Year Ended April 1, 2000 and
Option Values at March 31, 2000
The following table provides information on the value of unexercised
options held by the executive officers listed in the Summary Compensation
Table above at April 1, 2000.
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised
Acquired Value Options at April 1, 2000 Options at March 31, 2000(1)
on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Peterson 0 $0 485,855 114,145 $2,675,739.43 $708,159.91
Michael P. Mathews 0 $0 144,567 80,250 $ 705,350.47 $420,489.73
Bruno Deglaire 0 $0 104,591 87,358 $ 561,884.36 $489,023.95
Peter A. Tomasulo, M.D. 0 $0 27,332 76,583 $ 133,470.90 $410,547.73
Ronald J. Ryan 0 $0 37,500 109,008 $ 220,527.05 $647,821.68
--------------------
<FN>
<F1> Value of unexercised stock options represents difference between the
exercise prices of the stock options and the closing price of the
Company's Common Stock on the New York Stock Exchange on March 31,
2000.
</FN>
</TABLE>
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the cumulative total return for the five
year period commencing March 31, 1995 through March 31, 2000 among the
Company, the S&P 500 Index and the S&P Medical Products and Supplies Index.
The graph assumes one hundred dollars invested on March 31, 1995 in the
Company's Common Stock, the S&P 500 index and the S&P Medical Products and
Supplies Index and also assumes reinvestment of dividends.
<TABLE>
<CAPTION>
3/31/95 3/31/96 3/31/97 3/31/98 3/31/99 3/31/00
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Haemonetics Corporation $100 115 122 124 108 155
S&P 500 $100 132 158 234 278 327
S&P Medical Products & Supplies $100 149 163 236 310 323
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 2000, certain
information with respect to beneficial ownership of the Company's Common
Stock by: (i) each person known by the Company to own beneficially more
than five percent of the Company's Common Stock; (ii) each of the Company's
directors and each of the executive officers named in the Summary
Compensation Table elsewhere in this Proxy Statement; and (iii) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
Title Amount & Nature Percent
Name of Beneficial Owner of Class Beneficial Ownership Of Class
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sir Stuart Burgess (1) Common Stock 137,232 .54%
James L. Peterson (2) Common Stock 1,306,532 5.09%
Ronald J. Ryan (3) Common Stock 58,879 .23%
Michael P. Mathews (4) Common Stock 270,541 1.06%
Bruno Deglaire (5) Common Stock 128,269 .51%
Yutaka Sakurada (6) Common Stock 135,478 .54%
Peter A. Tomasulo, M.D. (7) Common Stock 41,290 .16%
Ronald G. Gelbman (8) Common Stock 15,000 .06%
Donna C.E. Williamson (9) Common Stock 49,300 .20%
Benjamin L. Holmes (10) Common Stock 28,000 .11%
Harvey G. Klein M.D. (11) Common Stock 24,000 .10%
N. Colin Lind (12) Common Stock 3,990,400 15.82%
Blum Capital Partners, L.P. (13) Common Stock 3,966,400 15.72%
Wellington Management (14) Common Stock 3,073,050 12.18%
State of Wisconsin Investment Board (15) Common Stock 2,224,000 8.82%
Neuberger & Berman (16) Common Stock 1,908,838 7.57%
Massachusetts Financial Services (17) Common Stock 1,506,563 5.97%
All executive officers and directors as a group
(12 persons) (12) Common Stock 6,184,921 24.52%
--------------------
<FN>
<F1> Includes 133,732 shares which Sir Stuart has the right to acquire
upon the exercise of options currently exercisable. Does not include
3,500 shares held in trust for the benefit of Sir Stuart's children.
Sir Stuart disclaims beneficial ownership of such shares.
<F2> Includes 494,605 shares which Mr. Peterson has the right to acquire
upon exercise of options currently exercisable. Does not include
41,150 shares held in trust for the benefit of Mr. Peterson's
children and 21,000 shares held in trust for the benefit of Mr.
Peterson's parents. Mr. Peterson disclaims beneficial ownership of
such shares.
<F3> Includes 58,879 shares which Mr. Ryan has the right to acquire upon
exercise of options currently exercisable.
<F4> Includes 205,164 shares which Mr. Mathews has the right to acquire
upon the exercise of options currently exercisable.
<F5> Includes 128,269 shares which Mr. Deglaire has the right to acquire
upon the exercise of options currently exercisable.
<F6> Includes 133,897 shares which Dr. Sakurada has the right to acquire
upon the exercise of options currently exercisable.
<F7> Includes 41,290 shares which Dr. Tomasulo has the right to acquire
upon the exercise of options currently exercisable.
<F8> Includes 15,000 shares which Mr. Gelbman has the right to acquire
upon the exercise of options currently exercisable.
<F9> Includes 48,000 shares which Ms. Williamson has the right to acquire
upon the exercise of options currently exercisable.
<F10> Includes 27,000 shares which Mr. Holmes has the right to acquire upon
the exercise of options currently exercisable.
<F11> Includes 24,000 shares which Dr. Klein has the right to acquire upon
the exercise of options currently exercisable.
<F12> Includes 24,000 shares which Mr. Lind has the right to acquire upon
the exercise of options currently exercisable. Includes, 3,966,400
shares owned directly by four investment advisory clients for which
Blum Capital Partners, L.P. is the investment adviser with voting and
investment discretion, three limited partnerships for which Blum
Capital Partners is the general partner, and one limited partnership
for which RCBA GP, L.L.C. ("RCBA GP") is the general partner. Mr.
Lind is a director and officer of RCBA Inc. (the general partner of
RCBA L.P.), an officer of RCBA L.P., and a managing member of RCBA
GP. Mr. Lind disclaims beneficial ownership of these shares except to
the extent of any pecuniary interest therein.
<F13> Includes information derived from a Schedule 13D filed with the
Securities and Exchange Commission and the shares described in
footnote (12). The reporting entity's address is 909 Montgomery
Street, #400, San Francisco, CA 94133.
<F14> This information has been derived from the most recent Schedule 13G
filed with the Securities and Exchange Commission as of 9/30/00. The
reporting entity's address is 75 State Street, Boston, MA 02109.
<F15> This information has been derived from the most recent Schedule 13G
filed with the Securities and Exchange Commission as of 9/30/00. The
reporting entity's address is 121 East Wilson Street, Madison, WI
53707.
<F16> This information has been derived from the most recent Schedule 13G
filed with the Securities and Exchange Commission as of 9/30/00. The
reporting entity's address is 605 Third Avenue, New York, NY 10158-
3698.
<F17> This information has been derived from the most recent Schedule 13G
filed with the Securities and Exchange Commission as of 9/30/00. The
reporting entity's address is 500 Boylston Street, Boston, MA 02116.
</FN>
</TABLE>
--------------------
STOCKHOLDER PROPOSALS
Any proposal submitted for inclusion in the Company's Proxy Statement
and form of proxy relating to the 2001 Annual Meeting of Stockholders must
be received at the Company's principal executive offices in Braintree,
Massachusetts on or before February 19, 2001. In accordance with the
provisions of Rule 14a-4(c) promulgated under the Securities Exchange Act
of 1934, if the Company does not receive notice of a shareholder proposal
to be raised at its 2001 Annual Meeting on or before May 4, 2001, then in
such event, the management proxies shall be allowed to use their
discretionary voting authority when the proposal is raised at the 2001
Annual Meeting.
OTHER MATTERS
Management knows of no matters which may properly be and are likely
to be brought before the meeting other than the matters discussed herein.
However, if any other matters properly come before the meeting, the persons
named in the enclosed proxy will vote in accordance with their best
judgment.
VOTING PROXIES
The Board of Directors recommends an affirmative vote on all
proposals specified. Proxies will be voted as specified. If signed proxies
are returned without specifying an affirmative or negative vote on any
proposal, the shares represented by such proxies will be voted in favor of
the Board of Directors' recommendations.
By Order of the Board of Directors
Braintree, Massachusetts Alicia R. Lopez
November 13, 2000 Clerk
DETACH HERE
PROXY
HAEMONETICS CORPORATION
Special Meeting of Stockholders
December 14, 2000
The undersigned hereby appoints Sir Stuart Burgess and James L. Peterson or
any one of them, with full power of substitution, attorneys and proxies to
represent the undersigned at the Special Meeting of Stockholders of
Haemonetics Corporation to be held Thursday, December 14, 2000 at the
offices of Haemonetics Corporation, 400 Wood Road, Braintree, Massachusetts
and at any adjournment or adjournments thereof, to vote in the name and
place of the undersigned with all the power which the undersigned would
possess if personally present, all of the stock of Haemonetics Corporation
standing in the name of the undersigned, upon such business as may properly
come before the meeting, including the following as set forth on the
reverse side.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED ON THE REVERSE SIDE
AND RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING IN PERSON.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SEE REVERSE
SIDE SIDE SIDE
HAEMONETICS CORPORATION
Dear Shareholder:
There is one item to be considered at the Special Meeting on December 14,
2000 that requires your vote.
Your vote counts, and you are strongly encouraged to exercise your right to
vote.
Please mark the boxes on the proxy card to indicate how your shares shall
be voted. Then, please sign the card and return it in the enclosed, paid
envelope.
Your vote must be received by the meeting date of December 14, 2000 to be
considered.
Thank you for your prompt attention to this matter.
Sincerely,
/s/ Alicia R. Lopez
Haemonetics Corporation
DETACH HERE
[X] Please mark votes
as in this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. ANY PROXY
HERETOFORE GIVEN BY THE UNDERSIGNED WITH RESPECT TO SUCH STOCK IS HEREBY
REVOKED. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ITEM 1.
1. To approve the Haemonetics Corporation 2000 Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name(s) appear(s) on the Proxy. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name
by authorized person.
Signature: Date: Signature: Date:
---------- ----- ---------- -----
HAEMONETICS CORPORATION
2000 Long-Term Incentive Plan
1. Purpose of the Plan.
--------------------
The purpose of the 2000 Long-Term Incentive Plan (the "Plan") of
Haemonetics Corporation (the "Company") is to promote the interests of the
Company and its stockholders by strengthening the Company's ability to
attract and retain competent employees and to encourage ownership of the
Company's stock by employees, directors, consultants, and advisors of the
Company and its present and future subsidiaries upon whose efforts and
initiative the growth and success of the Company depends.
Under the Plan, stock options ("stock options" or "options") may be
designated as either incentive stock options meeting the requirements of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), or non-
qualified options which are not intended to meet the requirements of the
Code.
2. Stock Subject to the Plan.
--------------------------
(a) The maximum number of shares ("shares") of common stock, $.01
par value, of the Company ("Common Stock") available for stock options
granted under the Plan shall be 4,000,000 shares of Common Stock. The
maximum number of shares of Common Stock available for grants of incentive
stock options under the Plan shall be 4,000,000. The maximum number of
shares of Common Stock available for grants shall be subject to adjustment
in accordance with Section 5 thereof. Shares issued under the Plan may be
authorized but unissued shares of Common Stock or shares of Common Stock
held in treasury.
(b) To the extent that any stock option shall lapse, terminate,
expire or otherwise be cancelled without the issuance of shares of Common
Stock, the shares of Common Stock covered by such grants shall again be
available for the granting of stock options. Further, if any stock option
is exercised through the full or partial payment of shares of Common Stock
owned by the optionee, shares equal in number to those tendered by the
optionee shall be added to the maximum number of shares available for
future grants under this Plan.
(c) Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall
be determined by the Committee.
(d) The maximum number of shares of the Company's Common Stock with
respect to which an option may be granted under the Plan to any employee in
any one fiscal year of the Company shall not exceed 500,000 shares (in the
aggregate for all such options taken together), subject to adjustment in
accordance with Section 5.
3. Administration of the Plan.
---------------------------
The Plan shall be administered by a committee (the "Committee")
consisting of two or more members of the Company's Board of Directors. The
Board may from time to time appoint a member or members of the Committee in
substitution for or in addition to the member or members then in office and
may fill vacancies on the Committee however caused. The Committee shall
choose one of its members as Chairman and shall hold meetings at such times
and places as it shall deem advisable. A majority of the members of the
Committee shall constitute a quorum and any action may be taken by a
majority of those present and voting at any meeting. Any action may also be
taken without the necessity of a meeting by a written instrument signed by
a majority of the Committee. The Committee shall have the full and
exclusive authority to interpret the Plan and to adopt, amend, and rescind
such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any option
agreement in the manner and to the extent it shall deem expedient to carry
the Plan into effect and shall be the sole and final judge of such
expediency. The decision of the Committee as to all questions pertaining to
the Plan shall be final, binding and conclusive on all persons. No
Committee member shall be liable for any action or determination made in
good faith.
4. Options.
--------
(a) Options granted pursuant to the Plan shall be authorized by
action of the Committee and may be designated as either incentive stock
options meeting the requirements of the Code or non-qualified options which
are not intended to meet the requirements of the Code, the designation to
be in the sole discretion of the Committee. Options designated as incentive
stock options that do not continue to meet the requirements of Section 422
of the Code shall be redesignated as non-qualified options automatically
without further action by the Committee on the date such failure to
continue to meet the requirements of Section 422 of the Code occurs.
(b) Options designated as incentive stock options may be granted
only to officers and employees of the Company or of any "subsidiary
corporation" as defined in Section 424 of the Code and the Treasury
Regulations promulgated thereunder (the "Regulations"). Options designated
as non-qualified options may be granted to officers, directors, employees,
consultants, and advisors of the Company or of any of its subsidiaries. In
determining a person's eligibility to be granted an option, the Committee
shall take into account the person's position and responsibilities, the
nature and value to the Company or its subsidiaries of such person's
service and accomplishments, such person's present and potential
contribution to the success of the Company or its subsidiaries, and such
other factors as the Committee may deem relevant.
(c) No option designated as an incentive stock option shall be
granted to any employee of the Company or any subsidiary corporation if
such employee owns, immediately prior to the grant of an option, stock
representing more than 10% of the voting power or more than 10% of the
value of all classes of stock of the Company or a parent or a subsidiary
corporation, unless the purchase price for the stock under such option
shall be at least 110% of its fair market value at the time such option is
granted and the option, by its terms, shall not be exercisable more than
five years from the date it is granted. In determining the stock ownership
under this paragraph, the provisions of Section 424(d) of the Code shall be
controlling. In determining the fair market value under this paragraph, the
provisions of subparagraph (e) below shall apply.
(d) Each option shall be evidenced by an option agreement (the
"Agreement") duly executed on behalf of the Company and by the optionee to
whom such option is granted, which Agreement shall comply with and be
subject to the terms and conditions of the Plan. The Agreement may contain
such other terms, provisions and conditions which are not inconsistent with
the Plan (including pre-established performance objectives and forfeiture
of option gain for competition with the Company) as may be determined by
the Committee, provided that options designated as incentive stock options
shall meet all of the conditions for incentive stock options as defined in
Section 422 of the Code. The date of grant of an option shall be as
determined by the Committee. More than one option may be granted to an
optionee.
(e) The option price or prices of shares of the Company's Common
Stock for non-qualified and incentive stock options shall be no less than
the fair market value of such Common Stock at the time the option is
granted as determined by the Committee. Except for adjustments pursuant to
Section 5(a) (relating to the adjustment of shares), the exercise price for
any outstanding option granted under the Plan may not be decreased after
the date of grant nor may an outstanding option granted under the Plan be
surrendered to the Company as consideration for the grant of a new option
with a lower exercise price.
(f) An option granted under the Plan may provide in the Agreement
for the payment of the exercise price by (1) delivery of cash or a check
payable to the order of the Company in an amount equal to the exercise
price of such option, (2) delivery of certificates of shares of Common
Stock of the Company owned by the optionee and acceptable to the Committee
having a fair market value equal in amount to the exercise price of the
option being exercised, or attestation of beneficial ownership of such
shares, (3) authorizing a third party to sell shares of Common Stock (or a
sufficient portion of the shares) acquired upon exercise of the option and
remitting to the Company a sufficient portion of the sales proceeds to pay
the exercise price, (4) using the proceeds of a recourse loan from the
Company to pay the exercise price, or (5) any combination thereof. The fair
market value of any shares of the Company's Common Stock which may be
delivered (actually or by attestation) upon exercise of an option shall be
determined by the Committee.
(g) To the extent that the right to purchase shares under an option
has accrued and is in effect, an option may be exercised in full at one
time or in part from time to time, by giving written notice, signed by the
person or persons exercising the option, to the Company, stating the number
of shares with respect to which the option is being exercised, accompanied
by payment in full for such shares as provided in subparagraph (f) above.
(h) Each option granted under the Plan shall, subject to Section 5
hereof, be exercisable at such time or times and during such period as
shall be set forth in the Agreement; provided, however, that no incentive
option granted under the Plan shall have a term in excess of ten (10) years
from the date of grant.
(i) Except as provided in the Agreement, the right of any optionee
to exercise any option granted to him or her shall not be assignable or
transferable by such optionee otherwise than by will or the laws of descent
and distribution, and any such option shall be exercisable during the
lifetime of such optionee only by him or her. Any option granted under the
Plan shall be null and void and without effect upon any attempted
assignment or transfer, except as herein provided, including without
limitation any purported assignment, whether voluntary or by operation of
law, pledge, hypothecation or other disposition, attachment, trustee
process or similar process, whether legal or equitable, upon such option.
5. Recapitalizations, Reorganizations, and Other Adjustments.
----------------------------------------------------------
(a) In the event that the outstanding shares of the Common Stock of
the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, spin-off,
distribution of assets, or dividends payable in capital stock, appropriate
adjustment shall be made in the number and kind of shares as to which
options may be granted under the Plan (including the share limits of
Sections 2(a) and 2(d)), and as to which outstanding options or portions
thereof then unexercised shall be exercisable, to the end that the
proportionate interest of the optionee shall be maintained as before the
occurrence of such event; such adjustment in outstanding options shall be
made without change in the total price applicable to the unexercised
portion of such options and with a corresponding adjustment in the option
price per share.
(b) In addition, unless otherwise determined by the Committee in
its sole discretion, in the case of any (1) sale or conveyance to another
entity of all or substantially all of the property and assets of the
Company, or (2) Change in Control (as hereinafter defined) of the Company,
the purchaser(s) of the Company's assets or stock may, in his, her or its
discretion, deliver to the optionee the same kind of consideration that is
delivered to the shareholders of the Company as a result of such sale,
conveyance or Change in Control, or the Committee may cancel all
outstanding options in exchange for consideration in cash or in kind which
consideration in both cases shall be equal in value to the value of those
shares of stock or other securities the optionee would have received had
the option been exercised (to the extent then exercisable) and no
disposition of the shares acquired upon such exercise been made prior to
such sale, conveyance or Change in Control, less the option price therefor.
Upon receipt of such consideration by the optionee, his or her option shall
immediately terminate and be of no further force and effect. The value of
the stock or other securities the optionee would have received if the
option had been exercised shall be determined in good faith by the
Committee, and in the case of shares of the Common Stock of the Company, in
accordance with the provisions of Section 4(e) hereof. The Committee may
provide in any Agreement that the vesting of any option shall automatically
accelerate in full or in part upon such a sale, conveyance, Change in
Control, or other similar event. The Committee shall also have the power
and right to accelerate the exercisability of any options, notwithstanding
any limitations in this Plan or in the Agreement upon such a sale,
conveyance or Change in Control. Upon such acceleration, any options or
portion thereof originally designated as incentive stock options that no
longer qualify as incentive stock options under Section 422 of the Code as
a result of such acceleration shall be redesignated as non-qualified stock
options. A "Change in Control" shall be deemed to have occurred if any
person, or any two or more persons acting as a group, and all affiliates of
such person or persons, who prior to such time owned less than thirty five
percent (35%) of the then outstanding Common Stock of the Company, shall
acquire such additional shares of the Company's Common Stock in one or more
transactions, or series of transactions, such that following such
transaction or transactions, such person or group and affiliates
beneficially own thirty five percent (35%) or more of the Company's Common
Stock outstanding.
(c) Upon dissolution or liquidation of the Company, all options
granted under this Plan shall terminate, but each optionee (if at such time
in the employ of or otherwise associated with the Company or any of its
subsidiaries) shall have the right, immediately prior to such dissolution
or liquidation, to exercise his or her option to the extent then
exercisable.
(d) In the case of a corporate merger, consolidation, acquisition
of property or stock, separation, reorganization, liquidation or other
similar transaction, to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of the Plan, the Committee may grant an
option or options upon such terms and conditions as it may deem appropriate
for the purpose of assumption of the outstanding options, or substitution
of new options for the outstanding option, in conformity with the
provisions of such Section 424(a) of the Code and the Regulations
thereunder, and any such action shall not reduce the number of shares
otherwise available for issuance under the Plan.
(e) No fraction of a share shall be purchasable or deliverable upon
the exercise of any option, but in the event any adjustment hereunder of
the number of shares covered by the option shall cause such number to
include a fraction of a share, such number shall be adjusted to the nearest
smaller whole number of shares.
6. No Special Employment Rights.
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Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the
continuation of his or her employment by the Company (or any subsidiary) or
interfere in any way with the right of the Company (or any subsidiary),
subject to the terms of any separate employment agreement to the contrary,
at any time to terminate such employment or to increase or decrease the
compensation of the option holder from the rate in existence at the time of
the grant of an option. Whether an authorized leave of absence, or absence
in military or government service, shall constitute termination of
employment shall be determined by the Committee at the time.
7. Withholding.
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As a condition of the exercise of any option granted under the Plan
and the delivery of any shares, the option holder and any permitted
transferees or beneficiaries shall make such arrangements as the Committee
may require for the satisfaction of all applicable tax withholding
obligations. With the approval of the Committee, which it shall have sole
discretion to grant, and on such terms and conditions as the Committee may
impose, the option holder may satisfy the foregoing condition by electing
to have the Company withhold from delivery shares having a value equal to
the minimum amount of tax required to be withheld. The Committee shall also
have the right to require that shares be withheld from delivery to satisfy
such condition.
8. Restrictions on Issue of Shares.
--------------------------------
(a) Notwithstanding the provisions of Section 7, the Company may
delay the issuance of shares covered by the exercise of an option and the
delivery of a certificate for such shares until the delivery or
distribution of any shares under this Plan complies with all applicable
laws (including without limitation, the Securities Act of 1933, as
amended), and with the applicable rules of any stock exchange upon which
the shares of the Company are listed or traded.
(b) It is intended that all exercises of options shall be
effective, and the Company shall use its best efforts to bring about
compliance with all applicable legal and regulatory requirements within a
reasonable time, except that the Company shall be under no obligation to
qualify shares or to cause a registration statement or a post-effective
amendment to any registration statement to be prepared for the purpose of
covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
9. Approval of Stockholders.
-------------------------
The Plan shall be subject to approval by a vote of Company
stockholders within twelve (12) months after the adoption of the Plan by
the Board of Directors of the Company and shall take effect as of the date
of adoption by the Board upon such stockholder approval. The Committee may
grant options under the Plan prior to such approval, but any such option
shall be conditioned on such approval and, accordingly, no such option may
be exercisable prior to such approval.
10. Termination and Amendment.
--------------------------
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the
Board of Directors of the Company. The Board of Directors may at any time
terminate the Plan or make such modification or amendment thereof as it
deems advisable; provided, however, that except as provided in this Section
10, the Board of Directors may not, without the approval of the
stockholders of the Company obtained in the manner stated in Section 9,
make any change in the Plan which (i) requires stockholder approval under
applicable law or regulations, (ii) increases the number of shares
available for stock options, (iii) expands the class of participants
eligible to receive stock option grants under the Plan, or (iv) materially
increases benefits available under the Plan by expanding the types of
permissible awards (such as by authorizing the grant of stock awards or
stock appreciation rights). The Committee may terminate, amend, or modify
any outstanding option without the consent of the option holder, provided
however, that, except as provided in Section 5, without the consent of the
optionee, the Committee shall not change the number of shares subject to an
option, nor the exercise price thereof, nor extend the term of such option.
11. Limitation of Rights in the Option Shares.
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An optionee shall not be deemed for any purpose to be a stockholder
of the Company with respect to any of the options except to the extent that
the option shall have been exercised with respect thereto and, in addition,
a certificate shall have been issued theretofore and delivered to the
optionee.
12. Notices.
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Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: General Counsel, and, if to an optionee, to the address as
appearing on the records of the Company.
13. Governing Law.
--------------
The Plan and all determinations made and actions taken with respect
thereto shall be governed by the laws of the Commonwealth of Massachusetts,
without regard to its conflict of law rules.
Approved by the Board of Directors:_________________________
Approved by the Stockholders:______________________________
